Earl Cadogan v Pitts & Anor Earl Cadogan & Ors v Sportelli & Anor and two other actions [electronic resource]

[2008] UKHL 71, 10 December 2008. In determining the price paid by nominee purchasers exercising a right to collective enfranchisement, hope value attributable to the possibility of non-participating tenants wishing to obtain new leases of their flats in the open market could be taken into account. The House of Lords had to decide (in five joined appeals), whether appellant landlords (C) were entitled to take hope value into account as an element when valuing their respective freeholds. Held: appeals allowed in part. Marriage and hope value were excluded from being taken into account when assessing the price payable for the purchase of the freehold. This was based on common sense and 'natural meaning' of the legislation involved. If marriage value was taken into account, it was logically impossible for hope value to also be factored in. As tenants would pay half the marriage value in the market, it made no sense that he would pay more while not being in the market, but with the possibility of being so in future. It would have been unfair to legislate to exclude from the valuation any consideration that the hypothetical purchaser might hope to sell the freehold to the tenants at a price enhanced by the marriage value, but not to exclude the prospect of selling them a lesser reversionary interest at a price improved by marriage value.