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Specific Performance of Construction Contracts

by Ian Percy

Ian Percy Vicbar CPD Seminar

This paper looks at the circumstances in which a party might successfully obtain specific performance of a contract requiring the construction of a structure.

An article by David Levin QC and Andrew Laird, entitled “Is a Building Contract Specifically Enforceable and, if so, under What Circumstances?” appeared in (2007) 23 BCL 16. The article considered the position of whether a builder was entitled to obtain specific performance of a building contract, or more particularly, whether a builder can restrain termination of its licence to occupy the land upon which the building works are being undertaken. Not surprisingly there are very few cases in which a builder has achieved this relief.

It will often be the case that a proprietor (meaning the party entitled to have a building constructed on their land) will not want specific performance. Frequently the proprietor and builder are in dispute, often over issues of the builder’s performance or lack thereof or quality of the work done by the builder, and so the last thing the proprietor wants is for the builder to complete the work. The proprietor wants nothing more to do with the builder and seeks damages as the primary relief.

However, there are situations where the proprietor wants the contract performed. The proprietor might wish to avoid the inconvenience of replacing the existing builder and overseeing completion of the works. The works might be well advanced. If a proprietor takes over the works they assume all manner of risks. They have to arrange for others to complete the work – often at more cost. They might then be forced to deal with planning, building and insurance issues whilst at the same time managing a dispute with the original builder and possibly the builder’s sub contractors. Rectification work must be both necessary and reasonable and the quantification of damages is often disputed. Delays occur which add to the stress and inconvenience of the dispute. Things might be a lot simpler if the original builder was made to perform the contract. In such cases a proprietor might want specific performance as the primary relief. As the High Court has recently reminded us, decrees of specific performance and injunction ensure or encourage the performance of contracts rather than the payment of damages for breach.

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