Goodman Rosen Inc. v. Sobeys Group Inc.

Goodman Rosen Inc. v. Sobeys Group Inc. Court Supreme Court Date 2003-03-18 Citation 2003 NSSC 62 Docket SH 188355 Judge/Registrar/Adjudicator Moir, Gerald R. P. (Honourable Justice) Document Type Decision Relations Library Sheet - Goodman Rosen Inc. v. Sobeys Group Inc. - 2003 NSSC 62 - 2003-03-18 - Library Sheet Decision Content IN THE SUPREME COURT OF NOVA SCOTIA Citation: Goodman Rosen Inc. v. Sobeys Group Inc., 2003 NSSC 062 Date: 20030318 Docket: SH 188355 Registry: Halifax Between: Goodman Rosen Inc. in its capacity as Receiver of Norsyd Investments Inc. Plaintiff v. Sobeys Group Inc. Defendant D E C I S I O N Judge: The Honourable Justice Gerald R.P. Moir Heard: 1 November 2002 and 17 February 2003 at Halifax Counsel: Michael J. Messenger for the plaintiff Robert G. Grant, Q.C. and Daniela Bassan for the defendant Peter M.S. Bryson, Q.C. for intevenors Shoppers Realty Inc., Shoppers Drug Mart Inc. and M.L. LeBlanc Drugs Limited Moir, J.: [1] Introduction. The plaintiff is conducting the receivership of a shopping centre in North Sydney. The defendant, Sobeys, is a tenant and it operates a supermarket at the mall. The intervenors operate a Shoppers Drug Mart pharmacy under a lease executed about a year after the Sobeys lease. The Shoppers Drug Mart lease included a covenant by the landlord that it would not permit any other space in the mall to be used as a pharmacy. Lately, Shoppers discovered that Sobeys was to open a pharmacy in its supermarket. The receiver complied with Shoppers’ demands to honour the covenant in the Shoppers lease by applying for an injunction. I received various affidavits, heard cross-examination of three witnesses and received counsels’ helpful submissions. I have concluded the injunction should be allowed. [2] Some Background. I find that the North Sydney mall is a community mall and a neighbourhood shopping destination as described in an affidavit of Ms. Sharen Cain of Shoppers. I agree with Mr. Bryson that there is a theme of “complementarity” and lesser internal competition announced by the third recital in the Sobeys lease. That theme should be taken into account because it contextualizes the use clause in the Sobeys lease. The practicalities underlying this dispute go beyond competition at the mall. It is clear that, within the mall, Shoppers has increased competition with Sobeys by offering more of the kinds of things Sobeys offers. And the same is so with a Zellars store. The more muscular dynamic is outside. In the mid 1990's, Sobeys had to pay for an expansion of the mall and its own store to compete with a supermarket constructed by Loblaws directly across the street. Last spring Sobeys got information that Loblaws planned an expansion. That usually foretells a state of the art “Atlantic Super Store” with a pharmacy. [3] Finally, it is clear that the lines of product sold by Shoppers and Sobeys have expanded remarkably since the mall opened more than twenty years ago. It is also clear that a successful supermarket will usually be much larger today. I think it reasonable to infer and necessary to bear in mind when interpreting the Sobeys lease, that the parties would have contemplated significant changes over the long term of this lease. [4] The Sobeys Lease. Rocca Group Limited was a developer of commercial premises in the 1970's. It has since failed and various of its rental properties were sold off. The company in receivership is a successor to Rocca as landlord of the North Sydney mall. In the spring of 1979, when the mall was under construction Rocca and Sobeys entered into a lease until 2005 of 22,000 square feet, which was later expanded. The lease includes this recital: The lessee has agreed to establish and operate a business in the Shopping Centre consistent with the planning of the lessor for the merchandising unity of the Shopping Centre and on the terms and conditions set forth in this Lease ... Consequently, article 4.03 of the lease provides: Save as provided herein, the Lessee shall use the Leased Premises only for the purposes of the business of the retail sale of a complete line of food products, as well as general retail merchandising, as carried on by the rest of the majority of its stores. Consistent with this, the landlord promised to restrict competition by other tenants. Article 4.32 of the lease includes: ... the Lessor shall not ... permit any part of the Shopping Centre ... to be used for the purpose of carrying on the business of the sale of food in any form except as hereunder expressly permitted. Article 4.32 then excepts restaurants, bakeries, delicatessens and stores selling certain kinds of food such as candy. The article goes on to make the non-competition provision a fundamental term of the lease, breach of which justifies termination by Sobeys, and to provide that the landlord will extract similar non-competition covenants from purchasers or mortgagees. [5] The meaning of the use clause, article 4.03, is crucial to the outcome of this application. Other provisions contextualize it. These include article 4.31: The Lessee may make changes, alteration [sic] and improvements to the Leased Premises that it may deem necessary without being obliged to restore same to its original condition at the expiration or termination of the term hereof, provided that no structural changes, alterations or improvements shall be made without the consent in writing of the Lessor, which consent shall not be unreasonably