Interim injunctions and the adequacy of damages

In AB v CD [2014] EWCA Civ 229; [2014] BLR 313, the Court of Appeal held that the ‘rule’ that an injunction should not be granted where damages would be an adequate remedy should be applied in a way which reflects the substantial justice of the case. On the facts the court took account of the fact that damages in respect of the breach had been capped (and in some cases excluded entirely) as a circumstance which favoured the grant of an injunction. However, it is important to bear in mind that it is for the court, and not the parties, to decide whether or not to grant an injunction. This being the case, the agreement of the parties in respect of the damages to be paid cannot bind the court when it considers whether to grant an injunction or make a specific performance order. The same reasoning is applicable where the contract contains a liquidated damages clause. A liquidated damages clause does conclusively fix the damages payable in respect of the breach but it does not have conclusive effect in relation to the grant of an injunction or the making of specific performance. At most it is a factor which the court can take into account when deciding whether to grant the injunction or make the specific performance order.