Rosen v Trustees of Campden Charities

For the valuation regime in section 9(1A)(d) of the Leasehold Reform Act 1967, an improvement must be made to an existing house and premises. Building the first house on a bare site provides the house; it does not improve a house and premises.

Work undertaken as the consideration for a valuable building lease is not an improvement at the tenant's own expense merely because it increases the property’s value. Further, a person is a predecessor in title only if the relevant tenancy was vested in that person when the work was done.

The appellant, successor in title to a 1937 long lease of a house at Kensington Gate, sought to enfranchise under the Leasehold Reform Act 1967. The terms of an earlier building agreement had been lost, but expert evidence established that the original builder was to construct the houses before becoming entitled to leases.

The Leasehold Valuation Tribunal, and then the Lands Tribunal, treated the 1852 and 1937 leases as a single tenancy under section 3(3). They decided that the original construction of the house was not an improvement for section 9(1A)(d). The appeal by case stated concerned whether that construction required a reduction in the statutory enfranchisement price.

1. Appeal dismissed unanimously. Evans-Lombe J gave the reasons, with Ward and Otton LJJ agreeing. The original construction did not reduce the statutory price under section 9(1A)(d) of the Leasehold Reform Act 1967.

2. The expression any improvement is relative. In its statutory context, it refers to an improvement of the house and premises being valued, not to an improvement of whatever land was originally demised. Section 2(3) shows that premises do not exist independently of a house. The erection of a new house on a bare site is therefore provision of the house, rather than improvement of a house and premises. The court applied the analogous reasoning in Sainty v Minister of Housing and Local Government 1964, 15 P&CR 432.

3. The same conclusion followed from the statutory purpose. Section 9(1A) seeks the open-market value of the house and premises, subject to disregarding value added by qualifying tenant improvements. A builder who incurred construction costs in return for a valuable 99-year lease had received the equivalent of value for that expenditure. There was no principled distinction between that bargain and payment of a premium for a valuable lease of an already-built house.

4. In alternative reasoning, the original builder was not a predecessor in title when construction occurred. He could protect his contractual interest, but could not obtain specific performance of the lease until he had performed the building condition. A subsequently granted lease, even if its term was backdated, did not retrospectively make him a tenant in law or equity while building work was undertaken.

5. Nor did the old recitals use of the words let and letting establish a tenancy. Under section 45(6) of the Law of Property Act 1925, the recitals were displaced insofar as proved inaccurate, and the words were in any event ambiguous. Estoppel by deed likewise failed.

• Court of Appeal: Dismissed the tenant’s appeal by case stated from the Lands Tribunal.
• Lands Tribunal: On 30 July 1999, held that the original construction was not a qualifying improvement under section 9(1A)(d) of the Leasehold Reform Act 1967.
• Leasehold Valuation Tribunal for London: Determined the statutory price payable for transfer of the freehold under section 9(1A) of the Leasehold Reform Act 1967.