Admiralty Park Management Company Ltd v Ojo [2016] UKUT 0421 (LC)  An interesting case where both parties had, for several years, ignored the express terms of the lease, yet the Court upheld the practices. It highlights that parties should be aware of, and observe, the terms of their leases, to avoid estoppel arguments arising later.

This case was an appeal to the Upper Tribunal (Lands Chamber) (UT), from the First-tier Tribunal (Property Chamber) (FTT).

The UT considered a leaseholder's service charge liability where, for several years, the management company had mistakenly used a different method of apportionment from that prescribed by the lease. The management company apportioned it by reference to the costs of maintaining all of the blocks in the estate of which the property formed part, instead of just the leaseholder's block. The leaseholder had never raised an objection to the method of apportionment.

In the earlier FTT proceedings the FTT determined that the leaseholder was not liable to pay service charges for the years 2010 to 2014 for services provided by the appellant, because the service charges had not been calculated in accordance with the terms of the lease. It was the FTT which queried why a different apportionment method was used - the leaseholder did not raise this issue. The landlord was refused permission for an adjournment in order to respond to the point raised by the FTT, and the FTT ultimately found in favour of the leaseholder.

The appellant appealed to the Upper Tribunal (Lands Chamber). The UT had to consider three issues being i) procedural irregularity; ii) estoppel by convention; and iii) the amount of the leaseholder’s liability. 

The UT decided that the FTT should be able to raise points which are relevant to the proceedings, so long as the parties are given the opportunity to respond to those points. In this case, the appellant was not given the opportunity to respond, which was procedurally unfair.

In relation to estoppel, the UT found that despite the terms of the lease, the leaseholder was estopped by convention from objecting to the method of apportionment used and from challenging the service charges on those grounds. The UT took into account that the tenant had acquiesced to this method of apportionment for several years and that at earlier hearings the tenant had not raised any objection.

As a result, the leaseholders’ liability was not reduced and the Upper Tribunal held in favour of the appellant. This is an interesting case as both parties had, for several years, ignored the express terms of the lease. It highlights that parties should be aware of, and observe, the terms of their leases, to avoid estoppel arguments arising later.