Case No: A2/2011/1479

Neutral Citation Number: [2011] EWCA Civ 668

IN COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
IN THE HIGH COURT OF JUSTICE- QUEEN’S BENCH DIVISION
MR JUSTICE MACFUFF
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 04/06/2011
Before :

LORD JUSTICE JACKSON

LORD JUSTICE ELIAS

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Between :

VEFA IBRAHIM ARACI Appellant

- and -
KIEREN FALLON Respondent

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Patrick Lawrence QC and Can Yeginsu (instructed by) Regnum Solicitors for the
Appellant

Graeme McPherson QC (instructed by Stewart Moore- Solicitors) for the Respondent

Hearing date: 3 June 2011

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JUDGMENTLord Justice Jackson:

1. This judgment is in six parts, namely:

Part 1: Introduction,

Part 2: The facts,

Part 3: The present proceedings,

Part 4: The appeal to the Court of Appeal,

Part 5: Would damages be an adequate remedy?

Part 6: The judge’s exercise of discretion.

Part 1. Introduction

2. The issue in this appeal is whether Mr Kieren Fallon, the well-known jockey,
should ride in the Epsom Derby today.

3. This appeal was issued at 3.00 pm yesterday afternoon. The court sat from about
4.00 pm to 6.30 pm yesterday evening, in order to hear argument. It is now 9.00 am on
Derby Day and we are giving judgment at the first practical opportunity.

4. The claimant in these proceedings is Mr Vefa Araci, a racehorse owner. The

claimant’s daughter, Ms Pinar Araci, manages all matters connected with the breeding
and racing of the claimant’s racehorses. The defendant is Mr Kieren Fallon.

5. The favourite in the Derby today is a horse called “Carlton House”, owned by Her
Majesty The Queen. The next four favourites in the betting include horses called
“Recital” and “Native Khan”.

6. Native Khan is owned by the claimant and has been trained by Mr Edward
Dunlop. Native Khan has so far run on five occasions. Native Khan has won two races
when ridden by the defendant. In other races Native Khan was ridden by three different
jockeys and secured excellent results.

7. In this judgment I shall refer to the British Horseracing Authority as “BHA”.

8. In these proceedings Mr Patrick Lawrence QC and Mr Can Yeginsu appear as

counsel for the claimant. Mr Graeme McPherson QC appears as counsel for the
defendant. I am grateful to counsel on both sides for the excellence of their oral and
written submissions, which they have had to prepare under considerable pressure of
time.

9. After these introductory remarks I must now turn to the facts.

Part 2. The facts

10. The defendant is one of the best known flat racing jockeys in this country. He has
won the Derby three times. He rode Native Khan in its first race, during July 2010,
which he won by 3¼ lengths.

11. On the 1st April 2011 the parties entered into a written agreement, called a “Rider
Retainer Agreement”, whereby the claimant retained the defendant to ride Native Khan
as and when requested over a period of one year. In return for that retainer, the defendant
was entitled to receive a retainer fee of £10,000 plus a number of additional benefits,
some of substantial value.

12. Clause 6 of the Retainer Agreement provides:

“6. Jockey’s Obligations

6.1 The Jockey and his agent(s) agrees that he shall:

(a) Not ride for any other horse where the Jockey has been retained to ride Native
Khan under this retainer

(b) Ride the Retainers’ Horses in races whenever possible to do so or as requested by

the Retainers; and

(c) Wherever a conflict of interest or of a choice of horses to ride occurs for that
include a Retainers’ Horse, the Jockey shall always ride the Retainers’ Horse, unless the
Retainers otherwise agree; and

(d) Ride the Retainers’ Horses in as diligent a way as possible, making all reasonable
efforts to win; and

(e) Conduct himself and appraise the Retainers in an open and honest fashion relating
to his subjective views about the training regime, fitness and potential of all the
Retainers’ Horses and recommendations for training and alternative jockeys when it is
not possible for the Jockey to ride a Retainers’ Horse in a race. In addition, the Jockey
shall use all reasonable endeavours to ride the retainers horse at the trainers
establishment at least twice per month for the purpose of forming such subjective
views”.

13. Clause 8.3 of the Retainer Agreement provides:

“8.3 In the case of a breach by Jockey by opting not to ride the Retainer’s horse (unless
injury) damages are to be liquidated and assessed at a sum of minimum £30,000 per race
not ridden”.

