The court also ruled that frozen yogurt could be considered non-perishable under the lease
Soft serve ice cream and frozen yogurt are two distinct desserts and cannot be considered in direct competition with one another, the Supreme Court of Nova Scotia has ruled.
In Second Cup Ltd. v. OPB Realty Inc., a decision released on Nov. 12, the applicant sought an order allowing it to sell frozen yogurt, including the famed Pinkberry Frozen Yogurt, at its franchise location in the Halifax Shopping Centre.
Second Cup and OPB Realty were tenant and landlord, respectively, of a retail space lease agreement containing a use clause, which stated that the tenant should use the store only for a specific purpose, which is the retail sale of “specialty coffees, coffee, espresso based beverages, teas, other hot, cold and blended beverages, gourmet coffee products, coffee in bean or bulk form and as ancillary thereto the sale of non-perishable food products, including, but not limited to, desserts, pastries, baked goods, dessert squares, muffins, croissants, danishes, scones, tarts, rolls, cakes, donuts, biscotti, bagels, cookies and premade specialty sandwiches all for on or off premises consumption. . . .”
The issue in the case was whether frozen yogurt could be considered a type of non-perishable food product that could be validly sold under the lease agreement.
Noting that, in the agreement, the term “non-perishable” was immediately followed by a non-exhaustive list of types of food, many of which would be conventionally considered perishable, Justice John Bodurtha defined “non-perishable,” as applied to the use clause, as food that is at least as non-perishable as the other listed food items, which all require some form of preservation, notably refrigeration.
“Whether or not frozen yogurt is ‘non-perishable’ under the dictionary definition does not decide the issue. What matters is whether frozen yogurt is ‘non-perishable’ under the use clause,” wrote Bodurtha.
Since frozen yogurt is at least as non-perishable as the other food items listed, given that, like the others, it also requires preservation through refrigeration, Second Cup’s product could therefore be considered “non-perishable” under the use clause, and could be validly sold under the lease agreement.
A witness for the respondents stated in his affidavit that Dairy Queen, another store in the HSC, sold soft serve ice cream, with the implication that this was in direct competition with Second Cup’s frozen yogurt.
But Bodurtha wrote in the decision that “there is very little to no evidence that HSC intended to limit competition among its shop owners.”
When asked about the difference between soft serve ice cream and frozen yogurt, the witness stated that he considered them the same.
Justice Bodurtha did not agree with this opinion. The court thus ruled in favour of the applicant, permitting it to sell its frozen yogurt in the retail space.
“I find soft serve ice cream and smoothies are distinctly different from frozen yogurt and, in particular, the Pinkberry Frozen Yogurt offered for sale by Second Cup,” said Justice Bodurtha. “There was no evidence before me as to whether these items are in direct competition, and, therefore, again, I find no reason to read the Use Clause restrictively to limit competition in the HSC.”
