Specific performance of an agreement concerning property

"The Court can order the specific performance of an agreement concerning immovable property, in the context of the mutual provision of consideration"

A party may expect that the Court, in the exercise of its discretion, will invoke the law of equity and order the specific performance of an agreement relating to immovable property, in the context of both parties providing consideration, even when the consideration consists of assistance and care to elderly persons while they are alive. This is an agreement in exchange, which is not a sale agreement, so the Court can apply the provisions of article 76(1)(d) of the Law of Contract, Cap. 149 and order the enforcement of specific performance of the contract when it would not be unreasonable or otherwise unequitable or practically unenforceable.

It is up to the Court to ascertain the type of agreement the parties have reached, that it is valid and constitutes a contract entered into in writing with consideration. If it was entered into without consideration, then it is void and does not create any contractual obligation. The same applies when the agreement was drawn up in writing and signed by the parties, but they are not closely related to each other. The consideration must not be vague but must be clearly defined so that the specific performance of the object of the contract and especially of the property whose ownership is sought to be registered can be ordered.

First Instance Decision

A property owner agreed in writing with the tenants that in addition to the amount of rent they paid monthly, they would provide her and her husband with daily care and any other assistance they would need for the rest of their lives. In return she agreed that the property they were renting would be transferred to their name when she and her husband passed away. With her will, she excluded the property from the disposal of the rest of her estate. After her and her husband's death, the executors of their will refused to transfer the property to the tenants and the latter resulted to Court, demanding specific performance of the agreement they entered into with the owner and that the property be registered in their name.

The Court of First Instance decided that the agreement that the owner signed with the tenants was valid, it was not a donation or sale, but an agreement, in the framework of which the provision of consideration was agreed on both sides. Taking into account all the circumstances, it decided that the conditions of Article 76(1)(d) of Cap.149 were met and that the imposition of specific performance of the contract would not be unreasonable or otherwise unequitable or practically unenforceable. That is why the Court issued an order of specific performance of the contract for the transfer of the property in their name, since it was separated as it was fenced, according to the measurements of the surveyor of the tenants.

Supreme Court Decision

The executors of the deceased's appealed the First Instance decision and the Supreme Court in its decision issued in C.A.162/2015, dated 8.2.2024, did not agree with the suggestion that the issuance of an order of specific performance was incorrect. It held that the particular contract could in no way be characterized as a contract of sale. Following relevant jurisprudence, it decided that while the sale implies consideration, the opposite is not the case. In this contract, there were no elements that are usually presented in a contract for the sale of immovable property and characterize it as such, so that the provisions of the previously applicable Law on specific performance, Cap.232, would apply.

It also held that the agreement provided for consideration to be provided by the tenants to the landlady and her husband. In fact, it stated that the terms of the agreement are essential and in case of violation of any of them, the violator is subject to the payment of legal damages, a provision that is consistent with the assessment that there were legal obligations of both parties and the intention to create a legal relationship.

The Supreme Court did not also accept the suggestion that the tenants could be entitled to reasonable remuneration for the services they had rendered the landlady and her husband. The issuance of an order of specific performance is based on the existence and validity of the relevant agreement that includes the promise in relation to the immovable property. It concluded that the trial Court correctly considered the issue of the issuance of an order of specific performance and that it was entirely right and fair to apply it in the present case, within the framework of the established principles of the law of equity, and dismissed the appeal.