Freehold price of house in Pimlico, SW London — Preliminary point as to whether price to be calculated on assumptions in s9(1) or those in s9(1A) — Relevant RVs were £347 on March 23 1965 and £1,347 on date of tenant’s notice to enfranchise, namely March 30 1984 — Tenant’s surveyor’s view that price payable under s9(1A) might be 10 times price payable under s9(1) — Tribunal of opinion that clear distinction must be made between (1) eligibility to enfranchise or extend a lease under s1 and (2) the price to be paid for the freehold under assumptions in s9(1) and s9(1A) — ‘Great reliance’ placed by tenant’s surveyor on s37(6) of 1967 Act which applied s25(1), (2) and (4) of Rent Act 1977 to ascertainment of RV, but tribunal consider s25 of the Rent Act was not applicable or was irrelevant to subject case — Tribunal agree with submission for landlords that use of present tense ‘is’ in phrase ‘the rateable value of which is above £1,000 in Greater London . . .’ clearly meant that RV should be taken as at ‘the relevant time’, ie date of tenant’s notice — Tribunal decline on authorities to read additional words into s9(1A) as invited to do by tenant’s surveyor — Statement in Woodfall on general point at issue accepted — Held that basis for calculating price to be in accordance with s9(1A) — Decision of an LVT in Silverman v Catherine Investments to same general effect noted although not binding — Action taken by tenant under Sched 8 to Housing Act 1974 to reduce RV on account of improvements had no relevance, in tribunal’s opinion, to determination of present preliminary point
N J Winbourne
FRICS appeared for the applicant, the tenant, Mr L Oliver; A R Connerty
(instructed by Druces & Attlee) for the respondents, the landlords.
Giving their
decision, THE TRIBUNAL said: This decision is made on an application by
the tenant for the determination under section 9 of the Leasehold Reform Act
1967, as amended, of the price which is to be paid for the freehold interest in
the house and premises at 20 St George’s Square, London SW1. The tenant holds
the premises under an underlease to December 2050 at a ground rent of £100 per
annum. The tenant’s notice of his claim to acquire the freehold was dated March
30 1984, which was admitted by the landlord by notice dated October 19 1984.
The tribunal
agreed, on the application of both parties, that they would deal only with the
preliminary point, as to which assumptions the price of the freehold was to be
calculated, namely the assumptions set down in section 9(1) or those in section
9(1A) of the Leasehold Reform Act 1967.
The parties
agreed that the relevant rateable values for the purposes of the Act were:
|
March 23 1965 |
£347 |
|
Date of notice to |
|
|
enfranchise |
£1,347 |
Tenant’s case
The principal
submissions made by Mr Winbourne were:
(a) There was a considerable difference so far as
the subject property was concerned between the two prices that would be payable
calculated on the assumptions of either section 9(1) or section 9(1A) of the
Act. In order to emphasise the importance of the case, he stated that in his
view the freehold price payable under the assumptions set out in section 9(1A)
might be 10 times the price payable under section 9(1). He posed the figures of
£1,800/2,000 in the case of the price payable under section 9(1), and
£18,000/20,000 in the case of section 9(1A), while stating that the figures
were in no sense valuations.
(b) The house was at present used as the main
residence of the tenant, but since May 1977 the tenant had been using part of
the ground floor as his professional office, a use for which he had obtained
planning permission.
(c) A notice dated September 20 1985 had been
served by the tenant on the landlord under Schedule 8 to the Housing Act 1974
to reduce the rateable value of the property on account of relevant tenant’s
improvements.
(d) The words ‘relevant time’ contained in
section 9(1) and (1A) of the Leasehold Reform Act 1967 were to be interpreted
in the context of measuring the period of the tenant’s occupation and not as
the date for ascertaining the rateable value.
(e) The Act of 1967 was not intended to enable
landlords and tenants to take advantage of varying rateable values — the only
exceptions were that unsettled rating proposals could be brought to finality.
