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Week 10 Declarations / Specific Performance Equitable Remedies - Coggle…
Week 10 Declarations / Specific Performance
Equitable Remedies
Declarations
What is a Declaration
? It is an order made by a court which states ‘with finality the true nature of the law or the rights, duties, and interests of the applicant under it’
A declaration is ‘an order granted by the court that states with finality the true nature of the law or the rights, duties, and interests of the applicant under it’:
Kinsella v Gold Coast City Council
[2014] QSC 65, [61]-[77
Declarations can be made on a wide range of subject matter. Some examples
● To determine a person’s interest in land;
● To determine the meaning of a will;
● To establish whether a contract is valid;
● To declare that a fiduciary has breached his or her duty
As a declaration finalises the rights, duties, or obligations in question,
courts will not grant
‘interim declaration’: Nsi Group Pty Ltd Mokas [2006] NSWSC 976
As a declaration finalises the rights, duties, or obligations in question, courts will not grant an ‘interim declaration’
or in interlocutory proceedings:
Re Elm
(2006) 69 NSWLR 145, 153: M W Bryan et al, (2017) 78-9.
however in some cases
a declaration will be granted ex parte:
Re Elm
(2006) 69 NSWLR 145, 153.
Requirements of evidence and a proper contradictor
There are
two preliminary questions
that need to be answered before a court can make a declaration
Can a declaration be made in the absence of evidence or whether the parties can consent to an order for a declaration without evidence?
Can a declaration be made in the absence of a proper contradictor?
A proper contradictor
is a person who is before the court and has a true interest in the declaration sought:
Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd
[1921] 2 AC 438 (Russian Commercial).
Jurisdiction to grant a declaration
Australia’s superior courts have inherent jurisdiction to grant a declaration:
Ainsworth v Criminal Justice Commission
(1992) 175 CLR 564
Although the declaration has its origins in equity, jurisdiction to grant a declaration is now found in statute.
In Queensland, the
Civil Proceedings Act 2011
(Qld)(CPA) section 10 provides:
(1) This section
applies to the Supreme Court only.
(2) The court may hear an application for a declaratory order only and may make a declaratory order without granting any relief as a result of making the order.
A court with jurisdiction to order a declaration has broad discretionary powers:
Forster v Jolodex Australia
(1972) 127 CLR 421
Three matters that should influence the exercise of discretion
Ainsworth v Criminal Justice Commission
(1992) 175 CLR 564,
Mason CJ, Dawson, Toohey and Gauldron JJ i
dentified three matters t
hat should influence the court’s decision to exercise its discretion, which are discussed below.
Need for a Real interest:
Locus Standi
The applicant must have a real interest in the controversy (‘standing’).
A ‘real interest’ does not require that the applicant must have a right that can be enforced against the other party:
QBE Insurance (Australia) Ltd v Lois Nominees Pty Ltd
[2012] WASCA 186, 169:
For a public right
, the plaintiff will need either interest
or a
‘special’ interest:
Australian Conservation Foundation Inc v Commonwealth
(1980) 146 CLR 493 in ‘the subject matter of the dispute
has to be more than a mere intellectual curiosity
[28.29]
Most interests recognised will be economic in nature.
1 more item...
a ‘
real’ interest
:
Ainsworth v Criminal Justice Commission
(1992) 175 CLR 564,
Foreseeable consequences; The declaration must produce foreseeable consequences for the parties
Ainsworth v Criminal Justice Commission is that a court should not make a declaration if the declaration will not produce any foreseeable consequences for the parties:
ACCC v Francis (2004) 142 FCR 1; cf. Rural Press Ltd v ACCC (2003) 216 CLR 53
A declaration ‘must have some effect on the rights and obligations of the parties’:
ACCC v Francis
(2004) 142 FCR 1, 32.
Therefore a court will not order a declaration if there is no practical utility in doing so:
Warramunda Village Inc v Pryde
(2001) 105 FCR 437, 440
A court will not grant a declaration that is ineffectual as a means of resolving a dispute, as this would damage the court’s authority and legitimacy. Also, it may lead to further litigation between the parties: N
eeta (Epping) Pty Ltd v Phillips
(1974) 131 CLR 286; 3 ALR 151
Abstract or hypothetical questions
The applicant must show that the parties have a real dispute over some question of law
Mellstrom v Garner
[1970] 1 WLR 603, partners of an accounting firm dissolved the partnership by agreement. The parties could not agree on the meaning of one of the terms of the agreement because it was poorly drafted. They sought a declaration. It was held that there was no dispute because no party broke or threatened to break the agreement: Radan and Stewart [28.19]. Therefore, the question was hypothetical.
If a declaration is sought to define rights or liability ‘in anticipation of future events’, unless the future events are at least likely to occur, the relief sought is ‘arguably only in respect of a “purely hypothetical” question’:
Re Painaway Australia Pty Ltd v JAKL Group Pty Ltd
[2011] NSWSC 205, [385] (Ward J).
However, if an application for a declaration concerns future legal rights, with the purpose of regulating future conduct, the question may not be hypothetical
Russian Commercial and Industrial Bank).
