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You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Right Honourable Charles Gerald John Earl Cadogan v Management Company Ltd [2004] EWLands LRA_29_2003 (30 July 2004) URL: http://www.bailii.org/ew/cases/EWLands/2004/LRA_29_2003.html Cite as: [2004] EWLands LRA_29_2003

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[2004] EWLands LRA_29_2003 (30 July 2004)

LRA/29/2003

LRA/30/2003

(Consolidated)

LANDS TRIBUNAL ACT 1949

LEASEHOLD ENFRANCHISEMENT – Collective enfranchisement – Head Lessee's right to appeal – Effect of service charge on value of intermediate interest – Caretaker's flat – whether cost of providing accommodation "including loss of rack rent" includes rack rental value not lost.

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE LEASEHOLD

VALUATION TRIBUNAL OF THE LONDON RENT ASSESSMENT PANEL

BETWEEN

THE RIGHT HONOURABLE

CHARLES GERALD JOHN EARL CADOGAN

Appellant

and

44/46 LOWER SLOANE STREET

MANAGEMENT COMPANY LIMITED First Respondent

and

HENRY McHALE

Second Respondent

Re: 44/46 Lower Sloane Street

London SW1W OBX

Before: His Honour Judge Michael Rich QC

and N J Rose FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on Tuesday 27 July 2004

Anthony Radevsky, instructed by Pemberton Greenish, solicitors, for the Appellant.

The first respondent did not appear and was not represented.

Mr McHale in person.


 


DECISION

Introduction

1. By a Decision dated 19 June 2003 the Leasehold Valuation Tribunal for the London Rent Assessment Panel ("LVT") determined the premium to be paid by the First Respondent, 44/46 Lower Sloane Street Management Company Limited ("the Purchaser") on the collective enfranchisement of 44 and 46 Lower Sloane Street, London, SW1 OBX under the Leasehold Reform Housing and Urban Development Act 1993, at £882,000. The Appellant, the Earl of Cadogan, is the Freeholder of the properties, and we will so refer to him. Before the LVT the Appellant had been the applicant for the determination of the premium and the Purchaser had been the respondent. The Second Respondent, Mr Henry McHale (to whom we will refer as Mr McHale), holds head-leases of each of the two buildings, respectively dated 7 March 1980 and 28 July 1981, in each case for a term expiring at Michaelmas 2045. The participating tenants, who have nominated the Purchaser, hold underleases granted by the original head-lessee for terms expiring immediately before the head-lease. The Decision apportioned the premium £761,000 to the Freeholder and £121,000 to the head-lessee.
2. In assessing the amount of the premium and its apportionment the LVT, at paragraph 6.3 of its Decision, recorded that

"The Tribunal accepts that the underleases … provide in paragraph 3 of the Third Schedule for the 'cost of employing a housekeeper … (including loss of rack rent thereon)' to be recovered via service charge. It therefore determines that the valuation of the intermediate lease should take account of loss of rack rent for the Caretaker's flat."