(f) Mr Winbourne referred to section 25(3) of the
Rent Act 1977 and section 37(6) of the Leasehold Reform Act 1967 and submitted
that ‘the appropriate day’ for his client’s property fell within the first two
lines of section 1(4) of the Act of 1967, since it had a rateable value of £347
on March 23 1965, and that that rateable value in his opinion was the only
rateable value to be considered for all purposes of the Act, including section
9(1A).
(g) He referred to p 3621 of Woodfall’s Law of
Landlord and Tenant dealing with section 9(1) and (1A) of the Act of 1967
and the different assumptions applicable for calculating the price to be paid
for the freehold dependent upon whether the rateable value was £1,000 or below
or was above £1,000.
He referred to
the following extract from Woodfall:
These
[rateable] values are not defined by reference to the appropriate day (April 1
1973) or any particular day. Accordingly, it would seem that if a house and
premises let under a tenancy created before February 18 1966 had a rateable
value on April 1 1973 in London of, for example, £900 and, if by the date of
the tenant’s notice claiming enfranchisement the rateable value has become
£1,000 on a rating revaluation, subsection 1(A) will then apply.
Mr Winbourne
begged to disagree with Woodfall, stating that, in his opinion, rateable
value was defined by the words in section 37(6) of the Act of 1967 which dealt
with the ascertainment of rateable value ‘for purposes of this Part of this
Act’.
(h) Section 9(1A) of the Act introduced by the
Housing Act 1974 dealt with exceptions and additions to the Act and in his
opinion did not affect his client’s property, which was to be dealt with for
all purposes as indicated in para (f) above and was subject to section 9(1).
Landlord’s
case
The principal
submissions of Mr Connerty were:
(a) Section 1 of the Leasehold Reform Act 1967
dealt with eligibility to enfranchise or extend a long leasehold whereas
section 9 of the Act dealt with the method of calculating the price to be paid
on a conveyance of the freehold.
(b) Section 9(1A) of the Act was added by the
Housing Act 1974. The words of the subsection are quite clear and should be
construed according to their plain and ordinary meaning. The term ‘relevant
time’ used in the section was defined both in section 1(1)(b) and in section 37(1)(d)
of the Act of 1967 as the date when the tenant gives notice of his desire to
acquire the freehold or extend the lease. The present tense ‘is’ used in the
words of section 9(1A) ‘. . . the rateable value of which is above £1,000 in
Greater London . . . ‘ is quite clear and unambiguous and must relate to ‘the
relevant time’. To construe the section in the manner urged by Mr Winbourne it
would be necessary to insert additional words.
(c) There is nothing in the Leasehold Reform Act
1967 which states that section 9(1A) of the Act applies only to premises not
previously within the Act. If Parliament had wanted to exclude the operation of
section 9(1A) in respect of premises previously within the Act it would have
said so expressly.
(d) Mr Connerty prayed in aid of his argument
paras 856, 857, 862, 864, 895 and 896 of Vol 44 of Halsbury’s Laws of
England, 4th ed, dealing with the rules of construction of statutes. His
principal submission in this context was that if the words of the statute were
plain and unambiguous the court was bound to construe them in their ordinary
meaning. Furthermore, in the case of confiscatory legislation, as was the case
with the Leasehold Reform Act 1967, if there were to be any ambiguity, which he
did not concede, the ambiguity should be construed in favour of the landlord.
(e) He referred to the House of Lords case of Stock
v Frank Jones (Tipton) Ltd [1978] 1 WLR 231 and to the following
extracts from the headnote in that case:
Per Viscount
Dilhorne and Lord Fraser of Tullybelton. When the language of a statute is
plain, then although it may appear that it might have been better drafted or
that amendment of it might be less productive of anomalies, it is not open to
the court to remedy the defect.
Per Lord
Simon of Glaisdale. A court may only depart from the plain words of a statute
if (1) there is clear and gross balance of anomaly; (2) Parliament could not
have envisaged it and could not have been prepared to accept it in the interest
of a supervening legislative objective; (3) the anomaly can be obviated without
detriment to that legislative objective; (4) the language of the statute is
susceptible to the modification required to obviate the anomaly.
