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mercredi 16 juillet 2014

Exclusivity Clauses in Commercial Leases: Battle over the Types of Fitness Centres Permitted on the Leased Premises

By Sarah D. Pinsonnault

In 403-9971 Canada inc. c. Place Lasalle Property Corporation, 2014 QCCS 3153, the Plaintiff is a company that operates a “Curves” franchise in the shopping centre ran by Place Lasalle Property Corporation (“Defendant Landlord”). For those of you who don’t know, Curves is a ladies-only fitness and weight loss centre. It soon became known to the Plaintiff that Les Entreprises Éngergie Cardio Inc. (“Defendant Tenant”) signed a lease with the Defendant Landlord, whereby the Defendant Tenant would open another fitness centre in the same shopping centre. This new fitness facility, called “Econofitness”, is described as a “no-frills” gym that admits both men and women. As a result, the Plaintiff, in claiming an alleged contravention of an exclusivity clause found in its lease, sought a provisional injunction against the Defendant Landlord to prevent the latter from renting to the Defendant Tenant.

Analysis

The Court had to analyse, in accordance with the criteria established by the Court of Appeal in Société de développement de la Baie James v. Kanatewat, [1975] C.A. 166, whether the rights asserted by the Plaintiff were clear, doubtful, non-existent, or somewhere in between, in order to determine if the provisional injunction should be granted.

Accordinly, the Court had to analyse the lease in question, pursuant to the applicable legal provisions set forth in the Civil Code of Québec with respect to the interpretation of contracts (s. 1425 et seq.).

After having done so, the Court concluded that the exclusivity clause only pertained to the gender of the clientele and not the type of business being operated in the shopping centre (i.e. a fitness centre). One of the reasons the Court came to this conclusion was based on the fact that the Plaintiff’s and the Defendant Tenant’s business models were quite different, in that the latter was “no frills” and allowed both men and women as clients :
“[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. 
[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.”

Consequently, having found this, in addition to the absence of an irreparable harm, the Court dismissed the Plaintiff’s application for a provisional injunction.

To read this decision in its entirety and other elements discussed therein, click here.

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