As a general rule, when a tenant breaches a keep-open covenant, the courts will normally refuse an order for specifi c performance but the landlord may be entitled to damages instead. In Douglas Shelf Seven Ltd v Co-operative Wholesale Society Ltd [2009] PLSCS 154 the landlord brought proceedings for the breach of their keep-open covenant when the tenant closed the store, resulting in compensation being paid to the landlord by the tenant. The landlord then brought a further action, seeking declarations that the tenant should pay the costs of security services for the empty store and also carry out works set out in an interim schedule of dilapidations.

The tenant argued that the landlord should have brought these claims with the earlier action for breach. Further, as the landlord had already received damages for the breach of the keep-open clause on the basis that the store would remain empty until the end of the lease term, the tenant’s repairing obligations had been reduced to keeping the store wind-tight, watertight and secure, and then restoring the property at the end of the lease term.

The court found that although the tenant could not be required to contribute to security services under the terms of the lease, the previous award of damages for breach of the keep-open covenant did not prohibit the landlord from enforcing the tenant’s other obligations under the lease until the end of the lease term.

Retail Partner Sarah Blunn notes: “The decision in this case is good for landlords in that it reinforces the tenant’s liability for dilapidations at the end of the lease term. However, for tenants in this position, it also highlights the possibility of negotiating a reduced liability for other covenants should the tenant be forced to cease trading”.