Steedman v William R Drinkle and Another: PC 21 Dec 1915

(Saskatchewan) Land in Canada was purchased under an agreement, where the price was to be paid by one initial payment and annual instalments. If the purchaser was to default on any payment, the vendor was free to cancel the agreement and to retain, as liquidated damages, the payments already made. It was also provided that time was to be considered as of the essence of the contract. The first deferred payment was not made on the due date. The vendor gave notice cancelling the agreement. Three weeks after the due date the purchaser tendered the amount due, which was refused. He thereupon brought an action claiming specific performance and relief from forfeiture of the amount already paid.
Held: The Board upheld the decision of the Canadian Court, that the stipulation as to the retention of the sums already paid was a penalty. But the Board declined to grant specific performance.
Viscount Haldane said:
‘Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance where justice requires it, even though literal terms as to stipulation as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of the bargain’.
And ‘As to the relief from forfeiture, their Lordships think that the Supreme Court was right in holding, for the reasons assigned in the former decision of this Board, that the stipulation in question was one for a penalty, against which relief should be given on proper terms. But as regards specific performance they are of opinion that the Supreme Court was wrong in reversing the judgment of Newlands J. Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance in cases where justice requires it, even though literal terms of stipulations as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of their bargain. If, indeed, the parties, having originally so provided, have expressly or by implication waived the provision made, the jurisdiction will again attach.’

Viscount Haldane
[1915] UKPC 71, [1916] AC 275
Bailii
Canada

Commonwealth, Land, Equity

Updated: 22 November 2021; Ref: scu.423780