3. By a notice of appeal dated 16 July 2003 the Freeholder appealed to the Lands Tribunal on the ground that "The LVT wrongly determined that the valuation of the intermediate lease should take account of loss of rack rent for the caretaker's flat". He otherwise accepted the LVT's valuation and, on that basis, the effect of allowing the Freeholder's appeal would be to reduce the premium to be paid by the Purchaser from £882,000 to £845,750 (Appendix 1). The effect of excluding the rental value of the caretaker's flat, however, is to benefit the Freeholder, because it increases the marriage value and the Freeholder's share of marriage value. Thus, the reduced premium would be apportioned as to the Freeholder £818,650 and £27,100 to Mr McHale.
4. Mr McHale, as well as being the head-lessee, also holds an underlease of Flat 1 at No.44 and is one of the participating tenants who nominated the Purchaser in accordance with the Act. He did not himself apply to be a party before the LVT, but as appears from paragraph 5.2 of the LVT's Decision, he was permitted to appear before the LVT both "as intermediate leaseholder and as appointed representative of the respondent long leaseholders". On 29 September 2003, he lodged a notice of intention to respond to the Freeholder's appeal in the name of the Purchaser. Since it is contrary to the interest of the Purchaser to resist the Freeholder's appeal, he has a direct conflict of interest in responding to the appeal on its behalf. Unfortunately, this difficulty was not identified until immediately before the hearing. On the Tribunal's pointing it out, however, the Purchaser resolved not to resist the appeal, but the Tribunal, with the Freeholder's consent, heard submissions from Mr McHale on the Freeholder's appeal.
5. On 16 July 2003, Mr McHale also gave notice of appeal against the LVT's Decision. The appeal was said to be in his name, although he signed it as "participating tenant and representing other participating tenants and the nominee purchaser". The grounds were (1) to challenge the LVT's valuation of the rack rent for the caretaker's flat (2) to challenge the valuation of the marriage value and (3) to challenge the LVT's deferment of the freehold reversion. In an accompanying letter he added a fourth area of challenge, namely as to the rate of capitalisation of his profit rent under the head-lease adopted by the LVT. The first and fourth grounds were both directed to increase the valuation of Mr McHale's interest and would, if successful, have the effect of increasing the premium to be paid by the Purchaser as well as, by reason of the impact on the apportionment of the marriage value, reducing the Freeholder's share of the premium. The second and third grounds would, if successful, reduce the premium to be paid. The third ground indeed would reduce the marriage value in part at the expense of Mr McHale as well as at the expense of the Freeholder and is therefore a ground of appeal contrary to Mr McHale's own interest. On the other hand, the reduction in the premium which would result from the appeal on the fourth ground would not only be entirely at the Freeholder's expense, but would also, by reason of the impact of such reduction upon the apportionment of the marriage value, benefit Mr McHale also.
6. It is true to say that the effect of the third ground upon the premium to be paid would, if it were to succeed, be greater than the adverse effect, from the Purchaser's point of view, of Mr McHale's first and fourth grounds. Mr McHale puts the combined effect of all four grounds upon the premium to be paid as being to reduce it from £882,000 to say £274,300, but the apportionment would increase Mr McHale's share from £121,000 to about £131,000, whilst it is the Freeholder's share that is reduced from £761,000 to say £143,000. This reflects the value to Mr McHale of grounds other than the third ground. It is not therefore necessary to review the figures further in order to identify the conflict of interest between Mr McHale and the Purchaser, which Mr McHale accepts has not been explained to the other participating tenants who would, if the Purchaser company were properly constituted, represent the majority control. Mr McHale indicated that in fact shares remain to be issued and it appears that the company may not yet have been properly constituted.
7. The Freeholder gave notice of intention to respond to Mr McHale's appeal on 8 September 2003, but in his statement of case dated 25 November 2003 said at paragraph 1:

"It is noted that Henry McHale is described as the Appellant. The Respondent to the application to the [LVT] was [the Purchaser]. That company is the only competent Appellant, and should be substituted as the Appellant in the title to this appeal, assuming it wishes to appeal."

8. Nevertheless, by Order dated 3 December 2003, made on the application dated 24 November 2003 of the Freeholder with the consent of Mr McHale, the two appeals were consolidated and Mr McHale was appointed as Second Respondent to the consolidated appeal. Although it appears to us that what was said by the Freeholder was probably right, subject to a proper understanding of Mr McHale's position before the LVT, we have not been invited to consider what effect the Order dated 3 December 2003, made on the Freeholder's own application, may have upon the Freeholder's right to object to Mr McHale's pursuing that part of his appeal which is in his interest rather than that of the Purchaser.
9. Although the Order of 3 December 2003 permitted the parties to call two expert witnesses each, Mr McHale gave notice to the Registrar, which was treated as being on behalf of both Respondents, that he did not intend to lodge expert valuation evidence, which as it appears to us would have been necessary if he wished to pursue the first ground of appeal as to the valuation of the caretaker's flat. He said, however, that he intended to rely on his own "expert witness report on the subject of the correct application of discounted cash flow techniques". That report does not identify the expertise which Mr McHale claims and, since it is prepared by a person with an interest in the proceedings, it is unlikely to carry the weight that would be attached to a report by an independent expert. Its subject matter would, however, be of relevance to Mr McHale's third and fourth grounds of appeal. The second ground we understand to depend exclusively on legal argument.
10. At the opening of the hearing we raised the question of whether the Purchaser should not be substituted for Mr McHale as Appellant in the appeal which he brought. On Mr McHale's application and upon terms that Mr McHale should pay the costs thrown away, we adjourned the issues raised by his appeal until the Purchaser has had an opportunity to apply to be substituted for Mr McHale in his appeal. Mr Radevsky accepted that, in view of the paragraph in the Freeholder's Statement of Case, which we set out at paragraph 7 above, the Freeholder would have difficulty in resisting such an application if the Purchaser agreed to pay interest on the premium eventually determined, at 8% per annum from 27 July 2003 until the first day of the hearing of such appeal. We have, in spite of his conflict of interest, allowed Mr McHale to speak on behalf of the Purchaser in regard to the application for an adjournment and the withdrawal of its opposition to the Freeholder's appeal. We would be minded, if he applied and were duly authorised to do so, to allow him to represent the Purchaser on such application to be substituted, although we think that the Purchaser would be better advised to be separately represented immediately. We would not be minded to allow Mr McHale to represent the Purchaser on an appeal where he would have a clear conflict of interest with the Purchaser. Whether or not he did have such conflict depends, of course, upon the scope of the appeal as proposed to be continued. If, on any basis, he wishes to be allowed to pursue those parts of his appeal which are contrary to the interest of the Purchaser, we will not hear him unless we are satisfied that the Purchaser has been properly constituted independently of Mr McHale, and he has given notice to it of his intention to apply to do so. We will not, of course, allow him to represent the Purchaser on any hearing of any application which he makes for that purpose.
11. Such appeal by the Purchaser, if substituted for Mr McHale, could not include grounds such as his first and fourth grounds, which are solely for the benefit of Mr McHale. If Mr McHale wishes to pursue them he will have to satisfy the Tribunal as to its jurisdiction to entertain an appeal from him, having regard to his status before the LVT, which does not appear to be as a party.

