Nailrile Ltd v Cadogan & Ors, Court of Appeal - Lands Tribunal, December 22, 2008, [2008] EWLands LRA_114_2006

Resolution Date:December 22, 2008
Issuing Organization:Lands Tribunal
Actores:Nailrile Ltd v Cadogan & Ors

LRA/114/2006 LRA/47/2007 LRA/89/2007 LRA/90/2007 LRA/106/2007 LANDS TRIBUNAL ACT 1949 LEASEHOLD ENFRANCHISEMENT - intermediate leasehold interests how to be valued Leasehold Reform, Housing and Urban Development Act 1993 Schedule 13 paras 6, 7 and 8 IN THE MATTER OF APPEALS AGAINST DECISIONS OF THE LEASEHOLD VALUATION TRIBUNAL OF THE LONDON RENT ASSESSMENT PANEL BETWEEN NAILRILE LIMITED Appellant and (1) EARL CADOGAN Respondents (2) WILLIAM HALLMAN AND NANCY HALLMAN Re: Flat 2, 12 Sloane Gardens, London SW1W 8DL (LRA/114/2006) _____________________ BETWEEN DAEJAN PROPERTIES LIMITED Appellant and (1) THE TRUSTEES OF THE EYRE ESTATE Respondents (2) VARIOUS LESSEES Re: Regency Lodge, Adelaide Road, London NW3 5EE (LRA/47/2007) ________________________ © CROWN COPYRIGHT 2008 © CROWN COPYRIGHT 2008 BETWEEN GULU LALVANI AND OTHERS Appellants and (1) EARL CADOGAN Respondents (2) CADOGAN ESTATES LIMITED Re: 62 Cadogan Square, London SW1X OEA (LRA/89/2007) _______________________ BETWEEN METROPOLITAN PROPERTIES CO (FGC) LIMITED Appellant and (1) TERENCE GEORGE KINGSTON Respondents (2) CYNTHIA MARGARET HAYNES Re: Flat 8, Elms Court, Montagu Road, London SW19 1SZ (LRA/90/2007) ______________________ BETWEEN UAE INVESTMENTS LIMITED Appellant and (1) ALIM INVESTMENTS LIMTIED Respondents (2) THE COMMISSIONERS OF THE EXHIBITION OF 1851 Re: Flat 32, Albert Hall Mansions, Kensington Gore, London SW7 2AL (LRA/106/2007) _____________________ Before: The President and A J Trott FRICS Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL On 16-20, 23 and 25-27 June 2008 Philip Rainey and James Fieldsend instructed by Wallace LLP for Daejan Properties Limited, Metropolitan Properties Co (FGC) Limited and UAE Investments Limited; by Forsters LLP for Nailrile Limited; and by Goodman Derrick LLP for Gulu Lalvani and Others Nicholas Dowding QC and Mark Sefton instructed by Pemberton Greenish for Earl Cadogan and Cadogan Estates Limited Anthony Radevsky instructed by Pemberton Greenish for The Trustees of the Eyre Estate and by Farrer & Co LLP for The Commissioners of the Exhibition of 1851 Timothy Harry instructed by Portner and Jaskel LLP for the Regency Lodge Lessees The following cases are referred to in this decision: Visible Information Packaged Systems Ltd v Squarepoint (London) Ltd [2000] 2 EGLR 93 Cadogan v Sportelli [2006] RVR 382 Railtrack plc v Guinness plc [2003] 1 EGLR 124 Woozley v Woodall Smith [1950] 1 KB 325 Compton Group Ltd v Estates Gazette Ltd (1978) 26 P & CR 148 Fawke v Viscount Chelsea [1980] QB 441 R (on the application of Edison First Power) v Central Valuation Officer [2003] 4 All ER 209 Jones v Wrotham Park Settled Estates sub nom Wentworth Securities Ltd v Jones [1980] AC 74 Ghaidan v Godin-Mendoza [2004] 2 AC 557 Craven (Builders) Limited v Secretary of State [2000] 1 EGLR 128 F R Evans (Leeds) Limited v English Electric Co Limited (1977) 36 P & CR 185 Arrowdell Limited v Coniston Court (North) Hove Limited [2007] RVR 39 Arbib v Earl Cadogan [2005] 3 EGLR 139 Henry Smith's Charity Kensington Estate Trustees v Frampton [1985] 1 EGLR 239 Cadogan Holdings Limited v Pockney [2004] LRA/27/2003 unreported Langinger v Cadogan LRA/46/2000 unreported The following further cases were referred to in argument: Jones v Wentworth Securities [1980] AC 74 Moseley v Hickman [1986] 1 EGLR 161 Szoma v Secretary of State for Work & Pensions [2006] 1 All ER 1 Hoare (VO) v National Trust [1999] 1 EGLR 155 James v UK (1986) 8 EHRR 123 Majorstake v Curtis [2008] 2 WLR 338 Howard de Walden v Aggio [2008] Ch 28 Wilson v First County Trust (No.2) [2004] 1 AC 816 Holy Monasteries v Greece (1994) 20 EHRR 1 Lithgow v UK (1986) 8 EHRR 329 Mellacher v Austria (1989) 12 EHRR 391 Papachelas v Greece (1999) 30 EHRR 923 Hentrich v France (1994) 18 EHRR 440 R (Gillan) v Commr of Police for the Metropolis [2006] AC 307 Vogt v Germany (1995) 21 EHRR 205 Fitzpatrick v Sterling Housing Association Ltd [1999] 4 All ER 705 Pepper v Hart [1993] AC 593 Fraser Pipestock v Gloucester City Council [1995] 2 EGLR 90 Shortlands Investments Ltd v Cargill plc [1995] 1 EGLR 51 Lloyds Bank Ltd v Lake [1961] 1 WLR 885 Dennis & Robinson Ltd v Kiossos Establishment [1987] 1 EGLR 133 Gray v IRC [1994] 2 EGLR 185 Nicholson v Goff [2007] 1 EGLR 83 Re Castlebeg Investments (Jersey) Ltd's Appeal [1985] 2 EGLR 209 Ryde International plc v LRT [2004] 2 EGLR 1 Customs and Excise Commrs v Cantor Fitzgerald International [2002] QB 546 Lloyd Jones v Church Commissioners [1982] 1 EGLR 209 Northern Electric v Addison [1997] 2 EGLR 111 Walton v Inland Revenue [1996] 1 EGLR 159 Trocette Property Co v GLC (1974) 28 P & CR 408 Wellcome Trust Ltd v Romines [1999] 3 EGLR 229 Re Westminster Property Group [1984] 1 WLR 1117 Simpson v Connolly [1953] 1 WLR 911 Robshaw Bros Ltd v Mayer [1957] 1 Ch 125 Lloyds Bank v Lake [1961] 1 WLR 885 Shortlands Investments v. Cargill [1995] 1 EGLR 51 Fitzpatrick v Sterling Housing Association [1999] 4 All ER 705 J A Pye (Oxford) v Graham [2005] 3 EGLR 1 Mason v Totalfinaelf UK Ltd [2003] 3 EGLR 93 National Westminster Bank plc v. Co-operative Wholesale Society [1995] 1 EGLR 97 Brown v Gloucester City Council [1998] 1 EGLR 95 Pitts & Wang v Earl Cadogan [2007] RVR 272 Raja Vyrcherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam (The Indian Case) [1939] AC 302 A-G of Ceylon v Mackie [1952] 2 All ER 775 Carl v Grosvenor Estate Belgravia [2000] 3 EGLR 79 The following LVT decisions were referred to: Sussex Lodge Freehold Ltd v Church Commissioners for England LON/ENF/1173/04 (17 November 2005) SCMLLA v Gesso Properties (BVI) Ltd LON/00BK/OCE/2007/0070-71 (21 December 2007) Weiss v Shawview International Ltd LON/NL/604/98 (4 August 1999) Podd v Howard de Walden Estates LON/NL/1407/01 (18 May 2001) Lee and Blackmun v The Portman Estate CAM/93/LVT/NL/013 (2004) Norman Sinclair Properties Ltd LON/NL/1890-1909/03 (20 August 2003) Matley v Liddell LON/NL/4573&4577/05 (4 June 2006) Cadogan v Panagopoulos LON/NL/464/06 (18 September 2006) Cadogan v Newman LON/NL/2275/03 (29 January 2005) Chawdhary v HC Jones & Co (Surrey) Ltd LON/NL/3583, 3584 and 3585/04 (27 October 2005) Grosvenor West End Properties v Harrison [2006] (LON/LVT/1807/2004) INTERIM DECISION Introduction

