Decision Nº LRA 135 2011. Upper Tribunal (Lands Chamber), 28-04-2014
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS Martin Rodger QC, Deputy President |
| Date | 28 April 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 135 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0087 (LC)
UTLC Case Numbers LRA/135/2011, LRA/168 /2011, LRA/176/2011 (heard together)
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT– flats and houses in prime central London – development potential – comparables – adjustments – valuation – development hope value – development value on reversion – appeals allowed in part – s. 9(1C) Leasehold Reform Act 1967 and s. 32 and Sch. 6 Leasehold Reform Housing and Urban Development Act 1993
IN THE MATTER OF APPEALS AGAINST THREE DECISIONS OF THE LEASEHOLD VALUATION TRIBUNAL FOR THE LONDON RENT ASSESSMENT PANEL
BETWEEN (i) LRA/135/2011 TRUSTEES OF JOHN LYON’S CHARITY Appellant andKAVEH ALAMOUTI Respondent
(ii) LRA/168/2011
TRUSTEES OF JOHN LYON’S CHARITY Appellant
and
RED EARL LIMITED Respondent
(iii) LRA/176/2011
WENDY LYNN ALAMOUTI Appellant
and
TRUSTEES OF JOHN LYON’S CHARITY Respondent
Re: (i) 70 Hamilton Terrace,
London
NW8 9UL
(ii) 110 Hamilton Terrace,
London,
NW8 9UP
(iii) 106 Hamilton Terrace,
London,
NW8 9UP
Before: Martin Rodger QC, Deputy President and A J Trott FRICS
Sitting at: 45 Bedford Square, London
WC1B 3AS
on 9 to 13 December 2013
Mr Mark Loveday, instructed by Pemberton Greenish LLP, for the appellant in LRA/135/2011 and LRA/168/2011 and for the respondent in LRA/176/2011
Mr Edwin Johnson QC, instructed by David Conway & Co, for the respondent in LRA/135/2011 and LRA/168/2011 and for the appellant in LRA/176/2011
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Kutchukian v John Lyon’s Charity [2013] EWCA Civ 90
Kutchukian v John Lyon’s Charity [2012] UKUT 53 (LC)
Padmore v Official Custodian for Charities [2013] UKUT 0646 (LC)
Cravecrest Ltd v Duke of Westminster [2012] UKUT 68 (LC)
Earl Cadogan v 2 Herbert Crescent Freehold Limited (2009) LRA/91/2007
Cravecrest v Duke of Westminster [2013] 2 P&CR 16
The following cases were also referred to in argument:
31 Cadogan Square Freehold Limited v Earl Cadogan [2010] UKUT 321 (LC)
Fattal v John Lyon’s Charity [2005] 1 WLR 803 (CA)
Fattal v John Lyon’s Charity LRA/21/2002
Pitts and Wang v Earl Cadogan [2007] RVR 269
Earl Cadogan v Erkman [2009] 1 EGLR 87
Arrowdell Ltd v Coniston Court (North) Hove Ltd [2007] RVR 39
Dependable Homes Ltd v Mann [2009] UKUT 171 (LC)
Chelsea Properties Ltd v Earl Cadogan LRA/69/2006
Snook v Somerset County Council [2005] 1 EGLR 147
Clinker and Ash Ltd v Southern Gas Board (1967) 18 P&CR 372
Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353
The Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v The Pontypridd Waterworks Co. [1903] AC 426
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These three appeals and two cross appeals against decisions of leasehold valuation tribunals, all of the London Rent Assessment Panel (“the LVT”), concern substantial houses in St John’s Wood, London NW8, Nos. 70, 106 and 110 Hamilton Terrace, each of which is the subject of a separate enfranchisement claim.
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The claims to enfranchise Nos. 70 and 110 are brought under the Leasehold Reform Act 1967 (“the 1967 Act”) by the owners of the long leasehold interest in each house. The claim in relation to No. 106 is a collective enfranchisement claim under the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”) brought by a nominee of the leaseholders of three of the four flats into which the house has been divided. In all three cases the owners of the freehold interest are the Trustees of John Lyon’s Charity (“the Landlord”).
