Court name
Supreme Court of Zimbabwe
Case number
SC 83 of 2006
Civil Appeal 134 of 2004

Metro International (Pvt) Ltd v Old Mutual Property Investment Corporation (Pvt) Ltd and Another (Civil Appeal No.134/04) (SC 83 of 2006, Civil Appeal 134 of 2004) [2007] ZWSC 83 (25 June 2007);

Law report citations
Media neutral citation
[2007] ZWSC 83










REPORTABLE
ZLR (68)






Judgment No. SC 83/06



Civil Appeal No.134/04








METRO
INTERNATIONAL (PVT) LTD v (1) OLD MUTUAL
PROPERTY INVESTMENT CORPORATION (PVT) LTD
(2)
THOMAS MEIKLE CENTRE (PVT) LTD








SUPREME
COURT OF ZIMBABWE


SANDURA
JA, CHEDA JA & MALABA JA


HARARE,
NOVEMBER 21, 2006 & JUNE 26, 2007









E W W Morris, for the appellant



G Gapu, for the first respondent


T
Biti
, for the second respondent










MALABA JA: This is an appeal from a declaratory judgment of the
High Court dated 11 May 2006 as to the meaning of the word
“supermarket”
used in two lease agreements entered into between
the first respondent (“Old Mutual”) and the appellant (“Metro”)
on the
one hand and Old Mutual and the second respondent (“TM”)
on the other. The declaratory order given was to the effect that:







“1. The word supermarket in the context of the lease agreement
entered into by the applicant with the first respondent on the 19th
of November 1995 and with the second respondent on the 6th
of March 1996 in respect of premises situate at the Westgate Shopping
Complex includes the trading floor area and ancillary facilities
viz
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.







  1. Each
    party shall bear its own costs.”








Old Mutual was the applicant in the court a quo whilst Metro
and TM were the first and second respondents respectively. Old
Mutual is the owner of shops in the shopping complex
known as
Westgate Shopping Centre. It lets out the business premises to
different tenants, including Metro and TM.







At the time Westgate Shopping Centre was under construction, TM
expressed interest in taking up tenancy of one of the shops to carry
on the business of a supermarket. It had wanted the supermarket to
be located in the front part of the shopping centre near the
car
park. Old Mutual was, however, desirous to have the TM Supermarket
located inside the shopping centre to draw more customers
for the
benefit of other lessees. By way of a compromise TM agreed to have
the supermarket located inside the shopping centre on
condition Old
Mutual undertook to guarantee its position as the biggest and
dominant supermarket in the shopping centre. As a result
Old Mutual
undertook not to lease to any other trader premises within the
shopping centre in excess of 1 000 square metres for the
purpose of
carrying on the business of a supermarket.







Old Mutual and TM entered into a lease agreement on 6 March 1996, in
terms of Clause 2 of which the former let to the latter for
a period
of ten years commencing on 1 April 1997 premises in extent of 4183,48
square metres to be used as a supermarket. The premises
were not to
be used for any other purpose whatsoever without the landlord’s
prior written consent.







Under Clause 40 headed “Exclusivity” Old Mutual undertook in
favour of TM:







“… not to lease any other premises over 1 000m² in the Building
as a supermarket during the first ten years of this lease without
the
written consent of the Tenant.”







Old Mutual entered into a lease agreement with Metro on 14 November
1995. The lease was also to commence on 1 April 1997 and run
for a
period of ten years. In terms of Clause 2 of the lease agreement the
premises let to Metro measured 2039 square metres in
extent. It
comprised a single storey shop, main Plaza, plus a walled service
yard approximately 130 square metres.




Under Clause 11.1 of the lease agreement the parties agreed that:







“11.1. The Tenant shall be entitled to use the premises for a
clothing store, plus a supermarket which may not exceed 1 000m²
and
for no other purpose whatsoever without the landlord’s prior
written consent.”







By an addendum No. 1 dated 19 November 1997 the parties agreed that
the area occupied by Metro be extended to 2264.53 square metres.







From the date of commencement of the lease to June 2004 Metro
operated the business of selling imported clothes under the name
“W-Store”.
It also ran a supermarket over an area which did not
exceed 1 000 square metres. When the clothing business fell on hard
times
because of the ban on importation of finished clothing material
Metro ceased operating the clothing business and closed W-Store.







