[2025] UKUT 195 (LC)

The appellant asked for permission to appeal on a number of grounds and was successful on one, namely “that the insurance premium charged to the applicants is for insurance of a range of risks beyond those the landlord has covenanted to insure against in the lease, and that that undisputed fact amounted to a prima facie case that the amount charged was not reasonable.”

To expand on that, the FTT appears from the paragraphs above to have rejected the argument that the landlord had over-insured the property on the basis that the appellant had not provided any evidence that it would be any less expensive just to insure the risks prescribed by the lease. That seemed to the Tribunal, in granting permission to appeal, to be troubling because the appellant said he was being charged for a much wider range of risks, including risks to the landlord’s business, and that he had raised a prima facie case that the charge was unreasonable which the landlord had failed to answer.

Following the grant of permission to appeal the respondent landlord has submitted grounds of opposition. It argues that the proposition that it had over-insured was not undisputed. The problem, it says, is that the insurance document to which the appellant referred, the “Zurich Real Estate Insurance Policy Document”, was a generic document, not specific to this property. However, also in evidence before the FTT were a number of documents headed “Summary of Cover” which the respondent said demonstrated that it had not in fact insured against, and was not charging the appellant for, the extra items that he said were covered. Hence, the respondent said, the FTT’s finding that “the Property was insured for the full reinstatement value for the Insured Risks as defined by the Lease.”

The appeal bundle provided by the appellant contained only the generic policy document and not the “Summary of Cover” sheets. At the Tribunal’s request the appellant has now produced those summary sheets.

From those sheets it is clear that the landlord is not insuring against “business interruption” nor against “book debts”. “Loss of rent” is listed and the sum insured is “£0”. The policy is clearly for building insurance as required under the lease, and for insurance of the “contents of the common areas”. “Terrorism” is listed but that is consistent with the requirement to insure against “malicious damage”; There is a further heading “All other damage” (£500) but again that seems to me to be consistent with the lease.

The only item insured against which is not obviously one of the Insured Risks under the lease is “Property Owner’s Liability”, where the sum insured is £5 million. I do not regard that one item as raising a prima facie case that the landlord has over-charged the leaseholders; to establish that there was an apparent problem I take the view that the appellant would have had to have shown both that it was possible to insure the building without that item and that it would be cheaper to do so without it.

Had the “Summary of Cover” documents been provided when permission to appeal was sought, or alternatively had they been referred to by the FTT, permission to appeal would probably have been refused. However, it is now apparent that these summary documents were in the FTT’s bundle, and they explain the FTT’s acceptance of the evidence of Mr Sargsyan and its finding that the property was insured as required by the lease and its rejection of the claim that it was overinsured.

The appeal therefore fails.