Equity looks on that as done which ought to be done

Grant Forest Products Inc. (Re), 2010 ONCA 355, released online yesterday, deals with the application of the equitable maxim that "looks on that as done which ought to be done".

The maxim is taken as meaning that as between two persons, where one of them has incurred an obligation and undertaken to do something for the other, a court of equity looks on the obligation as done and as producing the same result as if the obligation or undertaking had been actually performed.

Equity treats a contract to do a thing as if the thing were already done. In other words, as to the consequences of the subject matter of contract, it will be treated as if the final acts anticipated and contemplated by the parties have been carried out in the same manner as they ought to have been and as they might have been carried out. Equity acts on the conscience of a person. What one has undertaken to do, binds the conscience and equity therefore look to the acts of the person bound by conscience and interprets them in such a way that they amount to what ought to have been done.

The Court wrote:

[13] The first question is whether it was open to the motion judge in the exercise of his equitable jurisdiction to apply to the equitable maxim that equity looks on that as done which ought to be done. Like the other so-called maxims of equity, this is not a rule that must be rigorously applied in every case, but a principle illustrating the way in which the equitable jurisdiction of the court is exercised. See: Hanbury and Martin, Modern Equity 16th ed. at p. 27.

[14] In Snell's Equity 31st ed. (2005), the maxim is described this way at p. 107:

This maxim has its most frequent application in the case of contracts. Equity treats a contract to do a thing as if the thing were already done, though only in favour of persons entitled to enforce the contract specifically and not in favour of volunteers. Agreements for value are thus often treated as if they had been performed at the time when they ought to have been performed, with the same consequences as if they had then been completely performed. For example, a person who enters into possession of land under a specifically enforceable agreement for a lease is regarded in any court which has jurisdiction to enforce the agreement as being in the same position as between himself and the other party to the agreement as if the lease had actually been granted to him.

[15] In addition, in De Beers Consolidated Mines Limited v. British South Africa Company, [1912] A.C. 52 (H.L.), this is said about the maxim at pp. 65-66:

Much reliance was placed by counsel for the company in argument on the application to the agreement of December 7, 1892, and especially to its first paragraph, of the well-known doctrine of Courts of Equity, that in equity everything should be taken to be done which ought to be done. That doctrine cannot, in its application to contracts, however, be permitted to turn the conditional into the absolute, the optional into the obligatory, or to make for the parties contracts different from those they have made for themselves. What a party to a contract ought to do, within the true meaning of this doctrine, is what he has contracted to do, and nothing more and nothing less is to be taken, in equity, to be done. So that the very first point to be considered in this case, necessarily, is the true construction of the contract of December 7, 1892 - the determination of what the parties to it had respectively bound themselves to do.

[16] Thus, the maxim can clearly be applied if: (i) the contract, properly interpreted, imposes an obligation on a contracting party to do something that it has not done; (ii) the contract is one that can be specifically enforced; and (iii) the maxim is invoked not by a stranger, but by a party who would be entitled to specifically enforce the contract.