## Facts

- A landlord owned a shopping center whose main “magnet” unit was a supermarket operated by the tenant under a long lease.
- The lease contained a “keep-open” covenant requiring the tenant to keep the premises open for retail trade during usual local business hours.
- The tenant decided to close a number of loss-making stores, including this supermarket, closed the premises, and removed fittings, admitting breach of the keep-open covenant.
- The landlord sued seeking specific performance (mandatory injunction) to force the tenant to continue trading and also sought damages, alleging closure harmed the center and other tenants.

## Issues

1. Whether a court should grant specific performance or a mandatory injunction compelling a tenant to carry on a business to satisfy a keep-open covenant.
2. Whether an appellate court should reverse a trial judge’s discretionary refusal to grant specific performance in these circumstances.

## Decision

- The House of Lords allowed the tenant’s appeal and restored the trial judge’s order refusing specific performance, leaving damages as the remedy.
- The Court held that specific performance will not normally be granted to enforce an obligation to carry on a business, particularly where the operation is loss-making and damages can compensate the claimant.
- The Court emphasized that ordering continued trading would be difficult to supervise, and enforcement through contempt would be an unsuitable mechanism for disputes about the quality or vigor of performance.
- The Court found the keep-open covenant too imprecise to enforce coercively because it did not specify matters such as stock levels, space usage, or trading intensity.
- The Court held the Court of Appeal should not have interfered with the trial judge’s discretionary assessment absent an error of principle.

## Legal Principles

- Specific performance and mandatory injunctions are discretionary remedies; courts typically prefer damages where they provide adequate compensation.
- Courts generally refuse decrees compelling ongoing business operations because they require continuing supervision and invite recurring disputes over compliance.
- Equitable relief is inappropriate where it risks imposing disproportionate burdens on the defendant (e.g., forcing operation at a loss) relative to the claimant’s compensable loss.
- Difficulty in quantifying damages does not, by itself, make damages inadequate; courts may assess complex commercial losses.
- Appellate courts should show restraint in reviewing equitable discretion and should not substitute their view for the trial judge’s evaluative judgment without a clear error in principle.

## Conclusion

The House of Lords held that a keep-open covenant in a commercial lease will rarely be enforced by specific performance because compelling a party to run a business—especially at a loss—creates supervisory and fairness problems; damages are ordinarily the proper remedy, and appellate courts should not readily overturn a trial judge’s refusal of such relief.


Co-Operative Ins. Soc’y Ltd. v. Argyll Stores (Holdings) Ltd., [1998] A.C. 1 (H.L.)