Redrow Homes Ltd v Martin Dawn (Leckhampton) Ltd

Specific performance may be granted where the claimant arguably breached related contractual obligations, provided those breaches do not make enforcement inequitable. The court must consider the transaction as a whole and ask whether the unperformed obligation is sufficiently important, having regard to its connection with the obligation sought to be enforced, to make specific performance inequitable. A claimant need not establish its disputed factual case on a summary judgment application. Where the defendant’s continuing security is preserved and any damages claim remains available, an arguable claim for damages will not ordinarily justify withholding specific performance.

Redrow sought summary judgment requiring Martin Dawn, as mortgagee, to execute a planning agreement under Town and Country Planning Act 1990, section 106. The obligation arose under clause 15.9 of a legal charge securing sums payable under a land sale and overage arrangements.

Martin Dawn accepted that it had not executed the agreement but alleged that Redrow had breached related contractual obligations concerning the development area, planning negotiations and section 106 costs. It contended that those breaches gave rise to an equitable defence to specific performance and should be tried. The central issue was whether the alleged breaches made it inequitable to compel execution of the planning agreement.

1. Procedural disposal. Although the application did not fall within the express terms of paragraph 7 of the Practice Direction under CPR Part 24, the court proceeded with it. The defendant had filed all evidence on which it relied, sought no adjournment, and the court abridged time and permitted the application to proceed under CPR 24.4(1)(i), CPR 3.1(2)(a) and the overriding objective.
2. Summary judgment test. The court could not resolve disputed factual issues concerning the alleged contractual breaches or the risk to planning permission. It proceeded on the basis that Martin Dawn had an arguable claim for damages. The question was whether that claim constituted an arguable defence to specific performance.
3. Equitable assessment. Applying National and Provincial Building Society v British Waterways Board, the court considered the transaction as a whole. The relevant question was whether the obligation which Redrow allegedly failed to perform was sufficiently important, having regard to its connection with the obligation sought to be enforced, to make specific performance inequitable. Formal separation of contracts was not decisive.
4. Application. The present case differed materially from National and Provincial Building Society v British Waterways Board. Redrow was satisfied with the planning permission and agreement. No continuing or further act remained to be performed by Redrow. Martin Dawn would retain its security for future sums under the charge, and any damages claim would remain available. It was unnecessary to decide whether damages for past breaches were themselves secured by the charge.
5. Clause 15.9 imposed an unqualified obligation, subject only to its express proviso that the mortgagee would incur no covenants or other obligations under the planning agreement. It would not be inequitable to enforce that obligation despite the arguable breaches. The defendant had no real prospect of successfully defending the claim and there was no compelling reason for a trial. Summary judgment for specific performance was therefore granted.