cadogan_pittsHL2008
References: [2008] UKHL 71, [2008] NPC 136, [2010] 1 AC 226, [2009] 3 All ER 365, [2009] RVR 42, [2009] L and TR 10, [2008] 50 EG 72, [2009] 1 EGLR 153, [2010] 1 AC 226, [2009] 2 WLR 12, [2009] 1 P and CR 17
Links: Bailii, HL, Times
Coram: Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Lord Mance, Lord Neuberger of Abbotsbury
Ratio: The House considered the basis of valuation on an acquisition of the freehold reversion of a lease under the 1967 Act of the three elements, the rent, vacant possession after the lease, and the marriage or hope value of the two interests when merged, and particularly the last.
Held: In relation to a valuation under section 9(1), a landlord is not entitled to seek hope value. Under section 9(1A), the landlord cannot claim hope value in addition to marriage value because it is subsumed by marriage value. However, para 3 of Schedule 6 to the 1993 Act permits hope value to be taken into account in the valuation in so far as it is attributable to the possibility of non-participating tenants seeking new leases of their own flats. (Lord Hoffman dissenting)
Neuberger L said: ‘Once one considers a hypothetical prospective buyer negotiating with the landlord, one can see that, if the landlord sought hope value at the first, investment, stage, and then sought half the marriage value at the second stage, he would be seeking to have his cake and eat it. That is because the price he would be seeking for his interest would assume both the fact that the tenant was in the market (as the landlord is seeking half the marriage value) and that the tenant was not in the market (as the landlord is seeking hope value on the basis that the tenant is not in the market, but may be in the market in the future).’ Hope value as against non-participating tenants in respect of their flats may be taken into account.
Statutes: Leasehold Reform Act 1967 9, Leasehold Reform, Housing and Urban Development Act 1993 Sch 6, Commonhold and Leasehold Reform Act 2002 145 146
This case cites:
- Appeal from – Cadogan v Pitts and Another CA (Bailii, [2007] EWCA Civ 1280)
. . - Cited – In re Lucas and Chesterfield Gas and Water Board CA ([1909] 1 KB 16)
Land suitable for construction of a reservoir was the subject of a compulsory purchase for that purpose. The circumstances made it very unlikely that anyone other than the Water Board would have wanted, or been able, to construct the reservoir and . . - Appeal from – Cadogan and Another v Sportelli and Another CA (Bailii, [2007] EWCA Civ 1042, [2008] 2 All ER 220, [2008] 1 WLR 2142)
. . - At Lands Tribunal – Pitts and Another v Cadogan LT (Bailii, [2007] EWLands LRA – 79 – 2006)
LT LEASEHOLD ENFRANCHISEMENT – preliminary issues -procedure – deferment rate and hope value – whether respondent on appeal entitled to seek addition for hope value – whether respondent entitled to seek higher . . - Cited – Inland Revenue Commissioners v Clay CA ([1914] 3 KB 466)
The court considered the market value of a private residence. The evidence was that its value to persons wishing to use it as a private residence was 750 pounds. However, the house adjoined a nurses’ home the trustees of which wanted to extend their . . - Cited – Custins v Hearts of Oak Benefit Society LT ((1969) 209 EG 239)
The tribunal was asked to value a freehold on the tenant seeking to acquire the reversion under the 1967 Act.
Held: The actual tenant could be treated as being in the market as a potential purchaser of the freehold when assessing a price . . - Cited – Lloyd-Jones v Church Commissioners for England ([1982] 1 EGLR 209)
The tenant’s lease had about twelve years unexpired and was at a rent of andpound;45 per annum. The valuation of the landlord’s reversionary freehold interest involved two stages. The first stage was to assess the so-called investment value of the . . - Cited – James and Others v The United Kingdom ECHR (8793/79, (1986) 8 EHRR 123, Worldii, [1986] ECHR 2, Series A no 98, [1986] RVR 139, (1986) 8 EHRR 123123, Bailii)
The claimants challenged the 1967 Act, saying that it deprived them of their property rights when lessees were given the power to purchase the freehold reversion.
Held: Article 1 (P1-1) in substance guarantees the right of property. Allowing a . . - Cited – Lowther v Strandberg LT ([1985] 1 EGLR 203)
. . - Cited – Shulem B Association Ltd, Re LT (Bailii, [2000] EWLands LRA – 47 – 2000, [2001] 1 EGLR 105)
Hope value was held to justify an increase in the investment value of the freehold by around 15% of the marriage value on an enfranchisement valuation. . . - Cited – Blendcrown Ltd v Church Commissioners for England LT (Bailii, [2003] EWLands LRA – 50 – 2002, [2004] 1 EGLR 143)
The Tribunal described hope value as ‘a speculative element that does not lend itself to objective assessment’ and ‘essentially a matter of informed opinion’
Held: The landlord was awarded 5% of the hope value on the tenants application to . . - Cited – Arbib v Earl Cadogan LT (Bailii, [2005] EWLands LRA – 23 – 2004, [2005] 3 EGLR 139, [2005] RVR 401, [2005] 41 EG 204,)
LT LEASEHOLD ENFRANCHISEMENT – houses and flats in central London – appeals heard together regarding deferment rate – no convention that 6% established – absence of market evidence – decisions of LVTs and Lands . . - Cited – Gesso Properties (BVI) Ltd v SCMLLA Ltd LT (Bailii, [2004] EWLands LRA – 13 – 2003)
LT Hope value was not established by the landlord on the evidence. . . - Cited – F R Evans (Leeds) Ltd v English Electric Co Ltd ((1977) 36 P and C R 185)
On the rent review of a large factory of which the only potential occupier was the tenant in question, one should assume a hypothetical landlord and hypothetical willing tenant so that the rental levels were not affected by one or both parties being . . - Cited – Dennis and Robinson Ltd v Kiossos Establishment CA ([1987] 1 EGLR 132)
Section 9(1A) of the 1967 Act makes no express reference to a ‘willing buyer’, but it is implied by the assumption of a sale in the ‘open market’. . .
(This list may be incomplete)
Leading Case
Last Update: 15 December 2018
Ref: 278659
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