Dunnes Stores Unlimited Company v Dafora Unlimited Company

• Jurisdiction: Ireland
• Judge: Mr. Justice Mark Sanfey
• Judgment Date: 03 June 2022
• Neutral Citation: [2022] IEHC 342
• Court: High Court
• Docket Number: [Record No. 2020/7625 P.]

Between

Dunnes Stores Unlimited Company

and

Camgill Property A Sé Limited

Plaintiffs

and

Dafora Unlimited Company

First Named Defendant

and

Corajio Unlimited Company T/A Mr. Price Branded Bargains

Second Named Defendant

[2022] IEHC 342

[Record No. 2020/7625 P.]

THE HIGH COURT

Lease – Restrictive covenant – Sale of groceries – Plaintiffs seeking to enforce a restrictive covenant preventing the defendants from selling food, food products or groceries from a retail unit – Whether the term “groceries” in the lease extended beyond food or food products

Facts: The plaintiffs, Dunnes Stores Unlimited Company and Camgill Property A Sé Limited, sought, inter alia, to enforce a restrictive covenant preventing the defendants, Dafora Unlimited Company and Corajio Unlimited Company, from selling “food, food products or groceries” from a retail unit at Barrow Valley Retail Park, Sleaty Road, Carlow. While the term “food or food products” gave rise to little controversy –an interlocutory injunction was granted on 3rd December, 2020 by the High Court restraining their sale by the defendants – the issue of what, in the context of the lease in question, constituted “groceries” took up five full days of court time involving eleven witnesses, including a number of expert witnesses, and the making of complex and lengthy oral and written legal submissions. The first plaintiff in particular urged that resolution of the issue with regard to the Barrow Valley lease would have major implications for leases in other shopping centres in which it was an anchor tenant, and in respect of which similar wording was used. Both sides contended for their respective interpretations of the word “groceries”.

Held by Sanfey J that, on the basis of the evidence before him, the term “groceries” in the Unit 4 lease extends beyond food or food products, “groceries” includes “non-durable consumable household items which are purchased frequently”, and such items include the items set out at para. 9 of the reliefs in the statement of claim.

Sanfey J held that he would allow the parties a period of fourteen days from delivery of the judgment to either agree the appropriate orders, including orders as to the costs of the proceedings so far, or deliver written submissions as to what the orders should be. As the hearing before him addressed issues of liability only, he held that the parties should indicate what, if any, orders were necessary in order to progress issues of quantum which may arise. He held that he would give the parties liberty to apply in the event of any unforeseen difficulty.

Judgment approved.

JUDGMENT of Mr. Justice Mark Sanfey delivered on 3 ^rd June, 2022 .

Contents

INTRODUCTION	3
THE PARTIES	3
BACKGROUND TO THE DISPUTE: THE DUNNES LEASES	4
THE MR. PRICE LEASE	5
BACKGROUND AND CORRESPONDENCE	6
THE PLEADINGS	9
THE HEARING	13
THE PLAINTIFFS' EVIDENCE	14
Mr. Irwin Druker	14
Mr. Joseph Stanley	14
Mr. William Fleming	15
Mr. Michael Carrigan	16
Mr. Mark Clifford	17
Mr. Gary Taaffe	19
Mr. Damien Conway	20
THE PLAINTIFF'S EXPERT EVIDENCE	20
Mr. Malachy O'Connor	20
Mr. Anthony Foley	25
THE DEFENDANT'S EVIDENCE	27
Mr. Aidan Ringrose	27
Dr. Damian O'Reilly	29
GENERAL PRINCIPLES OF CONTRACTUAL INTERPRETATION	31
Relevance of the factual matrix	34
Commercial contracts	36
Long-term contracts	36
DIRECT EVIDENCE REGARDING CREATION OF THE LEASES	37
Evidence of Mr. Carrigan	39
“Exclusivities”	39
CONSTRUCTION OF THE RESTRICTIVE COVENANTS	40
“Supermarket, hypermarket” etc	40
Groceries	41
Aids to construction	42
CONCLUSIONS OF THE COURT IN RELATION TO THE EVIDENCE	44
THE RESTRICTIVE COVENANT CONSIDERED	45
ANALYSIS AND CONCLUSIONS	47
Mr. Price is not a “supermarket” etc.	47
“Groceries extends beyond food, food products”	47
Definition of “groceries”	49
ORDERS	54

