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Johnson v Agnew [1980] AC 367

Purchaser failed to comply with order for specific performance; alternative remedies

Facts

Johnson was in arrears on his mortgage and entered an agreement to sell the property to Agnew. The agreed price was sufficient to discharge his mortgage and to allow him to buy another property. Agnew failed to complete the sale, and Johnson obtained a summary order for specific performance. The order was not complied with and the mortgagees enforced their powers to sell the property for a sum which was insufficient to discharge the mortgage. Johnson sought damages from Agnew.

Issues

Agnew argued that Johnson had elected to enforce the contract by way of specific performance and, therefore, the court did not have the power to discharge the order for specific performance and award damages in lieu. The rights under the contract had merged with the order for specific performance, and could not be revived to form the basis of a claim for damages. Failure to comply with an order did not amount to grounds for discharging the order. Johnson contended that because the order had not been complied with, he was entitled to apply for the order to be discharged, treat the contract as at an end and obtain damages in lieu. Agnew had failed to fulfil her contractual obligations and, therefore, the measure of damages should be the difference between the agreed purchase price and the price obtained by the mortgagee.

Held

Johnson was successful in his claim. He had been entitled to elect specific performance and the contract remained in effect until that order had been complied with. As there was a failure to comply with the order, he was entitled to apply to the court to put an end to the contract and to receive damages appropriate to the breach of contract.


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