Themeline Limited v Vowden Investments Limited (in administration)
Decision date: 20 April 2011
Neutral citation: [2011] UKUT 168 (LC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned valuation and contractual allocation issues arising from collective enfranchisement of 39 Wilton Crescent, notably whether the nominee purchaser could insist on a bespoke contractual covenant preserving the valuation-date physical state of Flat 1 and whether the intermediate owner (Vowden) was entitled to a share of marriage value and on what basis. The Tribunal rejected the protective contractual clause as inappropriate and upheld LVT’s refusal to imply such a term, allowed Vowden’s claim to a share of marriage value, but restricted marriage value to that attributable to participating tenants obtaining new long leases of their individual flats (excluding an uplift premised on grant of a single lease of the whole building). The valuation figures were adjusted accordingly.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
A purchaser under collective enfranchisement is not entitled to a non-standard contractual covenant that effectively alters or duplicates rights and liabilities governed by existing leases up to contract; valuation assumptions should not be modified by inserting such a covenant. Paragraph 4(2) of Schedule 6 limits recoverable marriage value to the increase in value attributable to participating tenants’ ability to obtain new long leases of their respective flats, and excludes uplift based on assuming a single unified lease of the whole building.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment notes practical difficulties with imposing non-standard price abatements where the vendor is insolvent or subject to security (administration and a bank charge), suggesting such arrangements may impinge on secured creditors’ statutory entitlements. It also observes that the possibility of reconversion to a single house does not, without clearer statutory basis, displace the ordinary, narrow interpretation of paragraph 4(2).