Trustees of the Sloane Stanley Estate v Mundy [Court of Appeal]

The eagerly awaited case of Mundy was heard at the Court of Appeal on 16-17 January 2018 and the judgement was handed down on 24 January 2018.   CBG acted for the leaseholders (including Mr Mundy) at the Upper Tribunal and so were very keen to hear the result of this appeal. 

The Court of Appeal dismissed the appeal and upheld the decision of the Upper Tribunal, thereby rejecting the alternative methodology of calculating “relativity” – a key component in the calculation of lease extensions – put forward by Parthenia Limited (the Parthenia Model).      The Parthenia Model was based on data from prior to 1993 which it asserted was more appropriate in the calculation of a lease extension premium, given that the legislation required valuers to disregard the “real world” ie a world in which the Leasehold Reform Housing and Urban Development Act 1993 did not exist, when valuing a lease.     The current method is to rely on “relativity graphs” produced by the freeholders’ surveyors over many years which have now influenced the real world values in any event.    This remains the position. 

 The Upper Tribunal as affirmed by the Court of Appeal, held that even though the Parthenia Model was undoubtedly an impressive mathematical exercise and the current graphs were problematic, the main problem lay in the fact that when the model was used for one of the flats in the case, it produced a valuation that did not match the actual price paid for the flat just one week later than the date in question.   That was when the “clock struck 13”.      

 There was a lot of anticipation in the appeal by leaseholders who thought that their premiums would decease by as much as 30%.    However, it is important to note that the Mundy case involved a flat in Chelsea with a short lease.     It will therefore only apply to leases where “marriage value” applies ie when there is less than 80 years left to expire.    Further, if your flat is not in Central London, it is arguable that Mundy would have applied at all.     

 Nevertheless, the appeal has, quite rightly, put the focus on leasehold reform and given rise to calls for the government to make the process simpler.    

;You can protect yourself to a certain extent by seeking legal advice on your lease before it drops to below 80 years so that you do not have to deal with relativity at all.    CBG Law specialise in all aspects of enfranchisement and so please do give us a call on 020 7436 5151 or email Mark Brassey or Nicole Kalli on mb@cbglaw.co.uk or nk@cbglaw.co.uk to arrange an initial consultation.