The Court of Appeal has rejected a challenge by tenants of a
The court dismissed the appeal brought by Henry McHale and two other tenants of the six–flat property at 10 Sloane Gardens, London SW1, against an October 2008 Lands Tribunal (LT) ruling in favour of the Cadogan Estate.
Marriage value is the latent value that is released by the merger of the leasehold and freehold interests in a property by the process of enfranchisement and is taken into account when calculating the price payable on enfranchisement.
The LT had upheld a January 2007 leasehold valuation tribunal (LVT) ruling that, for the purpose of calculating the marriage value, it must be assumed that no rights of collective enfranchisement or lease extension arose under the Leasehold Reform, Housing and Urban Development Act 1993.
Arden LJ said that the Act directs that this assumption should be made when determining the value of the freeholder’s interest, but that the same schedule was “silent” as to whether the same assumption should be made when valuing the tenants’ interests.
However, she ruled that in order to produce a “consistent valuation”, the second of the two elements must be valued in the same way as the first, adding: “Otherwise, parliament’s obvious purpose of identifying the marriage value on a principled basis would be thwarted.”
She said that the fact that this might be “more generous to a party than it needed to be” was not a matter with which the court could be concerned, adding: “The stronger principle in the process of statutory interpretation is the application of a presumption that parliament intended to act in a principled and consistent way.”
McHale, the intermediate landlord under a headlease and two other tenants served a notice in July 2004 seeking to acquire the freehold. In January 2007, the LVT determined the enfranchisement price at £770,940, rejecting McHale’s claim that the tenants’ interests should not be valued on the no Act rights assumption.
The LT rejected his appeal, and amended an error in the enfranchisement price, correcting it to £780,405.
McHale and another v Earl Cadogan Court of Appeal (Arden, Elias and Pitchford LJJ) 21 December 2010.
The first appellant appeared in person on behalf of the appellants; Anthony Radevsky (instructed by Pemberton Greenish) appeared for the respondent; Stephen Jordan QC (instructed by Forsters LLP) appeared for the interested party, Cadogan Square Ltd.
