Liquidated damages - Building Contract Claims - page 53

may opt for an injunction instead. In General Accident Assurance Corporation
v. Noel 149 , it was held that where a party was in breach of a covenant in
restraint of trade, the injured party could not have both an injunction to
restrain further breaches and liquidated damages in respect of the breaches
already committed. The court concluded that the claimants had an option to
elect between, but could not have both remedies. It is suggested that this is
the correct answer to the problem posed when a party commits this kind of
breach. If it is assumed that the breach must cause the innocent party
undoubted but not readily quantifiable harm, liquidated damages appears
ideally suited to the situation. But if the award of damages, as in this case, is
expressed as a single sum, it may be argued that if the damages are paid, the
party in effect has a licence to carry on committing the breach, because the
injured party can recover no more. The answer to that argument seems to be
that a party had the opportunity to make an appropriate bargain. An
appropriate bargain in this case might well have been to have stipulated
not a single sum as liquidated damages, but a sum for every week that the
breach continued or, as in Dunlop Pneumatic Tyre Co Ltd v. New Garage &
Motor Co Ltd , for each separate breach. If a single lump sum is stipulated, it
must be assumed that it is calculated on the basis that any breach, whether
brief or protracted, would have the same overall effect on the claimant's
trade. Although that may be questioned in theory, in practical terms there is
much to commend that approach 150 . It has been said, although probably
obiter :
'Where there are different breaches and the agreement provides for a
particular sum of liquidated damages to be payable for each and every
breach, there is no bar to awarding the liquidated damages amount for
each breach which has occurred to date of trial and also awarding an
injunction to restrain future breaches.' 151
The judge went on to say that there was no double recovery, because the
two remedies were referable to different breaches. This contention seems to
ignore two principles. The first is that where liquidated damages are stipu-
lated they are exhaustive of the remedies available for a breach, and the
second is that an injunction is normally refused if damages would be an
adequate remedy. By agreeing a figure, be it a single sum or a sum for each
149 [1902] 1 KB 377: a case dealing with a covenant in restraint of trade.
150 English Hop Growers v. Dering [1928] 2 KB 174. The decision in General Accident v. Noel should be
compared to The Imperial Tobacco Co Ltd v. Parsley . This case has been quoted as authority for the
proposition that a party can recover liquidated damages and obtain an injunction where the sum
stipulated as liquidated damages is graded according to the extent of the breach. The case concerned a
price maintenance agreement by which the defendant undertook to pay the claimants £15 for every
sale in breach of the agreement. The trial judge granted an injunction to restrain further breaches, but
he refused to enforce the series of £15 payments on the basis that they were really penalties. As there
was no appeal on the injunction, but only on the question whether the payments were penalties
or liquidated damages, this case appears shaky ground on which to found any contention that
both liquidated damages and an injunction are available remedies in certain instances.
151 Lorna P. Elsley, Executrix of the Estate of Donald Champion Elsley v. J. G. Collins Insurance Agencies Ltd
(1978) 4 Const LJ 318 at 320 per Dickson J. This Canadian case concerned a covenant in restraint of
trade on breach of which the defendant was to pay liquidated damages.