14. It can be seen that Clause 6 imposes two principal obligations on the defendant.
First, there is a positive obligation to ride Native Khan when requested to do so.
Secondly, there is a negative obligation, namely not to ride a rival horse in any race
where the defendant has been requested to ride Native Khan.

15. Pursuant to the Retainer Agreement, on 14 April 2011 the defendant rode Native
Khan in the Craven Stakes at Newmarket, winning by two lengths. The defendant was
prevented from riding Native Khan in the 2000 Guineas owing to a short period of
suspension. However, he continued to ride Native Khan on the gallops in preparation for
future races.

16. Unsurprisingly, the claimant requested the defendant to ride Native Khan in the
Epsom Derby on 4 June 2011. This fact was not a secret. An article in the Racing Post of
21 May 2011 included a quotation from Mr Dunlop to the effect that the defendant
would be riding Native Khan in the Derby. Indeed there was also a photograph of the
defendant above a caption “Kieren Fallon: expected to ride Native Khan by trainer Ed
Dunlop”.

17. On Monday of this week (30 May 2011) the defendant sent a text message to Ms
Araci stating that he would not ride Native Khan in the Derby. The reason immediately
became apparent. The defendant was intending, and had agreed, to ride a rival horse
namely “Recital”. Recital is owned by an Irish group of individuals known as the
Coolmore Group and has been trained by an Irish trainer, Mr Aiden O’Brien.

18. This decision came as a serious blow to the claimant. Success in the Derby is of
critical importance to any major racehorse owner. Quite apart from the prestige of the
event and the prize money, any stallion that wins the Derby can command substantial
stud fees.

19. On Monday of this week the claimant confronted two substantial, and unexpected,
problems. First, the claimant had to find a substitute jockey at short notice. Secondly,
instead of benefiting from the defendant’s services, the claimant faced the prospect of his
chosen jockey riding another favourite horse in an attempt to beat Native Khan.

20. In relation to the first problem, the claimant managed to obtain the services of
Johnny Murtagh, another highly rated champion jockey. Unfortunately Mr Murtagh has
not previously ridden Native Khan and he will do so for the first time today. In relation
to the second problem, the claimant remains deeply concerned at the prospect of the
defendant riding a rival horse in the Derby. Quite apart from the defendant’s skills as a
jockey, the defendant also has considerable and recent experience of Native Khan and is
familiar with the strategy of the claimant’s team.

21. In these circumstances, and in order to prevent the defendant from riding a rival
horse in the Derby, the claimant commenced the present proceedings.

Part 3. The Present Proceedings

22. On Wednesday 1st June 2011 the claimant issued an application for an interim
injunction in the Queen’s Bench Division of the High Court. Time did not allow for the
issue and service of a claim form, but the claimant’s solicitors undertook to attend to
those formalities in early course.

23. The principal relief which the claimant sought in his application notice dated 1st
June 2011 was an injunction restraining the defendant from riding any horse other than
Native Khan in the Epsom Derby on 4th June 2011. The legal basis for the claimant’s
claim was that it was a breach of Clause 6.1 (a) of the Retainer Agreement if the
defendant were to ride Recital in the Derby. Accordingly, the court should enforce that
contractual obligation by issuing an injunction.

24. The evidence which the claimant lodged in support of his application comprised
two witness statements made by his daughter, setting out the material facts, and a
witness statement made by his solicitor dealing with procedural matters. The evidence
lodged by the defendant in response comprised his witness statement dated 2nd June
2011. In that statement the defendant advanced the defence that he would not be in
breach of the retainer agreement. This was because the claimant had instructed the
defendant to ride Native Khan in the French Derby on 5th June 2011 not the English
Derby on 4th June 2011.

nd
25. The injunction application came on for hearing on Thursday 2 June 2011 before
Mr Justice MacDuff. The judge delivered his judgment on Friday 3rd June 2011. That is
yesterday morning.

26. The judge rejected the factual defence advanced in the defendant’s witness
statement as being totally inconsistent with the contemporaneous documents. On page
12 of the transcript of his judgment the judge said this:

“For the purpose of this application, I proceed on the basis that the claimant’s evidence is
truthful. Without making a final determination, because I’ve not heard the witnesses, I
find it verging on fanciful to believe that Mr Fallon’s evidence could be accepted.”
27. Having regard to the contemporaneous evidence, which I shall not set out, that
conclusion is not surprising. Very sensibly, for the purpose of this appeal, Mr McPherson
does not challenge that conclusion.