withheld, and provided that no changes, alterations or improvements of any kind shall be made which shall diminish the value of the Leased Premises. The receiver and the intervenors assert that this article obligated Sobeys to obtain a consent from the landlord for the construction of the pharmacy. The article does three things. It allows the tenant to make changes, alterations and improvements without having to return the premises to their original condition at the end of the term of years. Secondly, it detracts from the first provision by imposing a requirement for consent where “structural changes, alterations or improvements” are proposed. Thirdly, it limits both the first and second provision by prohibiting “changes, alterations or improvements” that would diminish the value of the premises. As I read it, the second part of 4.31 means that the tenant needs consent for structural changes, structural alterations and structural improvements. It would be surprising if the construction of a pharmacy within a space of this kind involved structural changes. Plans for the renovation are in evidence and they do not indicate structural changes. In any case, the burden would lie upon the party asserting the proposition and no evidence of structural changes has been lead. It has not been established that article 4.31 obligated Sobeys to acquire the landlord’s consent for the new pharmacy. [6] As I said, the meaning of 4.03 is crucial to the outcome of this application. There are two questions. Is operating a pharmacy in a supermarket within “general retail merchandising”? If so, is it permitted by “as carried on by the rest of the majority of its stores”? The phrase “general retail merchandising” is unfamiliar and I have been provided with some controversial evidence of its meaning or usage. As regards the second question, I have been provided some evidence of merchandising at Sobeys’ stores in 1979 and the developments since that time. [7] Mr. John Torella is a consultant in the Canadian and American retail industries. After a career with T. Eaton Co., where he became responsible for all advertising, display, public relations, and special events, Mr. Torella worked for over twenty years as “head of retail departments” in communications companies. He is presently a partner and senior consultant with J.C. Williams Group. He provided this opinion: That in my opinion, the phrase “general retail merchandising” was a well understood and frequently used term in the retail industry in 1979. The term was frequently used to describe all types of merchandise carried by a department store. The phrase, as used in the retail industry in 1979 (and indeed today), is a shorthand method of referring in an all-encompassing and non-restrictive fashion to a broad range of goods, such as one would find in a department store. His affidavit goes on to state his observations that Eatons stores usually contained a pharmacy in 1979 and various department store competitors also frequently contained a pharmacy. He proceeds, then, to this opinion: That in my opinion, in 1979 pharmacies were, and continue to be, included within the phrase “general retail merchandising” as that phrase is used in the retail industry in Canada Mr. Torella was cross-examined. Counsel for the receiver and counsel for the intervenors attacked his qualifications on the basis that he had no experience in leasing and his experience was limited to department stores as of the important time, 1979. Criticisms of his opinions themselves are that he says nothing about services as part of general retail merchandising and that there is a logical flaw in an opinion which goes: (1) General retail merchandising means types of merchandise carried by department stores. (2) Pharmaceuticals are offered at pharmacies within some department stores. (3) Therefore, a pharmacy is within general retail merchandising. [8] Mr. Torella’s opinion was not offered on the basis that the lease employed a specialized or technical phrase or a term of art. It was offered simply to prove usage. The phrase, “general retail merchandising”, is somewhat unfamiliar and its use is outside the experience of the court, such that an opinion on use would be of material assistance to the point where the opinion could be said to be needed. As to qualification, it is not the precise meaning of this phrase in the lease that Mr. Torella is helping us with. Rather, he is indicating usage among those who would speak this way. To hear from him is much like consulting a dictionary. Further, he held a high position in a large chain of department stores. While he conceded on cross-examination that his knowledge was based upon his experience as a writer for Eatons and, later, as a member of senior management, that does not limit his knowledge to usage among those in the retail industry. He would have had a broad experience of that use. As regards his opinions, they are to be taken into account in interpreting the lease. I do not take Mr. Torella to have said nothing about services in this connection. His opinion is that the term was frequently used to describe “all types of merchandise”. Implicitly, he has contrasted services. Further, I do not agree that there is a logical flaw in Mr. Torella’s reasoning. I do agree that there is some blurring around “merchandising” and “merchandise” that carries over to “pharmacies” and “general retail merchandising”. I shall comment on this later. [9] Mr. Brian Hughes, the Manager of Real Estate