By: Anthony Pugh, Law Works

Editor: Ben Hanuka, Law Works 

In Second Cup Ltd. v. OPB Realty Inc., a September 24, 2019, decision of the Nova Scotia Supreme Court, the court allowed Second Cup’s application against a landlord for a declaration that it was entitled to sell frozen yogurt in a commercial plaza. 

Key facts 

In August 2017, Second Cup signed a lease with the landlord for a location at the Halifax Shopping Centre.  The lease included a useclause permitting Second Cup to use the premises to sell, among other things, “non-perishable food products, including […] desserts”, as an ancillary product to its main use of selling coffee and other hot beverages. 

In 2017, Second Cup began offering frozen yogurt at its locations.  It wished to sell frozen yogurt at the Halifax Shopping Centre location, but the landlord took the position that this was prohibited under the use clause.  Second Cup subsequently commenced an application. 

Frozen yogurt was a non-perishable desert 

The court had to reconcile the words “non-perishable” with the list of foods that followed it that would ordinarily be considered perishable, such as baked goods and sandwiches. Frozen yogurt was at least as perishable as some of those items. 

Further, the word “dessert” was more general than some of the other items.  The court held that this word would not have been included had the parties intended to preclude Second Cup from selling dessert items other than those specifically listed. 

The court held that the purpose of the useclause was primarily to prevent Second Cup from selling items that would harm the landlord’s operations.  The landlord argued that the court should have a broad interpretation of a clause limiting use.  The court disagreed, holding that the cases that the landlord cited were intended to protect tenants from competition.  There was no evidence before the court that Second Cup’s frozen yogurt offering would compete with existing ice cream stores. 

The landlord also argued that, if frozen yogurt was deemed non-perishable, it would eliminate restrictions in any food use clause and result in commercial absurdity.  The court rejected this argument, holding that the clause would not allow Second Cup to sell any frozen food, and that all food sales had to be ancillary to coffee and hot beverage sales. 

Anthony Pugh Associate