Decision Nº LRA 133 2014. Upper Tribunal (Lands Chamber), 25-06-2015
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Nicholas Huskinson |
| Date | 25 June 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 133 2014 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2015] UKUT 0338 (LC)
UTLC Case Number: LRA/133/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT – Collective Enfranchisement – Leasehold Reform, Housing and Urban Development Act 1993 section 1(4) – landlord’s counternotice offering grant of rights over additional land – counternotice also reserving rights to develop the additional land – construction of the leases regarding extent of lessees’ existing rights and lessor’s existing reservations over additional land – whether section 1(4) satisfied – if not, whether First-tier Tribunal entitled to determine that terms of acquisition should include acquisition by nominee purchaser of the additional land.
IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER)
(RESIDENTIAL PROPERTY)
BETWEEN: SNOWBALL ASSETS LIMITED Appellantand
HUNTSMORE HOUSE (FREEHOLD) LIMITED
Respondent
Re: Huntsmore House,
35 Pembroke Road,
London,
W8 6LZ.
Before: His Honour Judge Nicholas Huskinson
Sitting at: Upper Tribunal (Lands Chamber), Royal Court of Justice, Strand,
London WC2A 2LL
on
9-10 June 2015
Anthony Radevsky and Christopher Heather, instructed by Cripps LLP, on behalf of the appellant
Edwin Johnson QC, instructed by Russell-Cooke LLP, on behalf of the respondent
The following cases are referred to in this decision:
Ulterra v Glenbarr (RTE) Co Ltd [2008]1 EGLR 103
Fluss v Queensbridge Terrace Residents Ltd [2011] UKUT 285 (LC)
St Edmundsbury and Ipswich Diocesan Board of Finance v Clark [1975] 1 WLR 468
9 Cornwall Crescent London Ltd v Kensington and Chelsea Royal London Borough Council [2005] EWCA Civ 324
Cutter v Pry [ 2014] UKUT 0215 (LC)
Shortdean Place (Eastbourne) Residents' Association Ltd v Lynari Properties Ltd [2003] 3 EGLR 147
Bolton v Godwin-Austen [2014] EWCA Civ 27
Durrels House Ltd v Hemphurst Ltd (LRA/25/2009)
The following case was referred to in argument:
Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160, [2013] UKSC 46
Introduction
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This is an appeal, with permission, from the decision of the First-tier Tribunal Property Chamber (Residential Property) (hereafter “the F-tT”) dated 15 August 2014 whereby the F-tT decided that, upon a collective enfranchisement of premises under the Leasehold Reform, Housing and Urban Development Act 1993 by the respondent as nominee purchaser from the appellant as freeholder, the terms of acquisition should include a term whereby the freehold of some additional premises was also to be acquired, rather than the matter being dealt with under section 1(4) of the Act by the grant of rights over the additional premises and with the freehold thereof being retained by the freeholder. I shall hereafter refer to the appellant as the freeholder and the respondent as the nominee purchaser.
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Huntsmore House is located on the south side of Pembroke Road, London W8 in the Royal Borough of Kensington and Chelsea. The building is a purpose-built block of flats, forming roughly a C-shape around the central courtyard, landscaped gardens and a leisure complex. It was constructed in about 1989. Altogether there are 81 flats in the building.
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This building constitutes premises to which the collective enfranchisement provisions of the 1993 Act apply. The building constitutes the relevant premises for the purposes of section 1. The nominee purchaser claimed the right to acquire the freehold of the building by a notice under section 13 of the Act dated 20 March 2013. This notice claimed the right to purchase the freehold interest in the building and also claimed the right to purchase the freehold interest in the gardens, driveway, parking spaces and leisure complex appurtenant to the building (“the additional premises”). The additional premises are described in the F-tT’s decision in the following terms:
“8. The additional premises are an amenity area of the building which comprises a courtyard/walkway area, landscaped gardens, parking spaces and a leisure facility. A large part of the amenity area is enclosed by the building on three sides. The leisure facility comprises a building on the eastern side of the additional premises and includes a swimming pool, sauna, a gym and male and female changing rooms.
9. At the southern end of the gardens there are two parking spaces immediately adjacent to the south eastern side of the building, and a driveway which leads around the southern and western sides of the building to Pembroke Road. The entrance to the basement car park is located off this driveway. There are four further parking spaces immediately adjacent to the southern side of the building. There is a gravel walk which runs through the landscaped gardens which until recently was flanked on each side by trees.”
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By a counter-notice dated 24 May 2013 the freeholder admitted the right of collective enfranchisement in respect of the building but it put in issue certain matters including the price payable and the right for the nominee purchaser to acquire the freehold of the additional premises.
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In summary the substance of the dispute, in so far as is relevant to the present appeal, is as follows. The freeholder had certain development proposals which it wished to pursue, if it were able to obtain a suitable planning permission, which involved the demolition of the leisure complex within the additional premises; the construction upon the former footprint of the leisure complex of some additional residential units; and the construction of a replacement subterranean swimming pool under the existing garden area. It was the freeholder’s case that pursuant to the terms of the existing leases the freeholder had the right to carry out such a development and in consequence it was entitled to retain the freehold of the additional premises and merely to grant to the lessees, in satisfaction of section 1(4) of the Act, rights over the additional premises – being rights which were not so extensive as to prevent the freeholder from carrying out the proposed development.
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The F-tT in summary decided that the freeholder did not have the development rights claimed; that section 1(4) would not be satisfied by a grant of rights as contemplated by the freeholder; and that in consequence the nominee purchaser was entitled as part of the enfranchisement to acquire the freehold of the additional premises from the freeholder. The F-tT also considered valuation evidence and planning evidence regarding the prospect of a development as proposed by the freeholder ever being permitted to proceed and regarding the value of such development if it did proceed. The F-tT’s decision on these points is not (save for one point) before the Upper Tribunal for consideration as part of this appeal. The one point is that the F-tT came to two alternative valuations, namely that the price to be paid for additional premises should be £100,000 if the freeholder was entitled as against the lessees to carry out the proposed development and should be merely £10,000 of the freeholder was not so entitled. Having held that the freeholder was not so entitled the F-tT decided the price to be paid for the additional premises was only £10,000.
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In the present appeal the freeholder contends that the F-tT was in error in concluding that, having regard to section 1(4), the nominee purchaser was entitled to acquire the freehold of the additional premises. The freeholder contends that the proper conclusion which the F-tT should have reached was that the freeholder was entitled to retain the freehold of the additional premises (such that no question arose as to fixing a price for its purchase). As a subsidiary argument the freeholder also says that if, contrary to its main argument, the nominee purchaser is entitled to acquire the freehold of the additional premises then the price payable should be £100,000 (on the basis that the freeholder does enjoy against the lessees rights to carry out the proposed development) rather than merely the £10,000 fixed by the F-tT.
The title structure and the leases
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The freeholder’s freehold interest extends to both the building and the additional premises. The flats are all let on long leases which it was agreed could be treated as in effectively the same terms as...
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