It is generally considered to be difficult to obtain orders for specific performance of obligations to build. In Airport Industrial GP Ltd v Heathrow Airport Ltd and AP16 Ltd, the court did make an order for specific performance before any actual breach of contract had occurred.
The tenant of a site at Heathrow Airport was contractually obliged to build a car park providing 280 spaces by 22 October 2016. The tenant could have met its obligation by building a surface car park, but it would have been unprofitable and possibly made the tenant insolvent. The landlord had no right to carry out the works itself or forfeit the lease, and its only remedy was to seek specific performance of the tenant’s contractual obligations.
The court made an order for specific performance requiring the tenant to build a car park. In doing so, it effectively varied the contract to allow the tenant an additional two years to build its preferred (more profitable) option of a multi-storey. This was on condition that it compensated the landlord for the two year delay by way of damages and that, if it failed to meet planning and construction milestones, it must build a surface car park instead.
Damages were not considered to be an adequate remedy overall, which is why the tenant had to perform its contractual obligations. The order was made before the contractual deadline, and also included a timetable of steps the tenant was required to take.
The court considered the likely consequences of requiring the tenant to comply with its original contractual obligations and found that it would be disproportionate to force the tenant to build an unprofitable surface carpark.
Caution: fact sensitive area
Specific performance is an equitable remedy, and the court therefore has a significant element of discretion as to whether it is an appropriate remedy, taking into account all the circumstances of the particular case.
Because of its reluctance to take on an onerous supervisory role, the court will be less likely to order specific performance where a contract involves specified works rather than a particular result. It will also take into account whether the landlord has alternative remedies available, for example the ability to enter the land to carry out the works itself, either during the term or after forfeiture.
Why is this case important?
It means that specific performance, albeit in limited circumstances, is available to a landlord as a realistic remedy even when a breach of contractual obligations has not yet occurred.