Cadogan and another v Sportelli ; Pitts, Atlantic Telecasters Ltd, 27/29 Sloane Gardens Ltd and Grandeden Property Management Ltd v Earl Cadogan
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE PILL,Lord Justice Carnwath,Sir Peter Gibson,Lord Justice Ward |
| Judgment Date | 04 December 2007 |
| Neutral Citation | [2006] EWCA Civ 1331,[2007] EWCA Civ 1280,[2007] EWCA Civ 658,[2007] EWCA Civ 1042 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 December 2007 |
| Docket Number | Ref. No. 2006/2178 Ref No. 2006/2178 Ref Nos: 2006/2185 2006/2187 (Appeal No. 2006/2187) (Appeal No. 2006/2185) (Appeal No. 2006/2185) (Appeal No. 2006/2187) Case Nos: C3/2006/2178 & C3/2006/2185 & C3/2006/2187,C3/2006/1002,Case No: C3/2007/1110,Case No: (1) C3/2007/1110, |
[2006] EWCA Civ 1331
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
(HIS HONOUR MICHAEL RICH QC)
Royal Courts of Justice
Strand
London, WC2
Lord Justice Pill
Lord Justice Lloyd
C3/2006/1002
MR K MUNRO (instructed by Pemberton Greenish) appeared on behalf of the Applicant
The Respondents did not attend and were not represented
1. This is the oral hearing by way of renewal of an application for permission to appeal on the part of the Earl Cadogan and Cadogan Estates Limited against a decision of His Honour Michael Rich QC sitting in the Lands Tribunal, given on 7th April 2006 on one of two issues which arose in determining the price to be paid by the nominee purchaser, 27/29 Sloane Gardens Limited, in respect of the freehold of six flats at the address indicated by the name of the first respondent, the nominee purchaser. The issue on this particular point arose between the appellants, who are in effect the freeholders, and not so much the first respondent whom I have mentioned but rather the second respondent, Wayil Mahdi, the intermediate lessor who holds under a headlease from the Cadogan Estate dated 15th February 1979.
The Lands Tribunal decision was itself an appeal from a decision of a Leasehold Valuation Tribunal so that in a sense this appeal is a second appeal. As I said when refusing permission on paper on 6th July, it is not a second appeal within the terms of section 55 of the Access to Justice Act 1999 because it is not from the County Court or the High Court, it is from a legally qualified expert tribunal, but the subject matter of this aspect of the decision is a question of the construction of leases, the headlease and the underlease, and accordingly it seemed to me then (and I remain of the same view) that this is not one of those cases where the second appeal is from a specialist tribunal with different expertise from the court to which reference was made in Cooke v Secretary of State for Social Security [2001] EWCA Civ 734. There are no doubt other appeals from the Leasehold Valuation Tribunal to which those principles would apply. I therefore think it right to approach this case on the normal principles as regards the test for permission to appeal: as to whether the appeal would have a real prospect of success or whether there is some other compelling reason why the appeal should be heard.
Mr Munro, renewing the application for the appellants, submits that not only is there a significant sum of money at stake, which since the hearing has become identifiable in the sum of around £130,000, but also it is a matter of wider significance given the fact that his clients use headleases in no doubt standard, or more or less standard, terms and there is a familiar pattern of headlease and underleases of flats consisting of parts of the premises comprised in the headlease, so that similar issues may well arise in respect of other premises within the Cadogan Estate. Indeed, the judge's attention was drawn, as was ours, to a previous decision of the Lands Tribunal concerning 44 and 46 Lower Sloane Street in a case referred to as McHale, which was a decision about other premises within the Cadogan Estate raising similar issues on somewhat similar lease terms. So there is a degree of significance to the case. It does, however, turn on the construction of two documents, the headlease, to which I have referred, and the underlease which it is agreed was granted in standard terms and on which we have an example in the underlease of Flat 2 which was granted on 18th October 1989.
The headlease relevantly has in the lessee's covenants a covenant called I(XI) as to the user of the premises, which provides that the flats and maisonettes are to be used as single private residences each, with a caretaker's flat in the basement of the premises. The theme of the caretaker's flat, which is at the heart of this case, is taken up in clause XII(c) which is of critical importance to Mr Munro's submissions. That is a covenant by the headlessee, Mr Mahdi, to provide for the demised premises throughout the term a full-time caretaker:
". . . who shall reside in the Caretaker's flat rent-free as a licensee on a service basis . . . "
The caretaker's duties are then described.
The other provision of the headlease that is important in this context is clause XIX and, in particular, clause XIX(d) which deals with underlettings of parts of the demised premises. Clearly it was foreseen that the various flats or maisonettes would be underlet separately and clause XIX(d) provides a covenant that underlettings are permitted only at rents which are not less than the rent reserved under the headlease apportioned over the flats and maisonettes disregarding the caretaker's flat. The relevant words are these:
". . . and by an underlease containing a covenant by the underlessee to pay throughout the term of the underlease a proportionate part of the Lessee's costs of performing the covenants on the part of the Lessee contained in this Lease that the underlessees of the said units do not covenant to perform in their underleases and attributable to the underlet part when apportioned in manner aforesaid."
