Introduction

[1]           The Plaintiff seeks a Provisional injunction based on its interpretation of an exclusivity clause in its lease. As tenant in a shopping centre, the Plaintiff operates a “Curves” franchise: a ladies’ fitness centre and weight loss centre. It seeks to prevent Place LaSalle Property Corporation (hereafter, the «Defendant landlord") from renting to Les Entreprises Énergie Cardio Inc. (hereafter, "the Defendant tenant") in alleged contravention of that exclusivity clause.

[2]           The exclusivity clause grants the Plaintiff the right not to have the Defendant landlord lease, or permit the use "principally or in part" of any premises in the Defendant landlord's shopping centre (hereafter, the "shopping centre") as a "ladies’ fitness centre and weight loss centre".

[3]           The Defendant tenant will operate a "no-frills" mixed gender (male-female) fitness facility called “Econofitness” for which it has signed a lease to open shortly in the shopping centre. 

Whether the Rights Asserted by the Plaintiff are Clear, Doubtful or Non-Existent

Governing Law

[4]           In 1975, in the case of Société de développement de la Baie James v. Kanatewat[1], Mr. Justice Owen established the approach that Quebec courts have followed in matters of interlocutory injunction:

"At the interlocutory injunction stage, these rights are apparently either (a) clear, or (b) doubtful, or (c) non-existent.

     (a)  If it appears clear at the interlocutory stage that the Petitioners have the rights which they invoke, then the interlocutory injunction should be granted if considered necessary in accordance with the provisions of the second paragraph of Article 752 C.C.P.

     (b)  However, if at this stage the existence of the rights invoked by the Petitioners appears doubtful, then the Court should consider the balance of convenience and inconvenience in deciding whether an interlocutory injunction should be granted

     (c) Finally if it appears, at the interlocutory stage, that the rights claimed are non-existent then the interlocutory injunction should be refused."

[5]           The injunction remedy was codified under article 752 C.C.P. Due to its origins in English law, it is instructive to review the objective of an interlocutory injunction stated by Lord Diplock in the leading House of Lords decision of American Cyanamid Co (No 1) v. Ethicon Ltd[2] and the balancing the courts must undertake to achieve that objective:

"The object of an interlocutory injunction is to protect the Plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the Plaintiff's need for such protection must be weighed against the corresponding need of the Defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the Plaintiff's undertaking in damages if the uncertainty were resolved in the Defendant's favour at the trial."

[6]           It is important for the courts to establish and apply clear and consistent criteria since the stability of commercial relations requires that the parties have reasonable certainty of the legal principles under which they must operate.

[7]           Such principles were confirmed in the 1995 Court of Appeal decision in Brassard v. Société zoologique de Québec inc.[3]:

"… Moins l'apparence de droit s'avère forte, plus la nécessité de l'examen attentif du caractère irréparable du préjudice s'impose, comme celle, éventuellement, du poids des inconvénients:

«En l'espèce, si le droit de l'Ordre est clair et certain, le moindre préjudice, ou possibilité sérieuse d'un préjudice, aux droits du public ou à l'ordre public, peut suffire pour rendre nécessaire l'injonction, alors que si son droit est douteux, le préjudice invoqué doit être plus important que celui des appelants.» (Opinion de Monsieur le juge Jacques, p. 17)

     Dans l'étude de cette apparence de droit, la prudence s'impose. Le juge n'est pas saisi du fond de la demande. Il ne doit apprécier le mérite des moyens soulevés que pour se satisfaire de l'existence et de la qualité de l'apparence de droit. Dès que les moyens semblent suffisamment sérieux pour offrir une perspective raisonnable de succès, il lui faut conclure que le requérant a satisfait à la première exigence de l'article 752 C.p.c., comme le rappelait monsieur le juge McCarthy:

