Charles Carey-Morgan and Another v Trustees of the Sloane Stanley Estate
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan,Lord Justice Rimer,Lord Justice Pill |
| Judgment Date | 03 September 2012 |
| Neutral Citation | [2012] EWCA Civ 1181 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 September 2012 |
| Docket Number | Case No: Appeal Reference: C3/2011/3318 |
[2012] EWCA Civ 1181
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE UPPER TRIBUNAL (LANDS CHAMBER)
LRA/86/2009, [2011] UKUT 415 (LC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Rimer
and
Mr Justice Morgan
Case No: Appeal Reference: C3/2011/3318
Mr T C Dutton (instructed by Bircham Dyson Bell LLP) for the Appellants
Mr K S Munro (instructed by Pemberton Greenish LLP) for the Respondents
Hearing dates: 11 July 2012
Introduction
This is an appeal against a decision of the Upper Tribunal (Lands Chamber) dated 10 th October 2011; the decision is now reported at [2012] RVR 92. The tribunal judges were the President of the Lands Chamber (Mr George Bartlett QC) and Mr Paul Francis FRICS. The decision of the Upper Tribunal was in respect of an appeal from a decision and a supplementary decision, dated respectively 16 th December 2008 (BAILII: [2008] EWLVT LON_LV_NFE_00AW_0105) and 24 th April 2009, of the Leasehold Valuation Tribunal for the London Rent Assessment Panel ("the LVT"). There were two hearings before the LVT, together extending to 5 days. The appeal to the Upper Tribunal was by way of a re-hearing in relation to the issues which remained in dispute and the Upper Tribunal itself heard evidence of fact and expert evidence. The hearing before the Upper Tribunal lasted 3 days. Permission for a second appeal to this court was granted by Arden LJ on 27 th February 2012.
The application to the LVT was made, pursuant to section 24 of the Leasehold Reform, Housing and Urban Development Act 1993 ("the 1993 Act"), by the Trustees of the Sloane Stanley Estate as "the reversioner" within section 9 of the 1993 Act. The respondents to that application were Mr Carey-Morgan and Mr Stephenson who were together "the nominee purchaser" within section 15 of the 1993 Act. The reversioner asked the LVT to determine the terms on which the nominee purchaser was to be entitled to acquire the freehold of a block of flats known as Vale Court, Mallord Street, London, SW3. The principal term in dispute was the price to be paid for the freehold which was to be determined pursuant to section 32 of the 1993 Act (giving effect to the detailed provisions contained in schedule 6 to the 1993 Act).
Following the LVT's determination of the price to be paid for the freehold of the block, the reversioner appealed to the Upper Tribunal against certain parts of that determination. The issues which came before the Upper Tribunal in relation to the price to be paid were as follows: (1) the vacant possession values of the leases of some of the flats in the block; (2) whether there was potential for the freehold owner of the block to undertake a development of the roof of the block and, if so, the value of that potential; (3) hope value in relation to flats let on leases with unexpired terms of less than 80 years and where the leases were held by tenants who were not participating tenants within section 14 of the 1993 Act; (4) the deferment rate to be used in valuing the freehold interest in relation to flats subject to leases with unexpired terms of less than 5 years.
The only parts of the decision of the Upper Tribunal which have been challenged on this appeal relate to the deferment rate and hope value. The nominee purchaser submits that the Upper Tribunal was wrong in law in relation to its treatment of both the deferment rate and hope value and it further contends that the conclusions reached separately as to the deferment rate and hope value reveal inconsistencies or even double counting and cannot stand with each other.
On this appeal, Mr Dutton appeared on behalf of the nominee purchaser; he did not appear in the Upper Tribunal. Mr Munro appeared for the reversioner on this appeal, as he did in the Upper Tribunal.
The statutory provisions
Section 32(1) of the 1993 Act gives effect to schedule 6, where the detailed provisions as to the price payable for the freehold are to be found. The provisions which matter for present purposes are those in paragraphs 2 and 3 of schedule 6 which are in these terms:
Part II
Freehold of Specified Premises
Price payable for freehold of specified premises
2.—(1) Subject to the provisions of this paragraph where the freehold of the whole of the specified premises is owned by the same person, the price payable by the nominee purchaser for the freehold of those premises shall be the aggregate of—
(a) the value of the freeholder's interest in the premises as determined in accordance with paragraph 3,
(b) the freeholder's share of the marriage value as determined in accordance with paragraph 4, and
(c) any amount of compensation payable to the freeholder under paragraph 5.
(2) Where the amount arrived at in accordance with sub-paragraph (1) is a negative amount, the price payable by the nominee purchaser for the freehold shall be nil.