  1. These appeals arise from applications made to leasehold valuation tribunals under section 48 of the Leasehold Reform, Housing and Development Act 1993 to determine the terms of acquisition of new leases to be granted under the Act. Under Chapter II of Part I of the Act (in which section 48 appears) the "qualifying tenant" of a flat held on a long lease has the right to acquire, in substitution for his existing lease, a new lease at a peppercorn rent for a term expiring 90 years after the term date of the existing lease. He does this by serving notice on the person who is the "competent landlord" and following the statutory procedures that lead to the grant of a new lease by that person on payment by the tenant of a premium determined under the Act. The "competent landlord" is the owner of an interest in the flat that fulfils two conditions: firstly that it is an interest in reversion expectant (whether immediately or not) on the termination of the tenant's lease; and secondly that it is either a freehold interest or a leasehold interest of sufficient duration to enable the new lease to be granted.

  2. There may, of course, be interests intermediate between those of the tenant and the competent landlord, ie leases that expire after the term date of the existing lease but before the term date of the new lease. The Act makes provision for these intermediate leasehold interests in terms of procedure and the payment to be made to the owners of them. An intermediate interest is not extinguished. It continues, shorn of the expectation of possession on its termination but with the obligation to pay rent continuing. Procedurally the competent landlord acts on behalf of the owner of the intermediate interest in relation to proceedings under the Act, except that the owner of the intermediate interest is entitled, on giving the requisite notice, to be separately represented in any legal proceedings, including those for the determination of the amount that is payable to him.

  3. A number of particular features of intermediate interests are to be noted. The first is that an intermediate interest is frequently an interest that is not confined to the flat in issue but includes other flats in the same building. Secondly the existing value of an intermediate interest may be very small, typically where the reversion is for a short period and the rent payable to the owner of the intermediate interest is the same or little more than the rent payable by him. Thirdly, because every owner of an intermediate interest loses the expectation of possession of the flat and the owner of the intermediate interest immediately superior to the lease of the qualifying tenant loses his entitlement to rent but remains liable to pay rent to his landlord, the value of the interest after the grant of the new lease will often be negative.

  4. It may be helpful if we adopt a defined vocabulary for the purposes of this decision. The "competent landlord", ie the grantor of the new lease, may be the freeholder or he may be a leaseholder. In each of the present cases the competent landlord is the freeholder, and we will therefore refer to him as such. There may be more than one intermediate leaseholder, but in none of the present cases is there more than one. We will refer to the intermediate leaseholder in each case as the leaseholder. The tenant we will refer to as the tenant: so that the three parties in each case are referred to as freeholder, leaseholder and tenant. The interest of the leaseholder in each case includes not only the particular flat for which a new lease is granted but other flats as well. We will use the term the intermediate lease when referring to the entirety of that...

To continue reading