«En ce qui concerne la requête pour injonction interlocutoire elle-même, il importe de souligner immédiatement que ni la Cour supérieure ni notre Cour n'est appelée à décider du droit. Ce qui est en question sur telle requête n'est pas le droit mais l'apparence de droit...» (Voir Simon c. Municipalité d'Oka, [1992] R.D.J. 148, p. 152, opinion de Monsieur le juge McCarthy (C.A.); voir aussi: Favre c. Hôpital Notre-Dame, opinion de Monsieur le juge Bernier, p. 552; Royal Bank of Canada c. Propriété Cité Concordia, [1983] R.D.J. 524, p. 527, opinion de Monsieur le juge Montgomery (C.A.)" (this Court’s emphasis)

[8]           The Court is required to look at each one of the conclusions requested by the Plaintiff and, in accordance with what the Court of Appeal has instructed in earlier jurisprudence, determine whether the rights upon which those conclusions are asserted are: clear, doubtful, or non-existent or somewhere on the spectrum between the two.

[9]           The Supreme Court of Canada has provided guidance on the limited role of the motion’s judge at the stage of the interlocutory injunction (which is even more applicable at the stage of a provisional injunction).  In Manitoba v.  Metropolitan Stores Limited in 1987, the Supreme Court of Canada relied on the following statement from the case of American Cyanamid:

"It is not part of the courts function at this stage of the litigation to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations.  These are matters to be dealt with at the trial (Ed. note: i.e. trial of the permanent injunction)". [4]

[10]        This Court now turns to the applicable legal principles concerning interpretation of contracts. The Court of Appeal[5] sets out the rules regarding ambiguous terms in contractual documents:

Même si l'on devait considérer que ce texte est clair au point de ne pas soulever de difficulté d'interprétation, il convient de rappeler que l'ambiguïté peut naître même en présence d’un texte clair. Comme le soulignent les auteurs Lluelles et Moore, le juge doit d’abord se livrer à une interprétation sommaire (phase pré-interprétative) pour vérifier s’il y a ambiguïté :

Le doute naît parfois de l’emploi d’un terme inadéquat ou d’une contradiction entre deux clauses. Mais l’ambiguïté émane le plus souvent d’un défaut de précision (…)

Il convient de se méfier des apparentes clartés. Un texte peut être clair, pris isolément, mais se révéler obscur, mis en perspective avec le reste de la convention, ou être, formellement, dénué de toute ambiguïté, mais contredire le but manifestement poursuivi par les parties. (Références omises)^[6]

[11]        Two relevant C.C.Q. articles regarding contract interpretation are:

Art. 1425. Dans l'interprétation du contrat, on doit rechercher quelle a été la commune intention des parties plutôt que de s'arrêter au sens littéral des termes utilisés.

Art. 1431. Les clauses d'un contrat, même si elles sont énoncées en termes généraux, comprennent seulement ce sur quoi il paraît que les parties se sont proposé de contracter

[12]        The Court is mindful of the general principle in matters of commercial exclusivity covenants that the rule is free trade and the exception is restriction to free trade: accordingly, exclusivity clauses are to be construed narrowly since they are an exception to the general rule.[7]

Analysis

[13]        In the present case, the Court comes to the conclusion that the intention of the parties expressed in the exclusivity clause was to protect the Plaintiff as the only fitness centre and weight loss centre for women, in the shopping centre.  The essence of the protection (and hence the exclusivity) was gender-based: there could only be one fitness and weight loss facility that admitted only women.

[14]        The Court comes to this conclusion for three reasons:

a)            the difference in the wording used from the Plaintiff's lease with the original landlord (hereafter, the "original lease") and  the second lease, now in force, with the Defendant landlord (hereafter, the "existing lease");

b)            as a result of reading the exclusivity clause in context with other clauses of the existing lease; and

c)            the difference in the business operated by the Defendant tenant because of its mixed gender (male-female) clientele combined with its "no frills" fitness facilities.

[15]        In the original lease, exhibit P-8 dated December 31, 2002, the use was for "a Ladies fitness centre and weight loss centre" with the permitted sale of “Curves” branded vitamins and other “Curves” products.  Under paragraph 13.23, the original landlord agreed not to lease to another party for "the principal business of a " ladies fitness centre or any fitness centre, which admits women " (this Court's emphasis).  That exclusivity clause added also that the Plaintiff agreed that the landlord could lease space to a "men's fitness centre".

