Specific performance unaffected by waiver

Lord Denning’s in WJ Allen v. El Nasr Export1 stated that “the principle by

waiver is simply this : if one party, by his conduct, leads another to believe that the strict
rights arising under the contract will not be insisted on, intending that the other should act
on that belief, and he does act on it, then he first party will not afterwards be allowed to
insist on the strict legal rights when it would be inequitable for him to do so. In
Plasticmoda Societa Per Azioni v Davidsons (Manchester) LTD [ 1952], there must be
no consideration moving for him who benefits by the waiver. There may be no detriment
to him by acting on it. There may be nothing in writing. Nevertheless, the one who
waives his strict rights cannot afterwards insist on them. His strict right cannot at any rate
suspended so long as the waiver lasts. He may on occasion be able to revert to his strict
legal right for the future by giving reasonable notice in that behalf, or otherwise making it
plain by his conduct that he will thereafter insist on them.

In Plenitude Holdings v Tan Sri Khoo, the plaintiffs, a company, under registered a
written agreement of sale and purchased, purchase a piece of land from its chairman of
the board of directors of the second defendant. The plaintiffs were required on execution
of the said agreement to pay 10% of the purchase price by way of forfeitable deposit
amounting to $4,793,995.80. The balance of the purchase price was to be paid within six
months from the date of execution, with provisions for extension of time for completion.
The second defendant granted several extensions for completion to the plaintiff as
requested. On 12 December 1988, after some three and a half years, the solicitors for the
second defendant wrote to the plaintiffs informing them that the second the second was
terminating forthwith the said agreement on the ground that the plaintiffs were unable to
complete the purchase of the said land, and subsequently filed the present action.

The plaintiff managing director testified that through the help of a mutual friend
he spoke on the telephone with the first defendant who promise that he and the second
defendant would obtain a loan to enable the plaintiffs to pay the balance of the purchase

1
[1972] 2 ALL ER 127 at 140.
price, failing which the second defendant would enter into a joint venture with the
plaintiff to develop the said land. Acting on such assurance and in reliance on the oral
undertaking of the first defendant, the plaintiffs entered into the said agreement. The
plaintiffs contend that the instant termination of the said agreement was invalid as time
was no longer of the essence of the contract. They contend that they had been negotiating
with Sohaimi, the resident director of the second defendant for joint venture, and Sohaimi
had assured that the defendants would not terminate the said agreement and forfeit the
deposit. The plaintiffs further contend that they had arrived at a compromised
arrangement on joint venture with Sohaimi who was representing both the defendants.
The plaintiffs claim specific performance of the said agreement, damages and cost.

It was held : “ on the evidence viewed in totality I am satisfied that the plaintiffs
have made out a case to merit an order for specific performance. A court of equity
enforces specific performance of a contract affecting land because its act upon the
equities caused by the acts of the parties in the execution of the contract and not upon the
contract itself.

The defendant by their indulgence in granting the plaintiffs a series of extensions

to complete the terms of the agreement have lulled the plaintiffs into a false sense of
security and have given the plaintiffs reason to believe that they would be given a
reasonable time within which to complete the contract. It would be inequitable, in vie of
the dealings which had taken place between the parties, to allow the defendants to
enforce their strict legal rights against the plaintiffs after they have led the plaintiffs to
believe that they had no intention to enforce such right.

The plaintiffs are accordingly entitled to an order for specific performance of the
sale and purchase agreement dated 20 August 1984, with damages to be assessed and
paid by the second defendant to the plaintiffs for wrongful termination of the agreement
and by both defendants for breaches of their undertakings with costs.”
 This contract must also be positive nature, wherein one is required to do so
something. Negative contract, on the other hand, should be enforced through a
prohibitory injunction and not specific performance. Positive contracts can also be
enforce through mandatory injunctions. It depends on the plaintiff whether he wishes to
pray for specific performance or injunction. Generally, in case where urgent action is
required, injunction is preferred, and in case otherwise, courts generally prefer to issue a
decree of specific performance after giving on opportunity to both the parties of being
heard. Interlocutory injunctions are generally issued exparte, and are thus liable to be
discharge easily.

