Roberts & Anor v Fernandez

This is a renewed application for permission to appeal to the Court of Appeal. In this judgment I shall refer to the Leasehold Reform, Housing and Urban Development Act 1993 as “the 1993 Act”.

The appellants, who are husband and wife, are the joint freehold owners of a flat known as 70 Andace Park Gardens, 133-149 Widmore Road, Bromley, to which I shall refer as “the flat”. The appellants also own a large number of other flats in the area but they are not the subject of this appeal. The flat comprises one bedroom, kitchen, bathroom and living room. A lease of the flat was granted to the respondent for 99 years from 25 March 1986. The initial ground rent was £200 per annum subject to review every 25 years. It was increased to £358.68 per annum in 2011. A term of the lease is that every time it is assigned the freeholder receives one per cent of the sale price.

On 8 April 2013 the respondent gave notice to the appellants of her desire to exercise her right to acquire an extended lease under section of the 1993 Act. The claim was admitted by counter-notice served by the appellants on 22 April 2013. The respondent subsequently made an application to the First-tier Tribunal (Property Chamber) to determine the price payable for the extended lease. The First-tier Tribunal heard the application on 19 November 2013. Mr Morgan, a surveyor, acted both as expert witness for the respondent and also as advocate. Mr Roberts, who is a non-practicing barrister, represented himself and his wife as the freeholders.

The First-tier Tribunal had to apply the provisions of schedule 13 to the 1993 Act. The Tribunal heard the evidence and the submissions of the advocates. I will not go through all of their decision but amongst other matters they determined a capitalisation rate of 5.5 per cent, a deferment rate of 5.75 per cent, and they arrived at a final assessment of the premium payable at £10,052.

The appellants were aggrieved by the First-tier Tribunal’s decision and they appealed to the Upper Tribunal. The Upper Tribunal heard the appeal on 27 February 2015 and handed down its decision on 23 March 2015. The permission to appeal to the Upper Tribunal was on the basis of review. The Upper Tribunal upheld the First-tier Tribunal’s decision that relativity should be taken at 93.7 per cent; the Upper Tribunal reduced the deferment rate to 5.25 per cent; it increased the capitalisation rate from 5.5 to 7 per cent; and in the result it arrived at a premium which was only about £44 different from that assessed by the First-tier Tribunal. On that basis, applying the de minimis principle, the Upper Tribunal dismissed the appellants’ appeal.

The appellants were aggrieved by the decision of the Upper Tribunal and applied for leave to appeal to the Court of Appeal on three grounds. Firstly, the appellants contend that both tribunals erred in arriving at a figure of 93.7 per cent for relativity. Mr Roberts says that the Upper Tribunal did not properly address his arguments, did not take into account the fact that since the property crash of 2008 it is much more difficult to obtain mortgages for flats of the kind under consideration (certainly with shorter leases), and Mr Roberts says that the Upper Tribunal did not distinguish between current leasehold value as things stand and in the no-Act world.Secondly, Mr Roberts contends in his proposed appeal that the lease contains a number of onerous provisions as a result of which the value of the reversion is increased. Thirdly, Mr Roberts contends that the Upper Tribunal erred in increasing the capitalisation rate from 5.5 to 7 per cent. In this part of his appeal to the Upper Tribunal Mr Roberts suffered something of a boomerang effect in that he came out worse in relation to capitalisation rate than he was on the basis of the First-tier Tribunal’s decision.

The Upper Tribunal dismissed robustly the application for permission to appeal. In relation to relativity the Upper Tribunal said that Mr Roberts had accepted the validity of certain graphs which he proposes to challenge on appeal and which he told me today he proposed to challenge on appeal. In relation to onerous lease supplement the Upper Tribunal again saw no merit in the argument. So far as capitalisation is concerned the Upper Tribunal said that they had accepted the figure of 7.7 per cent which Mr Morgan had proffered in the course of his evidence-in-chief.

Mr Roberts on behalf of the appellants renewed his application for leave to appeal following refusal by the Upper Tribunal to the Court of Appeal. Sir Robin Jacob dealt with the matter on the papers. Sir Robin refused permission. He said that the Upper Tribunal had properly analysed the issues. It had given full reasons for its decision and for its refusal of permission. Furthermore, the threshold test for second appeals was not satisfied. Accordingly, said Sir Robin, there should be no permission to appeal to the Court of Appeal.