The Freeholder's Appeal

12. The Freeholder appeals against the determination of the price payable for Mr McHale's intermediate interest, because, as we have noted in paragraph 3 above, the attribution of a value of £51,978 to the head-lessee's right to recover, by way of service charge from the occupying tenants, a rack rent for the caretaker's flat, not only adds that sum to the premium payable by the Purchaser, but also affects both the quantification of the marriage value and its apportionment as between the Freeholder and Mr McHale. The net effect is to increase the Freeholder's share of the reduced premium paid by the purchaser, from £751,000 determined by the LVT to say £818,650.
13. Mr McHale's interest falls to be valued in accordance with Paragraph 7(1) of Part II of the 6^th Schedule to the Act., that is to say, mutatis mutandis, in the same way as the freehold interest. It is

"the amount which .. that interest might be expected to realise if sold on the open market by a willing seller …"

The possible bids by persons with an interest in the property are excluded by sub-paragraphs 3(1A) and 7(1A). The valuation is to be made on the assumption set out in paragraph 3(1) (d) that

"the vendor is selling with and subject to the rights and burdens with and subject to which the conveyance to the nominee purchaser ... is to be made..."

Thus, any right to be paid service charge by non-participating tenants is to be taken into account and the right to receive service charges from the participating tenants under the under-leases is part of the open market value of the head-lease. It, however, adds to that value only insofar as such service charges may exceed the outgoings which the head-lessee, whether under the head-lease or in his capacity as under-lessor, has covenanted to incur.

14. The LVT therefore had to construe the provisions of the underleases to determine whether, as contended by Mr McHale, they entitled the head-lessee to recover by way of service charge sums in excess of his outgoings, namely the rack rental value of the caretaker's flat which was included within his demise and for which he paid no rent and had covenanted to use only as rent-free accommodation for a caretaker. It was conceded in front of the LVT, that Mr McHale was not in fact levying any such charge as part of the service charge demanded from the tenants. Had they been represented at the LVT hearing by someone concerned to protect their interest rather than to advance his own, they might well have contended that even if, on their proper construction, the underleases did entitle him to recover such sums, the capital value of such right might be diminished by the uncertainty attaching to it. No such point was taken, and the sole ground of appeal has been as to the taking of the rack rental value into account at all.
15. The matter was determined on the basis that all the underleases were in the same form and together provided for 100% of any recoverable costs, so that the issue was solely whether the rack rent was to be brought into account for the purpose of assessing the service charges under the specimen underlease before the LVT. Mr Radevsky sought to amend the notice of appeal to allege that the underleases were not in similar form and did not together provide for recovery of 100% of the items recoverable as service charge (actually called "maintenance charge" in the underlease). If this is right, it may have wider implications for the valuation than merely whether the sum determined by the LVT as the value of the right which, they held, arose under the specimen underlease should be treated as part of the value of Mr McHale's interest. If the underleases require the provision of services without full recovery of the cost of doing so, the headlease may actually be burdensome rather than valuable. We did not, however, think it fair to allow such amendment unless Mr McHale was also to be allowed to raise at least the points taken in his first ground of appeal, which, as we have already set out, are not points to be taken by the Purchaser. This Decision is, accordingly, confined to the issue of construction of the head-lease and the underleases raised in the Freeholder's grounds of appeal. Whether any other issue may be raised by any party, will be determined in the context of any application to substitute the Purchaser for Mr McHale on his appeal, or for him to be allowed to continue with those elements of his appeal which are contrary to the interest of the Purchaser, and upon which the Purchaser may wish to be heard.
16. The headlease of No 44 contains at Clause 2(11) a covenant against using