for Sobeys in the Atlantic Region, says that “General Retail Merchandising Industries” is a well known Canadian standard industrial classification. He provided, in an affidavit, copies of documents from Statistics Canada. The “Standard Industrial Classification 1980" establishes as Class J, “Retail Trade Industries”, which involves “those primarily engaged in retail dealing, i.e. buying commodities for resale to the general public for personal or household consumption”. Of Retail Trade Industries there are several sub-classes including J60, “Food, Beverage and Drug Industries, Retail”, which is defined as “Establishments primarily engaged in retail dealing in groceries or food specialties.” The J60 sub-class include nine sub-sub-classes. Supermarkets are J6011 and the description reads: Establishments primarily engaged in retailing a balanced line of goods such as : canned, bottled, packaged and frozen foods fresh meat and poultry fish fresh fruits and vegetables prepared food products bakery products dairy products candy and confectionery and other food lines. In addition, newspapers, magazines, paper products, soft drinks, tobacco products, health and beauty aids, housewares, flowers, plants and other non-food articles may be sold. “Liquor, Wine and Beer Stores” are a separate sub-sub-class under J60, as are “Prescription Drugs and Patent Medicine Stores”. These are, respectively sub-sub class J602 and J603. “General Retail Merchandising Industries” are a separate sub-class altogether, J64, which involves only “General Merchandise Stores”, J641. General Merchandise Stores are “primarily engaged in retail dealing in a wide range of commodities” and are subdivided into J6411 “Department Stores”, J6412 “General Stores” and others, J6413. Department Stores are “primarily engaged in retail dealing in a general line of merchandise ... with no one commodity line representing more than 50% of total revenue.” General Stores are also “primarily engaged in retail dealing in a general line of merchandise”, but the merchandise is not arranged in separate departments and, in the case of General Stores, the most important merchandise is food, which may account for as much as 60% of revenues. [10] On behalf of Sobeys, Mr. Grant suggests that, in addition to the opinion of Mr. Torella and the Statistics Canada classifications, the Sobeys lease itself offers some clues as to the meaning of general retail merchandising. The reference in the recital, “for the merchandising unity of the Shopping Centre”, tends to indicate that everything to go on in the Shopping Centre is captured by the word “merchandising” including the marketing of services. Further, article 3.11 provides for percentage rent based upon “all sales of merchandise and services”, which tends to indicate that Sobeys could use the premises for chargeable services. [11] Ms. Sharen Cain is the Vice President of Retail Planning for Shoppers and she had had twenty-two years of experience in this field. In her affidavit, she said that she would not characterize the sale of prescription drugs as general retail merchandising. She emphasized regulation of pharmacies and the requirement for supervision by a professional person. [12] Ms. Cain also provided evidence going to the second issue, the issue concerning “as carried on by the rest of the majority of its stores”. Under her direction, Shoppers Drug Mart staff carried out a study of Sobeys stores across Canada and produced a report indicating their best assessment of the numbers of stores with and without pharmacies. Similar information, based upon Sobeys’ own records, was provided by Mr. Hughes. In 1979, Sobeys operated “Sobeys stores”. All but a few were in the Atlantic provinces. The few were in the neighbouring Gaspé. Now, Sobeys Group have Sobeys, Foodland, Needs, Price Chopper, IGA and Gorden Market IGA, which may be found in any province or the Northwest Territories. I am satisfied that the parties to the 1979 Sobeys lease, by “the rest of the majority of its stores”, could only have contemplated what the public would recognize as Sobeys stores. No one would say they were going to Sobeys if they were going to a Needs convenience store. Whatever the phase means, it does not mean one counts every store the corporation happens to own no matter what kind of a store it might be. Consequently, if the provision calls for a mechanical calculation, the relevant numbers would be these: there are presently 143 Sobeys stores in Canada and 61 have pharmacies (42%); there are 84 stores in Atlantic Canada and 51 have pharmacies (61%), and; the rest are in Ontario, 59 of which have pharmacies (17%). Plans are to increase the ratio to 75% in Atlantic Canada and 50% in Ontario by 2005. A bare majority of all Sobeys stores are expected to include pharmacies by next December. [13] The Shoppers Drug Mart Lease. One might well believe that managers in an organization such as Sobeys would expect that an organization such as Imasco would seek a promise for some exclusivity before putting a drug store into a community mall. However, that is neither here nor there. As Mr. Grant emphasizes, the Shoppers lease is no source for interpreting the Sobeys lease. It was executed well after the Sobeys lease and there is no evidence of any communications by anyone to Sobeys concerning an upcoming lease to Imasco. The Shoppers lease is only relevant to remedy. [14] In March 1980, nearly a year after the Sobeys lease, the landlord let about 8,000 square