Metro International (Pvt) Ltd v Old Mutual Property Investment Corporation (Pvt) Ltd and Thomas Meikle Centre (Pvt) Ltd

Old Mutual owned shops in Westgate Shopping Centre which it leased to tenants. It entered into two separate lease agreements: (1) with TM on 6 March 1996 for premises of 4,183.48 square metres to operate a supermarket, with an exclusivity clause (Clause 40) that Old Mutual would not lease premises over 1,000m² to any other tenant as a supermarket for 10 years; and (2) with Metro on 14 November 1995 for premises of 2,039 square metres (later extended to 2,264.53 square metres) to operate a clothing store plus a supermarket not exceeding 1,000m². Metro initially operated both a clothing store ("W-Store") and a supermarket within the size restriction. When the clothing business failed due to import restrictions, Metro closed W-Store and sought to convert the entire leased premises into a large store operating under a Spar franchise. Metro contended that "supermarket" meant only the trading floor area (shelves and refrigerators accessible to the public) and not ancillary facilities like bakery, butchery, cold rooms, and storerooms. Old Mutual disagreed, arguing that "supermarket" included both trading floor and ancillary facilities. Old Mutual applied to the High Court for a declaratory order on the meaning of "supermarket" in both lease agreements.

• What is the proper interpretation of the word 'supermarket' as used in the lease agreements between Old Mutual and Metro, and Old Mutual and TM?
• Whether 'supermarket' refers only to the trading floor area accessible to the public or includes ancillary facilities such as bakery, butchery, storerooms, cold rooms, offices, and other support facilities
• Whether the court should apply the ordinary and grammatical meaning of 'supermarket' or a specialized meaning as contended by Metro
• What principles of contractual interpretation apply to determine the parties' intentions in using the term 'supermarket'

The appeal was dismissed with costs. The High Court's declaratory order was upheld, confirming that "supermarket" in the context of both lease agreements includes the trading floor area and ancillary facilities such as reception and pricing areas, kitchens, storerooms, cold-rooms, toilets and such other facilities as are necessary for or ancillary to the business of a supermarket.

When interpreting contracts, courts must apply the 'golden rule' of interpretation by giving words their grammatical and ordinary meaning in context, unless this would result in absurdity. The word 'supermarket' in its ordinary and grammatical sense refers to a large commercial establishment occupying floor space with facilities for the sale of a wide variety of foods and household goods, which includes both the trading floor area (where customers select goods) and ancillary facilities (such as bakery, butchery, storerooms, cold rooms, offices, kitchens, and goods receiving areas) that are integral to the supermarket operation. Where parties use a term without defining it, they are presumed to have used it in its ordinary meaning. The interpretation of contractual terms must consider: (1) the context and inter-relation to the contract as a whole; (2) background circumstances explaining the genesis and purpose of the contract; and (3) extrinsic evidence of surrounding circumstances, including the parties' subsequent conduct showing how they understood the agreement. A party cannot unilaterally reinterpret clear contractual terms to suit changed circumstances.

The Court noted that the contra proferentem rule (interpreting ambiguities against the party who drafted the contract) was not necessary in this case, as the meaning of 'supermarket' could be determined through ordinary principles of interpretation. The Court observed that Metro's narrow interpretation of 'supermarket' only emerged after its clothing business failed and it sought to maximize use of the premises, suggesting an opportunistic reinterpretation rather than a genuine dispute about original intention. The Court's reference to Wikipedia Free Encyclopedia as an additional source for the definition of 'supermarket' suggests courts may consider modern, widely-accessible reference materials alongside traditional dictionaries when establishing ordinary meaning. The judgment implies that exclusivity clauses in shopping center leases serve legitimate commercial purposes in protecting anchor tenants and that landlords have obligations to honor such commitments to other tenants.

This case establishes important principles for the interpretation of commercial lease agreements in Zimbabwe and provides guidance applicable to South African law. It affirms that courts will apply the ordinary and grammatical meaning of words used in contracts unless the parties clearly intended a different meaning. The judgment is significant for commercial property law as it clarifies that retail premises measurements include not just customer-accessible areas but all facilities integral to the business operation. The case demonstrates that courts will look at the context of the entire agreement, the relationship between multiple related agreements, and the parties' conduct during performance to ascertain their true intentions. It serves as a warning against parties attempting to reinterpret contract terms opportunistically when circumstances change. The judgment's reliance on dictionary definitions and the 'golden rule' of interpretation aligns with South African jurisprudence on contract interpretation.