(1) Cadogan Square Properties Limited (2) 31 Cadogan Square Freehold Limited (3) 37 Cadogan Square Freehold Limited (4) Cadogan Square Limited (5) Betul Erkman v The Earl Cadogan
Decision date: 3 December 2010
Neutral citation: [2010] UKUT 427 (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 fixed the deferment rates to be used when valuing five freehold reversions of Cadogan Square properties with unexpired leases of about 15.6–17.8 years. The Tribunal adopted the Sportelli formula (DR = RFR + RP − RGR) as the starting point, rejected the landlord's net-rental-yield/graph method for these term lengths, adjusted components for sub‑20 year terms and set specific deferment rates: 23, 38 and 42 Cadogan Square at 5.25% and 31 and 37 Cadogan Square at 5.5%. The Tribunal treated 31 and 37 as flats for deferment-rate purposes and left RFR at 2.25%.
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
The decision applies the Sportelli approach to determine deferment (DR = RFR + RP − RGR) using RFR of 2.25% and baseline Sportelli figures, but holds that for unexpired lease terms under 20 years valuation judgment informed by market evidence about the property cycle justifies adjusting components (in practice the real growth rate) rather than adopting a net-rental-yield/graph method; accordingly the Tribunal set the rates above.
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 expressed skepticism about mathematical smoothing devices that seek to avoid a step at 20 years as lacking economic justification, observed that net rental yields have limited relevance for very short terms and invited the Upper Tribunal to provide further guidance on precedent effect and methodology.