Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] 2 WLR 898
Facts
Argyll operated a supermarket forming the principal retail unit in a shopping centre. Its lease required it to keep the premises open for retail trade during usual business hours. The store was losing money, and Argyll closed it as part of a wider commercial reorganisation. The landlord sought specific performance of the keep-open covenant as well as damages. The trial judge refused specific performance, but the Court of Appeal ordered continued trading. Argyll appealed to the House of Lords, challenging the appropriateness of compelling an ongoing business activity.
Legal Issue
Should a court compel a tenant to continue trading under a keep-open covenant, despite the practical and financial difficulties of enforcing an ongoing business operation?
Held
The House of Lords allowed the appeal and restored the refusal of specific performance. Lord Hoffmann explained the settled reluctance to compel the carrying on of a business. Such an order could generate repeated disputes about compliance, enforced through contempt proceedings, while imposing disproportionate losses on the defendant. The question was not whether court officers would literally manage the supermarket. The concern was continuing coercive supervision and the uncertainty of the obligation’s practical performance. Damages remained available for breach. The reasoning distinguished orders requiring an ongoing activity from orders requiring a defined result and preserved the discretionary, rather than mechanically absolute, character of equitable relief.
⭐ Legal Principle
Courts ordinarily decline specific performance requiring a defendant to carry on a business because of continuing enforcement difficulties and potentially oppressive consequences. Breach remains actionable in damages, and the equitable discretion should not be misstated as an exceptionless ban on every mandatory commercial order.
Significance
Argyll is a leading illustration of why proving breach does not settle the choice of remedy. It is relevant both to leasehold covenants and contractual equitable relief. Students should distinguish the inadequacy of damages from the practical objections to compelling ongoing commercial activity through repeated enforcement. An order directed to a defined result may raise different concerns from a continuing obligation to trade. The decision therefore requires attention to the proposed order, rather than a general preference for one remedy.
Common exam questions about this case
Did refusing specific performance excuse the breach?
No. The covenant remained binding and damages were available. The court was choosing an appropriate remedy for an admitted breach, not declaring that a loss-making tenant could disregard its lease. Contractual liability and the availability of coercive performance orders are separate questions.
What did continuing supervision mean?
It meant the prospect of repeated litigation over compliance with an ongoing trading obligation, backed by contempt sanctions. The objection was not that a judge would personally run the shop. Indeterminate operational disputes could make coercive enforcement costly, uncertain and oppressive over the remainder of the lease.
Would an order to complete a defined repair raise identical objections?
Not necessarily. A defined result can often be assessed on completion, while an obligation to run a business requires continuing choices over time. Argyll distinguishes those situations. The court must still assess the particular order and equitable discretion rather than assume that all positive obligations are treated alike.