feet for twenty years to Imasco with what was then one of its subsidiaries as sub-tenant, now Shoppers Drug Mart. This lease has been amended a number of times and the term now extends to the end of 2010. Article 35 restricts use of the Shoppers space and, consistent with the Sobeys lease, the tenants covenanted not to use the leased premises for “the sale of groceries, meat, fish, fowl, frozen food, fruit or vegetables, or any combination thereof”. The mall includes department store anchor tenants, and Shoppers Drug Mart also promised not to use the premises as “a department store, junior department store, or variety store, or an order office thereof”. This article contains a reference similar to “as carried on by the rest of the majority of its stores” in the Sobeys restriction. In the case of Shoppers Drug Mart, the landlord acknowledged that it is not a breach of the covenant restricting use if the operation at the Shoppers Drug Mart space is carried on “in the same manner as the majority of the other Shoppers Drug Mart stores in Nova Scotia”. On the other hand, the landlord covenanted with Imasco and Shoppers Drug Mart against allowing other tenants to operate a drug store in any part of their premises. In article 98, the landlord promised: ... not to permit ... any other premises or part of a premises in the shopping centre ... to be operated as a drug store, dispensary and pharmacy, or for the retail sale of items requiring the supervision of a registered pharmacist ... An exception was made for department stores: “This paragraph shall not apply to any premises leased to the department store tenants, including those premises initially leased to Zellars [and] Peoples Department Stores.” [15] Recent Events. The Hardman Group Limited has managed the North Sydney Mall in recent years. As a result of some communications from Sobeys, Hardman employees reviewed the Sobeys lease in early January 2000 and some concluded there was nothing in the lease to stop Sobeys from having a pharmacy. It appears they looked at article 4.31 but may not have considered 4.03. Some conversations took place between managers of Sobeys and of Hardman culminating in a letter from Sobeys to Hardman at the end of January saying “Sobeys will be installing a pharmacy in our North Sydney Mall location. Plans are being completed for an expected installation date of March 2000.” The letter explains, In-store pharmacies have become a standard in the majority of our Sobeys Stores located throughout Atlantic Canada. All new Sobeys stores to be constructed will include an in-store pharmacy. The reference to “the majority of our Sobeys Stores” suggests the writer was mindful of article 4.03. The letter invites questions but does not seek any consent. This contrasts with a letter of September 2000 in which Sobeys “request your authorization for the installation of a Full-Service In-Store Bank”. [16] It appears that nothing more was said between the parties on the subject of a Sobeys pharmacy after January 2000 and before October 2002. In the meantime, the landlord was placed in receivership by order of this court and the receiver retained Hardman to continue managing the mall. Both Sobeys and Shoppers had discussions with Mr. Daniel McKeough, a pharmacist and the owner of the Owl Drug Store in North Sydney, about his selling his business to Sobeys or Shoppers and coming to work for one or the other. Shoppers had made an offer and, in August 2002, Sobeys made a better one. Mr. McKeough entered into an agreement with Sobeys and informed Shoppers that “he had accepted another offer to purchase his business”. In September, Ms. Paulette Cox, on-site manager for Hardman, wrote to a colleague off-site: Rumour here has it that Sobeys has bought out a local drug store, Owl Drug Store located in Downtown North Sydney. From what I understand Sobeys had difficulty securing a pharmacist when the addition of a pharmacy was considered in the past. The owner of Owl Drug Store will also be operating the new pharmacy at Sobeys. Mary Leblanc, Shoppers Owner/Pharmacist, also mentioned this to me a few days ago. I have had no correspondence, or confirmation from Sobeys regarding this. I am wondering if you have heard anything? The colleague replied that he had heard nothing. [17] Sobeys began constructing the pharmacy in October 2002. Shoppers made demands upon the receiver and upon Sobeys. As regards the receiver, the demand was that if Sobeys did not desist the receiver should “immediately commence legal proceedings to ensure that the covenants in Section 98 [of Shoppers’] lease are respected.” For its part, Hardman requested plans and asserted a requirement that the landlord approve them before construction of the pharmacy could continue. Eventually, Sobeys provided plans “for your review and Landlord approval”. Contemporaneous with the demands made by Shoppers, Hardman advised Sobeys that Hardman could not give a consent and was taking advice. The construction continued. Shoppers sued Sobeys and applied for an interim injunction, which I refused after hearings early last November. The receiver brought an application for a final injunction, which was heard in conjunction with Shoppers’ inter parties application. The receiver’s application for a final injunction was opposed on the ground that the issues should be tried. I decided the issues could be determined on application but I adjourned it to give Sobeys time for discovery of documents and of witnesses and to