Per Lord
Edmund-Davies. Dislike of the effect of a statute is no reason for departing
from its plain language.
Per Lord
Scarman. If the study of a statute leads inexorably to the conclusion that
Parliament has erred in its choice of words, the court must eliminate the error
by interpretation but the error must be one of commission or omission which in
its context defeats the intention of the Act.
(f) He also referred to the case of Silverman
v Catherine Investments Ltd (1984) 271 EG 381 and to the following
extract from the judgment of the leasehold valuation tribunal in that case:
It was
pointed out to Mr Russell [surveyor representing the reversioner] that the only
valuation before the tribunal was one submitted to the tenant by Ellis &
Co. However, this was clearly a valuation prepared in accordance with the
provisions of section 9(1) of the Leasehold Reform Act 1967. The tribunal
understood that, at the date of the tenant’s notice claiming the right to
enfranchise, the rateable value of the subject property was higher than £1,000.
Unless the rateable value could be adjusted below this figure to take account
of the value of any tenant’s improvements it appeared that the special basis of
valuation should be used in accordance with the provisions of section 118 of
the Housing Act 1974, which inserted a new subsection (1A) in section 9 of the
Leasehold Reform Act 1967.
(g) He invited the tribunal to decide that as the
rateable value of the subject property at the date of the tenant’s notice to
the landlord claiming the right to enfranchise was above £1,000 the provisions
of section 9(1A) of the Leasehold Reform Act 1967 applied for the purposes of
the calculation of the price the tenant should pay for the freehold.
Tribunal’s
conclusions
The tribunal
were of the opinion that a clear distinction must be made between (1)
eligibility under the Leasehold Reform Act 1967 to enfranchise or extend a long
lease and (2) the price to be paid for a conveyance of the freehold calculated
in accordance with the assumptions laid down by section 9(1) and section 9(1A)
of the Act.
Eligibility
was determined by section 1 of the Act as amended by subsequent legislation,
and, in so far as it had regard to rateable values, this was dependent upon the
rateable value on ‘the appropriate day’ as defined in the Act.
The price to
be paid on a conveyance of the freehold was calculated in accordance with the
assumptions set down in section 9(1), which included the assumption introduced
by section 82 of the Housing Act 1969 that the tenant or members of his family
who reside in the house are not buying or seeking to buy, and in section 9(1A)
of the Act. It was the amount which at the ‘relevant time’ the house and
premises if sold in the market by a willing seller might be expected to realise
on those assumptions.
In the case of
section 9(1) no rateable value was mentioned and accordingly, provided the
right to acquire the freehold was established, the landlord was bound to convey
at the price calculated in accordance with the provisions of section 9(1).
However, in the case of section 9(1A), inserted by the Housing Act 1974, an
additional basis of valuation was introduced in the case of houses and premises
with rateable values over £1,000 in Greater London and over £500 elsewhere. Mr
Winbourne invites us to say that as the rateable value of his client’s property
was £347 on March 23 1965, section 9(1A) has no applicability and the valuation
of his client’s property is governed by section 9(1) of the Act. Mr Connerty,
however, asks us to agree with him that section 9(1A) means that the rateable
value mentioned in the section is that rateable value which the subject
property had at the relevant time, namely that defined by section 1(1)(b) and
section 37(1)(d) of the Act of 1967, being the time when the tenant gave notice
in accordance with the Act of his desire to have the freehold (or to have an
extended lease as the case may be), namely £1,347 in the case of the subject
property, and that accordingly the provisions of section 9(1A) of the Act
apply.
The tribunal
agreed with Mr Winbourne’s submission that ‘the appropriate day’ in respect of
his client’s application to enfranchise
house and premises had a rateable value of £347 on March 23 1965, but they
disagreed with his proposition that that rateable value was the rateable value
to be considered for all the purposes of the Act including section 9(1A).
Mr Winbourne
placed great reliance on section 37(6) of the Act of 1967 which applied section
25(1), (2) and (4) of the Rent Act 1977 to the ascertainment of the rateable
value of a house and premises for the purposes of Part 1 of the Act of 1967.
