(1) 31 Cadogan Square Freehold Limited (2) 37 Cadogan Square Freehold Limited v The Earl Cadogan
Decision date: 16 September 2010
Neutral citation: [2010] UKUT 321 (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 methodology and the treatment of future redevelopment value when determining the price payable by the freeholder under statutory leasehold enfranchisement for 31 and 37 Cadogan Square. The Tribunal rejected the LVT's "top-down" approach and adopted a "bottom-up" method, starting with agreed flat values and adding a modest uplift (15% of potential development value) to reflect the prospect of redevelopment in 2023, with deferment (later fixed at 5.5%) applied separately. Final purchase prices were determined 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
When valuing a reversion that may yield redevelopment value at a future date, the correct approach is to ask how a prudent, properly advised hypothetical purchaser would assess the probability and risks of realising that redevelopment value at the reversion date and to start from the agreed, certain value as flats (a bottom-up approach), adding a cautiously discounted proportion of potential future uplift rather than treating redevelopment as certain and lightly discounting from a top-down redevelopment value.
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 Tribunal indicated that prior LVT/Lands Tribunal decisions and post-valuation planning decisions may be admissible and relevant but their weight depends on context and they are not binding; hearsay can be admissible under the Civil Evidence Act with weight for the tribunal to determine. It also suggested a hypothetical purchaser would not base valuation on speculative two-stage or other opportunistic stratagems.