better prepare. The construction is now finished, the sale of Mr. McKeough’s pharmacy has closed and he is working in the new pharmacy at Sobeys. [18] Meaning of the Sobeys Use Clause. I have been referred to Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415 and Eli Lilly and Company v. Novapharm Limited, [1998] 2 S.C.R. 129 for general principles of contractual interpretation as articulated by Justice Iacobucci. In Manulife the majority treated a surety’s material change defence as involving a “principle of interpretation” (para. 11) where Iacobucci, J. for himself and Gonthier, J., wrote that “there is no special rule of construction for guarantees” (para. 78). Thus Justice Iacobucci’s disposition of the appeal required him to comment upon and apply basic principles of contractual interpretation. He said, at para. 79, “The cardinal interpretive rule of contracts is that the court should give effect to the intentions of the parties as expressed in their written document.” and, at the same paragraph, “The court will deviate from the plain meaning of the words only if a literal interpretation of the contractual language would lead either to an absurd result or to a result which is ‘plainly repugnant to the intention of the parties’.” (He described contra proferentem as “an interpretive rule of last resort”: para.80.) Justice Iacobucci wrote for the Court in Eli Lilly. He made it very clear that the following passage from p. 901 of Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888 does not mean that a court interpreting a contract is free to depart from the plain language of the contract to achieve a result which seems fair or sensible: Even apart from the doctrine of contra proferentem as it may be applied in the construction of contracts, the normal rules of construction lead a court to search for an interpretation which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entry into the contract. Consequently, literal meaning should not be applied where to do so would bring about an unrealistic result or a result which would not be contemplated in the commercial atmosphere in which the insurance was contracted. Where words may bear two constructions, the more reasonable one, that which produces a fair result, must certainly be taken as the interpretation which would promote the intention of the parties. Similarly, an interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an interpretation . . . which promotes a sensible commercial result. In this regard, the words “Where words may bear two constructions” could be emphasized. Justice Iacobucci wrote, a para. 56: When there is no ambiguity in the wording of the document, the notion in Consolidated-Bathurst that the interpretation which produces a “fair result” or a “sensible commercial result” . . . is not determinative. Admittedly, it would be absurd to adopt an interpretation which is clearly inconsistent with the commercial interests of the parties, if the goal is to ascertain their true contractual intent. However, to interpret a plainly worded document in accordance with the true contractual intent of the parties is not difficult, if it is presumed that the parties intended the legal consequences of their words. In Eli Lilly the trial judge had admitted evidence of the parties’ subjective intentions. This was contrary to the objective approach to contractual interpretation and Justice Iacobucci found it necessary to emphasize that contractual intent is to be determined according to the words the parties chose: The trial judge appeared to take Consolidated-Bathurst to stand for the proposition that the ultimate goal of contractual interpretation should be to ascertain the true intent of the parties at the time of entry into the contract, and that, in undertaking this inquiry, it is open to the trier of fact to admit extrinsic evidence as to the subjective intentions of the parties at that time. In my view, this approach is not quite accurate. The contractual intent of the parties is to be determined by reference to the words they used in drafting the document, possibly read in light of the surrounding circumstances which were prevalent at the time. Evidence of one party’s subjective intention has no independent place in this determination. [para. 45] [19] Clearly, this approach to contractual interpretation takes the contracting parties at their words. The words of the contract are not merely the source for various “plausible” meanings, from which the court is authorized to select a meaning based upon “efficacy” and “acceptability” (see Justice L’Heureux-Dubé at para. 41 of Manulife). Rather, the first principle of contractual interpretation is that “the court should give effect to the intentions of the parties as expressed in their written document”. This does not say that the exercise of interpreting a term in a contract is always confined to the words and the immediate or internal context, the rest of the written document. I take “possibly” in “possibly read in light of the surrounding circumstances” to mean that, in many instances, the applicable terms will have been written with such clarity that the court need not and should not delve into the surrounding circumstances, what Professor Driedger referred to, in the instance of statutory interpretation, as the external context. The other provisions of the contract will supply all of the context necessary to understanding and applying the terms at issue. Evidence of the surrounding circumstances is