In his judgement Mr Justice Mark Sanfey said that the term “groceries” as contained in a lease agreement at the centre of a dispute between Dunnes Stores and the operator of a Mr Price store “extends beyond food or food products.”
The judge also held that the term “groceries” includes “non-durable consumable household items which are purchased frequently.”
Other items deemed to be groceries by the judge include healthcare products, household and cleaning products; pet care and pet food; bathroom toiletries; hair care products, detergents; washing powder; cleaning products; shampoos; toothbrushes; toothpaste; kitchen towels and toilet rolls.
The case concerned the opening of a Mr Price store in the Barrow Valley Retail Park on the Carlow-Laois border where Dunnes is the anchor tenant in its 65,000 square foot premises.
Dunnes claimed that as part of the deal for it to become the anchor tenant an exclusivity clause was contained in leases agreements with the holders of other units in the park to prevent them from being in competition with the supermarket chain.
Arising out of the opening of the Mr Price store in 2020, Dunnes and the retail park landlords, Camgill Property A Sé Ltd, brought proceedings against Dafora Unlimited Company and Corajio Unlimited Trading as Mr Price Branded Bargains.
Dunnes claimed that in breach of the terms of its lease the operators Mr Price had been selling items from its outlet, namely groceries, in the retail park that it was not entitled to sell.
Represented by Martin Hayden SC, it sought a permanent injunction to prevent the Mr Price outlet selling certain items.
The restrictive clause contained in the lease, Dunnes claimed, prevented any other lease holder in the park from operating as a supermarket, hypermarket, grocery, discount food store, frozen food outlet, mini food market, convenience store or any similar premises for the sale of any food, food products or groceries.
The leaseholders of the other units could not sell any food, food products or groceries or sell wine, beer or spirits, Dunnes also claimed.
It claimed that Mr Price in breach of the restrictive clause had offered for sale items including biscuits, cakes, sauces, baking products, crisps, nuts, noodles, sweets, drinks, milk, bread, soup, and cereals.
It had also offered for sale groceries including washing powders, cleaning products and materials, shower gels, deodorants, shampoos, cosmetics, toothbrushes and toothpaste, kitchen towels and toilet paper.
Dunnes said that it had sought the insertion of the restrictive clause in leases for other units in the park as a condition of the chain putting one of its stores in the park over 15 years ago.
The defendants denied the claims and rejected the categorisation of groceries advanced by Dunnes.
They claimed Dunnes’ definition of groceries was “self-serving, arbitrary and over-broad, constituting a casual expansion of the use of the term ‘groceries to encompass many product types sold in a supermarket which go beyond the meaning of the word groceries as defined in the Dunnes lease.
They claimed that the terms grocery and food are commonly understood to be separate and distinct categories from confectionery, toiletries, cosmetic, perfumes and household accessories.
The defendants pleaded that the word “groceries” constitutes a term which is vague and ambiguous to the degree that it voided the restrictive clause of the lease.
In his judgement where he found in favour of Dunnes, Mr Justice Sanfey said that the word “groceries” is one with which everybody is familiar.
While the term “food or food products” gave rise to little controversy, he said that the case had taken some time to be heard and had involved multiple witnesses, including several expert witnesses, and the making of complex and lengthy legal submissions.
The Court had been urged that the outcome of the case would have major implications for leases in other shopping centres in which it is an anchor tenant, and in respect of which similar wording is used, he noted.
Mr Justice Sanfey said that he was satisfied that Mr Price is a variety discount store and its presence in the park was not in breach of the restrictive clause.
However, the judge said that the restrictions contained in the lease were quite clear to anyone seeking to trade in the park.
The judge said that he was satisfied that the term groceries extended beyond food products.
The court was satisfied that the prohibition of the sale of groceries contained in the lease includes non-durable consumable items.
However, the use of the term groceries gives rise to difficulties due to the absence of a definition of the terms in the lease.
After a lengthy hearing, the judge said that some definition in the lease would have been beneficial.
The judge said he accepted the evidence advanced by Dunnes and said that the justice of the case required that would have the effect of enforcing the restrictive covenant.
The defendants, he said, had “all but accepted” that the lease prevented it from selling food products.
However, the judge said that as well as food products, the term groceries as contained in the clause also applied to no durable consumable household items.
He said that if Mr Price removes all food products and groceries in compliance with his categorisation it will be in the court’s view in compliance with the restrictive covenant.
This would remove the threat of competition in the retail park, which the restrictive clause in the lease was intended to address, he said.
