ABSTRACT
This note contrasts the mixed reception of Cavendish Square across jurisdictions with that of Dunlop v New Garage. The test propounded in the newer case – that a remedy clause will be enforced unless it is out of all proportion to any legitimate interest in performance of the primary obligation to which it attaches – bears an error and an ambiguity. The error is evaluating the legitimacy of the primary obligation rather than the legitimacy of the remedy. The true rule denies remedies that are punitive, not remedies that attach to obligations of a certain sort. As to the ambiguity, having correctly centred a proportion between remedy and obligation the court does not specify the purpose(s) that define that proportion. Compensation, deterrence, and punishment are all purposes a remedy might have; a remedy can be proportionate to an obligation as compensation, as deterrence, or as punishment. It is agreed that a punitive purpose is disallowed, but the UKSC and some courts following it now allow deterrence and possibly others. The rest continue to apply the traditional rule that the only permissible purpose for a remedy clause is compensation.
Cavendish Square is also notable for rejecting the relaxed approach to secondary obligations of the High Court of Australia in Andrews v ANZ Bank. This has been more popular elsewhere than its new test, but the UKSC’s dismissive attitude to Andrews received a curt response from the older court’s Chief Justice French. In addition to these doctrinal problems, Cavendish Square seems to be causing practical trouble in certain industries. Other jurisdictions may be safest keeping to the old rule.
Enman-Beech, John, Note on Cavendish Square v El Makdessi; ParkingEye v Beavis [2015] UKSC 67 (July 01, 2025) in Jenny Russell and Lewis Graham (eds), Private Law and the UK Supreme Court (Routledge 2025), doi: 10.4324/9781003476788-15.
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