Specific performance dependant on an option is unaffected if the option is not

exercise strictly in the prescribe manner

In Kau Nia Enterprise (Pte) Ltd. v Teck Wah Corporation (Pte) Ltd 2 the fact that
by an option in writing given on June 10, 1980, the defendants for the sum of $5000 gave
the plaintiff an option to purchase a property in Singapore with vacant possession and at
the price of $720 000.00. Completion of the sale and purchase was to take place on
November 10, 1980. The option was exercisable at or before 4 p.m on july 30, 1980. The
acceptance was prescribed. The plaintiffs had to sign at the foot of the option at the
portion entitled “Acceptance Copy” and deliver it duty signed together with the balance
of the 10% of the purchase price at or before the time aforesaid.

The plaintiff did not exercise the option in the mode prescribed. Instead, they
handed to the defendants and the defendants accepted two cheques aggregating the sum
of $67 000 which together with the option fee amounted to 10% of the purchase price.

It’s was held that “ although the Plaintiff did not exercise the option in the manner
and within the time prescribe, I am satisfied that defendants had waived these terms and
had in truth and in fact accepted the plaintiffs’ belated and altered mode of converting the
option into a conclude contract. This is conclusive evidence by letter dated July 31, 1980

2
[1982] 1 MLJ 10.
and written by the defendant. The letter acknowledge the receipt of the two cheques, one
of which was for $5000 and the other for $62 000 which was post-dated to August 23,
1980. It made reference to the option fee. The defendants “confirmed the sale” to the
plaintiffs. By saying “you have already exercised the said sale” they meant or must be
taken to mean that the plaintiffs had been deemed by the defendants to have duly
exercised the option. The letter even went on to provide for interest to be charged if the
post-dated cheque was not only honored on presentation. The letter was accepted by the
plaintiffs.

On 8 September 1980 the plaintiffs requested the defendants to encash the post-
dated cheque. The defendants did. Completion of the sale and purchase was delayed. On
6 December 1980 the defendants’ solicitors stated that the transfer had been executed by
the defendants. They asked for a firm date for the completion. Up to this stage, it is clear
that every act of the defendants was in affirmation that the agreement for sale and
purchase was concluded and the actions of the defendants were steps taken by them
towards the completion of the sale.

On 21 January 1981 the defendants took an extraordinary step. They wrote to

their mortgagee bank to auction the property. It was calculated to deprive the plaintiffs of
the property. It was stated by counsel on both sides that the property was by then about
$1.6m. The defendants should not be allowed to renege on their contract just because the
property market was rising. The plaintiffs gave notice of completion. The defendants
could not give vacant possession of the property. The encroachments mentioned earlier in
this judgment were still there. The plaintiffs insisted on completion notwithstanding the
encroachments. As evidenced by the letter dated 3 April 1981 and written by the
plaintiffs’ solicitors, both parties agreed price to meet the cost and expense of removing
the encroachments. No agreement was reached on the amount of the abatement.

As the defendants failed to complete the sale notwithstanding repeated notices

from the plaintiffs, these proceedings were commenced from specific performance and
for an appropriate abatement of the price in view of the encroachments. On behalf of the
defendants, it was argued that the option, not having been exercised in the mode and
within the time prescribed, had lapsed. It was also argued that the letter of 31 July 1980
was not a sufficient memorandum, as it allegedly did not contain the essential terms. The
first contention is not consistent with the plain words and tenor of the defendants’ letter
of 31 July 1980, the effect of which I had already dealt with. It is so clear and
unambiguous. This is one case where happily the contemporaneous documents are such
that they conclusively demonstrate the conclusion of a contract in writing.