Dunnes Stores Unlimited Company and Another v Dafora Unlimited and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 16 February 2024
• Neutral Citation: [2024] IECA 37
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2022 207

Between/

Dunnes Stores Unlimited Company

Camgill Property a Sé Limited

plaintiffs/respondents

and

Dafora Unlimited Company

Corajio Unlimited Company T/A as Mr. Price Branded Bargains

defendants/appellants

[2024] IECA 37

Noonan J.

Haughton J.

Butler J.

Record Number: 2022 207

High Court Record Number: 2020 7625P

THE COURT OF APPEAL

Civil

JUDGMENT ofMr. Justice Robert Haughtondelivered on the 16 ^th day of February, 2024

1 . This is an appeal from the primary judgment of Sanfey J. delivered on 3 June 2022, and his follow up judgment delivered on 15 July 2022 in relation to orders and costs, and his orders made on 15 July 2022 and perfected on 20 July 2022.

2 . By the said orders made on 15 July 2022 Sanfey J. ordered as follows:-

“ IT IS ORDERED that the Second Named Defendant, its servants, agents, assignees or nominees, in its capacity as successor in title to the leasehold interest in Unit 4, Barrow Valley Retail Park, Sleaty Road, Carlow and as a tenant, sub-tenant, occupier or trader within the shopping centre be prohibited from using or permitting the use ofits unit in breach of the provisions of Clause (20) of the Second Schedule of the Indenture of Lease dated 12 July 2007, as between Redhill Properties Limited as Lessor, of the first part, and Stephen Murphy as Lessee, of the second part (‘the Unit 4 Lease’) and specifically prohibiting it from offering for sale and/or selling food, food products or groceries contrary to the provisions of Clause (20) of the Second Schedule of the Unit 4 Lease and/or the corresponding provisions as agreed and/or covenanted to by the First Named Defendant's predecessor in title in the lease, deed or document pursuant to which the Second Named Defendant occupies its unit in the retail estate.

AND THE COURT DOTH DECLARE

• 1. that the term ‘groceries’ in the Unit 4 Lease extends beyond food or food products;

• 2. that ‘groceries’ in the Unit 4 Lease includes ‘non-durable consumable household items which are purchased frequently’

• 3. that ‘non-durable consumable household items which are purchased frequently’ includes healthcare products; household healthcare products; household and cleaning products; pet care and pet food; bathroom toiletries; hair care products; oral care products and other toiletries; detergents; washing powder; cleaning products and materials; shower gels; deodorants; shampoos; cosmetics; toothbrushes; toothpaste; kitchen towel and toilet rolls.”

Sanfey J. further ordered that the plaintiffs recover their costs of the action, including all reserved costs and the costs of the interlocutory injunction application, from the defendants, and placed a stay on execution only in relation to such costs order pending determination of any appeal.

3 . In essence, this appeal concerns the interpretation of the word “ groceries” in a restrictive covenant in the Indenture of Lease dated 12 July 2007 (“ the Unit 4 Lease”) of a retail unit at Barrow Valley Retail Park (“ Barrow Valley”), Carlow occupied by the appellants (under the name “Mr. Price”) which prevents them from selling “ food, food products or groceries”. The proceedings were heard in the High Court over four days in May 2021 and a fifth day in June 2021, and the primary judgment of Sanfey J. was delivered on 3 June 2022. Following delivery, the matter was adjourned to allow the parties to consider the judgment and the question of the orders to be made, and following a further hearing on 13 July 2022 Sanfey J. made the orders recited above.

4 . At the outset it is convenient to state that I agree with the judgment and orders of Sanfey J., and his findings of fact and his reasoning – which I will refer to at some length – and I would dismiss this appeal.

Background

5 . The background and context in which the restrictive covenant was created is very fully set out in the judgment of Sanfey J. (which runs to 86 pages) and is germane to the conclusions that he reaches. For present purposes I will refer more summarily to the context and relevant provisions of the Unit 4 Lease, and tothe leases of Units 5 and 6 in Barrow Valley demised to the first named respondent (“ Dunnes Stores”), and to relevant evidence given by witnesses, and the trial judge's findings in relation to that evidence.

6 . Dunnes Stores, as is well known, carries on supermarket businesses. The second named respondent (“ Camgill”) is a company which has been entitled to the lessor's interest in the leases the subject of these proceedings since 14 December 2017.

