Wednesday, 19 November 2014

[Remedies] Perpetual Injunction for Breach of Negative Stipulations - Template/ Answer Guide

Perpetual injunction for breach of negative stipulations

Introduction

A might be able to request for a perpetual injunction for B’s breach of [term]. The reason why A would seek an injunction rather than specific performance order is because the term in question is, as will be shown, a negative stipulation and if specific performance is ordered, there would effectively be an enforcement of personal service (Thos Borthwick). If perpetual injunction is ordered, it will be a ‘final relief’ in that dispute and will remain in force for an indefinite period of time.
                                                                                                                                                                
To establish perpetual injunction for breach of negative stipulation, the following elements must be established:
1.     A’s legal right (under the contract) has been infringed;
2.     Common law relief is not adequate; and
3.     The court must be satisfied in its discretion that A is entitled to the injunction.

1          Legal Right

1.1A    B breached [term under the contract]. This clearly gives right to a cause of action – there is a breach of contract. Furthermore, the contractual term is negative in substance (Ampol).

1.1B     Furthermore, there is an anticipated breach (or continuing breach). The Court is able to order specific performance even if the balance is not due yet (Turner v Bladin).

1.2       The term in question is negative in substance (Ampol Petroleum v Mutton) since B does not have to do anything to comply with the term.

1.2A    In the case of Ampol Petroleum v Mutton, the defendant was obliged not to sell the service station to a purchase other than one who had been approved by the plaintiff but breached the term. The court held that one needs to look at the substance to find it is a negative stipulation.
                                                                                                               
2          Common law relief

2.1       Since an injunction is an equitable relief, A must show that common law remedies are inadequate. The common law damages seem to be inadequate because:

2.2       Therefore, the loss/damage which P will suffer if injunction is not granted will be an irreparable damage (Active Leisure).

2.3A    It is a loss that is not susceptible to valuation in monetary terms (Ampol).

2.3B     Alternatively, it is a loss where valuation of the loss is speculative or indeterminate (Ampol).

3          Jurisdictional factors

            There are discretionary factors which may bar an injunction. In this case, it is relevant to consider the issue of           [constant supervision; whether the contract is enforceable because it is a personal service etc] 

3.1A    [Constant supervision] The court will not award specific performance if an order would require constant supervision to ensure quality of performance (Lumley v Wagner).

3.1B     [Personal service] The contract in this problem involves a personal service/employment contract. The courts have been reluctant to compel the performance of such contract because it usually involves obligations of mutual trust and confidence of a fiduciary nature over long period of time (Page One Records v Britton). In Gillespie v Whiteoak, the court refused to order specific performance so that D can perform its obligations under a personal service contract that requires him to monitor and upgrade P’s software because firstly, it would require constant supervision and secondly, the obligations are reciprocal. Therefore, the court had to consider whether P’s obligations can be specifically enforced and by answering it in the negative, the court held there is want of mutuality

3.1C     [Personal service; short-term injunction] Alternatively, the court may award an injunction, instead of specific performance (because courts do not want to force someone to do that since it would involve constant supervision), for a short-period of time (Lumley v Wagner).

3.1D    [Mutuality] Even if B’s obligations are enforced, A’s obligations, reciprocal in nature, cannot be specifically performed (liked in the case of Gillespie v Whiteoak). Therefore, the court will not order injunction on the basis that there is lack of mutuality. In the case of Cowell v Rosehill Racecourse, even though the court was satisfied that there was a cause of action and that damages were inadequate, there was lack of mutuality as D would not be able to enforce the reciprocal obligation of P to act appropriate as it would require constant supervision. 


3.1DA  In the case of Page One Records v Britton, there was a negative stipulation that Troggs would not engage any other person to act as its manager during its 5 year period but they sought to terminate the contract. The manager sued for an injunction but the court held that there was a reciprocal obligation of personal service in which quality of performance was important. Thus, there was a constant supervision problem and lack of mutuality.

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