Estoppel by convention

Where a service is no longer provided to a tenant, can the landlord still recover costs under the service charge?

The background

Saunderson v Cambridge Park Court Residents Association Limited [2018] concerned a tenant who held a long lease of a flat in a building containing a number of other units. The lease did not contain express provisions relating to the landlord’s supply of services to the building or for the tenants’ contributions towards the costs of such services, but over time the landlord had provided a communal heating and hot water system, for which the tenants each made a contribution.

The tenant in this case disconnected his property from this communal supply after encountering problems with it, and installed his own gas boiler. Although it had approved the disconnection, the landlord continued to make demands for the tenant’s full contribution towards the heating and hot water costs and the tenant brought the case to the First-tier Tribunal, and subsequently the Upper Tribunal.

The decision

The Upper Tribunal found that the tenant was not liable for sums charged for the period after he had disconnected from the communal supply. As no express provisions were contained in the lease, an estoppel by convention was created by the landlord’s supply and the tenant’s payment towards the costs of that supply. The tenant’s liability to make such contributions by way of the estoppel ended when he disconnected his property from the communal system.

Further, the landlord had persistently failed to deliver an adequate heating and hot water supply to the property from 2008 to 2014, which had led the tenant to disconnect. It was therefore unjust to expect him to continue to contribute towards its costs, and it is the right of either party where an estoppel by convention exists to terminate such estoppel.

Advice and action for landlords

This case is a useful reminder that, where informal arrangements exist, either party may take action to change circumstances which could terminate an established estoppel by convention.

It is strongly recommended that where landlords are providing services outside of the express lease obligations, and particularly where tenants are making contributions towards the costs of such services, the arrangement is formalised by way of a variation or supporting letter, thus avoiding creation of an estoppel by convention which can be immediately terminated.