only helpful where the terms are unclear or ambiguous. That is to say, where there is a lack of clarity, one interprets the words in light of their full context. This involves no derogation from the first principle. The words still govern. A broader context merely assists in our understanding of words which are unclear. [20] This is an appropriate case in which to take that broader context into consideration because of the lack of clarity occasioned by the awkward phrase “the rest of the majority of its stores”. I should state what evidence I am relying on for that broader context and what does not go to establishing the broader context. I have some evidence as to the operation of Sobeys stores at the time of the lease and of changes since that time, which might give some indication of the directions in which Sobeys’ managers saw its business headed over the long period of the lease. The evidence of pharmacies in department stores could go to context. The evidence about use of the phrase “general retail merchandise” is not evidence of context. As I said, I admit that evidence because it is like consulting a dictionary when usage is unclear. In a situation like this, where parties are using language that is only familiar in certain circles, I think it open to a party to tender evidence of usage. I have already noted that this was not offered or admitted as evidence of a technical term or a term of art. The evidence of pharmacies in Sobeys stores goes to the application of article 4.03, not its meaning. [21] The use clause, article 4.03, bears repeating: Save as provided herein, the Lessee shall use the Leased Premises only for the purposes of the business of the retail sale of a complete line of food products, as well as general retail merchandising, as carried on by the rest of the majority of its stores. As has been said, the issues are whether a pharmacy is within “general retail merchandising” and whether such is “carried on by the rest f the majority of its stores”. [22] A problem I have with Mr. Torella’s opinion is that it treats the gerand or verbal substantive “merchandising” as if it were the noun or substantive “merchandise”. Merchandising refers more to the process of selling goods than to goods for sale. That is the sense one gets from the Statistics Canada publication, where General Retail Merchandising is a sub-class of an industry rather than a description of kinds of goods and it seems to be the sense in the lease where “for the purposes of . . . general retail merchandising, as carried on by the rest of the majority of its stores” is grammatically equal to “for the purpose of the business of the retail sale of a complete line of food products”. So, I do not accept that the phrase refers to “a broad range of goods”. Allowing for that refinement and taking account of the sub-class, General Stores, in the Statistics Canada publication, it seems to me that general retail merchandising usually means the business of selling merchandise in great variety, as in a department store or a general store. The business contemplated by the lease was the retail selling of a complete line of food products together with merchandise one might expect in a department store or a general store. [23] The gerand “merchandising” derives from the verb “merchandise”, and this derives from the noun “merchandise”, which came into English from French following the Normans. “Merchant” also came to us from the Normans, but it derives from Italian and, before it, popular Latin. This family of words comes forward when the topic is the retail sale of goods, rather than the sale of services. Some words in this family, such as “merchant navy” or “merchant bank”, refer to services but even those exceptional uses owe themselves to sale of goods, ie. ships used in trade not war and bankers financing trade. We could easily say “She markets her services.”, even “She markets her professional services.”, and “These are marketable services.”, even “marketable professional services”, but we never say “She merchandises her services.” or “These are merchantable services.” Indeed, if we spoke that way about professional services it would be to denote something crass by way of metaphor to sale of goods. Merchandise (the noun) is distinct from services and merchandising is distinct from selling services. I believe this distinction is preserved in Mr. Torella’s opinion of the meaning of “general retail merchandising”. It is also apparent in the Statistics Canada publication. For example, 6411 concerning Department Stores refers only to kinds of goods when identifying the sorts of merchandise included in a department store: “wearing apparel, furniture, appliances and home furnishings ... paint, hardware, toiletries, cosmetics, photographic equipment, jewellery, dogs, sporting goods ...”