On 16 June 2004 Metro advised Old Mutual of its intention to use the
area of the premises previously occupied by W-Store to trade
under a
Spar franchise. It argued that the lease agreement entitled it to do
so provided the “supermarket, within the store as
a whole does not
exceed 1 000m²”.







Metro envisaged the conversion of the whole area of the leased
premises into a large store with a trading area which it defined as
a
supermarket covering 1 000 square metres.







This is clear from the letter dated 22 October 2004 written by
Metro’s Managing Director to Old Mutual. In the letter Metro
asserted
its right to “run a large store with all its ancillary
facilities (offices, freezer rooms, kitchens/canteens, toilets, goods
receiving
and pricing areas, storerooms, compressor rooms etc), plus
a supermarket not exceeding – 1 000 square metres”. According to
Metro the floor space of the premises under ancillary facilities such
as the bakery, butchery, cold rooms and storeroom was not a
“supermarket”. The contention was that the word “supermarket”,
as used in the lease agreement, referred to the trading floor
area
with shelves and refrigerators containing goods to which the public
had access.







Old Mutual was of the view that the large store which Metro intended
to operate over the entire area of the leased premises would
be a
“supermarket” in excess of 1 000 square metres in size. The
Chief Property Manager wrote to the Managing Director of Metro
on 27
October 2004, pointing out that the word supermarket as used in the
lease agreement between the parties referred to the trading
area and
ancillary facilities of a large store. He said:







“Whilst we take note of your intention to separate the Supermarket
trading area from its ancillary facilities and defend that position,
we wish to advise that such a position is potentially not defensible.
You should appreciate that the current proposal materially
changes
the previous use hence the whole question of compliance.”







TM was also of the view that the word “supermarket” was used in
both lease agreements to include the trading floor area and all
ancillary facilities. In paragraph 20.8 of the opposing affidavit
TM’s Director said:







“… I submit that commonsense dictates that a supermarket cannot
consist solely of the area under shelving. Supermarkets by their
very definition are self-service stores and the goods sold therein
cannot be made available without the infrastructure of coldrooms,
a
bakery, butchery, a delicatessen, preparation areas, offices and
other facilities. The basic sales floor area must be supported
by
ancillary facilities.”







On 4 February 2005 Old Mutual made an application to the High Court
seeking a declaration as to the meaning of the word “supermarket”
in the context of the two lease agreements it entered into with Metro
and TM respectively in light of its obligation to TM under
clause 40.







The court a quo held that the word supermarket as used in the
context of the two lease agreements included the trading floor area
and all ancillary
facilities in the store such as the bakery,
butchery and storeroom. The learned judge said:







“According to Anderson & Labley: Success in Commerce at
p 25, a supermarket is a large self-service store buying in bulk.
This definition accords with the dictionary definition of the
term.
In the New Collins Concise Dictionary (1982) the word ‘supermarket’
is defined as ‘a large self-service store retailing
food and
household supplies’ while ‘store’ is defined as ‘an
establishment for the retail of goods and services’”.











What emerges from these definitions is that a supermarket is a large
commercial establishment where goods are stored in bulk and
where
goods and possibly services are retailed to members of the public.
Obviously, the space where goods are displayed and paid
for, viz
the trading area, is unquestionably an essential part of a
supermarket. Moreover, the definitions cited above indicate that the
storage facilities of a supermarket, as well as the areas where
services are provided, form as much an intergral part of the
supermarket
as its trading area. Taking this conception further, it
seems to me difficult to separate the other amenities and facilities
that
are usually attached to a supermarket from its trading area per
se
. In other words, a supermarket in its totality must be viewed
as comprising not only its trading area but also its ancillary
warehousing,
refrigeration and ablution facilities. In my view, the
latter constitute intrinsic facets of the notion of a supermarket.







In the result, I am of the considered opinion that the word
“supermarket”, regarded in both its grammatical and colloquial
sense,
means the entire enterprise comprising the business of a large
self-service store inclusive of its trading area as well as its
ancillary
storage, refrigeration, cooking and ablution facilities.
In the present context it follows that the Spar Supermarket presently
operated
by the first respondent includes not only its trading area
which is open to the public but also the ancillary facilities and
amenities
to which the public are ordinarily denied access viz
the entire area devoted to the business of the “supermarket”.”







