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You are here: Home / Latest News / Court of Appeal turns down Mundy case – unanimously

Court of Appeal turns down Mundy case – unanimously

January 24, 2018 //  by Sebastian O'Kelly

Chartered surveyor James Wyatt believes freeholders have been padding the costs of lease extensions by up to 50%. But his Parthenia mathematical model was rejected by the Court of Appeal today

The Court of Appeal has ruled against the Mundy case this morning.

In a unanimous ruling, the judges have also refused leave to appeal and awarded costs against Mundy, who was challenging the vested interests in leasehold with a statistically robust analysis of the untainted market evidence to value lease extensions and enfranchisement.

For leaseholders seeking to extend their leases, the ruling is a marked step in the wrong direction: the Parthenia model would have provided leaseholders with savings of up to 40 per cent.

In the view of LKP the set-back strengthens the argument for statutory imposed formula similar to those that exist in Northern Ireland and Scotland, whereby leaseholders can buy out the freehold for set multiple of annual ground rents.

Justin Madders MP has the second reading of his Bill to introduce precisely this measure next month. it is to be hoped that the government takes up the measure and it becomes law.

The Upper Tribunal of the property chamber had described Mr Wyatt’s Parthenia model as “a clock that struck 13”.

But the case did expose the flimsy methodology of all existing lease extension calculations – commissioned by vested interests in the leasehold sector.

But the case did expose the flimsy methodology of all existing lease extension calculations – commissioned by vested interests in the leasehold sector.

In his ruling, Lord Justice Lewison acknowledged that attempts to produce “the holy grail” – a definitive graph – by the Royal Institution of Chartered Surveyors had failed.

Further, that the Gerald Eve – for years the sector standard – was commissioned by the Duke of Westminster’s Grosvenor Estate.

The property tribunal acknowledged its flaws.

Property tribunal upholds lease extension ‘scandal’ that pays millions to freeholders

James Wyatt said:

“The Gerald Eve curve, with no statistical methodology or sales evidence, has tainted the market and meant leaseholders have overpaid hundreds of millions and the taxpayers have paid tens of millions in unnecessary tribunal costs.

“The Parthenia model using 7,969 flat and house sales from the untainted market and is peer reviewed is dismissed because it contradicts the sale price of a flat influenced by the Gerald Eve curve.

“Our methodology was described in the Court of Appeal as an ‘inconvenient truth for the entire industry’, and the existing situation as being an unwarranted transfer of wealth from leaseholders to freeholders.

The problem for Parthenia is that while it may be more mathematically robust, it draws on data before the 1993 Leasehold Reform, Housing and Urban Development Act, which changed the market by introducing enfranchisement.

In the succeeding 20 years, short leases have been transacted.

Lord Justice Lewison said:

“Sometimes markets behave irrationally. The tulip mania of the mid-17th century, the South Sea Bubble of the early 18 century, the railway mania of the mid 19-century and the dot.com bubble of the late 20th century are well known examples.

“Even in the absence of these extreme examples, markets are often influenced by what John Maynard Keynes called “animal spirits”.

“In my judgement there is no legal justification in a case like this for ignoring real market transactions.”

Court of Appeal Decision on Mundy

Related posts:

End lease extension ‘injustice’, veteran MP urges Commons Bottomley attacks ‘uncivilised extortion’ of lease extension racket in Mortgage Solutions Court of Appeal to hear Mundy case which will save millions on lease extensions Default ThumbnailCourt of Appeal ruling on Mundy case’s ‘inconvenient truth’ expected on Wednesday Mundy case in Court of Appeal showdown over valuation racket

Category: Latest News, NewsTag: Court of Appeal, Gerald Eve, James Wyatt, Lord Justice Lewison, Parthenia

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Reader Interactions

Comments

  1. stephen

    January 24, 2018 at 1:18 pm

    There really should be a defined table of relativity to apply to all flats except possibly those in Council Tax bands G & H where the term remaining is say in excess of 60 years.

    The amount of variation in marriage value within those permaters is relatively modest but is dwarfed by professional fees that the lessee has to incur

    The Gerald Eve graph which has been used to date and supported in legal cases, such as this should now perhaps be formally adopted into the legislation

    In Capital Gains tax legislation there is a table for wasting assets so the idea would not be new

  2. fleecehold reform

    January 24, 2018 at 2:22 pm

    disappointing though hardly surprising. And about time we abolished the leasehold system altogether, this is the priority now.

  3. Doubler

    January 24, 2018 at 2:41 pm

    Not surprised one bit, the vested interests of “England PLC” has won again!

  4. Brad

    January 24, 2018 at 3:07 pm

    Not surprised. Just look at the volume of the UK’s elite, elected and unelected decision makers with a vested interest in land.

    If you haven’t seen it and have a strong enough disposition, I recommend reading a blog called ‘who owns England’.

    Loses like this will hopefully make the various campaigns stronger.

