RESTAURANT AND MILK BAR

Dominion, Volume 30, Issue 266, 6 August 1937, Page 5

RESTAURANT AND MILK BAR

Neighbouring Firms Disagree FOOD DISCUSSED IN COURT Argument about whether a milk and coffee bar broke an agreement which it had made with a restaurant next door not to embark ou the same kind of business when it began to serve certain new’ kinds of food took place i the Supreme Court, Wellington, yesterday, the parties being two Willis Street businesses. One of the counsel said the court had to define the legitimate scope of a restaurant and the legitimate scope of a milk bar, coffee bar aud ice-cream vendor. Giving a verbal judgment, Mr. Justice Ostler said the milk bar had not crossed the line that divided it from a restaurant. The action followed the obtaining by Apollo, Ltd.,, restaurant and tearoom proprietors, of an interim injunction restraining Tip Top Milk Products Ltd., and Mealth Poods (New Zealand) Ltd. from encroaching on the business of the restaurant. The interim injunction was granted on a statement of claim which set out that the milk bar of Tip Top Milk Products Ltd. and the restaurant and business of Apollo Ltd. were acquired from Black and White Milk Bar Ltd., it being agreed in a deed of covenant that the milk bar owners would not conduct the business of a restaurant or tearoom, or both, in Wellington for five years. It was alleged that the manager of one or both defendants had started to sell sandwiches, toast, cakes and other foodstuffs in Willis Street, and had informed the directors of plaintiff company that it was intended that plant for the selling of soups, pies and other food was to be installed, and the converted nature of the business was to lie advertised. Mr. M.- 0. Barnett appeared for plaintiff company, Apollo. Ltd., aud Sir. D. B . Virtue for defendant companies, Tip Top Milk Products, Ltd.. and Health Foods (New Zealand), Ltd. Mr. Virtue said plaintiff did not intend to Pursue the piveeedings in respect to Health Foods the-onlv defendant likely to suffer being Tip Top Mills Products. Meaning of Agreement. Mr. Virtue ‘submitted, first, that if the covenant was enforceable the court must, in construing it, take into consideration the circumstances of the sale of the business to defendant. Secondly, the words of the covenant must be- construed by reference to its terms and by the meanin" of its terms commonly accepted in the trade at that time. Thirdly, the mere fact that certain items were on the menu of both businesses did not preclude defendants from vending them. The two trades were’ ones which overlapped. Fourthly, plaintiff’s business was substantially that of a 'restaurant which involved the preparation and service ot meals. Fifthly, the nm-tn business of the milk liar was to sell liquid refreshments and foods which were far short, of meals in the commonly accepted meaning of the term. ' Amplifying his submissions, Mr. virtue pointed out that his clients were in business first, and if the others entered the agreement without knowing what a cotfee bar” was, his clients should not be blamed. Counsel referred to several affidavits’ by milk bar proprietors secured to show that at the time the parties entered into the covenant milk bars sold the things that, plaintiff now complained at defendant selling. Soups were served nt the milk bar merely as a beverage and were, not of the kind or intended to be consumed in the way they were consumed in restaurants. Even pies were part of a coffee business, to which the covenant gave the milk bar rights. Mr. Virtue quoted an English legal definition of a coffee house to show that it sold pies.

Old-tinip Coffee Houses.

His Honour remarked that Mr. 'Virtue was on safer ground when discussing I lie meaning of "milk bar” in New Zealand.

At one time English coffee houses were gambling places. Mr. Virtue replied that at the time to which the definition referred coffee houses’ menus were similar to those of the New Zealand coffee pare. The Oxford Dictionary made a distinction between a restaurant and a coffee bouse. For the operation Of closing hour rules, pies had been placed bj’ the New South Wales Government in the category of light, refreshments. Factors in the difference between a milk bar and a restaurant were their prices, hours, types of service and different appeal to- the public.

Mr. Barnett said that the right to conduct a coffee bar'was a right to serve almost any foot), but defendants by their covenant not to compete with a restaurant were prevented from extending their business in the manner that other milk bars had extended theirs. Competition between such businesses bad caused additions to their menus, until now there were ones such as those Mr. Virtue had quoted which were really those of restaurants. Both Ive and Mr. Virtue referred to precedents to support their cases. Food Usual with Coffee. “Had I known as much about the facts of, the case as I know now I would never have granted the interim injunction,’’ said his Honour. The position was doubtful then, but the facts now disclosed in the affidavits showed that defendant company bought:'the goodwill not only of a milk bar but also, of a coffee bar. and the affidavits showed it was usual for a coffee bar to sell with its drinks not only biscuits but also toast and pies ami s-oup, such as tomato and toheroa soup. Thur, seemed to be established without, contradiction as the usual thing at: that time. Although the sale of those foods might interfere with plaintiff's business, the latter had no cause for complaint on that ground. The businesses overlapped. While people drank they liked to eat light solids, and those who sold drinks had to sell solid food to prosper. It was hardly necessary for him to point, out that defendant did not covenant to carry ou a coffee bar in the way it was carried on when it was bought. Be agreed with Mr. Barnett that there was a line beyond which defendants could not go in extending the sale of solid foods. He did not propose to lay down where the line was; it would be wrong for him to do so in those proceedings, but so long as defendant did not extend the sale beyond what was customary at the time the covenant was given plaintiff could not complain. In his Honour's opinion they had not crossed the line. The in junction was dissolved with £l5 15/- cost's.