Cravecrest Limited v The Sixth Duke of Westminster, The Earl of Home and Jeremy Moore Newsum Vowden Investments Limited
Decision date: 28 June 2012
Neutral citation: [2012] UKUT 68 (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 the price for collective enfranchisement of 38 Wilton Crescent, principally whether Vowden could withdraw its prior agreement that its overriding lease (ORL) be acquired and whether “development hope” value for reconversion to a single house could be reflected in valuations. The Tribunal refused Vowden's late amendment and held the prior agreement was finally agreed and binding; it also held development-related value may be included in separate valuations of the headlease and the ORL but must be reduced to reflect two-stage risk. The valuers were directed to apply a 5% risk discount (15% as an alternative) and the final premium was fixed at £6,856,500 on the 5% basis.
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: medium
From the judgment it can be identified that (1) an agreement that a superior lease will be acquired can be treated as “finally so agreed” for s.24 purposes even if expressed “subject to contract” where negotiations are complete and terms are not contingent, and (2) Schedule 6 valuation may reflect development or “hope” value in separate valuations of intermediate interests provided an appropriate discount is applied to reflect the risk of a two-stage unlocking process (5% where reasonable enquiries would have been made; higher if not).
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 made observations on statutory construction (urging that Schedule 6 be given its natural meaning and not strained to avoid outcomes unless grossly unfair) and commented on practical matters such as likely bank willingness to deal promptly to realise short-lived development opportunities; it also noted authority on interpreting bracketed words in para 3 and addressed procedural points about late valuation evidence and marriage value calculations.