"any part [of the demised premises] otherwise than as follows …

Basement A Caretakers flat"

By clause 2(12)(c) the headlessee covenants:

" To use its best endeavours to provide for the demised premises throughout the said term a full-time Caretaker … who shall reside in the Caretaker's flat rent-free as a licensee on a service basis …"

The headlease of No 46 contains a covenant at clause 2(12)(c) as follows:

" To provide for the demised premises throughout the said term a Caretaker … who shall reside in the Caretaker's flat rent-free as a licensee on a service basis …PROVIDED ALWAYS that for as long as this Lease and the Lease of No 44 Lower Sloane Street are both vested in the Lessee then the above-mentioned duties may be performed by the caretaker of No 44 ... and the basement together with the ground floor of the demised premises may be used together as a single private residence in one household only".

17. That is the arrangement that has been made and the absolute covenant to provide a caretaker for No 46 has been complied with by employing the caretaker of No 44 to perform the duties required under the lease of No 46. It is the flat provided to such caretaker in No 44, which the head-lessee covenants that he will occupy rent-free, that Mr McHale claims has a rental value for the purpose of valuing his interest in the head-leases.
18. The basis of such claim is the definition of maintenance contribution contained in Clause 2(4) of the underlease of Flat 2 at No 44 granted to the Countess of Sandwich by the original head-lessee on 29^th August 1980, which underlease has been accepted as being in a standard form for all the flats in the two buildings. By that sub-clause the under-lessee covenanted to pay a proportionate part of:

"the expenses and outgoings incurred by the Lessor in the repair maintenance renewal and insurance of the Building and the provision of services thereon and the other heads of expenditure as set out in the Third Schedule hereto such payment (hereinafter called 'the maintenance contribution')"

19. The subsequent provisions of the sub-clause provide for the certification of the "amount of the expense and outgoings incurred by the Lessor" (our underlining). The Third Schedule is then headed "Lessors expenses and outgoings and other heads of expenditure in respect of which the Lessee is to pay a proportionate part by way of maintenance contribution". The Schedule, in accordance with that description, contains a number of heads where the Lessor will be involved in actual outlay of expenditure. Paragraph 3 however refers to

"The cost of employing a housekeeper or housekeepers and also in respect of the accommodation (if any) within the Building to be provided for such housekeeper or housekeepers (a) the cost to the Lessor of outgoings for such accommodation and (b) the cost of providing such accommodation (including loss of rack rent thereon) and (c) maintaining the same in good and tenantable repair …" (our underlining).

20. "The Building" is defined in Clause 1(1) of the underlease to mean No 44 Lower Sloane Street. Mr McHale's submission, which was accepted by the LVT, was that the specific reference to paying a maintenance contribution including loss of rack rent on accommodation provided within the Building, entitled the underlessor to receive a sum equivalent to the rack rent of the caretaker's flat whether or not he suffered a loss by providing such accommodation.
21. In fact, of course, the head-lessee can incur no loss by providing the caretaker with accommodation in the basement flat, because he has covenanted to use that flat only as a caretaker's flat and to provide it to the caretaker rent-free. We put to one side Mr McHale's submission that the head-lessee might obtain permission to vary the user covenant, for example if the tenants no longer required a resident caretaker. That is not the basis upon which the basement flat was valued by the LVT, and there is no evidence before the Lands Tribunal as to what if any value is to be attached to that possibility. We also reject his submission that the covenants in the head-lease are irrelevant. By clause 4(1)(e) of the underlease the underlessor has covenanted

"to perform and observe the covenants .. contained [in the Lease under which he holds the Building]".

This has the effect both of entitling the underlessee to enforce the covenants contained in sub-clauses 2(11) and 2(12)(c) of the head-lease, and of making the provisions of the head-lease part of the factual context in which the underlease falls to be construed.

22. The language employed in the Third Schedule of the underlease does not, however, follow the language used in the head-lease. By clause 4(1)(d) of the underlease the underlessor covenants:

"So far as practicable [to] use its best endeavours to maintain the services of a housekeeper for the performance of such duties in the Building as shall from time to time be authorised by the Lessor".

