Decision Nº LRA 76 2013. Upper Tribunal (Lands Chamber), 08-12-2014
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS Sir Keith Lindblom, President |
| Date | 08 December 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 76 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0390 (LC)
UTLC Case Number: LRA/76/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
Leasehold enfranchisement – collective enfranchisement – leasebacks under Schedule 9 to the Leasehold Reform, Housing and Urban Development Act 1993 – units not in existence at the relevant date – common parts at the relevant date – rights over the common parts – leasebacks of commercial premises
IN THE MATTER OF AN APPEAL AGAINST DECISIONS
OF THE LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
BETWEEN:
and
Re Barrie House, 93-94 Lancaster Gate, London W2 3QJ
Before Sir Keith Lindblom, President, and Mr A. J. Trott F.R.I.C.S.
Sitting at 43-45 Bedford Square, London WC1B 3AS on 6, 7, 8 and 16 May 2014
Site inspection on 5 June 2014
Philip Rainey Q.C. and Ellodie Gibbons, instructed by Seddons, solicitors, for the appellant
Edwin Johnson Q.C. and Christopher Heather, instructed by Charles Russell LLP, for the respondent
The following cases are referred to in this decision:
Queensbridge Investment Limited v 61 Queens Gate Freehold Limited [2014] UKUT 437 (LC)
Barrie House Freehold Limited v Merie Bin Mahfouz Company (UK) Limited [2012] EWHC 353 (Ch.)
Cawthorne v Hamdan [2007] Ch. 187
Trongate v Eker, 13 Eaton Place, unreported, LVT/LON/00BK/OCE/2011/0058
Earl Cadogan v Cadogan Square Limited [2011] UKUT 154 (LC)
41-60 Albert Palace Mansions (Freehold) Limited v Craftrule Limited [2011] 1 W.L.R. 2425
Howard de Walden Estates Limited v Aggio and others [2008] UKHL 44
Cadogan v McGirk [1996] 4 All E.R. 643
Panagopoulos v Earl Cadogan [2011] Ch. 177
Gayford v Moffatt (1868-69) L.R. 4 Ch. App. 133
Green v Ashco Horticulturist Ltd. [1966] 1 W.L.R. 889
Wood v Waddington [2014] EWHC 1358 (Ch.)
William Aldred’s Case (1610) 9 Co. Rep. 57b
F.C. Strick & Co. Ltd. v The City Offices Co. Ltd. (1906) 22 T.L.R. 667
Heslop v Bishton [2009] EWHC 607 (Ch.)
Deacon v S.E. Railway (1889) 61 L.T. 377
Re McGuckian & Ors’ Appeal [2008] EW Lands LRA/85/2006 (3 January 2008)
R. (on the application of Cart) v Upper Tribunal [2012] 1 A.C. 663
Dartmouth Court Blackheath Ltd v Berisworth Ltd [2008] 2 P. & C.R. 36
9 Cornwall Crescent London Ltd v Kensington and Chelsea Royal London Borough Council [2006] 1 W.L.R. 1186
The following further cases were referred to in argument:
Kintyre Limited v Romeomarch Property Management Limited [2006] 1 E.G.L.R. 67
Cravecrest Limited v Duke of Westminster [2012] UKUT 68 (LC)
West Hampstead Management Company limited v Pearl Property Limited [2002] EWCA Civ 1372
Gormley v Hoyt [1982] 43 N.B.R. (2d) 75
Gilchrist v Revenue and Customs Commissioners [2014] UKUT 0169 (TCC)
Hosebay Limited v Day [2012] 1 W.L.R. 2884
DECISION
Introduction
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This appeal and cross-appeal concern the collective enfranchisement of a block of flats called Barrie House, at 93 and 94 Lancaster Gate, London W2 3QJ (“the building”). They challenge two decisions of a Leasehold Valuation Tribunal of the London Rent Assessment Panel (“the LVT”), the first dated 23 February 2012 (“the first decision”), the second 9 April 2013 (“the second decision”). The appellant, Merie Bin Mahfouz Company (UK) Limited (“MBM”), is the freeholder of the building. The respondent and cross-appellant, Barrie House (Freehold) Limited (“BHF”), is the nominee purchaser. The LVT granted permission for both the appeal and the cross-appeal on 13 May 2013, and the Tribunal directed that they be dealt with under the special procedure, by way of review.
