[2023] UKUT 231 (LC)

This first point is a generic one applying to all the charges in issue in the FTT.

The FTT found – and there has been no appeal from this finding – that the lease requires the leaseholders to pay £100 every quarter by way of service charges in advance, and then to pay on demand after the end of a given year the amount by which that contribution of £400 falls short of the total charge.

This is unusual, and inconvenient for the landlord because it has to pay up front for services, maintenance etc. What the respondent has done instead is to demand service charges quarterly, on each occasion for a quarter of the appellant’s share of the estimated forthcoming service charges, and also to make some ad hoc demands where extra expenditure is anticipated.

The appellant was unaware of the provisions in the lease for quarterly payments of only £100 until, he says, 2016. So this point was not in issue in the 2016 proceedings. But in the present proceedings the appellant challenged all the quarterly service charges on the basis that they were not demanded in accordance with the provisions of the lease. The FTT said at its paragraph 31 that of the £8,521.25 service charges demanded across the 4 relevant years all but £1,392.18 was in dispute on this basis. The FTT did not say how those two figures were calculated; I do not think they are correct because they do not include the sum in dispute for work on the driveway and the retaining wall under the second issue (see paragraph 9 above, but that does not matter for present purposes.

The respondent’s answer to this in its statement of case in the FTT was that it had not been aware that it was contravening the terms of the lease in this way. The appellant had paid the quarterly charges as demanded since the grant of the lease and it would be unfair for him now to take a substantial benefit as a result of his silence on the point for so many years; “the applicant should therefore be estopped from raising this argument in 2022.”

The FTT asked Mr Lacy at the hearing whether he had paid more than £100 a quarter and if so why, and his answer is recorded in the FTT’s refusal of permission to appeal: “Prior to the previous Tribunal case I did pay the amounts that I was requested and I appreciate that that’s because when I first bought my flat I didn’t fully realise the importance of the lease. Whether deliberately or by accident the management company sent me quarterly payment requests for whichever amounts they specified, so I paid those amounts.”

Nevertheless the FTT rejected the argument that he was estopped from relying upon this provision in the lease because, it said, in order to rely on estoppel a party must have acted to its detriment in reliance upon something said or done by the other party. Instead, it found something quite different: that the applicant had paid the service charges now in dispute, up to September 2016 and then on one occasion in January 2017 in the sum of £957 and that the applicant had therefore admitted liability for those charges, following Cain v Islington LBC [2015] UKUT 542.

The FTT did not set out what were the charges in issue for the period covered by that finding. Nor did the FTT state what were the payments that it determined had been made and when they had been made.

To explain the FTT’s decision about those payments we have to look at section 27A to the 1985 Act and then at the decision in Cain v Islington.

Section 27A(4) and (5) of the 1985 Act provide as follows:

“(4)

No application [to the FTT under section 27A] may be made in respect of a matter which-

(a)

Has been agreed or admitted by the tenant…

(5)

But the tenant is not to be taken to have agreed or admitted any mater by reason only of having made the payment.”

Thus the FTT has no jurisdiction to determine the reasonableness and payability of service charges that have been agreed or admitted by a tenant; but a single payment of a single charge does not mean that the tenant has admitted liability. In Cain v Islington the Tribunal (HHJ Gerald) said:

“18.

Looking at the reasoning behind this provision, no doubt the reason why the making of a single payment on its own, or without more, would never suffice is that … it is common enough for tenants to pay (even expressly disputed) service charges so as to avoid the risk of forfeiture and preserve their home and the value of their lease. But the reason why a series of unqualified payments may, depending on the circumstances, suffice is because the natural implication or inference from a series of unqualified payments of demanded service charges is that the tenant agrees or admits that which is being demanded. Putting it another way, it would offend commonsense for a tenant who without qualification or protest has been paying a series of demanded service charges over a period of time to be able to turn around and deny that he has ever agreed or admitted to that which he has previously paid without qualification or protest.”

In that case the Tribunal found that the where the tenant had paid service charges without protest or reservation over a six-year period he could not now challenge the reasonableness of those charges.

In the present case the FTT said:

“56 The Tribunal finds that the Applicant paid the on-account service charges at one-quarter of the budget sum until September 2016. No evidence was provided to the Tribunal on which the Tribunal could properly find that the Applicant did so having alerted the Respondent to the fact that the Applicant did not thereby accept or admit the sums to be payable…

67 The Tribunal has no jurisdiction in respect of matters which have been agreed or admitted ,as provided for in section 27A(4)(a) of the 1985 Act and hence the Applicant is prevented from pursuing this application fr the period prior to September 2016.

68.

However, necessarily no such inference could be drawn in relation to the later period in which the Applicant had not made payment and did take the point, except insofar as a payment was made of £957 in January 2017.”

It will be obvious that the argument that the respondent was making, and the conclusion that the FTT reached, had radically different consequences for the appellant. What the respondent was saying was that having paid substantive charges quarterly since the start of the lease the tenant should now be estopped from saying that he was only liable for £100 per quarter; but that would not have prevented him from arguing that the charges were based on costs that had not been reasonably incurred. By contrast, the FTT’s finding led it to the conclusion that the charges now in dispute had all been thereby paid or admitted until September 2016, and that the FTT had no jurisdiction in respect of those payments, nor in respect of the charges represented by the £957 paid in January 2017.

As to the period from September 2016 onwards the FTT found that the service charges had not been demanded as the lease required so far as the sum demanded every quarter was concerned. Moreover the demands from 25 December 2016 did not contain a summary of the tenant’s rights and obligations as required by section 21B of the 1985 Act, nor the information about the landlord required by section 48 of the Landlord and Tenant Act 1987. There is no appeal from those findings, and I was told at the hearing of the appeal that the services charges from September 2016 onwards, other than the sum of £957 paid in January 2017, have been cancelled from the appellant’s account insofar as they exceeded what the lease allowed.