The Co-operative Insurance Society Ltd owned the freehold of a shopping centre and they let the anchor unit to Argyll as a supermarket, for 35 years, starting 1979, with a covenant to ‘keep open the demised premises for retail trade’.
The Court of Appeal granted an award of specific performance by a majority, because there was considerable difficulty proving a loss suffered and Argyll had acted with ‘unmitigated commercial cynicism’.
The House of Lords allowed Argyll’s appeal and said the judge’s exercise of discretion was correct so that no specific performance could be awarded.
The purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance… 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.