The underlease, of which we have an example, does undoubtedly comply with the express terms of XIX(d) in that it includes, as one would expect, a service charge provision under which the underlessee is to pay a proportionate part of the lessee's costs of performing the various covenants. So far so good. What is at issue in this case is that the headlessee contends that the terms of the underlease permit him to recover from the underlessees collectively, in effect, the market rent of the caretaker's flat which he is not entitled, consistently with the headlease, to recover from the caretaker; in addition, of course, to recovering costs and expenditures including, no doubt, the remuneration of the caretaker.
Mr Munro submits that although such a provision would not, on the face of it, conflict with clause XIX(d) of the headlease which simply says what the underlease shall contain, not what it shall not contain in this respect, he says that it does conflict with the headlease taken overall because it conflicts with the obligation to provide the caretaker rent-free. That, I think, is at the heart of the case, but I must come back to that having referred to the relevant terms of the underlease.
The underlease identifies the headlease, and I note that it refers to the particular lease and includes any deed or document supplemental thereto. Service charge is provided for and the landlord, by clause 5(5) (p) , covenants to observe and perform the covenants in the headlease except insofar as they are passed on, in effect, to the underlessee by the terms of the underlease. Also by clause 5(5) (h) the headlessee covenants to employ one or more caretakers, cleaners, porters, maintenance staff, gardeners, or such other persons as the lessor may from time to time reasonably consider necessary.
9. The service charge is dealt with by the Fifth Schedule and two parts of that are of major significance. In paragraph 1(1) , the opening words, "service charge expenditure" is defined as meaning:
". . . the total expenditure incurred by the Lessor in any Accounting Period in carrying out its obligations under Clause 5(5) of this Underlease and all other costs, expenses, outgoings and matters incurred in connection with the maintenance, management and running of the Building including without prejudice to or limitation of the generality of the foregoing the following . . . "
Then there are 13 subparagraphs, some of which are fairly obvious in nature and only one of which is really of significance for the present case. That is subparagraph (iv) , which is in the following terms:
"The cost of employing, maintaining and providing accommodation in the Building for a caretaker including the provision of uniforms and boiler suits and including an annual sum equivalent to the market rent of any accommodation provided rent-free by the Lessor and general and water rates and gas and electricity charges in respect of such accommodation."
On the terms of the headlease and the underlease that I have mentioned, the Leasehold Valuation Tribunal held that under the terms of the underleases, the headlessee is entitled to recover from the underlessees by way of a service charge, in effect, the market rent of the caretaker's flat. His Honour Judge Michael Rich, sitting in the Lands Tribunal, upheld that decision. He too held that the case depended on whether the underlease was to be construed as entitling the intermediate lessor, the headlessee, to recover the cost of the caretaker's accommodation by way of service charge from the underlessees. He held that although the headlease was relevant, there was nothing in it that was inconsistent with such entitlement in the underlease.
At paragraph 20 of his decision he summarised the relevant principles of construction as derived from a number of earlier cases and Mr Munro does not take issue with the five propositions that he set out there. Applying those principles, he held that the provisions of Schedule 5, paragraph 1(1) of the underlease covered both items of actual expenditure and, by virtue of the latter part of the opening words — and in particular subparagraph (iv) — something which could not be called actual expenditure, namely the market rent which, by...
To continue reading
Request your trial
-
R Wellcome Trust Ltd v Upper Tribunal (Administrative Appeals Chamber)
...Urban Development Act 1993 (as amended). This decision was upheld as a guideline decision in the Court of Appeal [2007] EWCA Civ 104, [2008] 1 WLR 2142. 5 The Lands Tribunal considered three components of the deferment rate, namely, the risk free rate, the real growth rate and the risk prem......
-
Adrian Howard Mundy v The Trustees of the Sloane Stanley Estate
...comparable and the subject of the valuation, the greater the weight that can be given to the comparable. As Carnwath LJ put it in Earl Cadogan v Sportelli [2007] EWCA Civ 1042, [2008] 1 WLR 2142 at [87]: “Mr Jourdan did not, I think, challenge the tribunal's conclusion that the assumed mar......
-
Cadogan and another v Sportelli ; Pitts, Atlantic Telecasters Ltd, 27/29 Sloane Gardens Ltd and Grandeden Property Management Ltd v Earl Cadogan
...Gardens) (Instructed by Rokeby Johnson Baars LLP) (Grandeden) (Instructed by Maxwell Winward LLP SESSION 2008-09 on appeal from: [2007] EWCA Civ 1280 OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE LORD HOFFMANN My Lords, 1 For my part, I would have been content to dismiss these a......
-
N v Advocate General for Scotland
...was the guidance given by the Lands Tribunal on discount rates in the context of leasehold enfranchisement (see my comments in Earl Cadogan v Sportelli [2008] 1 WLR 2142, paras 91ff; on this aspect not questioned by the House of Lords at [2010] 1 AC 28 Except so far as statute otherwise pr......