The appellant, Mowlem plc, had contracted with the respondent local authority, Bath & North East Somerset District Council, to carry out restoration works to the Heritage Spa Buildings in Bath. A dispute arose over responsibility for problems in the paint coating that had been applied to four pools as part of the works. The council instructed Mowlem to remove the paint coating and Mowlem refused. The council then instructed another company to carry out this work and Mowlem refused them access to the site. The council therefore applied to the Technology and Construction Court for an injunction restraining Mowlem from denying access to their instructed contractor, and were awarded an injunction by His Honour Judge Seymour QC.
Mowlem challenged the basis upon which the injunction was granted by asserting that if they were found at trial to have wrongly denied access to the council's new contractor, then the council would be adequately compensated for any period of delay by an award of the liquidated and ascertained damages to which it was entitled under the contract.

Reference

The Court of Appeal found that the balance of convenience favoured leaving the injunction in place. This was because Mowlem would be adequately compensated in damages if the injunction was left in place and the council were later found to be responsible for the problems with the paint. The council on the other hand would not be adequately compensated in damages if the injunction were lifted and Mowlem found to be responsible for the problems with the paint. The Court reached this decision notwithstanding the fact that the council's entitlement to damages for delay had been set at a weekly rate in the contract. The Court was satisfied that this did not preclude the council from arguing that its actual losses would be higher and that an injunction should be granted to prevent these losses being incurred.

*Full case details
Bath & North East Somerset District Council vs Mowlem Plc, 20 February 2004, Court of Appeal (Civil Division), Judgment of Lord Justice Mance

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Postscript

The Court was not persuaded by Mowlem's contention that just because the parties had agreed a fixed level for damages for delay at the outset, the Court should treat that as conclusive as to the actual loss likely to be incurred by the council as a result of any delay, even when evidence suggested that their loss would in fact be much higher. The Court considered that if it accepted Mowlem's argument, it would effectively be holding that liquidated and ascertained damages were an agreed price to permit Mowlem to breach its contract. The Court had a wide jurisdiction under section 37(1) of the Supreme Court Act 1981 to grant an injunction "in all cases in which it appears to the Court to be just and convenient to do so", and in this case the Court was prepared to take into account the potential further loss that would be felt by the general public through the delay to economic regeneration generally. The decision shows the unwillingness of the Court to allow contractors to hold their clients hostage by virtue of their possession of the site and thereby obtain a favourable negotiating position in an unresolved dispute by causing further delay to the project as a whole.