Kilmartin SCI (Hulton House) Ltd v Safeway Stores

For the purposes of a contractual definition incorporating the Fifth Edition of the RICS Code of Measuring Practice, an area is “usable” if it can be used for any sensible purpose connected with the intended use of the premises. It need not be “floor”. The assessment is subject to the Code’s express exclusions and may take account of reasonable, non-structural works needed to make an area usable. Where works forming part of the landlord’s contractual obligations create an excluded feature, the premises are measured in their actual state at practical completion. Measurement tolerances do not convert the required NIA into a range where the agreement requires a single figure.

The claimant agreed to grant the defendant a 25-year lease of basement and ground-floor premises. The agreement permitted termination if the premises’ Net Internal Area, measured under the Fifth Edition of the RICS Code of Measuring Practice, was below 1,852.7 square metres.

After practical completion, the defendant served notice terminating on the basis that the minimum area had not been achieved. The dispute concerned the treatment of two lifts, a fire-escape area, a sloping area, a basement ramp and raised plinths, together with the effect of measurement tolerances. The central issues were the proper construction of “usable” in the Code and the contractual date and state of the premises for measurement.

1. Construction of “usable”. The Code is a measuring code, not a valuation code, and calls for a commonsense interpretation rather than excessive reliance on semantics. An area is usable if it can be used for any sensible purpose connected with the purposes for which the premises are to be used. It need not be capable of use for every purpose contemplated for the premises and need not be “floor”. The express exclusions in section 3 of the Code nevertheless apply.
2. State of the premises. Net Internal Area was to be determined immediately after practical completion, by measuring the premises in the actual state then existing. Areas falling within an express exclusion were excluded where the relevant works formed part of the Works which the claimant was contractually obliged to provide. The lift areas were therefore excluded. Areas altered or fitted out by the tenant, where the claimant had no obligation to provide the relevant facilities, would not reduce NIA.
3. Disputed areas. The adjoining area was excluded because the fire-safety requirement rendered it incapable of practical use; occasional use for moving goods did not make it usable. The sloping area, basement ramp and front plinths were usable, either in their existing state or after reasonable works, and were included. The lifts were excluded under the Code’s permanent-lift exclusion.
4. Tolerances. The agreed measurement tolerance did not create a bracket of possible NIA figures. The agreement required the ascertainment of a single measured figure, and the measured figure was the relevant figure despite possible measurement error.
5. After the appropriate additions and deductions, NIA was 1,855.6 square metres, exceeding the contractual minimum. The claimant’s claim for specific performance of the agreement succeeded.