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All England Law Reports/1984/Volume 1 /Patel and another v Ali and another - [1984] 1 All ER 978

[1984] 1 All ER 978

Patel and another v Ali and another

CHANCERY DIVISION

GOULDING J

17, 18 JANUARY 1984

Specific performance - Sale of land - Refusal of specific performance - Hardship - Hardship to defendant -
Unforeseen change in defendant's circumstances subsequent to date of contract - Unavoidable delay in
completing contract not due to either party's fault - Defendant a young married woman with three young chil-
dren contracting bone cancer resulting in amputation of leg subsequent to date of contract - Defendant be-
coming dependent on assistance from family and friends living in neighbourhood of house contracted to be
sold - Removal to another home elsewhere likely to deprive her of that assistance - Whether hardship enti-
tling court to refuse specific performance of contract.

In July 1979 the defendant and her co-owner of a house which they occupied entered into a contract to sell
the house to the plaintiffs. At that date the defendant, a married Pakistani woman aged 23 who spoke little
English and who had one young child, was in good health. The completion date under the contract was in
August 1979. Performance of the contract was subject to a long delay which was not the fault of either party
to the contract. In May 1979 the defendant's husband had been adjudicated bankrupt and within a week of
the contract for the sale of the house being signed his trustee in bankruptcy had obtained an injunction re-
straining completion of the sale, but by July 1980 the defendant was released from an undertaking which
prevented her completing the contract. By that date the defendant was found to have bone cancer and she
had to have a leg amputated. On 11 August 1980 the plaintiffs issued a writ seeking specific performance of
the contract. At the end of August 1980 the defendant gave birth to her second child, and in August 1983,
she had a third child. Because of her physical disability and her inability to speak much English the defend-
ant relied on assistance from friends and relations who lived very near to the house contracted to be sold to
keep her home going and to care for her children. In September 1983 the court made an order for specific
performance of the contract. The defendant appealed against that order. She submitted that, because of the
hardship she would suffer if she had to leave the house and move to a neighbourhood where she would be
deprived of the daily assistance from her friends and relations, specific performance of the contract should
be refused and the plaintiffs should be left to their remedy in damages for breach of the contract.

Held - Although a person of full capacity who contracted to buy or sell immovable property took the risk of
hardship to himself and his dependants, whether arising from existing facts or unexpectedly supervening in
the interval before completion, the court could, in the exercise of its discretion in a proper case, refuse specif-
ic performance of such a contract on the ground of hardship suffered by the defendant subsequent to the
date of the contract, even if the hardship was not caused by the plaintiff and did not relate to the subject mat-
ter of the contract. On the facts, it would inflict hardship amounting to injustice on the defendant to order spe-
cific performance of the contract since that would have the effect of asking her to do what she had never
bargained for, viz to complete the sale after more than four years and after all the unforeseeable changes
that had taken place during that period. Moreover, after the long period of delay (for which neither party was
to blame) it would be just to leave the plaintiffs to their remedy in damages. Accordingly, the court would or-
der that, provided the defendant paid into court by a specified date, or otherwise secured for the plaintiffs'
benefit, a fixed sum of money, the order for specific performance would be discharged and an inquiry would
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be ordered into the damage suffered by the plaintiffs by reason of the breach of the contract (see p 982 a to f
and p 983 a b, post).
[1984] 1 All ER 978 at 979

City of London v Nash (1747) 3 Atk 512, Webb v Direct London and Portsmouth Rly Co (1852) 1 De GM & G
521, dictum of James LJ in Tamplin v James [1874-80] All ER Rep at 562 and Sobey v Sainsbury [1913] 2
Ch 513 considered.

Notes

For hardship as a defence to a claim for specific performance, see 44 Halsbury's Laws (4th edn) paras 472-
477, and for cases on the subject, see 44 Digest (Repl) 51-56, 371-414.

Cases referred to in judgment

Gall v Mitchell (1924) 35 CLR 222, Aust HC.

Holliday (a bankrupt), Re, ex p the trustee of the bankrupt v The bankrupt [1980] 3 All ER 385, [1981] Ch
405, [1981] 2 WLR 996, CA.

London (City) v Nash (1747) 3 Atk 512, 26 ER 1095, LC.

Sobey v Sainsbury [1913] 2 Ch 513.

Tamplin v James (1880) 15 Ch D 215, [1874-80] All ER Rep 560, CA.

Webb v Direct London and Portsmouth Rly Co (1852) 1 De GM & G 521, 42 ER 654, LJJ.

Cases also cited

Burrow v Scammell (1881) 19 Ch D 175.

Nicholas v Ingram [1958] NZLR 972.

Norton v Angus (1926) 38 CLR 523.

Price v Strange [1977] 3 All ER 371, [1978] Ch 337, CA.

