[2025] UKUT 195 (LC)

The appellant, Mr Okoye, holds long leases of three flats at Rossmore Close, Enfield, which comprises two purpose-built block of flats. The respondent, Gray’s Inn Capital Limited, is the landlord. The lease contains covenants by the landlord to provide services and by the tenant to pay a service charge. The appeal is from the FTT’s decision on the appellant’s application for a determination as to whether service charges demanded in the years 2014 to 2023 were reasonable, in its jurisdiction under section 27A of the 1985 Act. A number of items were challenged; this appeal is concerned only with the FTT’s decision about the charges for insurance in the years in question.

Clause 4.2 of the leases requires the tenant to pay a proportion of the landlord’s expenditure on insuring the property against the “Insured risks”, defined at Clause 1.1 as:

“fire lightning aircraft and other aerial devices (including articles dropped from aircraft) explosion riot civil commotion strikes labour or political disturbance theft. or attempted theft malicious damage storm tempest bursting and overflowing of water or oil pipes tanks and other apparatus flood impact by road vehicles earthquake subsidence and heave landslip falling trees branches and aerials and accidental damage to underground services.”

The appellant raised a number of challenges to the charges for insurance. One was that the building was uninsured, which the FTT dismissed. Alternatively, the appellant said that the landlord was charging the tenants for his insurance which covered risks going beyond the “Insured Risks”, and that therefore the charge was not reasonable. The FTT explained:

“51.

The Applicant asserted that the Respondent had over-insured the Property which had resulted in higher premiums. The Applicant referred the Tribunal to Clause 1.1 which defined and contrasted that with the insurance risk cover obtained by the Respondent in the Zurich policy, which included damage, business interruption, book debts, property owners liability (page 413 of the Bundle). The Applicant submitted that the Applicant had not agreed to this additional cover and, because the Respondent had chosen to insure the Property for more than the Lease required, this should not be at the cost of the Applicant.”

After discussing some other points the FTT said:

“The Applicant contrasted [the definition of the Insured Risks] with the insured risk covered by the Respondent as set out at page 413 of the Bundle. However, the Applicant did not provide the Tribunal with alternative quotes but instead asked the Tribunal to exercise its discretion in considering the risks that the Applicant agreed to pay for in the Lease alongside the risks that were actually covered and reduce the amount of premium paid by the Applicant. The Tribunal therefore did not accept the Applicant s position that the Respondent had over insured the property given that the Applicant did not present the Tribunal with evidence of over insurance.

63.

In particular, the Tribunal accepted the evidence of Shushanik Sargsyan, on behalf of the Respondent, and in particular page 153 of the Bundle and Exhibit SS10 which set out the reinstatement report and insurance policy at Exhibit SS11. The Tribunal found that the Property was insured for the full reinstatement value for the Insured Risks as defined by the Lease.”

The FTT therefore allowed the insurance charges as having been reasonably incurred.