Walker Morris insolvency lawyers have successfully defended a major Court of Appeal case for its clients, the joint administrators of Vowden Investments, which determines the way real estate is valued on collective enfranchisement.
The case involved the administration of Vowden Investments, a London-based property developer, and provided clarification on the interpretation of a complex area of law specifically in relation to the way properties are valued under the statutory collective enfranchisement regime.
Vowden owned a number of residential properties in central London. When Vowden was placed in administration by its major creditor, the administrators were faced with a claim for collective enfranchisement in relation to a four-storey townhouse in central London that was divided into three self-contained flats. Vowden held a 125-year lease of the top-floor flat.
The tenants of the other two flats, via nominee company Cravecrest, exercised their right to acquire the freehold interest of the building, which included the acquisition of any intermediary leases. Due to the structure of the leases, Vowden’s lease was an overriding interest that was also capable of being acquired. It was the valuation of these intermediary leases (including Vowden’s leasehold interest) that was in dispute.
The Court of Appeal was asked to determine whether the potential increase in value (agreed to be £2m) by reinstating the property as a single home, and the potential to develop the roof space as a fourth floor, should be reflected in the price being paid to Vowden. Cravecrest said that it should not and that the valuation be reduced accordingly. Vowden, together with the other respondent, argued that it should be included.
Timothy Dutton QC, instructed by Walker Morris, successfully argued that the interpretation of the relevant statute does allow Vowden to benefit from the ‘development value’. This resulted in a final valuation of £6.85m of which £3.15m will be payable to the administrators of Vowden, a gain for the administrators in the region of £1m. Cravecrest has applied for permission to appeal to the Supreme Court.