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The principal issue in each of the appeals is the value of the unimproved freehold interest in the relevant appeal property. The valuation dates fall between April 2009 and November 2010, a period which saw the beginnings (at least) of a recovery in the prime central London (“PCL”) residential market following its sharp decline in the wake of the global financial crisis of 2008. The period featured very little activity in the market for comparable houses in the immediate vicinity of the appeal properties. A combination of limited market evidence, prevailing economic uncertainty and particular characteristics of the appeal properties, makes the valuation exercise in these appeals a difficult one.
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In three separate decisions the LVT reached the following conclusions:
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In the case of 106 Hamilton Terrace the price payable to the Landlord by the nominee purchaser, Mrs Wendy Alamouti, for the freehold on 14 April 2009, in accordance with section 32 and Schedule 6 of the 1993 Act, was £2,262,528. This price was based on a value of the freehold with vacant possession (“FHVP”) of £9m.
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In the case of 110 Hamilton Terrace the price payable by the tenant, Red Earl Ltd, for the freehold on 6 October 2010, in accordance with section 9(1C) of the 1967 Act, was £9.2m. The unexpired term of the tenant’s lease on the valuation date was only about six months and it was agreed that the enfranchisement price should be taken to be the FHVP value on the valuation date.
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In the case of 70 Hamilton Terrace, again in accordance with section 9(1C) of the 1967 Act, the price payable by the tenant, Mr Kaveh Alamouti, for the freehold on 1 November 2010 was £2,582,783. The unexpired term of the tenant’s lease on the valuation date was 37.91 years and the price determined by the LVT assumed that the FHVP value was £9.7m.
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In the case of 106 Hamilton Terrace the LVT’s decision was given on 17 October 2011 and the appeal is by the tenant, Mrs Alamouti.
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In the case of 110 Hamilton Terrace both the Landlord and Red Earl Ltd appeal against the decision of the LVT given on 7 September 2011. For convenience when we refer to the appellant we mean the Landlord.
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The appeals in the case of 70 Hamilton Terrace are against the decision of the LVT given on 19 August 2011 and again are brought both by the Landlord and by the tenant, Mr Alamouti. In this decision the Landlord is again referred to as the appellant.
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The appeals are brought with the permission of the Tribunal (George Bartlett QC, President) given on 23 December 2011 (No. 70) and 7 February 2012 (Nos. 106 and 110) and have been dealt with by way of re-hearing. In all three cases the Landlord was represented before us by Mr Mark Loveday of Counsel and the tenants by Mr Edwin Johnson QC. We are grateful to them both for their considerable assistance.
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The hearing of the appeals took place over five days in December 2013 and we conducted an accompanied inspection of Hamilton Terrace on 7 January 2014. Expert evidence was given on behalf of the Landlord by Mr John Philip Hamilton BSc MRICS and Mr James Richard Hyman BSc, both of Cluttons, and on behalf of the tenants by Mr Kenneth Gavin Buchanan BSc MRICS of Knight Frank, Mr Michael Sulkin of Aston Chase and Mr Neil Stone, of Bargets.
The uncontentious facts
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The relevant facts are not significantly in dispute, although in relation to some of the properties relied on as comparables certain matters of detail are obscure or unknown, and there is considerable disagreement concerning the characteristics and behaviour of notional potential purchasers for the three properties at their respective valuation dates. We will begin by summarising the uncontentious facts as we find them to be from the statements of facts agreed between the parties, from the evidence we heard and from our own observations.
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Hamilton Terrace is a wide tree lined road which all parties agree is one of the more prestigious addresses in St John’s Wood (though not, perhaps, the most prestigious). It was originally developed from about 1820, and mainly comprises substantial detached, semi-detached and terraced houses, with some purpose built blocks of flats of more recent vintage and in a variety of styles. The appeal properties all stand on a section of Hamilton Terrace comprising Nos. 70 to 112 located on its north east side between Hall Road and Abercorn Place, both of which are bus routes. On this section of Hamilton Terrace all of the buildings are detached or semi-detached houses on a grand scale, standing opposite similarly imposing properties. Parking on both sides of the road is restricted to permit holders although the road is sufficiently wide that additional pay-and-display...
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