Legal Principles and Key Points
- In the case of Johnson v Agnew 1980 AC 367, it was held that although a vendor has at trial, to elect to go for damages or specific performance, if he is to choose specific performance, he can still apply to the court to terminate the contract and is then entitled to damages for its breach.
Facts of the Case
- The claimant vendors, being in arrears with mortgage payments, entered into a written agreement for the sale of the properties.
- The purchasers failed to complete and as such the vendors obtained an order for specific performance.
- The purchasers then failed to carry out that order and the mortgagees then enforced their securities by selling the properties.
- The proceeds of sale were insufficient to discharge the mortgage in full.
- The vendors then moved for an order that the purchasers should pay the balance of the purchase price to the vendors.
- The judge made no order, and at the Court of Appeal allowed the vendor’s appeal.
Issues in Johnson v Agnew 1980 AC 367
- Could the vendors claim damages in respect of the missing repayment balance?
Held by House of Lords
- Appeal dismissed.
- Held that where specific performance was ordered but not complied with, damages was still available as an alternative remedy and the damages were to be determined on a common law basis as at the date when the remedy of specific performance was aborted.
- “The general principle for the assessment of damages is compensatory, i.e., that the innocent party is to be placed, so far as money can do so, in JJ the same position as if the contract had been performed. Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach—a principle recognised and embodied 401 A.C. Johnson v. Agnew (H.L.(E.)) in section 51 of the Sale of Goods Act 1893. But this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.” Pg.401