Recovery of insurance costs:  does it matter if the policy hasn’t been placed in joint names?

*Most* leases contain a covenant that requires a landlord (or management company) to place insurance.  Clauses vary from lease to lease.  For example, some leases specify (in detail) the perils against which insurance should be placed.  Whereas others are less prescriptive.

Some leases require a landlord to “note” the interest of lessees (and perhaps their lenders) on the insurance policy.

In other leases, a landlord is required to place the insurance in joint names.

Back in 2012, the Upper Tribunal considered the impact on recovery of service charges if the policy wasn’t placed in joint names (notwithstanding that the lease required it).

In Green v 180 Archway Road Management Company Limited, the lease in question required the lessee to pay for the cost of the landlord insuring the building “in accordance with” clause 4(ii).  That clause required the policy to be in joint names.  The policy wasn’t in joint names and therefore the Upper Tribunal held that the lessee was not required to pay their contribution towards those insurance costs.

The impact of failing to insure in joint names has once again troubled the Upper Tribunal in the matter of Brickfield Properties Limited v Georgiades [2020] UKUT 0118 (LC).


Terms of the lease in Brickfield Properties

In Brickfield Properties, the lease required the lessee to pay a service charge in respect of insurance as follows:

“To pay unto the Lessor on demand a sum equal to all such sums as the Lessor may from time to time pay for insuring and keeping insured the demised premises against loss or damage by fire, storm and tempest and such other risks as may be insured by the Lessor in the re-building costs (or otherwise as provided in clause 5(ii))”.

By clause 5(ii), the landlord had covenanted:

“At all times throughout the term hereby granted to keep the demise premises and the Lessor’s fixtures and fittings therein insured against loss or damage by fire, storm and tempest and such other risks covered under a comprehensive insurance policy in the joint names of the Lessor and the Lessee in such sum as shall from time to time be considered to be the full re-building cost” [my emphasis].


Proceedings in the First-Tier Tribunal (Property Chamber)

Having considered that they’d been over-charged for insurance for a number of years, the lessee made an application to the First-Tier Tribunal (Property Chamber) challenging the reasonableness of the charges.  The lessee also challenged the payability of the charges.

The FTT recognised that this lease was different to the lease in 180 Archway Road because in this case the words “in accordance with” aren’t present in this lease.  In 180 Archway Road, the lessee was obliged to pay for the cost of the landlord insuring the building “in accordance with” clause 4(ii) which required the policy to be in joint names.

Despite having recognised that the lease in Brickfield Properties was different from the lease in 180 Archway Road, the Tribunal found it appropriate, instead, to imply this.  The FTT implied a term into the lease to the effect that the lessee was only liable to pay for insurance if the landlord had insured in accordance with the terms of clause 5(ii).

The insurance hadn’t been place in joint names and therefore because the FTT implied a term in the lease, it held the lessee was under no obligation to pay for the insurance costs.

Unsurprisingly, the landlord appealed.


Grounds of appeal

Firstly, the landlord argued that the FTT should not have implied a term into the lease.  Secondly, the landlord argued that the FTT was wrong to conclude that the landlord’s insurance didn’t comply with clause 5(ii).


Decision on appeal

There was much discussion on appeal about whether contractual terms could be implied and, if so, when that should happen.

The landlord argued that the effect of the FTT’s decision is to re-write the lease.  The landlord argued that contractual terms could only be implied where it is necessary to do so.  It was argued that the lease here worked perfectly well without any implied terms.

The Tribunal agreed.  They agreed that there was no basis for the implication of words to make the clauses here match the ones in 180 Archway Road.

It was recognised that the obligation on the part of the lessee to pay was not expressed to be conditional upon the landlord insuring in joint names and that there was no reason why that conditionality should be implied.

The Tribunal went on to consider whether the landlord was in breach of clause 5(ii).  Despite the lease requiring the landlord to insure “in the joint names of the lessor and the lessee”, a policy hadn’t been placed in joint names but instead the interest of the lessee had been noted on the policy.

The Upper Tribunal considered the insurance intricacies at some length.  Ultimately, because the appeal has succeeded on the first ground the Upper Tribunal declined to make a decision on the second ground of appeal.

Accordingly, the Tribunal determined that insurance costs were payable in accordance with the contractual terms of the lease.



This case serves as (another) reminder of the importance of reading, understanding and implementing the terms of leases.

Leases will often contain “linked” obligations, such as a requirement on the part of the landlord (or management company) to provide services and a requirement on the part of any lessee to pay the service charge.  It’s important to look and see whether those obligations are independent or whether there’s an expressed provision which makes one conditional upon the other.  It seems from Brickfield Properties that where obligations aren’t expressed to be conditional, there should be no reason why that conditionality should be implied.



24 May 2020

Cassandra Zanelli

Widely recognised for her expertise in the industry, and listed among the 100 most influential people in residential leasehold management, Cass heads the team at PM Legal Services. Passionate about education and sharing knowledge, she's a regular speaker at conferences, events and seminars, having worked with leading organisations in the property management industry.

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