The answer to the question as to why the Court of Appeal rejected the appeal in Mundy was never quite as simple as it might have first appeared.
Firstly, the appeal was on limited grounds – and if it had been successful then the outcome would have been that the case would be sent back to the upper tribunal for them to re-determine the case. They might well have reached the same decision again, even if the appeal had succeeded.
Secondly, the grounds for seeking an appeal were essentially two-fold. The initial point being that the tribunal should not have rejected the Parthenia model ‘out of hand’ – it had said that it should not be used in future cases. The other point, which might be seen as being bigger and more ‘difficult’ was the so-called “circularity” argument.
In reaching its original decision the Upper Tribunal had rejected or found as flawed many of the traditional graphs of relativity such as the Gerald Eve Graph – and had opted for the concept of adopting the Savills 2015 Enfranchiseable graph as being robust in its statistical background. The argument was therefore that all transactions over many years since the earlier graphs had been introduced had in fact been influenced by them and were ‘tainted’ as such that they should be disregarded. This was a big leap to ask the court to make and the Court of Appeal declined to see things this way.
So, what does all this mean?
Well, if you are a leaseholder with a lease under 80 years things are very much ‘as they were’ – there is no radical shift in valuation that will make the pain of extending any easier. In fact – and this won’t make me popular – you could well say that relativities were higher before the initial Parthenia case in the tribunal. In fact, the examination of all of the graphs that took place as a result of this model has actually led to higher relativities ,as a lot of the earlier graphs that had been available to use that showed higher figures have now been discredited.
The area of interest will be if the Government seeks to prescribe what the Court described as the ‘holy grail’ – a method of determining relativity that would be reliable and simple to apply. Whether this will in fact be found remains to be seen.
Mark Chick is a Partner and Head of our Landlord & Tenant team.
If you need expert advice on extending your lease or buying your freehold or indeed, property matters more widely, please contact a member of our Landlord & Tenant team on email@example.com or call 020 7631 4141.