. Clearly, the phrase in question includes the retail sale of a very wide range of goods but does not include the sale of services except as incident to sale of goods. This clarity is not disturbed by the phrase in the recitals, “merchandising unity of the Shopping Centre”, even though some services might have been offered there. The phrase makes complete sense if merchandising is the primary business at the Shopping Centre. Nor does article 3.11 detract from this clarity. That was the article providing for percentage rent based on “all sales of merchandise and services”. Indeed, the need to deal separately with sales of merchandise and sales of services tends to show that the later is not included in merchandising. Article 3.11 only makes it clear that percentage rent would be payable if the landlord allowed Sobeys to sell services at the leased premises. Pharmaceuticals are among the kinds of goods one finds at a department store. If operating a pharmacy is retail sale of goods then the lease clearly allows for it, and if operating a pharmacy is sale of services then the lease clearly disallows it. With the assistance of some evidence of usage, this part of the provision is sufficiently clear that no resort need be had to external context in order to understand the meaning. [24] The phrase “as carried on by the rest of the majority of its stores” may demand extrinsic evidence to establish what is done in other stores. However, the issue which now confronts us concerns the ambiguous “rest of the majority”. What are we to look at? And, when are we to look at them? There is enough ambiguity to justify extrinsic evidence, even evidence of the negotiations if that evidence had been available. [25] To start with “when?” The parties contracted for a very long term. Based upon common sense as well as what actually took place after 1979, both Sobeys and Rocca must have recognized that Sobeys’ business would change over that long term. Therefore, one would expect the use clause to contain some elasticity allowing Sobeys to introduce new lines of product and discontinue others. Mr. Bryson argues that since the inclusion of a phrase such as “from time to time” modifying “as carried on” would so obviously have achieved the elasticity, its absence tends to show the parties intended to avoid its effects. Sobeys is allowed, possibly required, to use the premises for two broad purposes, “the business of the retail sale of a complete line of food products” and “general retail merchandising”. I have already made the point that these uses are not specifically tied to products. Rather, they are businesses. Neither business is static. Although it would have made interpretation easier, the term did not have to specifically reference changes and the future. Those concepts in inhere in the two described uses, and the expected elasticity is there. The limit is “as carried on by the rest of the majority of its stores”. While this does not expressly implement the elasticity (as in “as carried on from time to time by ...”) neither does it expressly exclude the elasticity (“as presently carried on”). The elasticity is in the purposes or uses having been defined by reference to dynamic businesses. Therefore the time contemplated by the use clause is the time a new use is introduced or an old use is discontinued, and not the time the lease was executed. [26] Turning to the question of what stores are counted, “the rest of the majority” does not make sense. I think the only reasonable interpretation is that the parties are referring to the majority of the rest of Sobeys’ stores. As I have already said, “its stores” means Sobeys stores, not any kind of store that may be owned by the corporation. On behalf of Sobeys, Mr. Grant argues that this term should be seen as further restricted. He submits that because, at the time of the lease, Sobeys stores were found only in the Maritimes and the neighbouring Gaspé, the term calls for a majority of stores in this area, excluding all Sobeys stores to the west of our region. This seems to me inconsistent with the position advanced by Sobeys and accepted by me that article 4.03 is forward looking or flexible, such that it does not exclude pharmacies on the basis that a majority of Sobeys stores did not have pharmacies in 1979. The language of article 4.03 contains nothing suggesting a territorial limit on the stores to be considered and such is inconsistent with the long term of the lease and the other indications that Sobeys’ future merchandising was in the contemplation of the parties. [27] Application of the Use Clause to the Facts. Here the issues are, (1) whether a pharmacy is within “general retail merchandising” as I have found the meaning of that term in article 4.05 and, specifically, whether a pharmacy is a business that primarily sells goods, and (2) whether pharmacies are to be found in the majority of Sobeys stores across Canada, excluding North Sydney. [28] The 2001annual report for Shoppers Drug Mart Corporation was introduced by Sobeys. If it is a guide to the nature of pharmacies then it shows them to closely resemble any retail enterprise. for examples: Shoppers Drug Mart was founded in 1962 by Murray Koffler, who developed a unique approach to the retail drug store industry in Canada by blending mass merchandising and low pricing with innovative marketing strategies. We are the largest player in the country, with system sales of 45 billion and over 825 stores from coast to coast. We are the only drug store group with a national presence. We are also leaders in all the key product categories - with commanding market share positions in the sale of prescription drugs, over-the-counter remedies, health and beauty products and cosmetics. No drug store competitor has a more convenient product range or can match our selection of health and beauty aids, cosmetics, household essentials, seasonal items and snacks. The last of these quotations is taken from a page with a picture showing a pharmacist passing a bag out a drive-through window to a customer behind the wheel of a car. Just as these quotations seem far removed from the traditional business of a professional druggist, so does the drift in Shoppers Drug Mart’s sales. Revenue from prescription sales is now less than revenue from front store sales. The annual report does refer to the pharmacy business as being at “the core” and it recognizes the professional service delivered by a pharmacist in phrases such as “pharmacists who are also entrepreneurs with an inspiring commitment to patient care and the practice of pharmacy”, “that enables our pharmacists to provide Canadians with counselling on medications, disease management and drug interactions”, and “our HealthWatch pharmacists play an integral role in the delivery of health care in Canada ...”