Decision Nº LRA 157 2011. Upper Tribunal (Lands Chamber), 08-09-2014
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS Martin Rodger QC, Deputy President |
| Date | 08 September 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 157 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0133(LC)
UTLC Case Number: LRA/157/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT – collective enfranchisement – whether tenants who were not parties to initial notice subsequently became participating tenants – deed of adherence – relativity – benefit of the Act – whether a purchaser’s margin to be deducted from aggregated leasehold values – appeal allowed in part
IN THE MATTER OF AN APPEAL FROM A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
BETWEEN
82 PORTLAND PLACE (FREEHOLD) LIMITED Appellant
AND HOWARD DE WALDEN ESTATES LIMITED Respondent
Re: 82 Portland Place
London W1
Before: Martin Rodger QC, Deputy President and A J Trott FRICS
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on
17-20 March 2014
Stephen Jourdan QC, instructed by TLT LLP Solicitors for the Appellant
Michael Pryor, instructed by Speechly Bircham LLP, Solicitors for the Respondent
The following cases are referred to in this decision:
McHale v Cadogan [2011] L & TR 18
Cadogan Square Properties Ltd v Earl Cadogan [2010] UKUT 427 (LC)
Arbib v Earl Cadogan [2005] 3 EGLR 139
Nailrile Limited v Earl Cadogan [2009] 2 E.G.L.R. 151
Arrowdell Limited v Coniston Court (North) Hove Limited [2007] RVR 39 (LT)
Hauser v Howard de Walden Estates Ltd [2013] UKUT 0579 (LC)
Earl Cadogan v Cadogan Square Ltd [2011] UKUT 154 (LC)
Cadogan v Sportelli [2007] 1 EGLR 153 Earl Cadogan v Cecil [2001] LRA/10/2000 (LT) Ryde International Plc v London Regional Transport [2003] ACQ/147/2000 (LT); [2004] 2 EGLR 1 (CA) Daejan Investments Ltd v The Holt (Freehold) Ltd (2008) LRA/133/2006Hildron Finance Ltd v Greenhill Hampstead Ltd (2007) LRA/120/2006
Church Commissioners for England v Chelwood House Freehold Ltd [2007] LON/ENF/1866/06Zuckerman v Trustees of the Calthorpe Estate [2009] EKUT 235 (LC)
Sinclair Gardens Investment (Kensington) Ltd v Ray [2014] UKUT 079 (LC)
Polydorou v Management Nominees (Reversions) Ltd [2010] UKUT 236 (LC)
Clarise Properties Ltd [2012] UKUT 4 (LC)
Midland Freeholds Ltd [2014] UKUT 0304 (LC)
Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] EWHC 2433 (Ch)
The following cases were referred to in argument: 31 Cadogan Square Freehold Ltd v Cadogan [2010] UKUT 321 (LC) Cadogan Holdings Ltd v Pockney (2004) LRA/27/2003 Carey-Morgan v Trustees of the Sloane Stanley Estate [2012] HLR 47 Chelsea Properties Ltd v Cadogan (2007) LRA/69/2006 Langinger v Cadogan (2001) LRA/46/2000 Northway Management Ltd v John Lyons Charity (2008) LON/00BK/OCE/2007/0375 Pledream Properties Ltd v 5 Felix Avenue London Ltd [2011] L & TR 20 Vignaud v Keepers and Governors of John Lyon’s Free Grammar School (1995) 71 P & CR 456 DECISION Introduction 1 The building 4The statutory valuation criteria in outline 11
Agreed facts and valuations 20
The issues 37
The McHale issue 38
The participation issue 41
Participation: the statutory provisions 45
The Participation Agreement 55
The Deed of Adherence 63
The letter of 21 July 2010 67
The dispute and the LVT’s conclusion 68
Submissions 71
Discussion and conclusion 76
The relativity issue 83
The LVT’s approach to relativity 91
Mr Beckett’s evidence and the case for the appellant 95
The Respondent’s case and the evidence of Mr Ryan and Mr Clark 123
Discussion and conclusion on relativity 134
The purchaser’s margin issue 152
The components of the purchaser’s margin 155
The case for the appellant 156
The case for the respondent 174
Discussion and conclusion on purchaser’s margin 184
Determination 208
Valuation appendices
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This appeal is against a decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”) given on 24 November 2010 and concerns the price payable on the acquisition by the appellant nominee purchaser of the freehold interest in 82 Portland Place, London W1 under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”). The LVT’s decision of 24 November 2010 was the first of three decisions by which it determined that the price payable on the acquisition was £21,340,923.
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Both parties sought permission to appeal from the LVT, which granted it to the appellant nominee purchaser on a single issue. The Tribunal (George Bartlett QC, President) subsequently granted permission to appeal on a further three issues but refused the respondent’s application for permission to cross-appeal and directed that the appeal be dealt with by way of rehearing. A stay of the appeal was agreed pending an anticipated decision of the Supreme Court on an appeal from the decision of the Court of Appeal in McHale v Cadogan [2011] L & TR 18. That appeal was eventually compromised causing the stay to lapse.
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At the hearing before us Stephen Jourdan QC, representing the appellant, called Mr Peter Beckett FRICS to give expert evidence on valuation matters. Michael Pryor of counsel, appearing for the respondent, called Kevin Ryan FRICS and Julian Clark MRICS to give expert evidence.
The building
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82 Portland Place is a purpose-built 1920’s mansion block comprising 25 units of accommodation on basement, ground and eight upper floors. It stands on the south east corner of the junction of Portland Place and Devonshire Place, a short distance south of Regents Park in the Harley Street conservation area. It is served by two passenger lifts, a resident porter and a communal central heating and hot water system.
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A headlease of the whole building granted on 28 November 1924 is now vested in 82 Portland Place Ltd, and will expire on 6 July 2021.
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The flats in the building include one used to accommodate the resident porter. 12 of the remaining flats are held on leases which will come to an end immediately before the expiry of the headlease in July 2021. It is agreed that, at the valuation date, these leases had unexpired terms of 11.82 years.
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A further 11 flats are held on long leases expiring in July 2111, granted following individual lease extension claims under Chapter 2 of Part 1 of the 1993 Act. Two additional units are also held on leases expiring in 2021 and are in mixed use: Unit I, which is occupied by medical practitioners, and Unit Z which comprises office accommodation on the ground floor and a residential flat in the basement.
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The building also includes a number of storerooms at eighth floor level, four of which have been combined to create one of the residential flats, referred to as Flat 40.
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The tenants of 13 of the flats in the building were named in the initial notice given under section 13 of the 1993 Act as participating tenants. Subsequently the tenant of Unit I became a participating tenant, and it is agreed that there are therefore 14 flats whose tenants are participating. The tenants of 10 flats, including the porter’s flat and Unit Z, are agreed not to be participating tenants. There is however an issue as to whether the tenants of Flats E and Q, who were not amongst the 13 named in the initial notice, have subsequently become participating tenants.
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Flats E and Q adjoin each other on the fourth floor of 82 Portland Place. Although held on separate leases, alterations have been carried out to combine the two flats into a single unit with a gross internal area in excess of 5,500 sq ft. Each of the flats is held on a short lease with only 11.81 years unexpired at the valuation date. The flats are owned by associated companies, Apeejay London Limited in the case of Flat Q and Surrendra Holdings Limited in the case of Flat E. Neither company was amongst the tenants who gave the initial notice.
The statutory valuation criteria in outline
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Section 32(1) of the 1993 Act provides that the price payable by the nominee...
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