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Both the appeal and the cross-appeal focus on MBM’s entitlement to leasebacks of particular parts of the building. As we shall explain, however, the cross-appeal gives rise to an issue of valuation, and at the invitation of both parties we have heard relevant expert evidence on that issue.
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After the hearing we gave the parties the opportunity to make further submissions in writing in the light of the Tribunal’s decision in Queensbridge Investment Limited v 61 Queens Gate Freehold Limited [2014] UKUT 437 (LC). Further submissions were made on behalf of MBM on 6 November and 27 November 2014 and on behalf of BHF on 27 October and 17 November 2014. We have taken those submissions into account.
Background
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The building stands at the junction of Bayswater Road and Lancaster Gate, opposite Kensington Gardens. It was built in 1936. It has 11 floors – a basement, the ground floor and nine storeys above that – beneath a flat roof. Its main entrance is on its eastern side, where there is an area for vehicles to stop and turn and a small garden. It originally contained 37 flats let to tenants and a porter’s flat in the basement.
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In 2010 and 2011 MBM carried out various works to the building. These were described by the LVT in paragraph 10 of the first decision:
“… In or about July 2010 [MBM] started work to extend the porter’s flat by incorporating part of an adjacent redundant tank room and that work was completed in November 2010. In about mid 2010 it applied for planning consent to construct a one bedroomed flat in the entrance hall of the building, which was granted on 9 December 2010. In about January 2011 it started work to build facilities for the porters in the area on the left (as seen from the entrance) of the ground floor which was formerly used by the porters for the storage of their uniforms and other items and by residents for temporary storage of large items awaiting transport. In January 2011 it started work to form a new flat in the entrance hall to the right of the staircase. As the works proceeded, the landlord’s project manager decided that there was room for a two bedroom flat, which was completed in June 2011 and named Flat 1A. In about July 2011 it started work on the formation of an office in the basement in an area formerly used by the porters and by residents for storage. In mid 2011 it dug an exploratory trench in the lawn adjacent to the eastern elevation of the building as a first step in the creation of two lightwells, one serving the extension of the porter’s flat and the other serving the basement office. Some of the leaseholders objected to the proposed works and the landlord undertook not to continue them pending an application by the tenants to the High Court for an injunction. On 17 August 2011 the landlord applied for planning consent to build two new flats on the roof of the building. Planning consent was refused on 19 January 2012 but the landlord proposes to appeal against the refusal.”
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Some time before the collective enfranchisement process got under way two mobile telephone antennae had been put up on the roof of the building, and associated equipment had been installed inside. One of these antennae, erected in 2005, belonged to O2 (UK) Limited (“O2”), the other, erected in 2008, to Orange Personal Communications Services Limited (“Orange”). Since the hearings before the LVT the equipment belonging to Orange has been removed.
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The freehold of the building is registered under title number LN8017. There is no head lease. The porter’s flat was retained in the freehold. So was Flat 1A. The other flats are let on long leases. 27 of them are occupied by qualifying tenants, 23 of whom participated in the enfranchisement. The leases of the other ten flats were held by MBM’s parent company, Merie Bin Mahfouz Group, which, because it owned more than two flats in the building, was not a qualifying tenant. O2 and Orange both had commercial leases for their antennae and equipment. O2 had a lease, granted in August 2005, of a room in the basement and part of the surface and airspace of the roof of the building. Orange had a lease, granted in January 2008, of part of the surface and airspace of the roof and a vault in the basement under the pavement on the north side of the building.
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On 12 January 2011 (“the relevant date”) BHF served on MBM their “initial notice” under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”), claiming to exercise the right to collective enfranchisement of the building. 12 January 2011 is therefore the valuation date, being the “the relevant date” under Chapter I of Part I of the 1993 Act. By the initial notice BHF claimed the right to acquire the whole of the freehold property registered under title number LN8017. The notice proposed a price of £2,350,000 for the freehold of the building and £500 for the strip of land on the eastern side of the building.
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On 10 March 2011 MBM served a counter-notice under section 21 of the 1993 Act, admitting that BHF was entitled...
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