England and Wales Lands Tribunal

[2003] EWLands LRA_41_2002 (20 January 2003)

LRA/40/2002

LRA/41/2002

LANDS TRIBUNAL ACT 1949

LEASEHOLD ENFRANCHISEMENT – Price payable for freehold – landlords' reasonable legal costs – absence of reliable evidence – appeals dismissed

IN THE MATTER of APPEALS from Two DECISIONS OF THE LEASEHOLD

VALUATION TRIBUNAL OF THE MIDLAND RENT ASSESSMENT PANEL

by

(1) DAVID EDWARD ACTON

(2) CHRISTINE ACTON Appellants

(No Respondent)

Re: 109 Weymoor Road

Harborne

Birmingham B17 ORT

and

74 Glendon Road

Erdington

Birmingham B23 5HG

Before: N J Rose FRICS

Sitting in public at Finance and Tax Tribunal, Priory Court, 33 Bull Street,

Birmingham on 14 January 2003

The following case is referred to in this decision:

Acton and Acton v Knott, LRA/34/2001, unreported

The following case was also cited:

West Midland Baptist (Trust) Association Inc v Birmingham Corporation [1968] 2QB 188

Mr D E Acton, one of the appellants, for the appellants


 


DECISION

1. These two appeals by Mr David Edward Acton and Mrs Christine Acton ("the appellants"), which were heard together under the Tribunal's simplified procedure, are from decisions of the Leasehold Valuation Tribunal of the Midland Rent Assessment Panel ("the LVT"). They relate to the enfranchisement under the Leasehold Reform Act 1967 ("the 1967 Act") of two semi-detached houses in the Birmingham area. The first property is known as 109 Weymoor Road, Harborne, Birmingham B170RT. The LVT determined the price to be paid for the freehold interest at £4,033 plus the landlords' legal costs of £325 plus VAT and disbursements of £8, together with an agreed valuation fee of £250 plus VAT. The appellants' case was that the price payable for the freehold should be £4,700 and that the legal costs should be £979 plus VAT and disbursements of £8. The freehold price payable for the second property, 74 Glendon Road, Erdington, Birmingham, B23 5HG, was agreed prior to the LVT hearing. The landlords' costs payable by the tenants were determined at the same figures as in the case of 109 Weymoor Road. Before me the appellants claimed that the legal costs should be £1,472 plus VAT and disbursements of £8.
2. Mr Acton appeared on behalf of the appellants. He produced evidence in the form of written statements which he amplified briefly at the hearing. So far as the freehold valuation of 109 Weymoor Road is concerned, he pointed out that the LVT had commented that the evidence of Mr Brunt, the tenants' valuer, lacked detail. Mr Acton submitted that, in the light of that criticism, the LVT was obliged to accept the evidence of his own surveyor, Mr Sloan.
3. I am unable to accept that submission. In its decision the LVT said:

"Mr Brunt's evidence may lack detail but we cannot accept Mr Sloan's contention that a price of £107,500 would have been obtainable at the time and it is noticeable that his supporting evidence is all drawn from a period at least 10 months after the event. We are also of the opinion that the site does not have a generous frontage whatever the perceived advantages or disadvantages of its slope."

