Dunnes Stores has won litigation against a discount store in an action where a High Court judge was asked to define which goods should be classed as groceries.
In his judgment, Judge Mark Sanfey said the term “grocery store” as it appears in a tenancy agreement at the center of a dispute between Dunnes Stores and store operator Mr Price “extends to beyond food or food products”.
The judge also held that the term “groceries” includes “non-durable consumable household items that are purchased frequently.”
Other items considered groceries by the judge include health products; household and cleaning products; pet care and pet food; bathroom toiletries; hair care products, detergents; washing powder; Cleaners; shampoos; toothbrushes; toothpaste; kitchen towels; and rolls of toilet paper.
The deal 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 agreement to become the anchor tenant, an exclusivity clause was included in the rental agreements with the owners of other units in the park to prevent them from competing with the supermarket chain. .
Following the opening of the Mr Price store in 2020, Dunnes and the owners of the business park, Camgill Property A Sé Ltd, brought an action against Dafora Unlimited Company and Corajio Unlimited Trading as Mr Price Branded Bargains.
Dunnes claimed that in breach of the terms of his lease, the operators Mr Price sold items from his outlet, namely groceries, in the retail park that he was not authorized for sale.
Represented by Martin Hayden, she had applied for a permanent injunction to be granted to prevent a Mr Price store from selling certain items.
The restrictive covenant contained in the lease, according to Dunnes, prohibited any other leaseholders in the park from operating as a supermarket, hypermarket, grocery store, discount food store, frozen food store, convenience store, convenience store or any other similar premises for sale. of any food, groceries or groceries.
Tenants in other units could not sell food, groceries or groceries or sell wine, beer or liquor, Dunnes also claimed.
He claimed that Mr. Price, in violation of the restrictive covenant, offered for sale items such as cookies, cakes, sauces, baked goods, chips, nuts, noodles, candies, drinks, milk, bread, soup and cereals.
He had also offered for sale groceries, including washing powder; cleaning products and materials; shower gels; deodorants; shampoos; beauty products; toothbrushes and toothpaste; kitchen towels; and toilet paper.
Dunnes said he asked for the covenant to be inserted into the leases of other park units as a condition for the chain to place one of its stores in the park more than 15 years ago.
The defendants denied the allegations and rejected Dunnes’ categorization of groceries.
They claimed that Dunnes’ definition of groceries was “selfish, arbitrary and overbroad”, constituting an occasional extension of the use of the term “groceries” to encompass many types of products sold in a supermarket that go above and beyond. beyond the meaning of the word grocery as defined in the Dunnes lease.
They claimed that the terms grocery and food are generally understood as separate categories from confectionery, toiletries, cosmetics, perfumes and household accessories.
The defendants claimed that the overall purpose of the lease clause was to prohibit a competing supermarket from operating adjacent to the premises of Dunnes Stores.
It is also alleged that the word “grocery store” is a vague and ambiguous term insofar as it negates the covenant of the lease.
In his judgment where he ruled in favor of Dunnes, Judge Sanfey said that the word “groceries” is the one everyone knows.
He said most people would be comfortable using the word and, if asked, would easily recognize its familiarity and consider that they understood its meaning.
The most cursory search of the websites of supermarkets operating in Ireland shows that almost all offer the sale and/or delivery of ‘groceries’ or ‘groceries’.
There is no doubt about the widespread use of the term by retailers large and small, and the words “grocery” or “grocery store” are consistently used in a variety of contexts.
This, he said, was the central issue of the case.
Although the term “food or food products” caused little controversy, he said the case took a long time to be heard and involved many witnesses, including several expert witnesses, and the drafting of complex legal arguments. and long.
The court had been told that the outcome of the case would have major implications for leases at other shopping centers where he is an anchor tenant and where similar wording is used, he noted.
Indeed, the two parties fiercely argued over their respective interpretations of the word “grocery”, added the judge.
Judge Sanfey said he was satisfied that Mr Price is a variety store and that his presence in the park did not breach the restrictive covenant.
However, the judge said the restrictions in the lease were clear enough for anyone wishing to trade in the park.
The judge said he was convinced that the term “groceries” extended beyond food products.
The court was satisfied that the prohibition on selling groceries contained in the lease includes non-durable consumable items.
However, the use of the term “grocery store” raises difficulties due to the lack of 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 put forward by Dunnes and said the justice of the case required that it would have the effect of enforcing the restrictive covenant.
The defendants, he said, had “almost agreed” that the lease prevented him from selling groceries.
However, the judge said that in addition to groceries, the term groceries as it appears in the clause also applied to non-durable consumable household items.
He said if Mr. Price removes all food and groceries in accordance with his categorization, it will, in the court’s view, be in accordance with the restrictive covenant.
This would eliminate the threat of competition in the business park, which the lease covenant was intended to address, he said.
The judge added that he was sure the parties could reach a business-like agreement on all the points in dispute, rather than resorting to further legal action.
The matter will return to court at a later date when final orders are issued in the action.