A recent High Court decision in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd and others [2025] EWHC 1247 (Ch) has caused a stir in the commercial property sector. The High Court ruled that the landlord of the Trocadero Centre in London must reimburse Picturehouse Cinemas approximately £700,000 in overpaid insurance rent, dating back nearly a decade.
For background, under the lease agreement, the landlord – London Trocadero (2015) LLP, part of the Criterion Group – was responsible for insuring the premises, with the tenant, Picturehouse Cinemas Ltd, required to contribute a proportionate share of the insurance premium. However, a dispute arose over the inclusion of broker commissions (sometimes as much as 50 – 60% of the gross premium) and a 35% “placement, administration and work transfer fee” added to the insurance premium over the 2022/23 financial year.
In practice, brokers charge commissions to insurers, which then the broker passes back a percentage to the landlord – costs which are then ultimately passed on to the tenant to pay at hugely inflated price.
The court found that the lease did not entitle the landlord to recover these commissions or the additional administrative fee, and held that:
- The broker’s commission was not a recoverable cost under the lease as it fell outside the specific definition in the lease of “Insurance rent” (being the premium for keeping the building in which the premises were situated insured).
- The 35% administrative fee imposed in 2022/23 was also not contractually recoverable (the court found that these were not genuinely incurred by the Landlord in insuring the building and also fell outside of the definition of Insurance Rent).
- Picturehouse are entitled to restitution for overpaid sums, which amounted to £700,000 after nearly a decade of inflated charges.
Implications
This ruling is a wake up call for both landlords and tenants:
- For landlords: This case shines a light on the importance of clear and precise lease drafting, especially surrounding clauses seeking to recover costs beyond standard premiums and the reasoning for these additional fees.
- For tenants: It highlights the value of scrutinising insurance rent and service charge provision drafting in leases before signing on the dotted line. Tenants may also have the grounds to challenge and reclaim inflated charges now this precedent has been set.
Impact on the wider market
Although this judgement does not set to establish new legal principles, it does shine a spotlight on a widespread but often common practice in commercial leasing. Many tenants may be unaware that they are indirectly funding landlord commissions through inflated insurance premiums. This decision could not only pave the way for similar successful claims in the future, but it could have a further impact on property insurance practices going forward.
Contact Us
You can contact Rebecca Cleal for assistance on any of these issues by e-mailing Rebecca at rcleal@prettys.co.uk
You can also view our other commercial property services here.
