Jetha and Jetha v Basildon Courts Resident Company Ltd [2017] UKUT 58 (LC): No Prior Approval at AGM for Interim Service Charge and Sinking Fund Contributions

The FTT determined that at an AGM of the Respondent Company they had not given prior approval to interim service charge and contribution to a sinking fund. However they determined that the tenants were obligated to pay due to an estoppel by convention.
The Upper Tribunal determined that it was a condition precedent that the service charges were approved at an AGM by a majority of its members. The FTT was entitled to determine there were no such resolutions.

However in respect of the estoppel by convention mere payment of the invoices was not sufficient. There was no evidence the tenants knew the demands had not been agreed at an AGM. As a result it could not be said that there was any common assumption. Further the Upper Tribunal added that any detriment to the Respondent did not in this case make it unjust or unconscionable for the Tenants to assert their case as the respondent could correct the situation.
Essentially the decision reiterates that it is unwise for freehold companies (even when owner managed) to depart from the terms of the particular leases in question and if they do this can have consequences!

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