A recent case highlighting Estoppel shows the importance of checking the terms of your lease13th October 2016
In Admiralty Park Management Company Limited v Olufemi Ojo , the Upper Tribunal (Lands Chamber) considered a tenant’s service charge liability where the management company had used a different method of apportionment from that prescribed by the lease.
The facts in Admiralty Park Management Company Limited v Olufemi Ojo (2016)
Admiralty Park Management Company Limited (Admiralty Park) was the management company of nine out of twelve blocks of flats on an estate. Olufemi Ojo (Ojo) was the tenant of a flat for a term of 99 years in one of the nine blocks managed by Admiralty Park.
In 2014 Admiralty Park commenced proceedings in the County Court against Ojo in relation to service charge arrears for the period 2010-14. Ojo applied to the First-tier Tribunal for a determination under section 27A of the Landlord and Tenant Act 1985 of his liability to pay service charges for each disputed year.
The lease between Ojo, the landlord and Admiralty Park contained a provision that Ojo should pay a proportion of the costs of maintaining and administering the block within which it was located. The other leases in the estate contained similar provisions for their own individual blocks. However, since 2009, Admiralty Park had erroneously charged each tenant a proportion of the costs in relation to all nine blocks that they managed. No one objected to this.
The First-tier Tribunal (FTT) decision
The FTT immediately spotted that the terms of the lease had not been complied with. Up until that point, neither party appeared to have appreciated the specific terms of the lease.
Admiralty Park attempted to justify charging Ojo by virtue of estoppel by convention, as the service charge had been calculated this way for a number of years and neither Ojo nor any other tenant had objected. The FTT however, held that it would be unacceptable to allow a party to put forward such an argument at such a late stage in proceedings. As a result it was held that because Admiralty Park was unable to justify the charges, Ojo’s liability was nil for the period in question.
Appeal at Upper Tribunal (Lands Chamber)
Admiralty Park appealed the decision in the FTT. The Upper Tribunal (Lands Chamber) considered:
• Whether the FTT had acted without jurisdiction, or in a way which was procedurally unfair, by reaching its decision on a new point not raised previously and not allowing Admiralty Park a sufficient amount of time to address it.
• Whether Ojo was prevented from objecting to the manner in which the service charges had been calculated, as he had not raised any objection since at least 2009.
In relation to the first issue, the Upper Tribunal held that the departure from the lease was so fundamental it was both proper and inevitable that the FTT should raise it as an issue. However, the Tribunal did state that the FTT should have allowed time for both parties to consider the point that it had raised. As a result, the FTT decision was unfair.
In relation to the second issue, the Upper Tribunal accepted Admiralty Park’s argument that Ojo should not be allowed to dispute his liability, as he had not raised any objections previously. The Tribunal held that it would have been obvious to Ojo (and indeed other tenants) that he was being asked to pay a smaller percentage of the costs than if he was only paying for his block, had he considered the statements. He had acquiesced for many years to the method of apportionment. It would be unfair for Ojo to dispute his liability given the potential impact this would have on the other tenants in the nine blocks managed by Admiralty Park.
In reaching this decision, the Upper Tribunal held that the FTT was right to make an order preventing Admiralty Park from adding the costs of the proceedings to the service charge.
This case highlights the importance of checking the terms of your lease. Failure to do so may result in an unfavourable decision against you.
For further information, please contact the Real Estate Disputes Team at Hamlins.