Chung and another v Towey
Leasehold enfranchisement – Leasehold Reform Act 1967 – Valuation – Costs – Respondent long leaseholder giving notice to acquire freehold of bungalow – Respondent applying to first-tier tribunal for determination of purchase price – Appellant freeholders seeking to recover cost of valuation commissioned by them after respondent making application – Whether recoverable under section 9(4)(e) of 1967 Act – Whether “incurred in pursuance of the notice” – Appeal allowed
The respondent, as long leaseholder of a bungalow, served a notice on the appellant freeholders seeking to exercise the right to acquire the freehold pursuant to the leasehold enfranchisement provisions of the Leasehold Reform Act 1967. He subsequently applied to the first-tier tribunal (FTT) for a determination of the purchase price that he was to pay for the freehold. The appellants were dissatisfied with the FTT’s determination but were granted permission to appeal on a single issue only, concerning their entitlement to recover from the respondent a fee of £400 which they had incurred on a valuation of the property.
The FTT took the view that the appellants were not entitled to recover the valuation fee because the valuation had been commissioned only after the respondent made his application for a determination of the purchase price. It considered that, in such circumstances, the costs of the valuation had not been “incurred in pursuance of the notice” for the purposes of section 9(4) of the 1967 Act and therefore did not did not fall within the liability of the purchasing tenant, under section 9(4)(e), to pay the reasonable costs of the freeholders in obtaining a valuation.
Leasehold enfranchisement – Leasehold Reform Act 1967 – Valuation – Costs – Respondent long leaseholder giving notice to acquire freehold of bungalow – Respondent applying to first-tier tribunal for determination of purchase price – Appellant freeholders seeking to recover cost of valuation commissioned by them after respondent making application – Whether recoverable under section 9(4)(e) of 1967 Act – Whether “incurred in pursuance of the notice” – Appeal allowed
The respondent, as long leaseholder of a bungalow, served a notice on the appellant freeholders seeking to exercise the right to acquire the freehold pursuant to the leasehold enfranchisement provisions of the Leasehold Reform Act 1967. He subsequently applied to the first-tier tribunal (FTT) for a determination of the purchase price that he was to pay for the freehold. The appellants were dissatisfied with the FTT’s determination but were granted permission to appeal on a single issue only, concerning their entitlement to recover from the respondent a fee of £400 which they had incurred on a valuation of the property.
The FTT took the view that the appellants were not entitled to recover the valuation fee because the valuation had been commissioned only after the respondent made his application for a determination of the purchase price. It considered that, in such circumstances, the costs of the valuation had not been “incurred in pursuance of the notice” for the purposes of section 9(4) of the 1967 Act and therefore did not did not fall within the liability of the purchasing tenant, under section 9(4)(e), to pay the reasonable costs of the freeholders in obtaining a valuation.
Held: The appeal was allowed.
There was a distinction between the cost of a valuation, on the one hand, and, on the other, the cost of a valuer appearing at or conducting the proceedings before the FTT. The latter was not recoverable since the purchasing tenant was not liable for costs incurred by the freeholder in connection with the proceedings. However, the former was recoverable by the freeholder under section 9(4)(e) as costs incurred in pursuance of the notice.
It made no difference whether the valuation was commissioned before or after the purchasing tenant applied to the FTT for the determination of the purchase price. Section 9(4) did not differentiate between the various costs recoverable under subsections (a) to (e). Each of them had to be incurred in pursuance of the notice of claim in order to be recoverable and some would only be incurred after the application to the FTT; an example was the costs, within subsection (b), incurred in the eventual conveyance of the freehold interest, if a price could be negotiated.
The appellants had obtained their valuation for their own purposes and not for the FTT. The valuation was the purpose of valuing and calculating the purchase price for the freehold and, if need be, negotiating with the respondent’s valuer. The cost of that work was plainly envisaged in the 1967 Act as being recoverable. The valuation fee was accordingly payable by the respondent: Covent Garden Group Ltd v Naiva [1995] 1 EGLR 243 and Goldstein v Conley LRA/49/2001 applied.
The appeal was determined on the written representations of the parties.
Sally Dobson, barrister
Click here to read transcript: Chung and another v Towey