Appeal

The defendant, Suriya Ali (otherwise Surrya Ali), appealed from the decision of Master Barratt given
on 19 September 1983 ordering specific performance of a contract for the sale by the defendant
and Nazir Ahmed (otherwise Nazir Ahmad) of a house known as 136 Sheaveshill Avenue, London
NW9 to the plaintiffs, Dine Shkumar Nigindas Patel and Jaymal Nigindas Patel. The appeal was
heard in chambers but judgment was given by Goulding J in open court. The facts are set out in the
judgment.

Michael Briggs for the defendant.

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Jonathan Simpkiss for the plaintiffs.

Mr Ahmed did not appear.

18 January 1984. The following judgment was delivered.

GOULDING J.

On 19 September 1983 the vacation master, on an application under RSC Ord 86, ordered the specific per-
formance of a contract dated 31 July 1979 for the sale by the defendants to the plaintiffs in this action of a
suburban dwelling house known as 136 Sheaveshill Avenue, Kingsbury, London NW9. I have now to decide
an appeal from that order. The notice of appeal, dated 26 September 1983, is expressed to be on behalf of
both defendants, but counsel who appeared before me represented only the first-named defendant, to whom
I shall henceforth refer as 'the defendant', and the second-named defendant has not appeared on the ap-
peal. The grounds of appeal are entirely personal to the defendant and do not directly concern her co-
defendant.

Counsel on both sides, desiring to avoid further delay and expense to their clients, have agreed that I should
treat this appeal as the trial of the action and finally dispose of it on the affidavit evidence before me. To
reach that result the plaintiffs agree that I may treat as evidence, subject of course to due consideration of
their weight, unsworn statements by medical men and by officers of the social services department and the
housing department of the local authority, the London Borough of Barnet, in whose area the property lies,
such statements being identified by and exhibited to an affidavit of a legal executive employed by the de-
fendant's solicitors.
[1984] 1 All ER 978 at 980

The circumstances of the case are unusual and it has caused me some anxiety. The argument for the de-
fendant, as it has been eloquently presented on paper and by her counsel, necessarily arouses so much
sympathy that I felt for a long time that any exercise of discretionary jurisdiction in her favour would probably
be unfair to her opponents, just because of the force of such sympathy.

The material facts are not in dispute and can be shortly stated. In 1979 the defendant was living in the prop-
erty with her husband, Mr Ali. They occupied it as their matrimonial home. Another couple, Mr and Mrs Nazir
Ahmed, were also living in the house. Mr Ahmed is the second defendant to the action. The property was
freehold and was registered in the name of Mr Ahmed and the defendant, who claim to be not only legally
but beneficially entitled thereto. On 31 July 1979 the contract was entered into between both defendants as
vendors and the plaintiffs, Mr and Mrs Patel, as purchasers. The price was 24,000, and the contractual
completion date 28 August 1979.

The performance of the contract has been subject (and this is a circumstance which, to my mind, is of the
greatest importance in the case) to a quite extraordinary delay, for which neither side on this appeal has
sought to blame the other. The causes of the delay have not been explored in detail in the evidence, but it
appears that a great deal of it can be put down to two difficulties. In the first place, the trustee in bankruptcy
of Mr Ali has made claim to a beneficial interest in the property. Mr Ali had been adjudicated bankrupt on 9
May 1979, in pursuance of a petition presented late in the previous year, and within a week of the signature
of the contract his trustee obtained an ex parte injunction restraining the completion of the sale. The ensuing
litigation in the bankruptcy court culminated in an order of Fox J made on 21 July 1980. The judge released
the defendant from undertakings, and Mr Ahmed from an injunction, preventing completion of the sale on the
footing that the trustee in bankruptcy would prosecute his claim against the proceeds of sale. The second
cause of delay, so it is said, was a succession of difficulties experienced by the plaintiffs in effecting service
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of proceedings on Mr Ahmed, who has returned to Pakistan. The writ in this action was issued on 11 August
1980, the application for summary judgment not until 4 July 1983.

Meanwhile, the circumstances of the defendant had changed disastrously. At the date of the contract she
had one child who was still a baby, and, so far as she knew, she was in good health. She was about 23
years old. She spoke and still speaks, in the words of her solicitor's affidavit, 'virtually no English at all'. In the
summer of 1980 she was found to have a bone cancer in her right thigh. On 24 July 1980, that is three days
after the order of Fox J in the bankruptcy proceedings, her right leg was amputated at the hip joint. She was
then in an advanced state of pregnancy and gave birth to her second child on 31 August. In the spring of
1981 her husband went to prison and remained there until mid-summer 1982. After his release she became
pregnant again and her child was born in August 1983.