Metro appealed against the judgment. The grounds of appeal are that:



“1. The court a quo erred in finding that the ordinary
meaning of the word ‘supermarket’ is applicable in the context of
the lease entered into between
the appellant and the first
respondent.







  1. The
    court a quo erred in interpreting the word ‘supermarket’
    in isolation, without having regard to the fact that the lease
    refers to ‘a
    clothing store, plus a supermarket which may not
    exceed 1 000 square metres’ and therefore, the reference to
    ‘supermarket’
    is to the trading floor area only, since the
    ancillary facilities such as reception and pricing area, storerooms,
    toilets and other
    facilities would also necessary for or ancillary
    to the business and the clothing store.








  1. The
    court a quo erred in interpreting the word ‘supermarket’
    without having regard to the intention of the parties.







  1. The
    court a quo erred in finding that the lease agreement between
    the second respondent and third respondent affected the
    interpretation of the
    lease agreement between the appellant and the
    first respondent.







  1. The
    court a quo erred in finding that the contra proferentem
    rule was not applicable and that the first respondent was not the
    dominant party, even though it was the owner of the property
    being
    leased.”












The allegations constituting the fourth and fifth grounds of appeal
can be disposed of right away. Clause 11.1 of the lease agreement
between Old Mutual and Metro particularly the limitation on the area
size of the supermarket to 1 000 square metres, was inserted
in light
of the obligation Old Mutual undertook in favour of TM under clause
40 of their lease agreement. The interpretation of
the terms of
clause 11.1 had to take into account the meaning of clause 40 of
their lease agreement.







Counsel are agreed that in establishing what the parties to the two
lease agreements meant when they used the word “supermarket”
there was no need for the Court to call in aid the contra
proferentem
rule of interpretation.







The question for determination is whether the court a quo was
correct in holding that the word “supermarket” was used by the
parties to the two lease agreements in its ordinary and grammatical
sense as referring to a large commercial establishment, occupying a
floor space with facilities for the sale of a wide variety of
foods
and household goods to members of the public.







In Coopers & Lybrand v Bryant 1995(3) SA 761(A) JOUBERT JA
at 767E-768E said:







“According to the ‘golden rule’ of interpretation the language
in the document is to be given its grammatical and ordinary
meaning,
unless this would result in some absurdity or some repugnancy or
inconsistency with the rest of the instrument … The
mode of
construction should never be to interpret the particular word or
phrase in isolation (in vacuo) by itself… The correct
approach to the application of the ‘golden rule’ of
interpretation after having ascertained the literal
meaning of the
word or phrase in question is broadly speaking, to have regard:




  1. to
    the context in which the word or phrase is used with its
    inter-relation to the contract as a whole, including the nature and
    purpose of the contract …








  1. to
    the background circumstances which explain the genesis and purpose
    of the contract, i.e. to matters probably present to the minds
    of
    the parties when they contracted.







  1. To
    apply extrinsic evidence regarding the surrounding circumstances
    when the language of the document is on the face of it ambiguous
    by
    considering previous negotiations and correspondence between the
    parties, subsequent conduct of the parties showing the sense
    in
    which they acted on the document, save direct evidence, of their own
    intentions.”












The parties did not define the word “supermarket” when they used
it. They must be presumed to have used the word in its ordinary
and
grammatical sense. In applying the “golden rule” of
interpretation to identify the ordinary and grammatical meaning in
which
the word “supermarket” was used in the two lease
agreements, the learned Judge referred to the definition of the term
given in
a Standard English dictionary.







One may add the definition of “supermarket” in Wikipedia Free
Encyclopedia
– where it is stated that:







“A supermarket is a departmentalized self-service store offering a
wide variety of food and household merchandise. It is larger
in size
and h as a wider selection than a traditional grocery store.






The supermarket typically comprises meat produce, dairy and baked
goods departments along with shelf space reserved for canned and
packaged goods as well as for various non-food items such as
household cleaners, pharmacy products and pet supplies. Most
supermarkets
also sell a variety of other household products that are
consumed regularly such as alcohol (where permitted) household
cleaning
products, medicine, clothes and some sell a much wider range
of non-food products.







The traditional supermarket occupies a large floor space on a single
level and is situated near a residential area in order to be
convenient to consumers. Its basic appeal is the availability of a
broad selection of goods under a single roof at relatively low
prices.”