28. At the hearing before the judge, Mr McPherson also developed an ingenious
contractual argument to the effect that the defendant riding Recital in the Derby would
not constitute a breach of contract. The judge rejected that argument. Mr McPherson
does not seek to renew that submission before this court.

29. At this point I should pay tribute to the judge for the excellent manner in which he
dealt with a series of issues that were highly contentious at first instance, but are no
longer live before this court.

30. The final issue which the judge addressed, and which remains a live issue, is
this. Granted that it would be a breach of contract for the defendant to ride Recital
in the Derby, in the exercise of its discretion should be court grant an injunction to
restrain such conduct?

31. The judge’s answer to that question was no. Accordingly, he dismissed the
application for an injunction. The claimant is aggrieved by the judge’s decision in this
regard. Accordingly, he appeals to the Court of Appeal.

Part 4. The Appeal to the Court of Appeal

32. For reasons already apparent, the appeal in this court has focused entirely upon the
last section of the judge’s judgment in which he considered how he should exercise his
discretion in respect of the equitable remedy of injunction. That aspect of the case has
been the subject of much fuller argument before this court than it was at first instance.

33. The crucial section of the judge’s judgment begins with a recitation of paragraphs
21-051 and 21-052 of Treitel on the Law of Contract (12th edition, 2007). The judge
accepted these paragraphs as accurate and he derived the following four propositions
from them:

“1. First, where there is a negative stipulaton, breach may be restrained by injunction,
as a matter of course, to restrain future breaches. It applies only to prohibitory
injunctions; and that is this case.

2. Secondly, the balance of convenience test applies to applications for interim

injunctions, except where there is a clear or uncontested breach of a covenant not to do a
particular thing. In my judgment, that also applies here.

3. Third, where the granting of the injunction amounts in substance to a final

determination at the interim stage, the court will take into account the strengths and
weaknesses of the respective cases, and the likelihood of the claimant’s eventual success
at trial. I interpolate that is in effect something I have already done, in examining Mr
Fallon’s evidence.

4. Fourth, this is all subject to discretion, an injunction being an equitable remedy.

Although, I emphasise the basic rule that an injunction in the circumstances described
will be normally granted as a matter of course. But injunctive relief may be refused if it
is oppressive to the defendant or cause him particular hardship, although it would not be
oppressive merely because burdensome or little prejudice to the claimant.”

34. It was in relation to the fourth of these principles that the judge found in favour of
the defendant. Hence he refused to grant the injunction sought.

35. Neither counsel in this appeal challenges the judge’s four principles. In relation to
the fourth principle, however, Mr Lawrence submits that where there is a clear breach of
a negative covenant, there must be special circumstances before the court, in the exercise
of its discretion, will withhold relief. In support of this submission Mr Lawrence relies
on two authorities neither of which was cited to the judge below.

36. In Doherty v Allman [1878] 3 App Cas 709 Lord Cairns LC emunciated the
following statement of principle:

“If parties, for valuable consideration, with their eyes open, contract that a particular
thing shall not be done, all that a court of equity has to do is to say, by way of injunction,
that which the parties have already said by way of covenant, that the thing shall not be
done; and in such case, the injunction does nothing more than give the sanction of the
process of the court to that which already is the contract between the parties. It is not
then a question of the balance of convenience or inconvenience, or of the amount of
damage or of injury – it is the specific performance, by the court, of that negative
bargain which the parties have made, with their eyes open, between themselves.”

37. In Hampstead and Suburban Properties Limited v Diomedous [1969] 1 Ch 248

Megarry J granted an interlocutory injunction to restrain the playing of musical
instruments in breach of covenant. Citing the statement of principle in Doherty, Megarry
J said this:

“Thirdly, there is Doherty v Allman. I accept, of course, that Lord Cairns’ words were
uttered in a case where what was in issue was a perpetual injunction and not an
interlocutory injunction. Indeed, the words seem to be obiter, for no negative covenant
was present in that case. But these considerations do not preclude the words from having
any weight or cogency in relation to an interlocutory injunction. Where there is a plain
and uncontested breach of a clear covenant not do a particular thing, and the convenantor
promptly begins to do what he has promised not to do, then in the absence of special
circumstances it seems to me that the sooner he is compelled to keep his promise the
better. In such a case I do not think that the enforceability of the defendant’s obligation
falls into two stages, so that between the issue of the writ and the trial the defendant will
be enjoined only if that is dictated by the balance of convenience and so on, and not until
the trial will Lord Cairns’ statement come into its own. Indeed, Lord Cairns’ express
reference to “the balance of convenience or inconvenience” suggests that he had not
forgotten interlocutory injunctions. I see no reason for allowing a covenantor who stands
in clear breach of an express prohibition to have a holiday from the enforcement of his
obligations until the trial. It may be that there is no direct authority on this point;
certainly none has been cited. If so, it is high time that there was such authority; and now
there is.”

