Agreement for lease — Net internal floor area — Measurement according to fifth edition of RICS Code of Measuring Practice — Meaning of “usable area” — Claim for specific performance — Claim allowed
The parties agreed a lease under which the defendant was to take a 25-year term of basement and ground-floor premises. The permitted use was Class A1 retail, and the defendant intended to open a small city-centre supermarket. The claimant agreed to carry out works to provide the defendant with a basic shell, the net internal area (NIA) of which was to be measured in accordance with the fifth edition of the RICS Code of Measuring Practice. It was also obliged to provide the defendant with lifts if required. If the minimum NIA was not achieved, the defendant had the option of terminating the agreement.
An expert instructed by the claimant measured the NIA of the completed shell as exceeding the minimum. The defendant questioned his methodology, and notified the claimant of an intention to terminate the agreement. The claimant brought a claim for specific performance. The central issue was whether certain areas within the premises had been improperly included in the NIA so as to bring it above the minimum requirement. These were: the lift shafts; part of the delivery area, including a fire-escape route; a sloping area from the level of the main floor to the front wall; a ramp at the rear of the basement; and two adjoining flat areas, referred to as plinths, towards the front of the basement.
The code defined NIA as “the usable area within a building measured to the internal face of the perimeter wall at each floor level”, subject to certain exclusions, of which lifts were one. The claimant argued that “usable”, in the NIA definition, meant capable of use for some purpose, which, in the context of the agreement, meant a practical purpose connected with the purpose for which the premises as a whole were contemplated to be used, namely Class A1 retail. The defendant argued that an area would not form part of the NIA unless it could be used, without undue restriction, for any of the purposes of the use contemplated by the agreement. There was also a dispute as to whether an area had to constitute “floor” in order to form part of the NIA, so as to exclude the sloping area, ramp and plinths.
Held: The claim was allowed.
(1) The emphasis in the definition of NIA was upon the usability of an area, and, although the vast majority of such areas would comprise floor, there was no reason in principle why a usable area that did not comprise floor should be excluded. “Usable”, in that context, did not mean that each and every area had to be capable of use for any of the purposes for which the premises, as a whole, were to be used. An area was “usable” if it could be used for a sensible purpose connected with the purposes for which the premises were to be used, regardless of whether it could be deemed to be “floor”. In practice, virtually any area of space that was excluded from the NIA would be excluded because of one of the express exclusions in the code, not because it was unusable.
(2) The NIA was to be measured immediately after the date of practical completion. An area that fell within an exclusion at that date should not be included in the NIA unless the exclusion resulted from work being carried out by, or on behalf of, the defendant, that the claimant was not obliged to provide. It was common ground that where the agreement contained an unconditional obligation upon the claimant to provide, in a defined area, a facility that brought it within an exclusion, that area would fall outside the NIA. The situation was no different where the defendant was entitled to require the works, as with the lifts. Accordingly, the lifts did not form part of the NIA.
(3) The fire-escape route did not form part of the NIA because, taking into account the requirement to provide such a route, no practical use could be made of that area; the fire officer would not allow it. An area, all of which was rendered incapable of practical use, could not be described as usable.
(4) The other disputed areas were usable, and, on that basis, the NIA slightly exceeded the minimum. The claimant was therefore entitled to specific performance.
Nicholas Dowding QC and Christopher Stoner (instructed by Eversheds, of Newcastle upon Tyne) appeared for the claimant; John McGhee and Michael Pryor (instructed by Clifford Chance) appeared for the defendant.
Sally Dobson, barrister
