Cie de Construction Belcourt v. Golden Griddle Pancake House, [1988] R.J.Q. 716 (C.S.)

Cie de Construction Belcourt v. Golden Griddle Pancake House, [1988] R.J.Q. 716 (C.S.).

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  An injunction must be distinguished from other remedies available to the creditor of an obligation because it is an equitable remedy.  It imposes a duty, the violation of which constitutes contempt of court.  So even though DF specifically wrote into the lease that breach would give rise to SP instead of damages, it's still up to the court's discretion whether to use this remedy.
  
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  The recent doctrine of QC confirms that 1065, 1610 and 1628 CCQ give the
  creditor the option of requiring SP "in the appropriate cases".  (Here the Court cites Jukier's concluding paragraph about how SP enforces the Will of the Parties.)  The court should determine "appropriate cases" by substantive law and objective criteria, NOT hardship and personal consequences. 
  
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  Cases which do not admit of SP are usually situations where the performance of the obligation has become virtually impossible, when the time within which the obligation was to be performed has elapsed, or the property to be delivered has perished or is no longer in the patrimony of the debtor. 
  
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  The judge has to consider the nature of the act, the personality and capacity of the debtor and the enforceability of the proposed order.
  
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  The nemo praecise rule should not be extended to encompass an order to compel
  the performance of obligations by moral persons who by their magnitude transcend the will of one person.
  
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  There's precedent for this in Loews Hotel v. PCC and in the two PCC v. Royal Bank cases, which also note that the judge has discretion over whether SP is appropriate in the circumstances.  Avis Immobilier G.M.B.H. c. National Trust (1986) took a more restrictive approach to SP, but the court distinguishes that case on the facts.
  
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  Golden Griddle argued that SP would not be appropriate here because it would
  violate a "balance of hardships" consideration.  The court squashes this by citing Brasserie Labatt v. Ville de Montreal (1987) which said the hardship of a person who has breached a contract can't be weighed against the hardship of the plaintiff.  The court should only take into account hardships SP would cause to a third party.
  
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  The act to be performed can be readily defined and assessed, and if GG stays open it won't want to do a half-ass job because that would destroy the value of its trademark, so there's no problem of ensuring compliance.
  

Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd, [1997] 2 W.L.R. 898 (H.L.)

- The Court of Appeal overturned this and ordered Argyll to keep the store open. Here, the HL restores the trial judge’s order of damages instead of SP.

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  There is definitely a settled practice. Is it justified?  The most frequent reason given is that an order to carry on a business would require constant supervision by the court, in the form of rulings by the court, on applications made by the parties, as to whether there had been a breach of the order.  Also, the threat of punishment for contempt of court is too powerful a weapon to use here, because it's hard to run a business, which is already at a loss, while there's a constant threat of imprisonment if you don't run it adequately.  Courts are much more likely to order SP to produce a specific result than to make an order to carry on business operations.  It's a matter of judicial discretion whether an order would be "precise" enough to be an appropriate subject for SP.
  
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  The HL seems to like a "balance of hardship" type argument: "the loss which the DF may suffer through having to comply with the order ... may be far greater than the PF would suffer from the contract being broken."  It's true that it's the DF's fault - "but the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance."
  
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  Finally, it can't be in the public interest to force hostile parties to stay in a relationship.  It's better to award damages because it brings the litigation to an end.  So the settled practice is justified.
  
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  The Court of Appeal said (like the QCSC in Golden Griddle) that once Argyll
  reopened the store it wouldn't do a half-ass job.  HL responds that the judge shouldn't speculate about this, and the question of certainty must be decided on the assumption that the court might have to enforce the order according to its terms.  Also, both landlord and tenant here are large sophisticated commercial parties and both were aware that the remedy for breach of contract was likely to be limited to an award of damages.  No doubt there was an effect on the surrounding stores, but neither Argyll nor C.I.S. warranted to them that Argyll would keep its store open.  This was a commercial risk the surrounding stores took on themselves, and they could take into account when negotiating their next rent review.
  

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  virtually identical facts: supermarket chain has a lease in a shopping Mall which contains a clause requiring continuous operation of the store for a certain number of years. Chain decides to downsize and close a few stores including that one. Mall sues to force performance.
  
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  House of Lords produces almost opposite reasoning. They seem to sanction efficient breach, stating that “although Argyll had knowingly acted in breach of a convenant, they did so in light of the settled practice of the court to award damages.”
  
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  Court rejects the notion that since it is in Argyll’s interest not to run the store half-heartedly, compliance with the order will not be difficult to enforce. In sharp contrast to QC decision in Golden Griddle, they write, “This treats the way the tenant previously conducted business as measuring the extent of his obligation to do so. In my view this is a non sequitur: the obligation depends on the language of the covenant and not on what the tenant has previously chosen to do.”
  
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  The House of Lords is not willing to impose unquantifiable loss on the defendant. Argyll found it to be most efficient to close the store and pay the damages. This law or practice on this point is settled, and business decisions are planned accordingly.
  
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  Moreover, an order of specific performance places the plaintiff in an unfair bargaining position. The benefit of specific performance may be far less than the detriment it will cause to the debtor, thus the creditor can demand more than what he would have gotten in damages because the creditor will want to get out of the obligation. “A remedy which allows him to secure, in money terms, more than the performance due to him is unjust.” (But arguably allowing the debtor to pay less than the obligation to perform is worth to him is also unjust.)