  5. Kim

    January 24, 2018 at 3:08 pm

    At least he had the cojones to challenge the status quo. It is a pity that he states he is “ wiped out financially “however he seems a very bright chap and I’m sure he will “ live long and prosper”. I believe that this verdict will just strengthen the resolve of campaigners who are demanding the Abolition of Leasehold and Strict Regulation of Managing Agents.

    The online petition is rapidly heading towards 7’000 . Please sign and share

  6. Michael Epstein

    January 24, 2018 at 4:39 pm

    Try and be positive folks,
    Our campaign is bound to have setbacks along the road. The trick is to move on and turn a defeat into an ultimate victory.
    Had we won, appeals would have been made up to the highest courts in the land, over a long period of time, at great expense and with no guarantee the victory wouldn’t be overturned. At best, all a ruling in our favour could have done is to mitigate one of the worst excesses of leasehold.
    This is yet another string to our bow that goes to prove leasehold does not work. it does not need “Mitigating” It needs “Abolishing!”

    • Kim

      January 24, 2018 at 6:49 pm

      Wise words Master Epstein.

  7. Paddy

    January 24, 2018 at 5:43 pm

    Not being funny as Tracy Pritchard on BBC’s W1A was wont to say, but I think I said this would happen.

    After watching the S of S from the new ‘Ministry of Moral Indignation On Housing Matters’ on Monday tell Parliament along the lines that, whatever the legal position, he argued the moral position in respect of freeholders being liable for cladding costs, I admit I had a funny feeling. The issues all somehow meld together? Not being funny or anything.

    • Kim

      January 24, 2018 at 6:38 pm

      In keeping with the W1A analogy . As the hilarious Marketing guru Siobhan Sharpe would have said to M’ learned friends at the appeal hearing:

      “ I am totally listening… what is is , you guys aren’t saying the right stuff.”

  8. Dennis

    January 25, 2018 at 1:17 am

    Janes Wyatt legal bill could be of the order of £500,000 I possibly more

    2.1 million leaseholders have leases below 80 years as a way of saying “thank you” for trying if each gave just 25p – it would have him from financial ruin

    I am sure some of the younger people would know how to set up a web page to achieve this

    • fleecehold reform

      January 25, 2018 at 2:23 pm

      I am with you on this. It is important to show solidarity and demonstrate strength in numbers.

      Sadly though, the average leaseholder will have no idea of what is going on, what is marriage value and why they need a lease extension. A lot of people I spoke with hardly know what is the length of their lease – until its too late. There are complex issues and many flat owners think they will sell and move on long before there is a problem.

      LKP makes these issues more widely known, but otherwise ‘vested interests ‘ (freeholders, managing agents, dodgy lawyers, ) much prefer a flock of ignorant leaseholders, who do not understand the law or know their rights.

  9. Joe

    January 25, 2018 at 10:43 am

    Tchenguiz,Roger Southam, Dukes of Westminster, Will Astor, Mr Fook MP and anonymous freeholders based in offshore tax havens will be celebrating big time.

    Property law once again fails to protect the ordinary leaseholder but favours billionaire investors.

    2.1 leaseholders all have votes and should use them at the next election to support the party which offers bold change and consumer protection.

    It is realistic and not defeatist to say that Theresa May and Javid have no intention of abolishing leasehold. They don’t even back the idea of a Regulator to protect the consumer against blatant overcharging. Consumer protection is one of their big ideas but sadly little sign of it in the property world. Vested interests of the property lobby dictate government policy and that shows no sign of changing

    • fleecehod reform

      January 25, 2018 at 2:33 pm

      Sadly I have to agree with you. Theresa May will not instigate any meaningful reform. This government will leave it up to the ‘goodwill’ of the the freeholder to do ‘the right thing’ and other platitudes. I had to sit through and listen to her talk about plastics which basically said ‘everyone should recycle more and buy less plastic’. No legislation, no enforcement, no penalties. Nothing.

      We need radical reform not soothing words.

      • Paddy

        January 26, 2018 at 10:04 am

        Somewhat like the Secretary of State of the new Ministry of Housing etc answering questions last Monday sounding quite firmly indignant that, whatever the legal position, he used the moral argument that freeholders should pay for removing unsafe cladding.

        The questioner appeared bewildered at this answer from the government.

        Quite. We seem to live in an era of government nannying and platitudes that sound cuddly and caring but come without any legal clout.

        Neither the courts or freeholders or managing agents are quaking at indignant sound bites. All that matters is law.

        We don’t elect representative nannies.

        Why is it so hard to publish ANY component of leasehold reform in a government bill to date?

        It took no time at all to announce to the managing agents without any evidence presented that the majority were ‘good guys’.

        I have yet to meet any of them myself after 20 years.

        Meanwhile I thought I heard a minister promise to meet Justin Madders in the new year about his bill. Wonder if that happened?

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