G & A Gorrara Ltd & Ors v Kenilworth Court Block E RTM Co Ltd

Payment of service charges does not, by itself, amount to agreement or admission under section 27A(4) of the Landlord and Tenant Act 1985. The statutory protection in section 27A(5) is not confined to a single payment. Agreement may be inferred from payment only where other circumstances, such as substantial delay and the tenant’s access to relevant information, make the inference clear. Agreement to interim charges does not establish agreement to final charges based on actual expenditure.

Estoppel by convention requires more than a shared assumption. The assumption must be communicated, relied upon in subsequent dealings, and cause detriment or confer an unconscionable benefit. In service charge disputes, section 27A(4) is generally the appropriate mechanism for addressing a tenant’s change of position.

The appeal arose from preliminary decisions of the First-tier Tribunal concerning service charges for a flat at a five-block development. The appellants had paid estimated, estate-wide interim charges for several years, but the lease’s required reconciliation and balancing exercise had not been carried out. They sought determinations of final charges, including charges attributable to their block.

The FTT held that payments without protest amounted to agreement or admission of the charges for 2012/13 to 2015/16 and that the appellants were estopped by convention from challenging the estate-wide basis of calculation. The central issues were whether those conclusions were legally sustainable and whether they could prevent a determination of final service charges.

1. Appeal allowed. The FTT’s findings concerning agreement or admission and estoppel by convention were set aside to the extent explained below.
2. Section 27A(5) of the Landlord and Tenant Act 1985 prevents agreement or admission being inferred from payment alone. The word “only” means absent other circumstances, and “any payment” is not confined to a single payment. A series of unqualified payments may contribute to an inference of agreement, but does not establish it without more.
3. The relevant circumstances may include substantial delay in challenging charges and the tenant’s possession of information enabling a challenge. The tribunal must assess the circumstances in the round. In Cain v London Borough of Islington [2015] UKUT 542 (LC), the conclusion was supportable because of the delay and available information, not because a series of payments alone was sufficient.
4. The appellants could potentially have agreed or admitted liability for interim charges calculated on an estate-wide basis. That did not amount to agreement or admission of final charges, which had not been demanded and could not be assessed without knowing the actual expenditure attributable to Block E. The FTT had not explained any contrary conclusion.
5. Estoppel by convention requires the elements identified in Commissioners for HMRC v Tinkler [2021] UKSC 39: a shared assumption, communication that the other party was expected to rely on it, actual reliance in subsequent mutual dealings, and detriment or an unconscionable benefit. The evidence, including the respondent director’s evidence, showed no reliance on anything communicated by the appellants. Payment of interim charges could not establish an estoppel concerning final charges.
6. The FTT therefore had to determine the final service charges for 2012/13 to 2019/20, together with any apportionment issue and the appellants’ claim for set-off. The judge suggested that the outstanding issues be addressed at one substantial hearing, while emphasising that this was only a suggestion.

• Upper Tribunal (Lands Chamber): appeal from the First-tier Tribunal’s decision of 29 November 2022 allowed. Findings on agreement or admission and estoppel by convention set aside to the extent stated in [2024] UKUT 81 (LC).
• First-tier Tribunal (Property Chamber): had held that service charges for 2012/13 to 2015/16 were agreed or admitted and that the appellants were estopped from challenging the estate-wide accounting basis.