Landlord ordered to repay insurance rent

Nichola Evans

In a recent judgment the landlord of the Trocadero Centre in London was ordered to repay hundreds of thousands of pounds to Picturehouse Cinemas with the court finding that the landlord had unlawfully charged insurance rent to the tenant.

The Facts

The usual practice in commercial leases is for there to be a sum payable by the tenant to the landlord by way of “insurance rent” where the landlord insures the building and passes on the insurance cost to the tenants, usually calculated in accordance with the floor area rented.

What had happened in this case is that the landlord had asked the insurer to pay to the insurance broker a significantly enhanced premium which the broker then passed to the landlord. The insurance premiums were increased commensurately and then the tenants were presented with bills accordingly.

In this case it was found that Criterion had engaged in this practice for a number of years and had sometimes been paid commissions of 60% resulting in earnings from the enhanced premium of over £1m per annum.

Picturehouse Cinemas made a claim against Criterion Group arguing that it was not entitled to charge the enhanced sums.

The Judgment

Mr Justice Richards sided with the tenant. Looking at the terms of the lease it was clear that the tenant was only obliged to pay a sum limited to the sum payable by the landlord for keeping the centre insured. It could not be said that the enhanced amount was demanded in order to keep the centre insured. The judge also noted that it could not be argued that the enhanced sum had been earned by the landlord for any work carried out in order to obtain the insurance. As there was no contractual or legal basis for the landlord to take this payment, there was a complete “failure of basis” and the court ordered the repayment of those sums to the tenant.

Key messages from the case

The key takeaways from this case are:

• The starting point will always be the phrasing of the lease and looking at the wording literally. If the wording is clear that will be applied and the court will not look at anything else.
• We cannot see that the courts will imply a clause into a contract that premiums can be paid to landlords.
• There is a limitation period for claims like these. There can only be a claim going back six years – a tenant cannot go back any further than this.

We understand that the landlord is looking to appeal this decision so watch this space – we will keep you advised on the progress of any appeal.

Trocadero (2015) LLP v Picturehouse Cinemas Limited [2025] EWHC 1247 (Ch)