[2024] UKUT 81 (LC)

The FTT conducted a hearing on 17 June 2021 and decided that the following preliminary issues had to be determined:

“a.

how should the lease be interpreted (in terms of whether the leaseholder is to pay a proportion of expenditure on Block E only or on the whole estate);

b.

apportionment;

c.

impact of the Commonhold and Leasehold Reform Act 2002 (“the

2002 Act”);

d.

were service charges for some years agreed or admitted, so that the

Tribunal has no jurisdiction to consider them?;

e.

what service charges were reasonably incurred;

f.

the impact of statutory controls in the Landlord and Tenant Act 1985

(“the Act”);

g.

set-off for breach of repairing covenants;

h.

costs.”

The FTT also suggested that the respondents might introduce a ninth issue (and gave permission for them to do so), namely “whether the Applicants should be estopped (through the application of the principles of estoppel by convention) from claiming that for certain service charge years, the historic accounts, on which determinations on the payability of service charges would rely, were incorrect”, and the respondent did so.

At the hearing on 17 June 2021 only two issues were determined, issues a and c above. Its decision was appealed to this Tribunal. In G & A Gorrara Ltd and others v Kenilworth Court Block E RTM Co Ltd [2022] UKUT 90 (LC) the Tribunal held that:

The second issue followed simply from Triplerose, but had to be decided because of the FTT’s construction of certain covenants in the lease and certain provisions of the statute. It is not necessary to read the Tribunal’s 2022 decision in order to understand the present appeal; but it is important that the decision established that the freeholder’s management of the estate as a single unit was in accordance with the terms of the lease, but that the RTM companies in continuing that practice had not acted in accordance with the provisions of the Commonhold and Leasehold Reform Act 2002. Moreover, the landlord remains responsible for management of appurtenant property shared by all five blocks, in particular the gardens.

The FTT then conducted a hearing on 31 October and 1 and 2 November 2022. It was intended to be a final hearing but only two further preliminary issues were determined, namely issue d above, whether service charges had been agreed or admitted, and the estoppel argument raised by the respondent at the FTT’s suggestion. The two issues were determined on the basis that they were relevant only to the four years 2012/13 to 2015/16.

As to admission or agreement, the FTT relied upon the Tribunal’s decision in Cain v London Borough of Islington [2015] UKUT 542 (LC), which it took to mean that the effect of section 27A(5) of the 1985 Act (set out at paragraph 8 above) is limited to a single payment. It said:

“106.

Our conclusion on this issue is that by virtue of payments without protest or qualification if the service charges demanded in the years 2012/13 to 2015/16 (so up to 25 March 2016) the Applicants are deemed to have agree or admitted the service charges for those years, and in consequence the [FTT] has no jurisdiction to consider those service charge years.”

As to estoppel by convention, the FTT noted that since it now had no jurisdiction to make any decisions about service charges in the first four of the years under challenge, the estoppel point was superfluous; nevertheless it decided 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 for all blocks.”

I will say more about how the FTT came to those decisions in the context of the arguments in the appeal.