Fleur Marie Alberti v Cadogan Holdings Limited
Decision date: 9 March 2021
Neutral citation: [2021] UKUT 85 (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 how to value a leasehold reversion under s 9(1A)(d) of the Leasehold Reform Act 1967 when the tenant has carried out improvements. The Tribunal held that the statute requires treating the tenant's improvements as if never made on the valuation date, and to re-write the property's history so that inevitable consequences of that counterfactual (including planning status and any resulting unlawfulness of occupation as a single house) are assumed. The preliminary issue was decided for Mrs Alberti and that assumption will be applied when fixing the freehold price.
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 a statutory valuation requires comparing the property's value as it is with the value it would have had if tenant-made improvements had not been made, the valuer must adopt the counterfactual that the improvements were never carried out and take into account the inevitable consequences of that counterfactual history (for example, a different planning status). The "reality principle" permits departures from actual facts only to the extent the statutory hypothesis compels them; where the hypothesis entails unavoidable consequences those consequences must be assumed in valuation.
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 noted that the best market proxy for the unimproved property might be a neighbouring building that had remained divided into flats and shared the same planning status, and observed that general appeals to fairness do not resolve the interpretive point—the valuation consequences follow from the proper application of the statutory hypothesis. Other authorities illustrating the "reality principle" were discussed but were not decisive to the outcome.