Read the full judgment text of HCA 003710/1997 on BabelCite. This High Court CFI judgment was delivered on 22 September 1998 before Barnett J.
Contract law – sale of land – binding provisional sale and purchase agreement – vendors' refusal to sign formal agreement – purchasers' claim for specific performance and damages in the alternative – vendors' subsequent offer to submit to specific performance – whether innocent party loses right to elect – distinction between anticipatory breach and actual breach – election of remedies – right of innocent party. Contract – breach – whether defaulting party's belated offer of performance can extinguish non-defaulting party's right to elect between equitable and common law remedies. A binding provisional agreement for the sale of a Hong Kong flat, signed on 24 February 1997, provided for completion on 10 April 1997 and the signing of a formal agreement on 10 March 1997. The defendants (vendors) refused to sign the formal agreement, and on 4 April 1997 the plaintiffs' (purchasers') solicitors demanded completion. On 10 April 1997 the plaintiffs issued the writ claiming specific performance and damages in the alternative. On 22 August 1998, more than a year after the breach, the defendants indicated they were prepared to submit to judgment for specific performance. The plaintiffs contended they retained the right to elect between specific performance and damages. The defendants relied on Frost v Knight (1872) LR 7 Ex Ch 111, Johnson v Agnew [1980] AC 367, and Fercometal SARL v Mediterranean Shipping Co [1988] 2 All ER 742 for the proposition that the contract remained alive for the benefit of the wrongdoer as well as the innocent party, so that the innocent party's right of election was lost. The plaintiffs relied on the Canadian authority of Beauchamp v Costal Corp 26 DLR 146, which held that bringing an action for specific performance does not itself constitute an election, and that a tender of performance by the defaulting party cannot deprive the innocent party of his right to elect in favour of damages. Held, drawing a distinction between anticipatory breach and actual breach: a party already in actual breach of a contract capable of specific performance cannot, by a later indication of willingness to perform, avoid the innocent party's right to elect. The English authorities cited by the defendants concerned anticipatory breach or termination of subsisting contracts and did not govern a case of completed breach. The plaintiffs' right of election was preserved, although they were now put to their election. The defendants' offer could at most precipitate the plaintiffs' election. Plaintiffs put to their election between specific performance and damages.
Legal issues: Effect of defendant's belated offer of performance on plaintiff's right to elect between specific performance and damages
Outcome: Plaintiffs' right of election preserved; defendants' indication of willingness to perform does not deprive plaintiffs of the choice between specific performance and damages.