Woodrolfe Park Freehold Limited v Drake-Lewis

For a notice to enfranchise under the Leasehold Reform Housing and Urban Development Act 1993, the tenant’s proposed price must make at least a realistic assessment of the statutory valuation components. A landlord may challenge a notice where the price is unrealistically low in the extreme sense identified in Cadogan v Morris, but the threshold is high. Marriage value is not necessarily substantial and may be nil or very small, particularly where the leases have a long unexpired term. An appellate court will not grant permission merely because a valuation appears surprising or because the lower court’s reasons could have been fuller, where no real prospect of establishing the required extreme unreality is shown.

The landlord applied for permission to appeal from a decision of the Colchester County Court, in which His Honour Judge Nicholas Brandt held that a notice to enfranchise served under section 33 of the Leasehold Reform Housing and Urban Development Act 1993 was valid on one preliminary challenge.

The notice proposed an enfranchisement price of £16,000. The landlord argued that the price was wholly unrealistic, particularly because it attributed little or no marriage value. The landlord had not served a counter-notice, so valuation by a tribunal was unavailable if the notice remained valid. A separate challenge concerning the person serving the notice remained outstanding. The renewed application therefore raised both a jurisdictional issue about whether the lower court’s decision was final and the merits of the valuation challenge.

1. Application refused. The landlord had not shown a sufficiently real prospect of success to justify permission to appeal.
2. The jurisdictional issue was resolved by the interpretation given in Tanfern Ltd v Cameron Macdonald to the Access to Justice Act 1999 (Destination of Appeals) Order 2000. A decision finally determining an aspect of a claim, including an issue directed to be heard separately, may be a final decision for the purposes of the Order, even though other issues remain.
3. The statutory valuation under Schedule 6 to the Leasehold Reform Housing and Urban Development Act 1993 includes the freeholder’s interest, the freeholder’s share of marriage value and any compensation. Marriage value means any increase in the aggregate value of the relevant interests attributable to the tenants’ ability, after acquisition, to obtain new leases without premium and without restriction as to term. The word “any” permits marriage value to be nil or very small, especially where the existing lease is very long.
4. The lower court had erred in its reasoning concerning security of tenure under Part 1 of the Landlord and Tenant Act 1954. That error was immaterial on the figures because correcting it would make little difference to the valuation. The dispute about yield also did not disclose an arguable error with substantial financial consequences.
5. Although the proposed marriage value appeared surprising, the tenant’s valuation was not alleged to be other than bona fide. The evidence did not establish that the notice was unrealistic in the extreme sense required by Cadogan v Morris. The order was expressed as an outright declaration of validity despite the outstanding second challenge, and Lord Justice Mance indicated that correction under the slip rule appeared appropriate.

• Court of Appeal (Civil Division): renewed application for permission to appeal refused. The appeal concerned the Colchester County Court decision of 18 July 2002, in which His Honour Judge Nicholas Brandt held that the notice was valid on the valuation challenge.
• Earlier permission applications: permission had previously been refused by the county court judge and by a single judge of the Court of Appeal.