This judgment is in six parts, namely:

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

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.

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.

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”.

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.

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

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.

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

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.

On the 1^st 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.

Clause 6 of the Retainer Agreement provides:

Clause 8.3 of the Retainer Agreement provides:

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.

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.

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”.

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.

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.

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.

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.

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

On Wednesday 1^st 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.

The principal relief which the claimant sought in his application notice dated 1^st June 2011 was an injunction restraining the defendant from riding any horse other than Native Khan in the Epsom Derby on 4^th 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.

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 2^nd 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 5^th June 2011 not the English Derby on 4^th June 2011.

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

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:

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.

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.

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.

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?

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.

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.

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 (12^th edition, 2007). The judge accepted these paragraphs as accurate and he derived the following four propositions from them:

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.

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.

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

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:

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.

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.

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.

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.

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 (30^th 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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

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.

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.

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.

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 21^st 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.

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.

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:

Mr McPherson does not criticise this passage in the judgment.

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.

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.

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.

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

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.

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.

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.

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, 30^th 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.

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.

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.

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.

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.

For these reasons I too would grant the injunction sought.