However, section 25(1) of the Rent Act 1977 in relation to whole premises,
which is the situation of the subject property, merely states that the rateable
value is that shown in the valuation list. Section 25(2) of the Rent Act 1977
deals with questions arising as to proper apportionment and aggregation of
rateable values, which is not applicable in the subject case, and section 25(4)
deals with those cases where the valuation list is altered and the alteration
has effect from a date not later than the appropriate day; in that event the
amended rateable value relates back to the appropriate day. In the subject case
the appropriate day is March 23 1965 and as the amendments to rateable value
have effect from a date later than the appropriate day section 25(4) has no
relevance to the subject case.
The tribunal
took note of the reference made by Mr Winbourne to Woodfall’s Law of
Landlord and Tenant p 3621, but they disagreed with Mr Winbourne’s
rejection of the statements set out on that page. The tribunal accepted those
statements, which were those set out in the extract from Woodfall quoted
in para (g) of the tenant’s case above.
Although the
tribunal were of the opinion that section 9(1A) of the Leasehold Reform Act
1967 could have been better drafted, they agreed with the submission of Mr
Connerty that the use of the present tense ‘is’ in the words ‘the rateable
value of which is above £1,000 in Greater London . . .’ clearly meant that the
rateable value should be taken as at ‘the relevant time’, namely the date of
the tenant’s notice to enfranchise. Furthermore, to construe the Act in the
manner in which Mr Winbourne invited the tribunal to do, it would be necessary
to insert additional words into the subsection. ‘It is a strong thing to read
into an Act of Parliament words which are not there, and in the absence of
clear necessity, it is a wrong thing to do’ said Lord Mersey in Thompson
v Goold & Co [1910] AC 409, 420. ‘. . . we are not entitled to read
words into an Act of Parliament unless clear reason for it is to be found
within the four corners of the Act itself’, said Lord Loreburn LC in Vickers,
Sons & Maxim Ltd v Evans [1910] AC 444, 445. The above statements
were adopted and followed by Viscount Dilhorne in Stock v Frank Jones
(Tipton) Ltd [1978] 1 WLR 231 at pp 234-5. We cannot agree with Mr
Winbourne that there is clear reason within the four corners of the Act for
reading the words ‘on the appropriate day’ after the words ‘rateable value’
where it first appears in section 9(1A) of the Leasehold Reform Act, 1967.
Neither can we agree with Mr Winbourne that we can read words into the Act
excluding the applicability of section 9(1A) to properties previously within
the Act, nor for interpreting the Act in the manner suggested by Mr Winbourne.
The tribunal
noted the decision of the leasehold valuation tribunal in Silverman v Catherine
Investments Ltd (1984) 271 EG 381 which, although not binding upon us, took
the view that as at the date of the tenant’s notice to enfranchise the rateable
value of the subject property was above £1,000, the calculation of the price
payable was governed by section 9(1A) of the Act of 1967.
The tribunal
also noted that the tenant had taken action under Schedule 8 to the Housing Act
1974 to reduce the rateable value of the subject property on account of
improvements to which the schedule applied. However, the tribunal were of the
opinion that this action had no relevance to their determination of the
preliminary point. The tenant had based his argument foursquare on the issue
not of reducing rateable value on account of improvements but on the issue that
the assumptions set out in section 9(1A) of the Leasehold Reform Act 1967 for calculating
the freehold purchase price did not apply to his case, for the reason that the
rateable value of the subject property was £347, being the rateable value on
the appropriate day of March 23 1965; that this was the date which was
pertinent, and this value was below £1,000; the date of the tenant’s notice to
enfranchise was not the date to be looked at for the purpose of the
applicability of section 9(1A) in the tenant’s view.
We accordingly
determine that the basis for calculating the price payable for acquisition by
the tenant of the freehold interest in the house and premises 20 St George’s
Square, London SW1, shall be in accordance with the provisions of section 9(1A)
of the Leasehold Reform Act 1967.
