P H CLARKE FRICSDate 29 October 2002Property: Hall Flat, 27 Belsize Park Gardens, London NW3Catchwords: LEASEHOLD ENFRANCHISEMENT – valuation costs – disallowed, not incurred to fix the premium but for proceedings in the LVT and Lands Tribunal – Leasehold Reform and Urban Development Act 1993, s.60
[1]This is an appeal from a decision of a leasehold valuation tribunal disallowing certain valuation costs in connection with the grant of a new lease under the Leasehold Reform and Urban Development Act 1993 (“the 1993 Act”).[2]The appellant (Mr Lionel Goldstein) is the landlord and the respondent (Mr Ronald Conley) is the tenant of the Hall Flat at 27 Belsize Park Gardens, London NW3 held on lease for 21¾ years from 25 December 1973. The lease expired on 25 September 1995.[3]On 27 March 1995 the tenant served notice under section 42 of the 1993 Act requesting the grant of a new lease. The landord’s counter-notice under section 45 was served on 24 May 1995. The premium for the new lease could not be agreed and the matter was referred for determination to a leasehold valuation tribunal (LVT) which determined the premium at £143,800. The landlord appealed to this Tribunal and the tenant lodged a cross-appeal (LRA/20/96 and LRA/5/98). By a decision dated 13 August and 18 September 1998 (HH Judge Rich QC, sitting as a member of the Lands Tribunal), allowed the landord’s appeal and determined the premium at £191,212.50. He awarded the landlord his costs. The costs order was the subject of an appeal and other proceedings, which had an unusual history but were heard by the Court of Appeal in May 2001 (Goldstein v Conley [2001] EWCA Civ 637; [2001] L&TR 30). Proceedings regarding the grant of the new lease were commenced in Central London County Court and on 7 August 2000 HH Judge Wakefield made an order that the question of the reasonableness of the surveyor’s fees claimed by the landlord be referred to a LVT under section 91(4) of the 1993 Act.[4]This matter was heard by a LVT for the London Rent Assessment Panel in September 2001. By a decision dated 16 October 2001 the tribunal determined that the only valuation costs recoverable by Mr Goldstein under section 60 of the 1993 Act were £587.50 payable to Moss Kaye Commercial. The tribunal rejected other valuation costs of £587.50 payable to Fineman Lever and £1,235 payable to Beust Citron & Co. On 3 December 2001 Mr Goldstein appealed against that decision to this Tribunal. On 23 October 2002 I held a hearing under the simplified procedure. Mr Goldstein appeared in person; Miss Edith Crowther appeared for Mr Conley (with leave of the Tribunal). At the close of the hearing I dismissed the appeal with a written decision to follow.[5]This appeal relates solely to valuation costs of £1,235 paid to Beust Citron & Co under an invoice dated 7 May 1997 addressed to Mr Goldstein’s former solicitors. The valuation services provided are described as “obtaining comparables as per instructions; making personal attendance upon 14 local estate agents in the Belsize Park/Highgate/Hampstead areas. Obtaining a list of tenancies at the offices of Camden Council.”[6]Mr Goldstein said that, following a meeting with Mr Conley in November 1994, he instructed Mr Eric Shapiro of Moss Kaye to prepare a valuation. Mr Shapiro charged a fee of £587.50. This is the amount allowed as valuation costs by the LVT. Mr Shapiro recommended that Mr Goldstein seek further advice and he instructed Mr Silver of Fineman 3 Lever & Co to prepare a valuation and a management company, Beust Citron & Co, to obtain comparable evidence. It is the costs of this latter which Mr Goldstein now seeks to recover under section 60 of the 1993 Act. He said that they are not excluded under subsection (5). This comparable evidence was used in presenting his case to the LVT and to this Tribunal. It was important to the success of the appeal to this Tribunal. The amount is fair and reasonable and compatible with section 60 costs. These fees were not claimed as part of the costs of the appeal to this Tribunal.