UK Electrical (Private) Limited v Commercial and Industrial Holdings (Private) Limited

The respondent is a tenant of an immovable property (remainder of Stand No. 4916 and Lot No. 1 of Stand 6178 Salisbury Township) under a principal lease agreement. In June 2017, the respondent entered into a sublease agreement with the applicant, subletting a portion of the premises. The sublease agreement provided for monthly rent of US$9,000 plus VAT, with annual reviews commencing 1 July. Clause 1.4 of the sublease specified that rentals would be reviewed annually and should increase in line with any increases from the primary landlord to the respondent. Clause 4 provided that rental reviews would be "in line with percentage increases as may be applied by the primary landlord to the lessor." The applicant sought information from the respondent regarding the percentage increases applied to the main lease to verify the correctness of rental increases being charged to it as subtenant. The respondent acknowledged the applicant's entitlement to such information but the applicant doubted the correctness of the information provided and sought proof from the principal lessor.

• Whether the dispute should be referred to arbitration in terms of clause 4 and clause 22 of the sublease agreement
• Whether the applicant's papers disclosed a cause of action
• Whether the applicant was contractually entitled to receive information from the principal lessor showing percentage increases in rentals under the main lease agreement
• Whether constitutional principles under section 62(2) of the Constitution of Zimbabwe 2013 applied to the dispute

The court ordered: (1) Respondent to provide the applicant with information from the principal lessor, including any agreement and other documents, showing the percentages by which the rentals in the main lease agreement were increased, within 10 business days from the date of the order; (2) Respondent to pay the costs of the application.

Where a sublease agreement provides that rental increases shall be reviewed "in line with percentage increases" applied by the principal landlord to the intermediate lessor/sublessor, the subtenant has a contractual right to receive information and documentation from the principal lessor proving the actual percentage increases applied to the main lease. This right arises from the necessary implication of the contract, as the subtenant would otherwise have no means of verifying the correctness of rental increases charged to it. An arbitration clause that applies to disputes regarding "determination of open market rent" does not extend to disputes concerning the percentage increase in the principal lease where the rental review is expressly tied to increases in the main lease rather than market rent. The doctrine of constitutional avoidance requires courts to resolve disputes on ordinary legal principles where possible, rather than reaching constitutional questions unnecessarily.

The court observed that constitutional law should be reserved for serious constitutional disputes, not those that can be resolved through the application of other principles of law such as contract law principles. The court noted that costs on an attorney-client scale are a special order warranted only where there are special reasons, such as vexatiousness of the defense or other reprehensible conduct, and that no such special reasons existed in this case. The court also commented that the declaratory relief sought in the draft order was unnecessary as it merely represented the basis upon which the applicant was found entitled to the substantive relief.

This case is significant in Zimbabwean contract law for clarifying the interpretation of rental review clauses in sublease agreements. It establishes that where a sublease provides for rental increases "in line with" percentage increases in the principal lease, the subtenant has a contractual right to receive information and documentation proving the actual percentage increases applied in the main lease. The case also reinforces the doctrine of constitutional avoidance, confirming that courts should resolve disputes on ordinary legal principles (such as contract law) where possible, reserving constitutional adjudication for matters that cannot be resolved otherwise. The judgment provides guidance on the interpretation of arbitration clauses in lease agreements, holding that such clauses must be construed narrowly and apply only to the specific disputes contemplated therein.