Mr Roberts applies today on behalf of both appellants at an oral hearing for permission to appeal to the Court of Appeal. At an early stage I did remind Mr Roberts of the difficulty which he faced, namely the restriction upon appeals to the Court of Appeal. What the appellants are seeking to do is to bring a second appeal. Therefore they must show not only that they have arguments with a real prospect of success but they must also satisfy the requirements of Rule 52.13(2) for a second appeal. That says the Court of Appeal will not give permission unless it considers that (a) the appeal would raise an important point of principle or practice or (b) there is some other compelling reason for the Court of Appeal to hear it. This is certainly not a case where there is a compelling reason for the Court of Appeal to hear the appeal; therefore I must focus on the issue whether the proposed appeal raises an important point of principle or practice.

It seems to me that all of the arguments which Mr Roberts wishes to deploy in the Court of Appeal are detailed submissions on valuation and related issues. It must be understood that the First-tier Tribunal and the Upper Tribunal are expert tribunals. The Property Chamber of the First-tier Tribunal and the Lands Chamber of the Upper Tribunal are regularly dealing with issues of the kind which arise here under the 1993 Act. I have looked carefully at all of Mr Roberts’ arguments as set out in his grounds of appeal, as developed in his skeleton argument, and also I have considered the way he put the points orally this morning. It seems to me that these are all detailed arguments for an expert tribunal. Mr Roberts has had the benefit of two hearings before expert tribunals. It is quite impossible to discern from the arguments which he puts forward any important point of principle or practice which merits a second appeal to the Court of Appeal. The points which Mr Roberts makes about the graphs are matters appropriate for the tribunals but not for the Court of Appeal. There is an issue as to whether or not Mr Roberts accepted the graphs relied upon by Mr Morgan without challenge. The Upper Tribunal says that Mr Roberts did; Mr Roberts says that he did not. That is not something which the Court of Appeal is going to be in a position to resolve.

So far as the mortgageability argument is concerned, it is clear that the Tribunal had that in mind. Also so far as the argument about the no-Act world is concerned, it is clear that the Tribunal had that in mind. Mr Roberts tells me that it was mentioned on a number of occasions during argument. Mr Roberts says that a deduction should have been made on that account but was not. That is not an important point of principle or practice which merits an appeal to this court.

I then come to the failure to apply an onerous lease supplement. Mr Roberts says that the Upper Tribunal misunderstood Millard Investments v Cadogan Estates (LON/LVT/1756/04) in that a reference in the Millard judgment to 0.1 per cent came out in the Upper Tribunal’s decision as 1 per cent. There may well have been a misunderstanding of Millard in that respect but I do not see how that affected the final decision of the Upper Tribunal in relation to the onerous lease supplement. The short point is that Mr Roberts has submitted to me as he has submitted to the tribunals that this should cause an increase in the value of the reversion and the Upper Tribunal has not accepted that point. A hearing in the Court of Appeal is not an occasion to rerun detailed arguments of that nature before this court.

Mr Roberts handed up to me a decision of the First-tier Tribunal concerning a flat in the Oasis block which is close by to the block of flats in which the property that is the subject of this application is located. Clearly Mr Roberts did better on the issues concerning the Oasis flat than he has concerning the flat at 70 Andace Park Gardens, but the Court of Appeal is not going to carry out an analysis of the First-tier Tribunal’s decision on the Oasis flat and the Upper Tribunal’s decision on 70 Andace Park Gardens and then interfere with the Upper Tribunal’s decision. That again is a misunderstanding of the function of the Court of Appeal.

The final proposed ground of appeal relates to capitalisation. Here Mr Roberts says the First-tier Tribunal got it right and the Upper Tribunal got it wrong, so the fact that he appealed to the Upper Tribunal on matters including that point has proved rather a boomerang for him. The Upper Tribunal say that Mr Morgan gave evidence that 7 per cent was the norm when rent reviews were at intervals of 20 years or more and the Upper Tribunal say that they accepted that evidence and they were entitled to do so. Mr Roberts says that Mr Morgan’s evidence was not correct. He should have said that he normally agreed capitalisation rates of 5 or 6 per cent. It is for the Upper Tribunal to decide whether they accept the evidence of a surveyor such as Mr Morgan. That is not an issue for the Court of Appeal.

I can see that there are arguments both ways in relation to 70 Andace Park Gardens, I can see that Mr Roberts did considerably better in relation to the Oasis flat than he did in relation to Andace Park Gardens, but I am totally unpersuaded that there are arguments which have a real prospect of success in the Court of Appeal or that this proposed appeal raises any point of principle or practice which comes anywhere near to satisfying the requirements for a second appeal as set out in Rule 52.13 of the Civil Procedure Rules.

In the result this application for permission to appeal is refused.