38. I should also add, although it was not mentioned by counsel, that the statement of
principle in Doherty was cited and applied by this court in Attorney General v Barker
[1990] 3 All ER 257, in order to restrain the disclosure of confidential information in
breach of contract.

39. I would therefore accept the judge’s formulation of the four relevant principles,
subject to one qualification which emerges from authorities not cited to the judge. Where
the defendant is proposing to act in clear breach of a negative covenant, in other words
to do something which he has promised not to do, there must be special circumstances
(e.g. restraint of trade contrary to public policy) before the court will exercise its
discretion to refuse an injunction.

40. In relation to the fourth principle, the judge also addressed the question whether
damages were an adequate remedy. The judge found this to be a difficult and finely
balanced question, but ultimately he concluded that they were.

41. Thus two separate questions emerge from the judge’s judgment around which
argument has revolved in this appeal. First, whether damages would be an adequate
remedy. Secondly, whether it was a proper exercise of the judge’s discretion to withhold
an injunction in the circumstance of this case. I shall address these two questions
separately, beginning with the question whether damages would be an adequate remedy.

Part 5. Would damages be an adequate remedy?

42. I shall use the phrase “adequate remedy” as that is a convenient shorthand.
Nevertheless, as is pointed out in chapter 27 of Chitty on Contracts (30th edition, 2008),
that phrase is not entirely appropriate. The real question is whether it is just in all the
circumstances that the claimant should be confined to his remedy in damages.

43. The first point taken by Mr Lawrence under this heading is that the assessment of
damages for breach of clause 6.1 (a) would be an extremely complex and unsatisfactory
exercise. Suppose, for example, that Recital ridden by the defendant wins the Derby this
afternoon and Native Khan, ridden by Mr Murtagh comes second, third or fourth. The
claimant would then claim damages for two separate breaches. First, the effect of the
defendant not riding Native Khan and secondly the effect of the defendant riding Recital.
It is not easy to speculate what would have been the outcome of a race if different
jockeys had been riding different horses, although no doubt expert witnesses would
assist the court.

44. In the course of argument I pointed out to Mr Lawrence that courts are used to
assessing chances and sometimes have to pile speculation upon speculation in assessing
damages. This point is true, but it is not a complete answer to Mr Lawrence’s argument.
Although the court always does its best and always comes up with an answer, in a case
like the present there may be no right answer and no answer which would properly do
justice between the parties. We simply do not know what would happen if a different
jockey rides Recital and a different jockey rides Native Khan. I do therefore accept that
Mr Lawrence’s first argument has some limited force.

45. Mr Lawrence’s second argument is that the defendant would not in fact be able to
meet an award of damages and the judge simply failed to take this into account. In
answer to this point, Mr McPherson submits (a) that this point did not loom large in the
argument below and (b) that the judge plainly had the point in mind. Mr McPherson
referred to a passage page 23 of the transcript of the judgment. That passage refers to the
claimant’s submission that there was no assurance that damages would be paid.

46. Whilst I accept Mr McPherson’s submission that the judge referred to the
existence of this point, the judge does not specifically address it in his judgment.
Furthermore, there was no evidence before the judge from the defendant as to his means.
So there was no basis upon which, if the judge had addressed the point, he could have
held that the defendant would be able to meet any substantial award of damages and
costs.

47. In the course of this appeal Mr McPherson has told the court, on instructions, what
his client’s financial position is. There has also been some discussion about what
damages the claimant might recover, depending upon the outcome of the race and a
number of different scenarios.