4. The elements of the valuation that were in issue were the standing house value, which Mr Brunt assessed at £95,000 and Mr Sloan at £107,500, and the percentage of that value attributable to the site, where the respective figures were 30% and 35%. The LVT's determination was based on 33% of a standing house value of £97,500. The LVT therefore decided that the correct figures lay between the respective positions of the two valuers. Given the deficiencies of the evidence presented by both sides, such a conclusion is entirely understandable. Mr Acton is a solicitor, not a valuer. No expert evidence has been submitted to me to justify a valuation different from the LVT's figure of £4,033, which I therefore uphold.
5. I should add that Mr Acton also relied on the price of £4,350 for which the appellants had purchased the freehold reversion at auction in August 2000. He suggested that this was the only accurate and relevant valuation evidence that should have been considered by the LVT, which should therefore have determined the price at a minimum of £4,350. That submission was rather surprising, given that it was the tenants' surveyor, Mr Brunt, who had referred to the auction price in support of his valuation, and Mr Acton who had questioned the admissibility of such evidence before the LVT.
6. In any event, the price determined by the LVT was only some 7.5% below the figure that had been paid at auction. The tenants' notice of claim to acquire the freehold was served 20 days after completion of that sale. It is possible that the price paid at auction was arrived at following competitive bidding from the tenants, the effect of which must be left out of account under s.9(1) of the 1967 Act. In addition, or alternatively, it may have included an element to reflect the hope of subsequently selling the freehold to the tenants on terms which would be more satisfactory to the landlords than would be available if the matter were referred to the LVT. Again, any such hope value must be left out of account. Whatever the reason, it is perfectly understandable that the LVT did not consider it necessary to explain the small difference between its determined figure and the auction price in its written decision, bearing in mind that Mr Brunt, who was the surveyor who had relied upon it, had produced a valuation which, at £3,582, was even further below the auction price than that determined by the LVT.
7. I now turn to the disputed legal costs. In each case the figures proposed by Mr Acton were based on an hourly charging rate of £145 applied to the time spent. This rate was that adopted by the district judges at the Coventry Combined Court Centre as a guideline for the purposes of the summary assessment of costs of partners and solicitors of at least four years post qualification experience. Mr Acton said that this was in line with the approach that had been adopted by this Tribunal (Judge Rich QC) in a previous appeal by the appellants concerning another house in Glendon Road, No. 83 (Acton and Acton v Knott, LRA/34/2001, unreported). He said there was no point in a landlord appealing to this Tribunal in order to obtain guidance on the correct approach to be adopted, if the LVT then ignored this Tribunal's decision. It was, he said, essential for landlords and tenants and their advisors to know for future occasions on other properties, and with some element of certainty, what if anything the LVT was relying upon when reaching its decision,

"and the reasons for accepting or rejecting such important issues arising from superior Lands Tribunal decisions."

8. Mr Acton has a direct financial interest in the outcome of these appeals, since the disputed legal costs will be paid to the firm of which he is the sole principal. Moreover, since there is no respondent, his is the only evidence before me. Against that background, it was of crucial importance for Mr Acton to take care to ensure that the evidence he gave was entirely impartial. Having carefully considered that evidence, I regret that I have come to the conclusion that he has failed to do so. My reasons are as follows. Although he strongly criticised the LVT for failing to follow Knott, he has not done so either. He has claimed for time spent in receiving and reading the tenants' applications to the LVT, although Judge Rich held that such costs were not recoverable. He has also claimed in full for time spent on receiving and reading cautions from the Land Registry, despite Judge Rich's observation that such work

"would seem to be difficult to bring, at least wholly, within the permissible head of costs under paragraph (a) of investigating title, and clearly is not recoverable under any other head."

Finally, Judge Rich commented critically on Mr Acton's failure to provide any material to identify the subject matter or timing of the costs claimed for letters and telephone calls; Mr Acton has made similar claims in the two current appeals, but has again failed to supply any supporting documentation. Mr Acton's evidence was also, in parts, inconsistent with the evidence he gave to the LVT. He there claimed £150 for future conveyancing work in each case, but he increased this before me to the figure of £225 each which had been fixed by the LVT. For letters and telephone calls he had previously claimed £116 for 109 Weymoor Road and £166.75 for 74 Glenmore Road; these figures were increased to £464 and £667 respectively for the purposes of the current appeals.

9. Thus, Mr Acton has chosen to pick and choose those parts of the LVT decisions and of Knott which suit his case, and to suggest different costs at the LVT and here for identical pieces of work. I regret that in my judgment the presentation of his case took the form of pure advocacy rather than incorporating the objective evidence that is required.
10. In the absence of any reliable evidence on the matter of legal costs, the appeals fail. I find that the price payable for the freehold interest in 109 Weymoor Road is £4,033 plus the landlords' legal costs of £325 plus VAT and £8 disbursements and the agreed valuation fee of £250 plus VAT. The total reasonable costs to be paid by the tenants of 74 Glendon Road are £575 plus VAT and disbursements of £8.
11. I make no order as to costs.

Dated: 20 January 2003

(Signed) N J Rose