The defendant has been fitted with an artificial leg. She is able to walk about the house and dress herself,
but not to do shopping, and she needs help with household duties and with the children. She is greatly de-
pendent on friends and relations to enable her to keep her home going and to look after her children, espe-
cially on her sister who, I was told, lives only a few doors away, and on a friendly neighbour, Mrs Dhillon.

It is in these circumstances that the defendant asks the court to refuse specific performance of the contract
and to leave the plaintiffs to their remedy in damages. Her advisers recognise that the court must be satisfied
that the legal remedy will be effective, and there is evidence that sympathetic persons in the Muslim commu-
nity in which she lives are willing to put up money for that purpose.

That the hardship to the defendant of enforced removal from the property would be great is, on the evidence,
beyond doubt. Any accommodation which the local authority could immediately provide for the defendant is
likely to deprive her of the daily assistance on which she relies, or at least greatly to diminish it. The move
would necessarily cause much more severe disturbance to the lives of the children, now aged five years,
three
[1984] 1 All ER 978 at 981

years and five months, than a family removal does in ordinary cases, and might even make it impossible for
the defendant to keep them with her, handicapped as she is by her physical disability.

The hardship which would be caused to the plaintiffs if specific performance were refused and adequate pe-
cuniary compensation were available is not, so far as the evidence reveals, greater than what is necessarily
involved in being disappointed of the purchase after so long a delay. Since the contractual date for comple-
tion in 1979 the plaintiffs have lived in accommodation rented from their local authority, the London Borough
of Barnet.

It is not in dispute that, like other equitable relief, the specific performance of contracts is a discretionary
remedy, but, in the ordinary case of a sale of land or buildings, the court normally grants it as of course and
withholds it only on proof of special facts. The textbooks and reported decisions have long recognised hard-
ship as one ground on which, in a proper case, a purchaser or vendor may be refused specific performance
and be left to his right to damages for breach of contract at law. The difficulty is to determine within what lim-
its hardship to a defendant can properly be said to justify this exercise of judicial discretion. There is no doubt
that, in the majority of cases, the hardship which moves the court to refuse specific performance is either a
hardship existing at the date of the contract or a hardship due in some way to the plaintiff. In the present
case, neither of those conditions being satisfied, the plaintiffs, rely strongly on that principle or practice,
which is stated in varying terms in all the well-known textbooks. It is sufficient for me to cite a passage from
Fry on Specific Performance (6th edn, 1921) p 199, paras 417-418:
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'It is a well-established doctrine that the Court will not enforce the specific performance of a contract, the result of which
would be to impose great hardship on either of the parties to it; and this although the party seeking specific perfor-
mance may be free from the least impropriety of conduct. The question of the hardship of a contract is generally to be
judged of at the time at which it is entered into: if it be then fair and just and not productive of hardship, it will be imma-
terial that it may, by the force of subsequent circumstances or change of events, have become less beneficial to one
party, except where these subsequent events have been in some way due to the party who seeks the performance of
the contract. For whatever contingencies may attach to a contract, or be involved in the performance of either part,
have been taken upon themselves by the parties to it. It has been determined that the reasonableness of a contract is
to be judged of at the time it is entered into, and not by the light of subsequent events, and we have already seen that
the same principle applies in considering the fairness of a contract.'

However, the principle so stated cannot be erected into a fixed limitation of the court's equitable jurisdiction.
It is recognised, both by Fry LJ's book and in the argument of counsel for the plaintiffs in the present action,
that the court has sometimes refused specific performance because of a change of circumstances superven-
ing after the making of the contract and not in any way attributable to the plaintiff.

One such case is City of London v Nash (1747) 3 Atk 512, 26 ER 1095, where Lord Hardwicke LC refused
specific performance of a contract which required the demolition of houses and building of new ones, be-
cause he thought that the demolition would be a public loss and no benefit to the plaintiffs, who would be
sufficiently compensated by damages at law. This seems a strong case, because the difficulties were due to
breaches of contract by the defendant himself. The report shows, however, that the Lord Chancellor was al-
so influenced by laches on the part of the city (see 3 Atk 512 at 517, 26 ER 1095 at 1098). Another relevant
case is Webb v Direct London and Portsmouth Rly Co (1852) 1 De GM & G 521, 42 ER 654, where the
Lords Justices refused specifically to enforce a purchase of land by the company after it had abandoned its
proposed enterprise of constructing a railway from Epsom to Portsmouth. Similar in principle are the cases
where the court has refused injunctions to compel specific performance of restrictive
[1984] 1 All ER 978 at 982

covenants by reason of a change in the character of the neighbourhood, even where the plaintiff and his
predecessors in title have in no way contributed thereto: see Sobey v Sainsbury [1913] 2 Ch 513 at 529.
Thus, I am satisfied that the court's discretion is wide enough, in an otherwise proper case, to refuse specific
performance on the ground of hardship subsequent to the contract and not caused by the plaintiff.

