Bath v Mowlem (2004) [2015] 1 WLR 785; AB v CD [2015] 1 WLR 771; Ashton v Express Sign Labs [2015] FCA 975: interlocutory injunctions

KEYWORDS: HOW CONTRACTUAL LIMITATIONS AND EXCLUSIONS OF DAMAGES AFFECT INTERLOCUTORY INJUNCTIONS

KEY TAKEAWAY

These three decisions153 all deal with an issue that arises when seeking interlocutory injunctions: will damages be an adequate remedy? While this is not a separate factor for Australian courts to consider (see Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57, 81–84 [65]–[72] (Gummow and Hayne JJ; Gleeson CJ and Crennan J agreeing at 68 [19]), it is used as part of determining the balance of convenience.

The upshot of the English cases is (per Underhill LJ in AB v CD [2015] 1 WLR 771, 783 [28]): "The primary commercial expectation must be that the parties will perform their obligations. The expectations created (indeed given contractual force) by an exclusion or limitation clause are expectations about what damages will be recoverable in the event of breach; but that is not the same thing." This is consistent with the trend of High Court of Australia decisions, including Zhu v Treasurer (New South Wales) (2004) 218 CLR 530 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, which reject the notion of economic breach of contract.

The decisions

Bath and North East Somerset District Council v Mowlem plc [2015] 1 WLR 785 is a construction case. It has been reported (as a note) over 10 years after the date of the decision (20 February 2004). The primary judge had granted the Council an injunction restraining Mowlem plc (the head contractor) from denying subcontractors access to the relevant site for testing, purportedly in accordance with the contract. It was accepted there was a serious question to be tried about whether the contract authorised this testing (at 788–789 [7]). Mance LJ (with whom Brooke LJ and Park J agreed) noted that "the decisive issue is ... whether ... an injunction should be granted as a matter of convenience" (at 789 [8]).

The Council contended that damages would not be an adequate remedy because, if the injunction was not granted, there would be "an indefinite stalemate" between the Council and the head contractor, causing delay, the loss from which would exceed the amount of liquidated damages agreed in the contract (at [9]).

This argument found favour in the Court of Appeal. Mance LJ said (at 793–794 [15]–[16], emphasis in original):

"The council accepts—indeed it asserts—that it would be bound in any claim for damages by its contractual agreement regarding liquidated and...