[2024] UKUT 81 (LC)

The FTT itself suggested that the respondent might argue that the appellants (or rather, again, the second and third appellants) were estopped by convention from challenging the estate-wide basis on which the interim charges were imposed in the years 2012/13 to 2015/16.

Having made its finding that it had no jurisdiction in respect of those years, the FTT noted that any finding of estoppel by convention would have no practical effect. I have set aside its finding on section 27A(4) and therefore I have to look at the effect of its finding about estoppel.

What exactly was the convention that was said to estop the appellants? The FTT at its paragraph 83 explained that the respondent’s case:

“is based on the fact that the accounting arrangements for Kenilworth Court, namely that accounting is on an estate wide basis, have been in place for a very long time without objection.”

At its paragraph 107 the FTT set out the estoppel alleged in the respondent’s own words:

“The Respondent adopts a fairly narrow formulation. As it is the party alleging the estoppel, we adopt its formulation. It is that “the strict terms of the lease applied and were not affected by the exercise of the right to manage by the individual blocks in 2006 and 2007.” As a result, the Respondent continued to account to all

lessees at Kenilworth Court on an estate basis, not a block basis, and the Respondent asks that the Applicants should be estopped from arguing that this assumption was incorrect.”

The FTT set out the law relating to estoppel by convention, as confirmed by the Supreme Court in Commissioners for HMRC v Tinkler [2021] UKSC 39:

The FTT found that the respondent and the second and third appellants shared a common assumption that the RTM companies were correctly managing the estate as a single unit; that by paying the service charges the appellants communicated that assumption to the respondent; that the respondent would have been influenced by that and that the appellants in failing to challenge the common assumption accepted that the respondent would rely on it. Mutual dealings followed on that basis. Whilst the appellants would suffer some detriment if estopped from asserting the correct basis of accounting, the respondents would suffer a greater detriment if they now had to unpick decisions made long ago on an estate-wide basis. In conclusion:

“139 … in our view it would be unconscionable to put the Respondent into an uncertain and potentially chaotic position, as would be the case if the Applicants were permitted to require the accounts for 2012/13 to 2015/16 to be assessed on the true basis now.

140.

Our decision is that the Second and Third Applicant are estopped from alleging that the accounts and service charges due from the Second and Third Applicants for service charge years 2012/13 to 2015/16 inclusive were prepared on an incorrect basis, in so far as they are prepared on the basis that all lessees at Kenilworth Court share the service charge costs for all blocks.”