The court can order the specific performance in the context of the mutual provision of consideration
In the exercise of its discretion, the court may 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 a 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 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 their 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, who turned to the 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 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.
The court issued an order of specific performance of the contract for the transfer of the property to the tenants, 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 appealed the first instance decision and the case went before th Supreme Court. In its decision issued in C.A.162/2015, dated February 8, the Supreme Court 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 characterised as a contract of sale. Following relevant jurisprudence, it decided that while sale implies consideration, the opposite is not the case. In this contract, there were no elements usually presented in a contract for the sale of immovable property, characterising it as such, for the provisions of the previously applicable law on specific performance, Cap.232, to 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 would be subject to the payment of legal damages, a provision consistent with the assessment that there were legal obligations for both parties and the intention to create a legal relationship.
The Supreme Court also did not 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 included 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.
George Coucounis is a lawyer specialising in Immovable Property Law, based in Larnaca. E-mail: [email protected], tel: 24818288