48. It would not be appropriate for me to speculate in this judgment about how, on a
future date, a Queen’s Bench judge will assess damages. That judge will at least have the
advantage of knowing the outcome of this afternoon’s race, which is an advantage I do
not enjoy. I am also conscious that there is no evidence before the court about the
defendant’s means and the claimant has had no opportunity to test the facts which Mr
McPherson has stated on instructions. Suffice it to say that, on the basis of the present
material, in my view there is a real risk that if things go badly for the defendant in the
litigation, and if the claimant obtains judgment for substantial damages and costs, the
defendant may be unable to meet that judgment in full. If this court does not grant an
injunction, the defendant may find himself paying damages for two separate breaches,
namely (1) failing to ride Native Khan and (2) potentially riding to victory on Recital.

49. There is a further point to consider under this head. There is a real possibility that
if the defendant rides Recital this afternoon, he will finish ahead of Native Khan by
reason of (a) his skills as a jockey and (b) his special knowledge concerning Native
Khan and the strategy of the claimant’s team.

50. Quite apart from the financial rewards which flow from winning the Derby, there
is also the prestige which attaches to any horse and any horse owner following such a
triumph.

51. In relation to this issue, Mr McPherson places reliance on clause 8.3 of the
Retainer Agreement. This shows, he submits, that the parties contemplated damages
being an adequate remedy. Indeed the clause sets out a minimum level for damages in
the event of breach.

52. I do not accept Mr McPherson’s argument for two reasons. First, although the
clause provides assistance in assessing damages for less serious breaches of contract, this
does not imply that damages will be an adequate remedy for every breach of contract.
Secondly, clause 8.3 is specifically focused upon the jockey’s refusal to ride Native
Khan. It says nothing about the consequences of the jockey acting in breach of the
negative obligation, namely not to ride a rival horse in a race against Native Khan.

53. Having weighed up all of these factors, which have been much more fully argued
on appeal than at first instance, I come to a different conclusion from the judge. In my
view, in the circumstances of this case, an award of damages in lieu of an injunction
would not be an adequate remedy.

54. I must next turn, therefore, to the judge’s exercise of discretion.

Part 6. The Judge’s exercise of discretion

55. In relation to the exercise of discretion, the crucial passage in the judge’s judgment
reads as follows:

“Albeit not in the context of an employment case, an injunction here would be, for one
short day, a restraint of trade and a prohibition on a major sportsman from carrying on
his occupation. I say “one short day”; it is not just one day, it is Derby Day.

Although none of these considerations is decisive in itself, a combination of factors may,

and in this case does, persuade the judge to exercise his discretion against the granting of
an injunction.
By “these circumstances” I include the following: that the owners of Recital, for all I
know potentially innocent victims of this dispute, may have difficulty in obtaining a
substitute jockey at this late stage, certainly one of the same stature as Mr Fallon; that, as
Mr McPherson has submitted, it is not known whether the British Horseracing Authority
would react to an application to change jockeys at this late stage; also, that the betting
public, as Mr McPherson further submits, to date have placed wagers in the belief that
Recital, an enormously fancied horse, will be partnered by Mr Fallon, and there is no
doubt at all that his chances in this major race would be reduced with a different rider.

Those are three further factors to be placed in the scales, none decisive but all capable of
affecting the overall picture.

In my judgment, there is also a wider public interest. The Derby arouses interest in all
segments of society. Mr Fallon is a major champion rider, and this is a premier race
meeting. There is a public interest in maintaining that high regard.”

56. Each of the factors relied upon by the judge has been subjected to close analysis in
this court. It is difficult to see how, either individually or cumulatively, they could justify
the court in refusing the relief which is sought, particularly in a case where damages
would not be an adequate remedy. Let me take the judge’s factors in turn. First, there is
the observation that there would be a restraint of trade, albeit for a very short time. It is
common ground between counsel that in the circumstances of this case, restraint of trade
is not a relevant consideration: see Warner Brothers Pictures v Nelson [1937] 1 KB 209.

57. The next factor identified is Coolmore’s difficulty in obtaining a substitute jockey.
Despite the fact that, presumably, Coolmore stands behind the defendant in relation to
these injunction proceedings, there is no evidence before the court from Coolmore. Mr
Lawrence points out that any number of excellent jockeys would jump at the chance to
ride Recital in the Derby. I do accept that Coolmore may not be able to procure a
substitute jockey of the defendant’s stature. However, it should be noted that the
claimant faced precisely the same problem earlier this week (as a result of the
defendant’s first breach of contract) and took rapid steps to deal with it. It is unrealistic
to suppose that Coolmore have not been making urgent enquiries within the racing world
ever since Wednesday when these proceedings were launched.