The concept of a supermarket as a large self-service store
occupying a large floor space and retailing a wide variety of food
and
household goods is the essence of the definitions given. The
learned Judge found that the area size of a supermarket was
demarcated
by the floor space it occupied. It incorporated the floor
space under shelves and refrigerators with the merchandise displayed
for
the public to take to the tills for payment. This is what is
referred to as the trading floor space. That leaves that part of the
floor space occupied by ancillary facilities such as butchery,
bakery, storeroom, kitchen and goods receiving area. The definition
of supermarket in the Wikipedia & Free Encyclopedia clearly
includes ancillary facilities and those on the trading floor space.







Mr Morris argued on behalf of Metro that the word
“supermarket” refers to the trading floor space only. He said
that is the place where
money is made and to which the public has
access. It appears to me that the meaning given to the word
“supermarket” by the appellant
is contrary to the ordinary and
grammatical meaning of the word. If the parties intended to give the
word the limited or special
meaning advocated for by Metro they would
have defined it.







In each lease agreement the word supermarket was used in the
context of the rights to use floor spaces of the leased premises.
TM
was given the right to use the whole floor space of the leased
premises as a supermarket. Metro, on the other hand, was given
the
right to use the floor space of the leased premises as a clothing
store plus a supermarket which may not exceed 1 000 square
metres.
Each party was under an obligation not to use the floor space for any
other purpose whatsoever without Old Mutual’s prior
written
consent.







There was a clear restriction on the maximum area size of a
supermarket Metro could legally operate over the floor space of the
leased premises. As it had no right at all to use the floor space
under the clothing store for anything other than the business
of a
clothing store it had to have all the facilities, the use of which
was connected to the business of a supermarket, within the
1 000
square metres of the floor space of the leased premises. Metro
could not locate a butchery or bakery providing back up service
to
the trading area of the supermarket on the floor space reserved for
the clothing store.







In the context in which the word “supermarket” was used in
clause 11.1 of the lease agreement between Old Mutual and Metro,
it
is clear that it was meant to refer to all the facilities which
occupied the floor space measuring 1 000 square metres and
constituting
the business of a supermarket. That would include the
floor space under the shelves and refrigerators with goods displayed
for the
public to take to the tills for payment and the floor space
under ancillary facilities such as the butchery, bakery, offices and
storerooms.







When the clothing store was operational, Metro accepted that the
word supermarket bore the ordinary and grammatical meaning given
to
it by the court a quo. At p 114 of the record there is a
diagram depicting the layout of the clothing store and supermarket.
The diagram shows that the
trading floor space of the supermarket was
251 square metres. The rest of the floor space was under ancillary
facilities such as
the storeroom, produce/meat preparation,
compressor, goods receiving and food handling facilities. The
trading floor space and the
ancillary facilities floor space did not
exceed 1 000 square metres. The diagram formed part of the contract
of lease and expressed
the common intention of the parties as to what
a supermarket entailed in the context of the lease.







It is also clear from the diagram that the clothing store had its
own trading floor space which was 846 square metres in extent.
It
was only after the demise of the clothing store business that Metro
became desirous to establish a large store with all its ancillary
facilities (offices, freezer rooms, kitchens, canteen, toilets, goods
receiving and pricing areas, storerooms and compressor). It
was then
that a suggestion was made that the floor space of 1 000 square
metres was a trading floor to which the word “supermarket”
in
clause 11.1 of the lease agreement referred.







There is a diagram at p 113 of the record which shows that Metro
had now converted the whole floor space of the leased premises
into a
large self-service area of 865 square metres. The rest of the floor
space was to be under ancillary facilities such as storerooms,
bakery, delicatessen, office, butchery, kitchen, canteen and goods
receiving. It retailed a wide variety of foods and household
goods.
In short Metro had converted the whole floor space of the leased
premises into a large supermarket without prior written
consent of
the landlord. The attempt to give the word “supermarket” as used
in clause 11.1 of the lease agreement, an exceptional
meaning
referring to the trading floor space only was correctly rejected by
the court a quo.







The appeal is accordingly dismissed with costs.



















SANDURA JA: I agree



















CHEDA JA: I agree



















Atherstone & Cook, appellant’s legal practitioners



Scanlen & Holderness, first respondent’s legal
practitioners



Honey & Blackenberg, second respondent’s legal
practitioners