Co-Operative Insurance Society Ltd v Argyll Stores: HL 21 May 1997

The tenants of a unit on a large shopping centre found the business losing money, and closed it in contravention of a ‘keep open’ clause in the lease. They now appealed from a mandatory injunction requiring them to keep the store open.
Held: Specific performance is an exceptional remedy, as opposed to the common law damages to which a successful plaintiff is entitled as of right. A ‘stay open’ clause in a commercial lease is not to be enforced by a mandatory injunction requiring the business to be conducted at a loss. The remedy of damages is adequate. To make a order might invite constant requests to the court to judge compliance with it, and the availability of contempt proceedings may be expensive and not a sufficient restraint. The settled practice was against such orders, and the practice was based on sound common sense: ‘although any breach of covenant is regrettable, the exercise of the discretion as to whether or not to grant specific performance starts from the fact that the covenant has been broken. Both landlord and tenant in this case are large sophisticated commercial organisations and I have no doubt that both were perfectly aware that the remedy for breach of the covenant was likely to be limited to an award of damages. The interests of both were purely financial: there was no element of personal breach of faith.’
Lord Hoffmann: ‘Mr Smith who appeared for CIS said that if the order became oppressive (for example because Argyle were being driven into bankruptcy) or difficult to enforce they could apply for it to be varied or discharged. But the order would be a final order and there is no case in this jurisdiction in which such an order has been varied or discharged except when the injuncted activity has been legalised by statute.’
Lord Browne-Wilkinson, Lord Slynn of Hadley, Lord Hoffmann, Lord Hope of Craighead, Lord Clyde
Times 26-May-1997, [1997] UKHL 17, [1997] 2 WLR 898, [1998] AC 1, [1997] All ER 297, [1997] 1 EGLR 52, [1997] CLC 1114, [1997] NPC 79, [1997] EG 81, [1997] 23 EG 141
House of Lords, Bailii
England and Wales
Citing:
CitedAttorney-General v Colchester Corporation 1955
Lord Goddard said: ‘No authority has been quoted to show that an injunction will be granted enjoining a person to carry on a business, nor can I think that one ever would be, certainly not where the business is a losing concern.’ . .
CitedWilson v Northampton and Banbury Junction Railway Co 1872
Lord Selborne LC said: ‘It is of the highest importance . . that all communications between a solicitor and a client upon a subject which may lead to litigation should be privileged, and I think the court is bound to consider that . . almost any . .
CitedBraddon Towers Ltd v International Stores Ltd 1987
Slade J considered the availability of an order for specific performance of a positive covenant: ‘Whether or not this may be properly described as a rule of law, I do not doubt that for many years practitioners have advised their clients that it is . .
CitedJ C Williamson Ltd v Lukey and Mulholland 1931
(High Court of Australia) Dixon J said: ‘Specific performance is inapplicable when the continued supervision of the Court is necessary in order to ensure the fulfilment of the contract.’ . .
CitedC H Giles and Co v Morris 1972
Megarry J considered why a court should be reluctant to create an obligation to continue a business where a court might be asked to judge compliance:: ‘difficulties of constant superintendence’ were a ‘narrow consideration’ because ‘there is . .
CitedIsenberg v East India House Estate Co Ltd 1863
The court refused a mandatory injunction to compel the defendant to pull down part of a new building which interfered with the plaintiff’s light and exercised instead the Court of Chancery’s recently-acquired jurisdiction under the 1858 Act to order . .
CitedWolverhampton Corporation v Emmons 1901
The court granted an order for specific performance of a covenant in a building contract. Romer LJ said that the first condition for specific enforcement of a building contract was that ‘the particulars of the work are so far definitely ascertained . .
CitedTito v Waddell (No 2); Tito v Attorney General ChD 1977
Equity applies its doctrines to the substance, not the form, of transactions. In respect of the rule against self dealing for trustees ‘But of course equity looks beneath the surface, and applies its doctrines to cases where, although in form a . .
CitedJeune v Queens Cross Properties Ltd 1974
The lease contained a covenant by the landlord to carry out repairs. A balcony of his, not within the area let, was at risk of collapsing.
Held: Damages alone would be not an adequate remedy. The court ordered specific performance of the . .
CitedShiloh Spinners Ltd v Harding HL 13-Dec-1972
A right of re-entry had been reserved in the lease on the assignment (and not on the initial grant) of a term of years in order to reinforce covenants (to support, fence and repair) which were taken for the benefit of other retained land of the . .
CitedDowty Boulton Paul Ltd v Wolverhampton Corporation 1971
An order was sought to require the defendant tenants to keep an airfield open as a going concern.
Held: The order was refused. Pennycuick V-C said: ‘It is very well established that the court will not order specific performance of an . .
Appeal fromCo-Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd CA 29-Dec-1995
A ‘keep open’ clause in a commercial lease can be enforced by an order specific performance but only in rare cases. It would normally be unreasonable.
Millett LJ said: ‘The competing arguments in the present case, and the difference in the . .

Cited by:
CitedMidtown Ltd v City of London Real Property Company Ltd ChD 20-Jan-2005
Tenants occupied land next to land which was to be developed after compulsory acquisition. The tenants and the landlords asserted a right of light over the land, and sought an injunction to prevent the development. The developer denied that any . .
CitedCoventry and Others v Lawrence and Another SC 26-Feb-2014
C operated a motor racing circuit as tenant. The neighbour L objected that the noise emitted by the operations were a nuisance. C replied that the fact of his having planning consent meant that it was not a nuisance.
Held: The neighbour’s . .
CitedCavendish Square Holding Bv v Talal El Makdessi; ParkingEye Ltd v Beavis SC 4-Nov-2015
The court reconsidered the law relating to penalty clauses in contracts. The first appeal, Cavendish Square Holding BV v Talal El Makdessi, raised the issue in relation to two clauses in a substantial commercial contract. The second appeal, . .

These lists may be incomplete.
Updated: 03 January 2021; Ref: scu.158892