Introduction

1 . The word “groceries” is one with which everybody is familiar. Most people would be comfortable using the word and, if asked, would readily acknowledge its familiarity and consider that they understand its meaning. The most cursory search of websites for supermarkets operating in Ireland shows that almost all of them offer sale and/or delivery of “groceries” or “grocery items”. There can be no doubt as to the widespread use of the term by retailers big and small, and the words “grocery” or “groceries” are in constant use in a variety of contexts: “grocery delivery”, “click and collect groceries”, “online grocery shopping”, and so on.

2 . But what does the word “groceries” actually mean? This was the central issue in the present case, in which the plaintiffs seek, inter alia, to enforce a restrictive covenant preventing the defendants from selling “food, food products or groceries” from a retail unit at Barrow Valley Retail Park (‘Barrow Valley’), Sleaty Road, Carlow. While the term “food or food products” gave rise to little controversy – an interlocutory injunction was granted on 3 ^rd December, 2020 by this Court restraining their sale by the defendants – the issue of what, in the context of the lease in question, constituted “groceries” took up five full days of court time involving eleven witnesses, including a number of expert witnesses, and the making of complex and lengthy oral and written legal submissions.

3 . The first named plaintiff in particular urged that resolution of the issue with regard to the Barrow Valley lease 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. Indeed, both sides contended fiercely for their respective interpretations of the word “groceries”.

The parties

4 . The first named plaintiff (‘Dunnes’ or ‘Dunnes Stores’) is a private unlimited company which carries on the well-known ‘Dunnes Stores’ supermarket business. The second named plaintiff (‘Camgill’) is a company which is and has been entitled to the lessor's interest in the leases the subject of these proceedings since on or about 14 ^th December, 2017.

5 . The first named defendant (‘Dafora’) is a private unlimited company which has as its principal activity the buying and leasing of its own property. The defendants together maintain that a sub-tenancy exists between Dafora and the second named defendant (‘Corajio’) which, according to an affidavit of 17 ^th November, 2020 sworn by Mr. Declan Crinion, Managing Director of each of the defendants, “…trades as a discount variety goods retailer under the name of ‘Mr. Price Branded Bargains’” [emphasis in original]. Mr. Crinion avers at para. 27 of that affidavit that Corajio “entered into occupation of the Mr. Price unit [at issue in these proceedings] and commenced trading on 29 October, 2020 and employs 26 full-time staff”. Where appropriate, I will refer to the defendants collectively as ‘Mr. Price’.

Background to the dispute: the Dunnes leases

6 . By leases of 19 ^th December, 2005 and 14 ^th February, 2008 (‘the Dunnes leases’), 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), demised to Dunnes Stores units 5 and 6 respectively in Barrow Valley Retail Park. Each premises was demised for a term of one thousand years in consideration of the payment of a premium and the reservation of a yearly rent of €1. The sites, which comprise 0.797 acres and 0.498 acres, are registered respectively in folios 3073L and 3088L of the Register of Leaseholders County Laois.

7 . Clause 3 of each of the Dunnes leases provided that the lessor covenanted to perform and observe the covenants set out in part III of the third schedule of the Dunnes leases, including certain restrictive covenants binding upon all of the 13.6 acre retail estate described in the first schedule to the plenary summons and certain adjoining lands as set out in the leases (“the restrictive covenants”).

8 . The restrictive covenants of particular relevance to the present dispute, and relied upon by the plaintiffs, were set out in the Dunnes leases as follows:-

“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 owed 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.

1.4 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...