Another limitation suggested by counsel for the plaintiffs was that, in the reported cases, as he said, hardship
successfully relied on has always related to the subject matter of the contract and has not been just a per-
sonal hardship of the defendant. Certainly, mere pecuniary difficulties, whether of purchaser or of vendor,
afford no excuse from performance of a contract. In a wider sense than that, I do not think the suggested
universal proposition can be sustained. In Webb's case the hardship in no way affected the title to the prop-
erty or its physical condition. It was a hardship to the railway company to be compelled to pay for land it
could never use, just as it is a hardship to the defendant here to be compelled to convey a house she cannot
now well do without.

The important and true principle, in my view, is that only in extraordinary and persuasive circumstances can
hardship supply an excuse for resisting performance of a contract for the sale of immovable property. A per-
son of full capacity who sells or buys a house takes the risk of hardship to himself and his dependants,
whether arising from existing facts or unexpectedly supervening in the interval before completion. This is
where, to my mind, great importance attaches to the immense delay in the present case, not attributable to
the defendant's conduct. Even after issue of the writ, she could not complete, if she had wanted to, without
the concurrence of the absent Mr Ahmed. Thus, in a sense, she can say she is being asked to do what she
never bargained for, namely to complete the sale after more than four years, after all the unforeseeable
changes that such a period entails. I think that in this way she can fairly assert that specific performance
would inflict on her 'a hardship amounting to injustice' to use the phrase employed by James LJ, in a different
but comparable context, in Tamplin v James (1880) 15 ChD 215 at 221, [1874-80] All ER Rep 560 at 562.
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Equitable relief may, in my view, be refused because of an unforeseen change of circumstances not amount-
ing to legal frustration, just as it may on the ground of mistake insufficient to avoid a contract at law.

In the end, I am satisfied that it is within the court's discretion to accede to the defendant's prayer if satisfied
that it is just to do so. And, on the whole, looking at the position of both sides after the long unpredictable
delay for which neither seeks to make the other responsible, I am of opinion that it is just to leave the plain-
tiffs to their remedy in damages if that can indeed be effective.

I have come to this conclusion without taking into account the welfare of the defendant's children except as
involved in her own personal hardship. I much doubt whether, even in the present atmosphere of opinion on
which her counsel dwelt in his address, the interests of the children are material in their own right, though he
did derive some support from the obiter observations of Isaacs J in the High Court of Australia in Gall v
Mitchell (1924) 35 CLR 222 at 230, where he said:
'Hardships of third persons entirely unconnected with the property are immaterial. But I do not think that rule excludes
the case of third persons so connected with the defendant that, by reason of some legal or moral duty which he owes
them, it would be "highly unreasonable" for the Court actively to prevent the defendant from discharging his duty. The
circumstances of such a case might, in my opinion, be properly weighed for the purpose of determining the discretion
of the Court.'

On the other hand, I am not persuaded by the suggestion of counsel for the plaintiffs that the refusal of spe-
cific performance may not be of value to the defendant because of the still undetermined claim of her hus-
band's trustee in bankruptcy. It seems not unlikely that, if she can succeed in keeping possession of the
house here, she may also keep it in the bankruptcy court, at any rate for a period of some years, even if the
trustee's claim is well founded: cf Re Holliday (a bankrupt) [1980] 3 All ER 385, [1981] Ch 405.
[1984] 1 All ER 978 at 983

I will hear counsel on the precise form of order. What I have in mind is this. The order will recite the parties'
agreement to treat the hearing of the appeal as the trial of the action as between the plaintiffs and the de-
fendant. I will direct that, if within a specified period (I suggest on or before 29 February 1984) a certain sum
is paid into court to the credit of the action, or otherwise secured to the satisfaction of the plaintiffs, then the
master's order will be discharged. Instead, an inquiry will be ordered what damage the plaintiffs have suf-
fered by reason of the two defendants' breach of contract and the first defendant (whom I have been calling
the defendant) will be ordered to pay the amount found due on the inquiry and the plaintiffs' taxed costs of
the action, including this appeal, the costs of the inquiry being reserved. I have heard argument regarding the
sum to be paid in, and I fix it at 10,000. If the money is not provided by the date specified, the appeal is to
stand dismissed with costs. In either event, there will be a legal aid taxation of the costs (so far as not previ-
ously dealt with) of those parties who have been legally aided incurred during the respective periods when
they have been so aided. I perceive that the order may confer a benefit on Mr Ahmed, though absent from
the appeal, but that seems to me inevitable in the circumstances.

Order accordingly.

Solicitors: Ralph Haring & Co, Hampstead (for the defendant); Gerard Hales & Co, Ealing (for the plaintiffs).

Evelyn M C Budd Barrister.