When will a court grant an order for specific performance of a term in a building contract?

When will a court order specific performance of a term in a building contract? This question was recently considered by Efthim AsJ in Grech v Biltar [2025] VSC 636.

Specific performance:

• is not a matter of right in the party seeking relief, but of discretion in the court:
• is, as a general rule, available only when damages are inadequate; and
• may be awarded instead of damages “only when it can, by that means, do more perfect and complete justice”.

See: Gretch, [26] -[28] and the authorities there referred to.

Also, specific performance “is inapplicable when the continued supervision of the court is necessary in order to ensure the fulfilment of the contract”^[1] and a building contract is “par excellence, one the performance of which requires continual supervision”^[2]. It is for that reason that, as a general rule, the courts will not order specific performance of a building contract.

In Crouch Developments Pty Ltd v D & M (Australia) Pty Ltd [2008] WASC 151, Martin CJ said at [21]:

“In relation to building contracts, it is not the case that specific performance will never be granted in respect of such contracts: Meagher RP, Heydon JD and Leeming MJ, Equity Doctrines and Remedies (4th ed 2002) at [20-080]. However, as the authors of that text observe (at 21-215), generally speaking, neither specific performance nor interlocutory injunctions having the effect of specific performance will be granted in respect of building contracts in other than exceptional circumstances.”

In Grech the parties to a building contract which required a builder to build a new dwelling entered into a deed of settlement (Settlement Deed) to resolve a dispute.  The builder’s main obligation under the Settlement Deed was to complete the building works and to rectify any defects identified by an expert to the satisfaction of the expert. If the builder defaulted under the Settlement Deed, the owner had the right to seek specific performance of the Settlement Deed. The builder failed to perform its obligations under the Settlement Deed and the owner commenced a proceeding seeking specific performance in accordance with the default provisions in the Settlement Deed.

After reviewing the authorities, His Honour considered Mayor, Aldermen and Burgesses of Wolverhampton v Emmons [1901] 1 QB 515, where Romer LJ identified (at 524) an exception to the general rule:

“The question, which is not free from difficulty, is whether, under the circumstances of this case, an order for specific performance should be made in favour of the plaintiffs. There is no doubt that as a general rule the Court will not enforce specific performance of a building contract, but an exception from the rule has been recognised. It has, I think, for some time been held that, in order to bring himself within that exception, a plaintiff must establish three things. The first is that the building work, of which he seeks to enforce the performance, is defined by the contract; that is to say, that the particulars of the work are so far definitely ascertained that the Court can sufficiently see what is the exact nature of the work of which it is asked to order the performance. The second is that the plaintiff has a substantial interest in having the contract performed, which is of such a nature that he cannot adequately be compensated for breach of the contract by damages. The third is that the defendant has by the contract obtained possession of land on which the work is contracted to be done.

Thus, to be granted a remedy for specific performance, the plaintiff needs to demonstrate:

• the building work the plaintiff seeks to enforce performance of is defined by the contract;
• the plaintiff has a substantial interest in having the contract performed which is of such a nature that it cannot be adequately compensated for breach of contract by damages; and
• the defendant is in possession of the land on which the building work is contracted to be done.

In Grech, Efthim AsJ decided that none of the three requirements were met. Apropos the first requirement, His Honour was of the view that there would be issues outstanding which could not be resolved without the court’s intervention. With respect to the third requirement, his Honour noted that there had been animosity between the parties in the past and that situation might flare up again which weighed against an order for specific performance.

^[1] JC Williamson Ltd v Lukey (1931) 45 CLR 282, 297-8 (Dixon J)

^[2] Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 5^th ed, LexisNexis, 2015, [20-080].

This post originally appeared on roberthaykc.blog