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The appeal related to a restrictive covenant given by the developer of a shopping centre in a lease that it granted to a retailer over part of the centre. In giving the covenant the developer and later Peninsula each undertook not to allow any substantial shop to be built on the rest of the centre in competition with the Dunnes. Peninsula then argued that the covenant engaged the doctrine of restraint of trade; that it was unreasonable; and that it was therefore unenforceable. The appeal to the Supreme Court concerned whether the covenant engages the doctrine.

The Supreme Court unanimously allowed the appeal and dismissed Peninsula’s common law claim. Lord Wilson observed that the court’s duty in this appeal was to examine the decision in Esso in the light of questions of logic and public policy and to ask whether the surrender of a pre-existing freedom was an acceptable criterion for engagement of the doctrine.

The Court held that it has long been accepted and normal for the grant of a lease in part of a shopping centre to include a restrictive covenant on the part of the landlord in relation to the use of other parts of the centre. It followed that the covenant in this case has at no time engaged the doctrine. Peninsula sought an alternative remedy under the Property (Northern Ireland) Order 1978, which gives the Lands Tribunal or the High Court the power to make an order modifying or extinguishing the covenant if it constitutes an impediment to the enjoyment of land. The Court observed that that would be a more satisfactory vehicle for resolution of the issues in this case and so Peninsula’s claim under the Order should now proceed to be heard.

For judgment, please download: Judgment

For Court’s press summary, please download: Press summary

For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing please visit: Supreme Court website: 28 January morning and afternoon session and 29 January morning session

To watch the judgment summary, please visit: Supreme Court website: 19 August 2020