Decision Nº LRA 59 2012. Upper Tribunal (Lands Chamber), 19-02-2014
| Jurisdiction | UK Non-devolved |
| Judge | Judge Edward Cousins |
| Date | 19 February 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 59 2012 |
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UPPER TRIBUNAL (LANDS CHAMBER)
UT Neutral citation number: [2014] UKUT 0074 (LC)
LT Case Number: LRA/59/2012
LEASEHOLD ENFRANCHISEMENT – collective enfranchisement – alleged procedural irregularity – extent of demise - terms of leaseback – need to specify additional leaseback proposals in counter-notice - appeal dismissed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER) (LEASEHOLD VALUATION TRIBUNAL)
BETWEEN
and
(1) DECLAN BUCKLEY Respondents
(2) MATTHEW WILCOX
RE: 32 PETHERTON ROAD
LONDON N5 2RE
Before: Judge Edward Cousins
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on 26th November 2013
Mr Benedict Sefi instructed by Derrick Bridges & Co,, solicitors, for the Appellant
Ms Nicola Muir instructed by Bolt Burden, solicitors, for the Respondents
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Cawthorne v Hamdan [2007] Ch 187
Cadogan Estates Ltd v Morris [1998] EWCA Civ 1671
Burman v Mount Cook Land Ltd [2002] Ch 256
DECISION
THE BACKGROUND
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This is an appeal from the decision (“the Decision”) of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”) handed down on 21st January 2012. The dispute derives from the proposed purchase by the Respondents of the freehold of a building comprising three flats known as and situate at 32 Petherton Road, London N5 2RE (“the Building”) pursuant to the provisions of the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”). The Respondents are the long leaseholders of two flats within the Building of which the Appellant is the current freeholder. The First Respondent is the leasehold owner of flat A (“Flat A”) and the Second Respondent is the leaseholder owner of flat B (“Flat B”). The appeal is concerned with the disputed terms of a leaseback of flat C (“Flat C”) to the Appellant, and the extent of the demise to be granted within the Building (“the Leaseback”).
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The Decision followed a hearing which took place over two separate days, namely on 16th August 2011 and on 16th January 2012. The LVT referred to these hearing days as the “First Stage” and the “Second Stage”.
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The LVT’s own summary of the Decision is as follows:-
“The terms of the leaseback to Flat C in the specified premises will be on the basis of those provided for in Part IV, Schedule 9 of the 1993 Act. The departures1 proposed by the [Appellant] are not reasonable or practical and are rejected. The appendix to this decision summarises the terms which are rejected.”
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By an application made to the LVT on 8th February 2012 the Appellant sought permission to appeal the Decision. Twelve grounds of appeal were cited in support. The application was refused by the LVT on 14th March 2012, detailed reasons being provided in the reasons to refuse permission (“the Refusal”). Thereafter the Appellant renewed her application for permission before the Tribunal (George Bartlett QC, President). On 26th June 2012 he granted permission and made the following Order:
“There is a realistic prospect of success on the ground that the LVT was in error in its determination of the extent of the “unit” for the purposes of paragraph 5 of Schedule 9 to the 1993 Act; and the contentions on the terms to be included in the demise are reasonably arguable and the appellant should be permitted to advance them.
The appeal will be by way of review.”
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In a letter dated 3rd July 2012 from the Tribunal, under cover of which the permission to appeal was sent to the Appellant’s solicitors, it was explained that because the appeal would be by review only “….the only evidence that can be considered…is evidence that was presented to the lower tribunal and your arguments relating to the lower tribunal’s decision.”
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I heard this appeal on 26th November 2013. Detailed submissions were made by Counsel for the Appellant and the Respondents. In this context it is to be noted that although the Appellant sought to persuade the Tribunal that the appeal should be way of a review with a view to a re-hearing, permission for the appeal was limited by the President to a review in the terms set out above. Despite the attractive arguments in the written and oral submissions presented by Counsel for the Appellant in order to persuade me on appeal to enlarge the debate to encompass wider issues, this Decision is limited to the grounds of appeal specified by the President, namely, whether the LVT was correct in its analysis in relation to the extent of the unit, and the terms to be included in the demise of Flat C back to the Appellant.
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In essence, the dispute between the parties relates to the extent of the demise of the Leaseback of Flat C to the Appellant, and the terms on which the Leaseback should be granted. However, there is a preliminary point which also requires determination, namely whether the Appellant can rely upon the “departures” from the original terms of the Counter-Notice, or whether she is constrained by its original phraseology.
The relevant statutory provisions
Leaseback
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The relevant statutory provisions governing leasebacks are to be found in section 36 of, and Schedule 9, Part III to, the 1993 Act. The effect of these provisions is that on a collective enfranchisement under the 1993 Act, the former freeholder is entitled as of right to require a leaseback of any “flats or other units” falling within Parts II or III of Schedule 9 not held on a qualifying lease. For the purposes of this appeal, this definition encompasses any unit (the freehold of which is owned by the same person, and which is contained within the specified premises) which is not a flat let to a person who is a qualifying tenant of it. Under Schedule 9, Part III, paragraph 5, the statutory machinery2 is provided whereby the freeholder has the right to a leaseback of certain units and the nominee purchaser shall if so required grant to the freeholder a lease of the unit in accordance with section 36 and paragraph 7. Paragraph 7 provides that the leaseback “…shall conform with the provisions of Part IV of this Schedule…”, and any departure can only be made if the parties agree to it or it is directed by the LVT on an application being made to it by either the nominee purchaser or by the freeholder.
Terms of the Counter-Notice
9. Section 21(3)(a)(ii) of the 1993 Act provides that in addition to the requirement set out in subsection (2)(a) the counter-notice must specify any additional leaseback proposals by the reversioner. The relevant statutory language is mandatory and sets out in terms what the reversioner is required to do, namely the reversioner must specify any additional leaseback proposals in the Counter-Notice. The question therefore arises for consideration whether she did having regard to the contention made by the Respondents’ Counsel that the Appellant’s case has “constantly changed throughout these proceedings.” There are a number of cases on the validity or otherwise on counter-notices, to which I shall refer again below.3
The Claim
10. The parties have agreed a statement of facts and issues (“the Statement of Facts and Issues) from which I take the following outline of the relevant facts.
11. The Building comprises a terraced house containing five floors within which three flats have been constructed. The present configuration of the Building is as follows:
Flat A Lower and ground floor. The lease was granted on 30th August 1978 by the Appellant’s father, Mr Bottrill. The Gross Internal Area (“the GIA”) is estimated by the Respondents’ expert witness as being 1,200 sq ft.
Flat B First floor flat. The lease was granted on 26th September 1984. The GIA is estimated at 492 sq ft by Mr Bottrill.
Flat C Second floor and an additional floor built into the loft space. This is retained by the Appellant and let to tenants on assured shorthold tenancies. The GIA is estimated at 1,200 sq ft.
12. At the rear of the Building there is a communal staircase with half-landings between the floors. Both Flats B and C are accessed at first floor landing level. The demise of Flat A includes the exclusive use of the rear garden and the front basement area. At the front of the Building there is also small garden which does not form part of the demise of Flat A. This front part (excluding the front basement area) comprises a planted area, and a partly fenced bin area situated by the steps...
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