Sinclair Gardens Investments (Kensington) Ltd v Ray  EWCA Civ 1247
19th April 2016
A previous decision of the Upper Tribunal is admissible evidence of what it decided and it is a question of what weight a subsequent tribunal should give it. The extent to which the previous decision is a decision on general points of interest rather than specific facts and the cogency of the reasoning will impact on the weight to be given to a particular decision.
A leasehold valuation tribunal hearing a case related to a property in the West Midlands had applied a deferment rate of 5.75% in reliance on the decision in Zuckerman v Calthorpe Estates Trustees  UKUT 235 (LC). The landlord challenged reliance on that decision.
To what extent may a panel of the First Tier Tribunal rely on a decision of the Upper Tribunal on what is a question of valuation?
The tribunal at first instance relied on the decision in Zuckerman and the evidence of the tenant’s valuer that since Zuckerman all negotiated settlements in the West Midlands had taken deferment rates of between 5.75% and 6%. The LVT said that following Zuckerman “it is now generally accepted that in the Midlands area a higher deferment rate should be adopted.”
Decision on appeal
In Sportelli v Cadogan  EWCA 1042 the question of the status of the Lands Tribunal’s decision was one of the subjects discussed in the appeal. Carnwath LJ (with whom Ward LJ and Sir Peter Gibson agreed) held that the Lands Tribunal was entitled to offer guidance and to expect LVTs to follow that guidance unless and until the legislature intervened. However he also noted that the functions of the Lands Tribunal were to be subsumed into the Tribunal Service; and that it would be for the Upper Tribunal as a superior court of record to lay down guidelines as to the precedent effect of its decisions for different purposes.
Lewison LJ noted that that had not as yet been done, but held the mere fact that the Upper Tribunal had not yet taken the formal step of proclaiming that its decision was to be treated as a “guidance case” did not rob it of value for a subsequent tribunal. A previous decision of the Upper Tribunal is admissible evidence of what it decided and it is a question of what weight a subsequent tribunal should give it. The extent to which the previous decision is a decision on general points of interest rather than specific facts and the cogency of the reasoning will impact on the weight to be given to a particular decision.
Interestingly the Court of Appeal noted with approval that the LVT’s selection of the appropriate deferment rate was not simply based on the decision of the Upper Tribunal in Zuckerman but also on the expert opinion of the tenant’s valuer and on the effect that that decision had had in the real world.
This case should be contrasted with the decision of the Administrative Court in R. (on the application of Wellcome Trust Ltd) v Upper Tribunal  EWHC 2803 (Admin). In relation to guideline cases. In that case Wellcome, who had not been a party in the Sportelli litigation sought to adduce evidence that the deferment rate set in that case was wrong.
The LVT refused to admit evidence to that effect. They applied a decision of the Lands Tribunal Earl Cadogan v Erkman  13 EG 144. In Erkman the President of the Lands Tribunal held that evidence should not be admitted to challenge the deferment rate as it would undermine the concept of guidance if a party could insist upon adducing evidence to show that the guidance was incorrect. Such evidence ought in general to be excluded because of the public interest in avoiding wasted expenditure and the risk of inconsistent results, but such evidence could be admitted in the exercise of the Tribunal’s discretion if it was satisfied that exceptional circumstances justified such a course.
Wellcome sought permission to appeal and the then President of the Upper Tribunal refused permission noting that it was “a consequence of the function of Sportelli as a guideline decision that the issues that it determined should not be revisited in subsequent cases unless there is compelling justification for doing so”.
Wellcome sought JR of that decision and argued that the Upper Tribunal was entitled to issue decisions as guideline decisions, but said it was wrong to give effect to that by excluding otherwise relevant and admissible evidence.
Ouseley J held that where an attack is on the correctness of the guideline, from the start and without change of circumstance, then the exceptional circumstance test was appropriate. When it comes to excluding evidence on the grounds that it is not relevant, it is no more than saying that the Tribunal, having considered the evidence, is satisfied that it could not bring about an alteration in the deferment rate. It is saying that, if admitted, it would not be sufficient to revise the guideline, so there is no point in admitting it.
The position is rather unclear as the Upper Tribunal has not given guidance on what should and should not be regarded as a guideline decision. Also the legal basis for it being able to do that is unclear. But it would appear that the mere fact that an Upper Tribunal says in a decision that it is a guideline case will have rather startling consequences. In the case of a guideline case any non-party affected by the decision will find that if they seek to challenge the correctness of the decision they will have to satisfy the exceptional circumstances case.
On the other hand if there is no statement to that effect in the decision then the decision will merely be admissible evidence of what it decided and it is a question of what weight a subsequent tribunal should give it. As is apparent from the instant case it will then be perfectly in order for the parties to call evidence to corroborate or (presumably) to contradict the decision of the Upper Tribunal.
Given the consequences which follow and the opaque basis upon which the Upper Tribunal can decide whether a decision is a guideline decision or not, this writer thinks it would perhaps be better if the matter were dealt with by way of amendment to the Upper Tribunal (Lands Chamber) Rules 2010, or at least by a practice statement.