Court of Appeal decision

In Araci v Fallon(1) the Court of Appeal clarified the correct judicial approach to applications for injunctions to prevent the breach of a negative covenant.


The dispute arose out of a contract between a racehorse owner, Mr Araci, and well-known jockey Kieren Fallon. On April 1 2011 the parties entered into a form of written agreement, known as a rider retainer agreement, whereby Araci retained Fallon to ride his racehorse, Native Khan, as and when requested during a one-year period for a retainer fee of £10,000, as well as a number of other substantial benefits.

The contract imposed two principal obligations on Fallon:

  • a positive obligation to ride Native Khan when requested to do so;
  • a negative obligation not to ride a rival horse in a race in which he had been asked to ride Native Khan.

Pursuant to the contract, Fallon rode Native Khan at the Craven Stakes at Newmarket on April 14 2011 as requested. Following this event, he continued to ride the horse in preparation for future races. Araci asked Fallon to ride Native Khan at the Epsom Derby on June 4 2011 and it was subsequently reported in racing journals that he would do so.

Shortly before the event, on May 30 2011, Fallon sent a text message stating that he would not ride Native Khan in the race. It transpired that Fallon had instead agreed to ride a rival horse, called Recital, for a group of Irish racehorse owners.

Araci obtained the services of another highly rated jockey to ride Native Khan in Fallon's place at short notice. However, he remained concerned by the prospect of Fallon riding a competitor horse in the race, not least because Fallon had recent and considerable experience of Native Khan and was privy to the team's race strategy.

Araci accordingly issued proceedings on June 1 2011 and sought an injunction to prevent Fallon from riding in the race. The matter came before the court on June 2 2011.

In his defence Fallon argued that he was not in breach of contract, since Araci had asked him to ride Native Khan not at the Epsom Derby on June 4 2011, but at the French Derby on June 5 2011. The judge rejected this factual defence as being totally inconsistent with contemporaneous documents, stating that he found it "verging on the fanciful to believe that Mr Fallon's evidence could be accepted".

Notwithstanding this, the judge declined to exercise his discretion to grant an injunction restraining Fallon from riding in the Epsom Derby on the basis that to do so would be oppressive and cause hardship to Fallon, and that damages for breach would be an adequate remedy.

Araci appealed the decision. He argued that the judge had misapplied the principles which governed the court's exercise of its discretion in respect of the equitable remedy of injunction. More particularly, he submitted that in cases where there is a clear breach of an agreement not to do something, there must be special circumstances before the court in the exercise of its discretion will withhold injunctive relief. In so doing, he relied on the following passage from Doherty v Allman [1878]:

"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…in such case the injunction does nothing more than give the sanction…of the court to…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."

Court of Appeal decision

Giving the lead judgment in the Court of Appeal, Lord Justice Jackson accepted Araci's submission, agreeing that the court should not exercise its discretion to refuse an injunction to restrain the breach of a negative covenant unless special circumstances exist, such as cases where an injunction would cause a restraint of trade contrary to public policy. Examining the various factors which the first instance judge took into account in exercising his discretion, it was held that they were incapable of justifying the refusal of an injunction where there was such a clear breach of contract by Fallon.

The Court of Appeal also disagreed with the trial judge's view that in the absence of an injunction, damages would provide Araci with an adequate remedy for Fallon's breach. While it was acknowledged that the court is used to assessing chances and speculating in its assessment of damages, it was recognised that it would be a complex and unsatisfactory exercise in such a case - it was impossible to know what the outcome of the race would have been if different jockeys had ridden Native Khan and Recital. The court also considered that there was a real risk that Fallon would be unable to satisfy a future judgement.

Lord Justice Elias agreed with the judgment on both counts.


The decision not to grant an injunction at first instance may be surprising, given the finding that Fallon had deliberately disregarded the clear prohibition in the contract. Nevertheless, it is relatively unusual for an appeal court to interfere with the exercise of discretion by a lower court, as it did in this case.

The decision also highlights the benefit of spelling out in a contract what a contracting party cannot do, as well as what it is required to do. This will significantly enhance the chances of obtaining an injunction in the event that one party fails to perform the contract in accordance with its terms.

For further information on this topic please contact Sarah Trimmings at Reynolds Porter Chamberlain LLP by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected]).


(1) [2011] EWCA Civ 668.