58. The next point touched upon is that it is not known whether the BHA would
permit a change of jockey at this late stage. When I pressed Mr McPherson about this
point, he readily accepted that in the event of injury the BHA would always permit a
change of jockey. Mr McPherson was only able to suggest one reason why conceivably
the BHA might not permit a change of jockey in this case, namely that Coolmore had
known about the injunction proceedings for some days but have not changed jockeys
until today. In subsequent debate with the bench Mr McPherson accepted that if the
BHA’s refusal arises from fault on the part of Coolmore, that is not a matter which the
defendant can rely upon in these proceedings. I am bound to say that I should be most
surprised if the BHA do refuse consent in the present unusual circumstances. Although
legal proceedings have been on foot since Wednesday, the outcome was always
uncertain and no injunction has been granted before this morning.

59. The next point identified by the judge is that the betting public will have been
misled. This is because some people will have bet on Recital in the belief that the
defendant would be the rider. This is not a good point for two reasons. First, some
members of the public will have bet on Native Khan because they thought that the
defendant would be riding that horse. I have in mind persons who read the Racing Post
dated 21st May 2011 and placed bets before it was announced that Mr Murtagh would
be riding Native Khan. Secondly, and more fundamentally, when a member of the public
bets on a horse, he or she is running a multitude of risks. These include amongst many
others the risk that the anticipated jockey will be prevented from riding as a result of
injury. Admittedly, the risk of injunction is usually lower than the risk of injury, but it is
one of the vicissitudes of life. I do not see that this is a reason to withhold relief.

60. The final factor identified by the judge is the public interest in the Derby. I accept
that the Derby is a major national event and not only for those with a keen interest in
racing. If the effect of the injunction were to prevent the Derby from taking place, I
would unhesitatingly refuse an injunction. Indeed if the effect of the injunction were that
Recital would not run this would be a material factor. However, on the evidence before
this court, there is no reason whatsoever to believe that Recital will not run this
afternoon if the injunction is granted. The sole effect of the injunction, if granted, is that
the Derby will take place without one major champion rider. This is unfortunate but does
not materially detract from the event as a whole. Such a rider may be unavailable
because of suspension (as recently happened) or because of illness or indeed because of
other commitments.

61. I quite accept that the grant of an injunction would be a grievous blow for the
defendant, but that would not be oppressive or unjust. The defendant has voluntarily
entered into a contract for substantial reward, which prohibits him from riding Recital
this afternoon. The defendant has brought this present predicament upon himself by his
own deliberate and cynical disregard of a contract recently entered into. As the judge
observed on page 20 of the transcript:

“I am satisfied, as I have expressed earlier, that the true facts here are that the defendant
believed he could just ignore this binding contract. I have little sympathy for him and in
my judgment he has acted with deliberate selfishness.”

62. Mr McPherson does not criticise this passage in the judgment.

63. I would add that the defendant has not improved his position by putting forward
evidence in these proceedings which it is common ground must be treated as untruthful
for the purposes of this appeal.
64. I readily accept that the Court of Appeal only interferes with the judge’s exercise
of discretion in relation to an interim injunction in one of the exceptional situations
described by Lord Diplock in Hadmor Productions v Hamilton [1983] I AC 191 at 196.
However, in my view this case falls into that category. First, the judge erred in law in
holding that damages would be an adequate remedy. Secondly, although weight must be
a matter for the trial judge not this court, in my view the various factors identified by the
judge are not capable of justifying refusal of relief in a clear case such as this.

65. The defendant voluntarily entered into a contract for substantial reward containing
both positive and negative obligations. There is nothing special about the world of racing
which entitles the major players to act in flagrant breach of contract. The defendant has
promised in the context of a commercial agreement that he will not compete against
Native Khan in the Derby this afternoon. In my view, that promise should be enforced.

66. Accordingly, I would allow the claimant’s appeal and grant an interim injunction
in the terms sought in paragraph 1 of the draft order.

Lord Justice Elias:

67. I agree with the judgment of Jackson LJ, but since we are disagreeing with the
judge below, I will add a short judgment of my own.

68. The claimant is seeking to enforce an express negative covenant by which Mr

Fallon has undertaken not to ride for a competitor if given the chance to ride Native
Khan. Mr Fallon has been given that opportunity, and yet he is proposing to do precisely
what he has undertaken that he will not do, namely to ride a competing horse, Recital.