7 . The first named appellant (“ Dafora”) is a private unlimited company whose principal activity is the buying and leasing of its own property. The appellants together maintain that a sub-tenancy exists between Dafora and the second named appellant (“ Corajio”) which trades as a “ discount variety goods retailer” under the name of “ Mr. Price Branded Bargains”. Corajio entered into occupation of Unit 4 and commenced trading on 29 October 2020, and according to affidavit evidence employs 26 full time staff.

8 . By leases (together “ the Dunnes leases”) dated 19 December 2005 and 14 February 2008 Redhill Properties Limited (“ the Lessor”, which term in the context of the leases includes Camgill from the date of its acquisition of the reversionary interest in both leases in 2017) demised to Dunnes Stores Units 5 and 6 in Barrow Valley for a term of 1,000 years in consideration of payment of a premium and the reservation of a yearly rent of €1.00. Units 5 and 6 comprise 0.797 acres and 0.498 acres respectively, and the said leases are registered in Folios 3073L and 3088L respectively of the Register of Leaseholders County Laois.

9 . Clause 3 of each of the Dunnes leases provides that the Lessor covenants to perform and observe the covenant set out in Part III of the third Schedule, including certain restrictive covenants binding on all of the 13.6 acre retail estate comprising Barrow Valley. The restrictive covenants relevant to the present dispute are as follows:-

“(1) The Lessor hereby covenants with the Lessee so as to bind the Lessor its successors and assigns and all tenants, sub-tenants, occupiers, users, licensees and invitees at any time of the Relevant Property, or any part thereof except the Demised Premises and any Connected Person and so as to bind the Relevant Property and every part of it except the Demised Premises by whomsoever owned as restrictive covenants and for the protection and benefit of the Lessee and of the Demised Premises and every part thereof and to the full extent permitted by law:-

• 1.1 Not to use or permit or suffer to be used the Relevant Property or any part thereof as a supermarket, hypermarket, grocery, discount foodstore, frozen-food outlet, mini-foodmarket, convenience store or any similar premises or, save as expressly permitted in this clause (1), for the sale of any food, food products or groceries.

• 1.2 Not otherwise to sell or display or permit or suffer to be sold or displayed any food, food products or groceries except for the sale of food and food products for consumption on the premises only within any restaurants, fast-food restaurants, public houses, cafes, food-courts, cinemas or hotels within the Relevant Property.

• 1.3 …

• 1.4 To include in every lease or other deed or document disposing of any interest in the Retail Estate or any part thereof except the Demised Premises a covenant on the part of each transferee assignee tenant licensee or other disponee and binding their respective successes and assigns not to use the premises so leased or otherwise disposed of in breach of the provisions of this clause (1).

• 1.5 …

• 1.6 To ensure that no third party breaches or otherwise contravenes the provisions of this clause (1); and the Lessee may without prejudice to any other right or remedy it may have and without being obliged to do so in the name of the Lessor take such action and proceedings as the Lessee may consider necessary or desirable on account of any breach or threatened breach of the provisions of this clause (1) and in respect of any arbitration or Court proceedings actually issued take over the conduct and/or settlement at its cost and expense of any proceeds [sic] which the Lessee would request the Lessor to so initiate.”

10 . By Deed of Transfer dated 14 December 2017 Camgill acquired the Lessor's interest in the Dunnes Stores leases and also the Unit 4 Lease, in respect of which Dafora acquired the Lessee's interest as hereafter detailed.

Unit 4 Lease

11 . By a Lease dated 12 July 2007 the Lessor demised to Stephen Murphy (“ the Lessee” which term includes its successor and assign Dafora) Unit 4 in Barrow Valley. The Unit 4 Lease describes the assigned property as a plot of ground containing 0.364 acres, and it was demised for a term of 999 years in consideration of the payment of a premium and the reservation of a yearly rent of €1.00. The Unit 4 Lease is now registered in Folio 3087L of the Register of Leaseholders, County Laois.

12 . By clause 2 of the Unit 4 Lease the Lessee covenanted to perform and observe the covenants set out in the second Schedule which gave effect to the restrictive covenants in Part III of the third Schedule of the Dunnes leases and included inter alia at clause (20) of the second Schedule covenants binding upon the Lessee, its successors, assigns, sub-tenants or licensees:-

“1. Not to use or permit or suffer to be used the Demised Premises or any part thereof 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;

2. Not to sell or display or permit or suffer to be sold or displayed any food, food products or groceries;

3. Not to sell or permit or suffer to be sold wine, beer or spirits.”

It is the interpretation of the first two of...