[16]        This original lease was still in force when the Plaintiff entered into negotiations with the Defendant landlord who had acquired the shopping centre.  This is an important fact since it underscores that both the Plaintiff and the Defendant landlord were aware of the particular wording of the original exclusivity clause.

[17]        As a general rule in negotiating such exclusivity clauses in commercial leases, the tenant is seeking the widest possible protection against competition for its business while the landlord wishes to restrict such exclusivity as much as possible to allow it the opportunity to rent to the broadest spectrum of potential tenants.

[18]        In the existing lease, the permitted use under paragraph 1.7 is: "ladies fitness centre and weight loss centre".  The Plaintiff must operate this specific use continuously during the term of the existing lease [see paragraph 10.1.1].

[19]        In fact, the Plaintiff’s franchise agreement was filed by the Plaintiff. It stipulates that the franchise operated by the Plaintiff is for a "Curves for women 30 minute fitness and weight loss business."[8]

[20]        Under the existing lease (Schedule E, paragraph 3.3), the original lease is resiliated upon delivery of the existing lease.

[21]        There are, in effect, two similar but not identical exclusivity clauses that co-exist in the existing lease:

a)            under paragraph 6 of schedule J: "the landlord shall not lease or permit any other space in the Shopping Centre to be operated or used principally or in part as a ladies fitness centre". The clause goes on to say that the "landlord shall have the right to lease or permit the occupation of a men's fitness centre in the Shopping Centre without contravening the “Curves” Exclusivity". 

The Plaintiff argues that the mention of a "men's fitness centre" restricts the landlord to only leasing to a fitness centre that allows men only.  The Court does not agree.  This clause, as drafted, does not limit the landlord's right to only lease for such a limited use since:

i.              express limiting words such as "only" are not used; and

ii.            the Court interprets this sentence as being an example of a type of fitness centre which may be allowed. This interpretation is collaborated by the fact that clearly a men's fitness centre could never compete with a ladies fitness centre in any event. Hence, the only reason for such an express reference is as an example of permitted "fitness centres" i.e. those that do not cater exclusively to ladies.  This would be the case for a men's fitness centre, or mixed gender (male-female) fitness centre;

b)            in schedule J at page 71, the identical exclusivity clause noted above in (a) is reproduced along with the exclusivity clauses for other present tenants in the shopping centre, except that after the words "ladies fitness centre" there is added in handwriting and initialled on behalf of the Plaintiff and the Defendant landlord, the following words "& weight loss centre".  As a result of the addition of these words, the Court interprets that the parties intended that the exclusivity was for "a ladies fitness centre and weight loss centre", which is almost identical to the wording of the franchise agreement.

[22]        The Plaintiff could have negotiated the same wording as was in the original lease, with the inclusion of the additional phrase "or fitness facilities that admitted women".  Had this been done, then the Defendant tenant would not have been able to lease the premises to a mixed gender (male-female) fitness centre since in addition to admitting men, it also admits women.

[23]        However, this wording is absent from the existing lease. This is relevant to interpretation since, by analogy, C.C.Q. article 1426 indicates that a tool for interpretation is the meaning that the parties have already given to the words by their past actions. While the Defendant landlord was not a party to the original lease, it had knowledge of it.

[24]        There is no evidence in the record concerning the specific negotiations.  However, the wording in the original lease "or fitness facilities that admitted women" are notably absent from the existing lease. The Court is entitled to assume that the parties to the existing lease did not intend this meaning.

[25]        Moreover, this interpretation is consistent with paragraph 10.1.2 of the existing lease which provides some greater flexibility for the Defendant landlord as follows:

"Unless otherwise specifically set out in the lease to the contrary, nothing contained in the lease will prevent the landlord from leasing any other premises in the shopping centre to any other tenants carrying on a business which is similar in whole or in part, to the business permitted to be carried on from the leased premises pursuant to section 1.7".  (this Court's emphasis)

[26]        In the Court's view, the addition of these words further confirms the intention of the parties to restrict the protection for a fitness and weight loss centre exclusively to women since the Defendant landlord is permitted to lease to  "similar" businesses:   for example, the Defendant tenant which is not exclusively for women, but which is a mixed gender (male-female) fitness centre.