. (HealthWatch is a registered trade mark.) [29] Both the common law and legislation have long recognized pharmacists as providers of professional services. Their duties and standards of care are well established in the common law. Negligence or incompetence may lead not only to civil liability but also to loss of licence under governing legislation. Dispensing and compounding prescription drugs are regulated services, not regulated goods. This profession is at the “core” of a pharmacy, to use the work in the Shoppers Drug Mark annual report. It is the pharmacist who makes the pharmacy a pharmacy. It is a place where prescription drugs are sold but these goods are sold only on account of professional services where a pharmacist compounds or dispenses prescription drugs and advises upon the use of both prescription and non-prescription drugs. [30] The prominence of professional services at a pharmacy takes it out of “general retail merchandising” as that phrase is meant in the uses clause. What Sobeys proposes is far different from merely adding a new line of product. It proposes to sell a line of goods which involves, at the same time, the selling of professional services. In my opinion, article 4.03 precludes this. [31] Further, even if the operation of a pharmacy by a professional pharmacist was within “general retail merchandising”, pharmacies are not yet to be found in the majority of Sobeys stores. For this additional reason, article 4.03 precludes a pharmacy in the Sobeys store at North Sydney Mall. [32] Remedy. An injunction is the presumed remedy for a continuing breach of a negative covenant: Doherty v. Allman (1878), 3 App. Cas. 709 (HL) and see Robert J. Sharpe, Injunctions and Specific Performance (Aurora: Canada Law Book, looseleaf ), p. 1-3. The consequences for the innocent party of a breach of a negative covenant are often impossible to assess and the injunction is, in effect, specific performance where a party has promised not to do something. [33] On behalf of Sobeys it is submitted that the court should not exercise its discretion in this case because of what it terms the landlords’ laches after Sobeys’ January 2000 advice that it would be opening a pharmacy. The intervenors have referred me to M.(K.) v. M.(H.), [1992] 3 S.C.R. 6 at p. 77 where Justice LaForest approved this passage from Meagher, Gummow and Lehane: It is a defence which requires that a defendant can successfully resist an equitable (although not a legal) claim made against him if he can demonstrate that the plaintiff, by delaying the institution or prosecution of his case, has either (a) acquiesced in the defendant’s conduct or (b) caused the defendant to alter his position in reasonable reliance on the plaintiff’s acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb... Justice LaForest went on to say: Thus there are two distinct branches to the laches doctrine, and either will suffice as a defence to a claim in equity. What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice between the parties, as is the case with any equitable doctrine. In this case there was no acquiescence and there was no delay causing Sobeys to alter its position. In January 2000 Sobeys said to Hardman that Sobeys would open a pharmacy in March 2000. Nothing happened. Hardman or the landlord did not delay. Rather, the subject evaporated. I also find that Sobeys did not rely upon the silence. Firstly, there was no silence to be broken after Sobeys failed to proceed in March 2000. Secondly, the Sobeys letter shows that Sobeys’ officials clearly had article 4.03 in mind, but they did not refer the landlords’ agent to that provision. Thirdly, officials at Sobeys were not even thinking of the January 2000 communications when Sobeys contracted with Mr. McKeough in August 2002 and it began renovations for a pharmacy in October 2002. No mention was made of those communications in the responding affidavits, and the letter from Sobeys to Hardman at the end of January 2000 was not put foreword by Sobeys until February 2003, after it had been produced by the receiver. [34] Breach of the Sobeys uses clause could have serious consequences for the receiver, consequences which may be difficult to foretell. The Mall is soon to be put up for sale. The possibility of Shoppers terminating its lease could affect the marketing effort in various ways. Further, obligations are owed to Shoppers on account of the clear violation of its lease that a pharmacy at Sobeys would entail. Considering all the circumstances, I am satisfied that the presumed remedy is also the just remedy. [35] Conclusion. I will grant the receiver’s motion for a permanent injunction restraining Sobeys from operating a pharmacy at the North Sydney Mall for the rest of its lease. If necessary, I will accept submissions on costs or any other outstanding issues. J.