23. Since the minimum duties which the full-time caretaker, which the head-lessee has covenanted to provide by clause 2(12)(c) of the head-lease and with the under-lessee by reason of clause 4(1)(e) of the underlease are already spelled out, this does not add to the under-lessor's obligations. Nor do we think that the references to a "housekeeper" in the under-lease rather than "Caretaker" in the head-lease affects the nature of the obligations, although it does indicate, as Mr Radevsky submitted, that the draftsman of the under-lease probably did not have the provisions of the head-lease in mind. The obligation in each case is expressed in the singular, and in the context, we do not think that the obligation in either the head-lease or the under-lease could be construed as obliging the underlessor to employ more than one caretaker and/or housekeeper. But paragraph 3 of the Third Schedule clearly entitles him to employ "a housekeeper or housekeepers". It is in respect of the accommodation "(if any)" provided within the Building for such housekeeper or housekeepers that the underlessor is entitled to recover "the cost of providing such accommodation (including loss of rack rent thereon)". Thus, improbable as it may be in practical terms, there could be accommodation provided other than the caretaker's flat in the basement which may be provided for a housekeeper, in respect of which the underlessor would be entitled to recover the cost of provision including loss of rack rent. Mr McHale in fact holds Flat 1 in No 44.
24. In our judgement, if paragraph 3 of the Third Schedule, in providing for the recovery of the cost of housekeeper's accommodation within the building, could only be referring to the caretaker's flat in the basement, the specific inclusion of "the loss of rack rent" within the definition of the "maintenance contribution" would, notwithstanding the provisions for certification of such charges being "incurred", entitle the under-lessor to include the rack rental value of the basement flat, precisely because the language is used in the context of the head-lease which requires it to be let rent-free. We would feel forced to give some meaning to the provision, rather than to reject it as meaningless or mere surplusage or an obvious mistake, and that is the only meaning that it could have. Once, however, it appears that the words could, at least theoretically, have meaning and effect even if they do not entitle the underlessor to recover a loss which he has not in fact suffered, there is no reason to construe "the cost of providing such accommodation (including loss of rack rent thereon)" as including a loss not incurred or suffered in an amount made irrecoverable by the terms of the head-lease. The underlease should not be construed as entitling the underlessor to recover as part of the maintenance charge a sum in excess of the cost of providing the services, unless such construction is unavoidable.
25. If this is the correct construction of the head-lease and the underlease, the effect would be as follows. The head-lease grants the basement flat to the head-lessee on the same terms as the common parts of the Building: it is not lettable and must be maintained. The premium paid on the head-lease would reflect this. The underlessees take their underleases on terms that they must pay the cost of the provision of a resident caretaker, but not the cost of providing as opposed to maintaining his accommodation, at least in so far as the underlessor does not incur cost in its provision. In the same way they are granted rights over the common parts and must pay the cost of their maintenance. The premium which would be paid for the underleases should reflect that package of rights granted by the underlease. Although it is right that the underlessees thus have the benefit of a resident caretaker more cheaply than if they had to pay for his accommodation by way of maintenance charge, they do so because the premium paid for the grant of the underlease should, if the provisions of the Third Schedule were properly construed at the date of the grant, have taken account of such benefit.
26. Accordingly we allow the Freeholder's appeal and, subject to the result of any further appeal arising out of Mr McHale's notice of appeal, we would determine the premium to be paid at £845,739, which we round up to £845,750. This will be apportioned between the Freeholder £818,650 and Mr McHale £27,100.
27. This Decision will take effect when, but not until any application as to costs has been determined. If an application is made to substitute the Purchaser as appellant on Mr McHale's appeal, any application as to costs should be made so that it can be considered at the same time. If no such application is made, then written submissions may be made by 10^th September 2004, and the Tribunal will give directions as to submissions in reply. A paragraph as to costs will then be added to this Decision.

