Background
Mrs Tachkani holds the long lease of a flat at Thornfield Green, a 24-unit residential development. Thornfield Hawley Management Company Ltd, the freeholder, had accumulated a reserve fund and demanded contributions to it through service charges.
In proceedings concerning service charges for 2018 to 2025, the First-tier Tribunal held that the leases’ repairing obligations implied authority to maintain a reserve fund. It also considered that leaseholders had implicitly agreed to a variation through past practice and meetings, and that Mrs Tachkani was estopped from disputing the fund.
The Court’s Holding
The Upper Tribunal allowed Mrs Tachkani’s appeal and set aside the First-tier Tribunal’s decision on the reserve fund. Neither of her leases authorised the landlord to hold or demand reserve-fund contributions. A repairing obligation does not itself supply that power, and no implied term was necessary for the leases to work.
The Tribunal also held that a lease granted by deed cannot be varied by an implicit consensus at a meeting or by conduct over time; variation requires a deed or an order of a court or tribunal. Mrs Tachkani’s past role as a director in 2015 and her lack of recorded objection at a 2017 AGM did not establish agreement to reserve-fund demands made from 2018 onwards. She was therefore not liable for the reserve-fund contributions demanded for 2018 to 2025.
Key Takeaways
- A landlord needs authority in the lease to demand contributions to a reserve fund.
- A broad obligation to repair does not, without more, imply power to build or collect a reserve fund.
- A deed of lease cannot be varied by informal consensus, acquiescence, or meeting discussions.
Why It Matters
The decision distinguishes prudent estate management from contractual authority. Even where a reserve fund is sensible and has been used responsibly, service-charge demands for it must be permitted by the lease.
It also confirms that historic tolerance of a charging practice does not necessarily bar a leaseholder from challenging later demands, particularly where the evidence does not show an agreement to pay them.