69. I recognise that there has as yet been no trial and that Mr Fallon’s contention that
he understood that he would be required to ride Native Khan in the French Derby, but
not the Epsom Derby, has not been fully tested. But for the reasons given by the judge
below, I am satisfied even on the limited material we have that Mr Fallon’s defence is
fanciful and has no prospect of success. On that premise, if the injunction were to be
granted at trial there is no reason why it should not be granted even at this interlocutory
stage, essentially for the reasons given by Megarry J in Hampstead & Suburban
Properties Ltd v Diomedus [1969] 1 Ch. 248, 259 and by Nourse LJ in Attorney
General v Barton [1990] 3 All ER 257, 262. In a case where the breach of a negative
covenant is clear, there is no magic in the fact that the injunction is being sought at an
interlocutory stage. All questions of balance of convenience are then immaterial, as the
Lord Chancellor, Lord Cairns made clear in Doherty v Allman (1878) 3 App Cas 709,
720 in the passage reproduced by Jackson LJ in his judgment.

70. So the question becomes whether the injunction should be granted following a
trial. There were two reasons relied upon by the judge why it should not. First, he
considered that damages would be an adequate remedy. However, that is not generally a
relevant consideration when the injunction restrains the breach of a negative covenant.
The court is by granting the injunction simply enforcing what the parties have agreed:
see the discussion in Chitty on Contracts, 30th Edition, para 27-060. Exceptionally an
injunction may be refused if it would be oppressive to the defendant to grant it, but it can
hardly be said to be oppressive to prevent Mr Fallon from acting in cynical disregard of
the obligations he has voluntarily undertaken.

71. In any event, even if the adequacy of damages were a relevant consideration in this
context, I would respectfully disagree with the judge’s conclusion – which he reached
with considerable hesitation – that damages would be an adequate remedy here. The
calculation of damages would be extremely complex. Assuming that Recital performs
better than Native Khan, a court would have to grapple with the question of what would
have happened if Recital had had a different and less skilful rider, and Mr Fallon had
been riding Native Khan. Apart from such difficult issues on causation, the calculation of
loss would also be problematic. To what extent, for example, would Native Khan’s value
as a stud horse be affected if Native Khan were to lose out to Recital because it was
ridden by Mr Fallon? I recognise that some of the difficulties will arise simply by virtue
of the fact that Mr Fallon has refused to ride Native Khan, whether or not he rides
Recital. But if he is allowed to ride Recital, the problems are, in my view, materially
exacerbated. So even with expert assistance, it is obvious that the assessment of loss
would involve a considerable degree of speculation and uncertainty.

72. I do not say that the exercise of assessing damages could not be carried out if it
had to be; a rough and ready assessment is generally better than none at all. But the fact
that some assessment could in principle be made does not mean that it is just that the
claimant should be limited to such an unsatisfactory remedy. Moreover, as Jackson LJ
has pointed out, if the claimant were to be denied the right to own a Derby winner as a
result of Mr Fallon’s switch of horses, no damages would adequately compensate for
that. There is also a real risk the defendant might not be good for the possible damages.

73. Accordingly, I do not accept that the judge was entitled to find that the adequacy
of damages could constitute a good reason for refusing the injunction. This alone vitiates
the exercise of his discretion and requires the court to consider the matter afresh in
accordance with the principles enunciated by Lord Diplock in Hadmor Productions v
Hamilton [1983] 1 AC 191, 196.

74. The second reason relied upon by the judge for refusing the injunction was that it
is a discretionary remedy and there were in the judge’s view factors militating against the
exercise of the discretion in this case. However, the discretion must be exercised in
accordance with established legal principles. I respectfully agree with the observations of
Lord Justice Jackson that the matters relied upon here by the judge did not justify the
refusal of the injunction. This is not a case where the agreement being enforced operates
in unlawful restraint of trade or is otherwise contrary to public policy. Nor has there been
undue delay or culpable conduct by the claimant or anything of that nature. The adverse
effect of the injunction on Recital’s owners is unfortunate, but innocent third parties are
often prejudiced when injunctions are granted to enforce lawful covenants restricting a
person’s freedom to work. I do not, therefore, accept that the judge was entitled to
conclude that this was an inappropriate case to grant the injunction.

75. For these reasons I too would grant the injunction sought.