Leasehold enfranchisement – Lease extension – Purchase price – Deferment rate – Leasehold Reform, Housing and Urban Development Act 1993 – Leasehold valuation tribunal adopting deferment rate for property in West Midlands by reference to decision of Upper Tribunal in Zuckerman v Trustees of the Calthorpe Estate [2009] UKUT 235 (LC) [2010] 1 EGLR 187 – Correct approach to decisions of Upper Tribunal as evidence on valuation issues – Appeal dismissed
The leasehold valuation tribunal (LVT) was asked to determine the premium payable by the respondent, as leaseholder of a two-bedroom, ground-floor maisonette in Halesowen, West Midlands, to acquire an extended lease of those premises from the appellant landlord under Chapter I of Part I of the Leasehold Reform, Housing and Urban Development Act 1993. The lease had 48.29 years left to run when the leaseholder exercised her right under the Act to acquire a new lease.
The parties agreed that the freehold vacant possession value of the maisonette was £96,600 but differed as to the appropriate deferment rate to be applied to it in calculating the premium payable for the new lease. The LVT adopted the rate of 5.75% for which the leaseholder contended, comprising the generic 5% rate for flats laid down in Lord Cadogan v Sportelli [2007] 1 ELGR 153 plus the 0.75% addition made in Zuckerman v Trustees of the Calthorpe Estate [2009] UKUT 235 (LC) [2010] 1 EGLR 187 for other flats in the Midlands area, made up of an additional 0.5% to reflect poorer growth outside the prime central London area (PCL) and a further 0.25% to reflect obsolescence and deterioration. The LVT took the view that, while no new evidence on the matter had been adduced before it, it was now generally accepted that a higher deferment rate should be adopted in the Midlands area. It concluded that the price payable was £10,407.
On appeal from that decision, the appellant contended that a departure from the Sportelli rate had to be supported by compelling evidence in the particular case and that the LVT was not entitled simply to rely on Zuckerman in the absence of such evidence. The Upper Tribunal allowed the appeal in part, holding that Zuckerman could be relied on as a sufficient basis for the additional 0.5% to reflect poorer long-term growth in the West Midlands area but that any further adjustment to reflect the greater risk of obsolescence and deterioration had to be based on the characteristics of the particular property under consideration; it held that the appropriate overall deferment rate was 5.5% on the facts of the case: see Re Sinclair Gardens Investments (Kensington) Ltd’s appeal [2014] UKUT 79 (LC); [2014] PLSCS 168.
The appellant appealed on the issue of the extent to which the first-tier tribunal, as successor to the LVT, could rely on a decision of the Upper Tribunal on a question of valuation.
Held: The appeal was dismissed.
The position at common law was that, leaving aside questions of res judicata or issue estoppel, a finding of fact in one set of proceedings was not only not binding, but not even admissible, in another set of proceedings. However, under r 16 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, the Upper Tribunal was empowered to admit evidence whether or not that evidence would be admissible in a civil trial in England or Wales. While the Upper Tribunal had not itself laid down guidelines as to the precedent effect of its decisions for different purposes, the mere fact that the Upper Tribunal had not taken the formal step of proclaiming that its decision was to be treated as a “guidance case” did not rob it of value for a subsequent tribunal. Having arrived at the conclusion that a previous decision of the Upper Tribunal was admissible evidence of what it decided, then, in the absence of guidelines laid down by the Upper Tribunal itself, the question to be decided was then what weight should be given to it by a subsequent tribunal. Both the extent to which the previous decision was a decision on general points of interest rather than specific facts, and the cogency of the reasoning, would impact on the weight to be given to a particular decision, but that was a matter for the subsequent tribunal.
It followed that, in the instant case, it was for the LVT and the Upper Tribunal to decide what weight to give to Zuckerman. That was a question of fact for the tribunal in question and not a point of law on which an appeal lay to the court. Moreover, the LVT’s selection of the appropriate deferment rate was based not simply on the decision of the Upper Tribunal in Zuckerman but also on the evidence of expert witnesses and on the effect that the Zuckerman decision had had in the real world. In reaching its conclusion, the LVT had also been entitled to rely on its specialised general knowledge. It could not be said that the LVT had no evidence on which to base its conclusion or that its decision was perverse. The LVT’s decision revealed no error of law: Re Clarise Properties Ltd’s appeal [2012] UKUT 4 (LC); [2012] 1 EGLR 83; [2012] 17 EG 112 and 82 Portland Place (Freehold) Ltd v Howard de Walden Estates Ltd [2014] UKUT 133 (LC); [2014] PLSCS 275 considered.
Oliver Radley-Gardner (instructed by WH Matthews & Co) appeared for the appellant; the respondent appeared in person.
Sally Dobson, barrister
Click here to read the transcript of Sinclair Gardens Investments (Kensington) Ltd v Ray