Value of freeholder's interest
3.—(1) Subject to the provisions of this paragraph, the value of the freeholder's interest in the specified premises is the amount which at the relevant date that interest might be expected to realise if sold on the open market by a willing seller (with no person who falls with sub-paragraph (1A) buying or seeking to buy) on the following assumptions—
(a) on the assumption that the vendor is selling for an estate in fee simple—
(i) subject to any leases subject to which the freeholder's interest in the premises is to be acquired by the nominee purchaser, but
(ii) subject also to any intermediate or other leasehold interests in the premises which are to be acquired by the nominee purchaser;
(b) on the assumption that this Chapter and Chapter II confer no right to acquire any interest in the specified premises or to acquire any new lease (except that this shall not preclude the taking into account of a notice given under section 42 with respect to a flat contained in the specified premises where it is given by a person other than a participating tenant);
(c) on the assumption that any increase in the value of any flat held by a participating tenant which is attributable to an improvement carried out at his own expense by the tenant or by any predecessor in title is to be disregarded; and
(d) on the assumption that (subject to paragraphs (a) and (b)) the vendor is selling with and subject to the rights and burdens with and subject to which the conveyance to the nominee purchaser of the freeholder's interest is to be made, and in particular with and subject to such permanent or extended rights and burdens as are to be created in order to give effect to Schedule 7.
(1A) A person falls within this sub-paragraph if he is—
(a) the nominee purchaser, or
(b) a tenant of premises contained in the specified premises, or
(ba) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 1(2)(a), or
(c) an owner of an interest which the nominee purchaser is to acquire in pursuance of section 2(1)(b).]
(2) It is hereby declared that the fact that sub-paragraph (1) requires assumptions to be made as to the matters specified in paragraphs (a) to (d) of that sub-paragraph does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the relevant date the freeholder's interest in the specified premises might be expected to realise if sold as mentioned in that sub-paragraph.
(3) In determining that amount there shall be made such deduction (if any) in respect of any defect in title as on a sale of the interest on the open market might be expected to be allowed between a willing seller and a willing buyer.
(4) Where a lease of any flat or other unit contained in the specified premises is to be granted to the freeholder in accordance with section 36 and Schedule 9, the value of his interest in those premises at the relevant date so far as relating to that flat or other unit shall be taken to be the difference as at that date between—
(a) the value of his freehold interest in it, and
(b) the value of his interest in it under that lease, assuming it to have been granted to him at that date;
and each of those values shall, so far as is appropriate, be determined in like manner as the value of the freeholder's interest in the whole of the specified premises is determined for the purposes of paragraph 2(1)(a).
(5) The value of the freeholder's interest in the specified premises shall not be increased by reason of—
(a) any transaction which—
(i) is entered into on or after the date of the passing of this Act (otherwise than in pursuance of a contract entered into before that date), and
(ii) involves the creation or transfer of an interest superior to (whether or not preceding) any interest held by a qualifying tenant of a flat contained in the specified premises; or
(b) any alteration on or after that date of the terms on which any such superior interest is held.
(6) Sub-paragraph (5) shall not have the effect of preventing an increase in value of the freeholder's interest in the specified premises in a case where the increase is attributable to any such leasehold interest with a negative value as is mentioned in paragraph 14(2).
Paragraph 4 of schedule 6 deals with the freeholder's share of marriage value and paragraph 5 of schedule 6 deals with compensation for loss resulting from enfranchisement. It is not necessary to set out those provisions although I will refer to the concept of marriage value later in this judgment.
Comment on the statutory provisions
Paragraph 3 of schedule 6 directs that certain valuation assumptions are to be made for the purpose of determining the value of the...
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...[13]; Kosta v Trustees of the Phillimore Estate [2014] UKUT 319 (LC), [2014] L & TR 25 at [98]); and by this court in Carey-Morgan v Trustees of the Sloane Stanley Estate [2012] EWCA Civ 1181, [2012] HLR 47 at [8]. In some cases the tribunal has adopted the phrase “no-Act building” which ......
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Table of Cases
...v Cadogan [2010] UKUT 427 (LC), [2011] 1 EGLR 155, UT(LC) 78, 79, 80, 82, 149 Carey-Morgan (Charles) v Sloane Stanley Estate Trustees [2012] EWCA Civ 1181, [2012] 3 EGLR 38, [2012] All ER (D) 23 (Sep), CA 81 Cawthorne and Others v Hamdan [2007] EWCA Civ 6, [2007] Ch 187, [2007] 2 WLR 185, [......