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Pemberton Greenish secures outstanding victory at the Upper Tribunal in the ‘Relativity Cases’

The Upper Tribunal (Lands Chamber) today handed down its decision in the conjoined cases of Sloane Stanley Estate v Mundy; Sloane Stanley Estate v Lagesse; and Aaron v Wellcome Trust Limited.

Leading London law firm Pemberton Greenish, representing the Trustees of the Sloane Stanley Estate, secured a comprehensive victory for their client in the widely reported dispute on relativity in lease extension claims under the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”). The principal issue in the cases was the correct way to value an existing lease of a flat without statutory rights under the 1993 Act, a central tenet of the valuation process under the legislation.

The lessees had argued for relativity in the valuations to be determined by reference to a model (“the Parthenia model”) using a statistical technique known as hedonic regression.

The model was constructed from a large amount of data from market transactions between 1987 and 1991, at a time when the market was not influenced by the 1993 Act, and applied so as to isolate from that data the effect on value of lease length. The proposition was that the model was accurate in indicating relativity in the market for the period the data covered and that it remained accurate at the valuation dates in 2014.

The tribunal found that the Parthenia model was not compatible with market evidence which showed that it produced an impossible result. It was described by the tribunal as “a clock that strikes 13”. Its use was therefore rejected.

The tribunal also set out a clear framework for valuers on the approach to be adopted to relativity in future cases, based on real market evidence.

Commenting on the decision, Kerry Glanville, Partner and Head of Real Estate Dispute Resolution at Pemberton Greenish, which represented Sloane Stanley, said:

“The Upper Tribunal decision is to be welcomed for its robust clarification of the correct approach to relativity and for its emphatic rejection of the Parthenia model. We are thrilled at the outcome both for our clients and for landlords generally”.