Dunnes Stores won a legal dispute against a discount store in an action in which a High Court judge was asked to define which products should be classified as groceries.
In his ruling, Judge Mark Sanfey said the term “groceries” contained in a lease at the center of a dispute between Dunnes Stores and store operator Mr Price “extends beyond food or food products” .
The judge also held that the term “groceries” includes “non-durable consumable household items that are frequently purchased.”
Other items the judge considers edible include health care products, household and cleaning products; pet care and pet food; Toiletries; hair care products, detergents; soap powder; Cleaning products; shampoos; toothbrushes; toothpaste; kitchen towels and toilet paper 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 main tenant in his 65,000-square-foot facility.
Dunnes claimed that as part of the deal to become the main tenant, an exclusivity clause was included in the leases 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 retail park, Camgill Property A Sé Ltd, brought 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, had been selling items from his outlet, namely groceries, in the retail park that he had no right to sell.
Represented by Martin Hayden SC, he sought a permanent injunction to prevent the Mr Price establishment from selling certain items.
The restrictive clause contained in the lease, Dunnes asserted, prevented any other tenant in the park from operating as a supermarket, hypermarket, grocery store, discount food store, frozen food establishment, mini food market, convenience store. or any similar premises for sale. of any food, food products or groceries.
The tenants of the other units were not allowed to sell food, food products or groceries or sell wine, beer or spirits, Dunnes also claimed.
It asserted that Mr. Price, in breach of the restrictive clause, had put up for sale items including cookies, cakes, sauces, baked goods, chips, nuts, noodles, candy, beverages, milk, bread, soup, and cereal. .
It had also offered for sale groceries that included powdered detergents, cleaning products and materials, shower gels, deodorants, shampoos, cosmetics, toothbrushes and toothpaste, kitchen towels and toilet paper.
Dunnes said he had sought the inclusion of the restrictive clause in leases for other units in the park as a condition for the chain to put one of its stores in the park more than 15 years ago.
The defendants denied the claims and rejected Dunnes’ proposed food categorization.
They stated that Dunnes’s definition of groceries was “self-serving, arbitrary, and overbroad, constituting a casual expansion of the use of the term ‘groceries’ to encompass many types of products sold in a supermarket that go beyond the meaning of the word groceries as defined in the Dunnes lease.
They stated that the terms grocery and food are commonly understood as separate and distinct categories from confectionery, toiletries, cosmetics, perfumes and home accessories.
The defendants alleged that the general purpose of the lease clause was to prohibit a competing supermarket from operating in conjunction with the Dunnes Stores facility.
It was also alleged that the word “groceries” constitutes a term that is vague and ambiguous to the extent that it nullifies the restrictive clause of the lease.
In his ruling in favor of Dunnes, Judge Sanfey said that the word “groceries” is one that everyone is familiar with.
He said that most people would be comfortable using the word and, if asked, would readily recognize its familiarity and consider that they understand its meaning.
The most cursory search of supermarket websites operating in Ireland shows that almost all offer sale and/or delivery of “groceries” or “grocery items”.
There can be no doubt about the widespread use of the term by retailers large and small, and the words “groceries” or “groceries” are used consistently in a variety of contexts.
“But what does the word ‘groceries’ really mean?” asked the judge.
This, he said, was the central issue in the case.
While the term “food or food products” sparked little controversy, he said the case had taken some time to be heard and had involved multiple witnesses, including several expert witnesses, and the filing of lengthy and complex legal filings.
The Court had been urged that the outcome of the case would have important implications for leases at other shopping centers where it is a principal tenant, and in respect of which similar wording is used, it noted.
In fact, both sides argued fiercely over their respective interpretations of the word “groceries,” the judge added.
Judge Sanfey said that he was satisfied that Mr Price is a discount variety store and that his presence in the park did not violate the restrictive clause.
However, the judge said that the restrictions contained in the lease were quite clear to anyone looking to trade in the park.
The judge said he was pleased that the term groceries extended beyond food products.
The court found that the prohibition on 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 presented by Dunnes and said the fairness 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 them from selling food products.
However, the judge said that in addition to food products, the term groceries in the clause also applies to non-durable consumable household items.
He said that if Mr. Price removes all food and grocery products in accordance with his categorization, it will be in the opinion of the court in accordance with the restrictive agreement.
This would remove the threat of competition in the retail park, which the restrictive clause in the lease was intended to address, he said.
The judge added that he was confident that the parties could reach a commercial agreement on any point where there is a dispute, rather than resort to further legal action.
The matter will return to court at a later date when final orders in the action are issued.