What I mean is that my army simply lets them keep moving. Shouldn't they fight and shatter the Army? If it was the other way around my Army would be utterly destroyed so why does the AI simply get to keep on trucking and live to fight another day.
No, I understand what you meant and I was responding.
If you look at an army, there's a little white "surrender" flag over a retreating army. As long as the army has it, it (1) cannot be given orders, (2) will not re-inforce, and (3) cannot be engaged by an enemy army. It will recover morale during this period.
In most cases, an army will auto-retreat to the opposite corner of it's empire. This will happen to both the player and the AI, whether you want it to or not.
There are cases where you get a 1-province retreat only, but I don't know the exact conditions. In your case it's easy to understand: as England in the Hundred Year's War, you don't have anywhere safe on the continent to run to--all your provinces border the enemy--so the army logic of "getting as far away as possible and re-grouping" only moves you to Normandy or so, not enough time to cover morale.
Chasing a retreating army isn't a bad idea, as it doesn't recover strength and you will catch up sooner or later. It is risky, though, since if you are defeated deep in enemy territory you can end up in the short-retreat mode again.