In
Commonwealth v Sterling Nicholas Duty Free Pty Ltd
(1972) 126 CLR 297, the question was whether Sterling Nicholas’s proposed business procedures would breach the Commonwealth’s custom laws. In this case the declaration was granted.
A matter
will not be merely hypothetical
if it involves adversary litigation, an actual controversy, a point submitted by a person aggrieved, or a binding decision raising a res judicata between the parties:
Australian Boot Trade Employees’ Federation v Commonwealth
(1954) 90 CLR 24.
Specific performance
Overview
Regarding specific performance, the court’s exercise of discretion is also reliant on having jurisdiction to order specific performance
Specific performance is an
in personam
remedy
attaches to the person not the property (
in rem
)
? directs a contracting party to perform its contractual obligations
where the obligation is negative, requiring the defendant to refrain from an act, an injunction is the appropriate remedy
Where a contractual obligation is positive, i.e., ‘the defendant is required to perform some positive act, then specific performance is the appropriate remedy’
What is required is ‘some threat of refusal, either express or at least implied, or some actual refusal on the part of the contracting party to perform the contract in whole or part’:
Wolsey Investments Pty Ltd v Gillespie
[2007] NSWCA 358, [33];
two forms of specific performance
“
Executory
”: the parties have entered an agreement, but have not completed the formal requirements for the agreement to be legally binding; and
Executory specific performance ‘compels the execution of a contract that requires something to be done, such as the execution of a deed or conveyance, to place the parties in the positions contemplated’:
“
Executed
”: the parties have completed the formal requirements to enforce the contract at common law, but common damages are not a suitable remedy.
Executed specific performance refers to ‘the enforcement of any contractual obligation to perform an act’. Here there is a contract in place. The plaintiff applies to the court to have the other party to the contract fulfill a contractual obligation/s.
Differences between specific performance and damages at common law
At common law,
a plaintiff will always have a right to an award of damages for a breach of contract. Common law damages will always be available to a plaintiff who is ready, willing, and able to perform the contract.
in equity
, specific performance will not be ordered automatically where a breach of contract is proved: See Radan and Stewart [29.7].
A court’s exercise of discretion to order specific performance is also subject to the court having jurisdiction. A court cannot order specific performance if it does not have jurisdiction
if the court does not have jurisdiction to order specific performance:
(1) The court will not be able to award equitable damages; and
(2) The plaintiff will have to rely on recovering common law damages.
Jurisdictional Factors
Before a court can exercise jurisdiction, and thus its discretion to order specific performance, there must be
(1) a binding contract for valuable consideration; and
Inadequate consideration may be a factor that influences the court to refuse an order of specific performance.
(2) common law damages must be inadequate in the circumstances.
. The assessment of adequacy of damages is made at the time of the order, not at the time of the formation of the contract:
ANZ Executors & Trustees Ltd v Humes Ltd
[1990] VR 615
If there are significant difficulties in assessing damages or in ‘enforcing an award of damages, damages will be inadequate’:
Laemthong International Lines Co Ltd v Artis (the Laemthong Glory)
[2005] 1 Lloyd’s Rep 632
To answer this question, the court asks whether damages will provide ‘a complete remedy’: Adderley v Dixon (1824) 57 ER 239, 240.
Discretionary Factors relating to an order of Specific Performance
Personal services contract
Courts generally will not enforce a contract that coerces the defendant and the plaintiff to maintain a personal relationship. Courts will also avoid the application of orders that will result in forms of servitude:
De Francesco v Barnam
(1890) 45 ChD 430.
Examples of these relationships;
include employment contracts: Geys v Sociètè Gènèrale, London Branch (1890) 45 CH 430, 438, and
partnerships.
Constant court supervision
The starting point is that the court will not grant specific performance if the parties’ obligations under the contract are not clearly defined:
JC Williamson Ltd v Lukey & Mulholland
(1931) 45 CLR
Courts avoid making orders that would require its ongoing supervision. However, ‘if the terms of the contract are clearly defined, equitable relief will be granted’: Tito v Waddell (No 2) [1977] Ch 106, 321
Hardship for the defendant
Court will not order a SP if the terms of the contract would result in unconscionable hardship upon the defendant
David Jones Ltd v Perpetual Ltd
[2006] QSC 337
Lack of mutuality
Specific performance will only be available in cases where the defendant would have been able to obtain relief from the plaintiff. In other words, the contract must be enforceable in both directions unless the defendant’s rights to enforce the other party’s obligations have been lost due to her own conduct.
At the date on which the court makes the order: Price v Strange [1978] Ch 337 (Price v Strange).
Plaintiff in substantial breach and/or not ready, willing and able to perform
The basic principle is that the plaintiff will be denied an order of specific performance if she is in substantial breach of the contract
there are cases in which a plaintiff will be able to seek an order for specific performance even if she has breached her obligation: Mehmet v Brown (1965) 113 CLR 295
Remember
: if a party fails to comply with an order of specific performance, the court may make a
finding of contempt of court
: Cooperative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998]