[7]Miss Crowther said that the Beust Citron costs are not recoverable under section 60 of the 1993 Act. They were not incurred in order to fix a premium and for negotiation on that premium following the tenant’s notice, but to enable Mr Goldstein to put his case to the LVT and the Lands Tribunal. Subsection (5) of section 60 excludes valuation costs used in proceedings before a LVT. They appear to have been included in the costs awarded by this Tribunal, shortly to be re-assessed. Miss Crowther also referred to sections 43 and 48 of the 1993 Act. Decision[8]The relevant provisions of section 60 of the 1993 Act are as follows:- “(1) Where a notice is given under section 42, then (subject to the provisions of this section) the tenant by whom it is given shall be liable, to the extent that they have been incurred by any relevant person in pursuance of the notice, for the reasonable costs of and incidental to any of the following matters, namely –(a) ………………………………………(b) any valuation of the tenant’s flat obtained for the purpose of fixing the premium or any other amount payable by virtue of Schedule 13 in connection with the grant of a new lease under section 56;(c) ……………………………………... …………………………………….. (5) A tenant shall not be liable under this section for any costs which a party to any proceedings under this Chapter before a leasehold valuation tribunal incurs in connection with the proceedings.” 4[9]The landlord’s valuation costs recoverable under section 60(1)(b) are for the purpose of fixing the premium to enable the landlord to quote a figure to the tenant, hopefully to be settled by negotiation. He cannot recover under this section valuation fees incurred in connection with proceedings in the LVT if the premium cannot be agreed (e.g. for expert evidence or for representing the landlord at the hearing) (subsection (5), nor for expert evidence before this Tribunal on appeal.[10]The position is as follows. Mr Conley served notice under section 42 of the 1993 Act on 27 March 1995. Mr Goldstein obtained a valuation from Mr Shapiro of Moss Kaye who submitted an invoice on 13 July 1995 in the sum of £587.50 (inc. VAT). The LVT awarded these costs under section 60(1)(b), stating that they were satisfied that they were incurred in pursuance of the tenant’s section 42 notice and for the purpose of fixing the premium. I think that is correct. The tribunal then refused to allow the Fineman Lever valuation costs and the Beust Citron comparables costs on the grounds that both were incurred in connection with the LVT hearing and the subsequent Lands Tribunal hearing. Also it would not be reasonable to expect the tenant to pay Fineman Lever’s valuation costs, who were instructed because Mr Goldstein was dissatisfied with the Moss Kaye valuation. I think this decision is also correct.[11]The Fineman Lever costs are no longer claimed. It is clear from what Mr Goldstein told me that the Beust Citron costs were incurred, not for the purpose of a valuation to fix the premium, but in support of Mr Goldstein’s case before the LVT and this Tribunal. This is supported by correspondence put before me. On 7 June 2001 Mr Silver of Fineman Lever wrote to Mr Goldstein as follows:- “As requested, I write to confirm that you assisted in the Leasehold Valuation Tribunal proceedings, and later the Lands Tribunal proceedings in relation to the above matter, by seeking and obtaining details of comparable transactions in the locality. In this regard, you have informed me that in doing so, you acted as an employee of Beust Citron & Co.”[12]He wrote again on the same subject in more detail on 13 September 2001:- “As requested I can confirm that at the time that I was dealing with this matter, I was a Director of Fineman Lever & Co. I was instructed by you to represent you in front of the Leasehold Valuation Tribunal. I can confirm that you assisted me by providing me with details of comparable transactions and information from the Rent Register of Camden Council. You have informed me that Beust Citron & Co were employed by you to obtain this information. The above mentioned information formed an important element of the comparable evidence supplied to the LVT and subsequently the Lands Tribunal when this matter went to appeal.” 5[13]For the reasons given above I find that the LVT were right to disallow the valuation costs of Beust Citron & Co under section 60 of the 1993 Act. The appeal is dismissed. I make no order as to the costs of this appeal. DATED: 29 October 2002 (Signed) P H Clarke 6