Dated 30 July 2004

His Honour Judge Michael Rich QC

N J Rose FRICS


 


APPENDIX 1

44/46 LOWER SLOANE STREET, LONDON, SW1W OBX

RE-CALCULATION BY LANDS TRIBUNAL OF LVT'S DETERMINATION OF

PREMIUM PAYABLE, EXCLUDING CAPITALISED VALUE OF

RACK RENT OF HOUSEKEEPER'S FLAT

		Value without Act	Long leasehold value
Value of participating tenants' interests		£1,577,000	£2,672,350
Value of non participating tenants' interests		£1.144.775	£1,782,675
			£4,455,025
Proportion of participating: non participating in relation to long leasehold values		0.6:0.4
Valuation of freeholder's existing interest
No.44
Rent received	£1,200
YP 42.42 yrs @ 7%	13.4758	£16,171
Rent review at 25.12.2023
Additional rent received	£1,200
YP 21.75 yrs @ 7%	11.0085
Deferred 20.67 yrs @ 7%	0.247	£3,263
			£19,434
No.46
Rent received	£1,000
YP 42.42 yrs @ 7%	13.4758	£13,476
Rent review at 25.12.2010
Additional rent received	£250
YP 34.75 yrs @ 7%	12.9248
Deferred 7.67 yrs @ 7%	0.5951	£1,923
Rent review at 25.12.2020
Additional rent received	£250
YP 24.75 yrs @ 7%	11.6087
Deferred 17.67 yrs @ 7%	0.3025	£878
Rent review at 25.12.2030
Additional rent received	£250
YP 14.75 yrs @ 7%	9.0196
Deferred 27.67 yrs @ 7%	0.1538	£347
Rent review at 25.12.2040
Additional rent received	£250
YP 4.75 yrs @ 7%	3.9264
Deferred 37.67 yrs @ 7%	0.0782	£77
			£16,700
Value of ground rent income			£36,134
Reversion to freehold value
Value of participating flats	£2,672,350
Value of non-participating flats	£1,782,675
Total value	£4,455,025
PV of £1 in 42.42 yrs @ 6%	0.0844
		£376,004	£376,004
Value of freeholder's current interest				£412,138
Valuation of head lessee's current interest
No.44
Ground rents receivable	£1,600
Less ground rent payable	£1,200
Profit rent	£400
YP 42.42 yrs @ 9% + 2.5%	9.6608	£3,864
Rent review at 29.09.2023
Additional rent received	£1,600
Less additional ground rent payable	£1,200
	£400
YP 22 yrs @ 9% + 2.5%	8.0227
Deferred 20.42 yrs @ 9%	0.1721	£552
No.46
Ground rents receivable	£1,800
Less ground rent payable	£1,000
Profit rent	£800
YP 42.42 yrs @ 9% + 2.5%	9.6608	£7,729
Rent review at 25.12.2010
Additional rent received	£450
Less additional ground rent payable	£250
Profit rent	£200
YP 34.75 yrs @ 9% + 2.5%	9.225
Deferred 7.67 yrs @ 9%	0.5163	£953
Rent review at 25.12.2020
Additional rent received	£450
Less additional ground rent payable	£250
Profit rent	£200
YP 24.75 yrs @ 9% + 2.5%	8.3561
Deferred 17.67 yrs @ 9%	0.2181	£364
Rent review at 25.12.2030
Additional rent received	£450
Less additional ground rent payable	£250
Profit rent	£200
YP 14.75 yrs @ 9% + 2.5%	6.8075
Deferred 27.67 yrs @ 9%	0.0921	£125
Rent review at 25.12.2040
Additional rent received	£450
Less additional ground rent payable	£250
Profit rent	£300
YP 4.75 yrs @ 9% + 2.5%	3.4377
Deferred 37.67 yrs @ 9%	0.0389	£40		£13,627
Marriage value calculation
Value of interests after enfranchisement
Freeholder	£0
Head lessee	£0
Nominee purchaser (from above)	£2,672,350		£2,672,350
(participating tenants)
Value of interests before enfranchisement (participating tenants only)
Freeholder
Value of freehold
reversion in participating
Flats	£225,546
Apportioned value of ground rent income	£21,680	£247,226
Head lessee
Total existing value	£13,627
Apportioned value of ground rent income	0.6	£8,176
Existing value of participating flats		£1,577,000
Total value before enfranchisement		£1,832,402	£1,832,402
	Marriage Value	£839,948
	50% of marriage value	£419,974
	Total enfranchisement price		£845,739	£845,739
Apportionment of enfranchisement price
Freeholder – existing interest	£406,532
Proportion of marriage value	£412,138	£818,670
Head lessee – existing interest	£13,627
Proportion of marriage value	£13,442	£27,069
	Total Enfranchisement Price	£845,739	£845,739	£845,739
				Say £845,750
		Apportioned to Freeholder	£818,650	£818,650
		To Head Lessee	£27,100	£27,100
				£845,750