[27]        The third reason why this exclusivity clause does not apply to the Defendant tenant is the different nature of the two (2) businesses: the centre as operated by the Plaintiff in comparison with the Econofitness centre proposed by the Defendant tenant.

[28]         From the website for “Curves” in the French language, the “Curves” business, i.e. the one operated by the Plaintiff, is described as follows:

a)            “Curves” is a programme "complet avec des exercices physiques, un plan de repas et un suivi personnalisé dans un seul programme et en un seul endroit";

b)           "Curves” offre un programme intégral comprenant des exercices physiques, un régime alimentaire et un suivi personnalisé en un seul endroit…"; and

c)            the “Curves” webpage notes that the “secret ingredient” that distinguishes it from other sports clubs or weight loss centres is the "community of women who work together to obtain their objectives of getting into shape and supporting their local community." (this Court's translation).  The “Curves”  philosophy is noted as: "Pas de messieurs, pas de maquillage, pas de miroirs".

[29]        The Defendant tenant has a different business model for its Econofitness division, which is differentiated from the original Energie Cardio concept because of its "no-frills" approach. At Econofitness, a membership can be obtained for as low as $120 per year.  Their facilities consist of exercise machines full stop: there are no support or instructional staff, and there is no discussion of any diets or additional help of any kind.  Courses are given by way of pre-recorded videos.  The Court understands that shower facilities are provided, but only on a "Pay as you shower basis".  There is also no space in the facility exclusively dedicated to women.[9]

[30]        For these reasons, the Court determines that the Plaintiff has not shown that it has an exclusivity clause opposable to the Defendant tenant's lease with the Defendant landlord i.e. for the alleged cause of action, the Plaintiff's rights are non-existent.

Irreparable Harm

[31]        The 2006 Superior Court case of GDG Environnement ltée v. Groupe Bio Services inc.[10] requires the «… preuve susceptible de prouver une perte de clientèle ou une perte de profits" or loss of goodwill, to meet the criteria of irreparable harm.

[32]        The evidence adduced by the Plaintiff does not meet this test.  The fact that the Plaintiff’s representatives say that they will go out of business and that they will lose reputation because of the new tenant does not make it so.

[33]        In fact, at paragraph 48 of their Introductory proceeding, the Plaintiff asserts that the annual fees for the Defendant tenant can be as low as $120 while their annual fees are $528.  Because of this substantial price differential, the Plaintiff further asserts that it will be priced out of business, that the price differential will incite their current members not to renew their memberships and that the price differential will dissuade potential members.

[34]        The alleged result arises from legitimate price competition in the free market where consumers are provided with a broad gamut of choices for services which may be "similar" but which are outside the protection of the present exclusivity clause.

[35]        It is important to note that Econofitness as well as its parent, EnergieCardio do have specific facilities at different other locations in Montreal that are exclusive for women. However, the one in this shopping centre is not one of them.

[36]        Accordingly, the Plaintiff has not satisfied this criterion.

Urgency and Balance of Convenience

[37]        As a result of the Court's previous two findings concerning the appearance of right and irreparable harm, it is not required to decide the issue of balance of convenience and urgency. However, for completeness, the Court will now do so.

[38]        In other jurisprudence, it has been decided [11] that where a Plaintiff waited over two (2) months to take legal proceedings to protect its exclusivity clause in the lease and where in so doing, it allowed the new tenant to invest over $2 million in renovations to the premises, such a delay meant that the test of urgency was not met and furthermore, that because of its investment in the new leased premises, the balance of convenience was in favour of the new tenant.

[39]        In the present circumstances, the Plaintiff acted within a month from being advised that the Defendant tenant was moving into the premises, and accordingly any investment made by the new tenant cannot be attributed to the Plaintiff’s delay.  Had it been required to do so, the Court would have found that the Plaintiff had established both urgency and the balance of convenience in its favour since it already had a long-established business in the shopping centre. 

CONCLUSIONS

FOR THESE REASONS, THE COURT:

[40]         dismisses the Application for a Provisional Injunction;

[41]        With costs to follow the outcome of the action.