[2024] UKUT 81 (LC)

However, in the present case the FTT prompted the respondent to rely on estoppel by convention, and the argument succeeded. Again we face the difficulty that it is not clear whether the FTT decided that the appellants were estopped from contesting the basis of calculation of the interim service charges on an estate-wide basis, or whether the FTT found that the appellants are estopped from ever requiring final charges to be calculated for Block E. In light of what the FTT said at its paragraphs 139 and 140 (see paragraph 68 above) it rather looks as if the FTT thought that the respondent should never have to unpick the estate-wide calculations.

If the FTT’s finding on estoppel related only to the interim charges then it was unnecessary; the interim charges are not in dispute. It would in any event have to be set aside for the reasons I give below.

Insofar as the FTT’s finding was that the appellants are estopped by convention from ever requiring that final service charges be calculated for Block E separately, in line with the statutory powers of the respondent under the 2002 legislation, it is set aside, for the following reasons.

First, the “convention” or common assumption does not correctly describe what the respondent was doing. The estoppel that it claimed was, as set out in paragraph 66 above, “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”. But the respondent never managed the estate in accordance with the strict terms of the lease; it never reconciled the interim and actual service charges nor balanced the under- and over-payments.

Second, even if the assumption is re-characterised as an assumption that the estate was to be managed as a single unit and not block by block, estoppel by convention cannot succeed because of the evidence of Mr Hodgkins, who was the director of the respondent at the material time, which the FTT accepted. He said that he did not rely upon any common assumption communicated to him by the appellants. He said (I quote from the transcript, set out in the grounds of appeal):

“… it was just never an issue. We never talked about it because we just thought it was the right thing to do. I didn’t raise the subject with anyone about how the estate should be managed. You know, it’s just how it was. It had always been managed that way. … it never entered anyone’s head to discuss how the estate should be managed. It just carried on as before and before I was involved.”

Mr Walsh for the respondent argued that the FTT’s finding of reliance was correct, but did not say why this evidence did not make it clear that there was no reliance by the respondent on anything communicated by the appellants.

Further grounds of appeal rely on the argument that it was only after 2016 that the appellants realised that the estate was being managed as a single unit and not block by block and that therefore they cannot have had the relevant common assumption in 2012. The FTT found as a fact that Ms and Mr Gorrara knew, or would have known if they had thought about it, that the estate was being managed as a single unit on the basis of what they were told in the service charge accounts. Again we run into the confusion as to whether the estoppel is supposed to be about the interim charges or the final charges; as to the interim charges the FTT’s finding of fact is clearly correct, the appellants knew or should have known of the basis on which interim charges were calculated. If the appellants accepted that, and communicated their acceptance to the respondent, then that might satisfy the requirement for a common assumption about the interim charges (which are in any event admitted) to be made and communicated; but again there could be no estoppel because of the absence of reliance.

As to the final charges, the FTT did not explain how an acceptance that the interim charges were calculated on an estate-wide basis could be the basis of an estoppel by convention relating to the final service charges. Nor did it say how such an assumption could have been communicated; I do not see how the payment of interim charges could communicate a common assumption about the final charges. Nor did the FTT say in what sense any such assumption could have been relied upon, since the respondent has never done anything about the final service charges.

Insofar as the FTT found that the appellants were estopped from going back on a common assumption that final charges would be calculated on an estate-wide basis, that finding is set aside because any such finding is unexplained and could have no basis in the evidence.

I add two further points.

The first is that so far as the interim charges are concerned, there could be no estoppel by convention because of the absence of reliance. Yet I found above (paragraph 59) that the appellants could have been found to have accepted or agreed that the interim charges were calculated on an estate-wide basis. That illustrates what I said above; the requirements of section 27A(4)(a) are simpler than those of estoppel by convention and there is no need to resort to the latter in the context of service charge disputes.

Second, I have not explored Ms Gourlay’s argument that, even if the requirements for estoppel by convention were met, it is not possible to defeat by estoppel the provisions of the 2002 Act which enable an RTM company only to manage its own block. An exploration of that difficult point would be futile in the present case because in any event estoppel by convention cannot succeed on the facts, and would have no benefit in future cases since estoppel is not the appropriate concept for circumstances such as these.