Landlord required to return £100,000s of insurance commissions

In the recent case of London Trocadero v Picturehouse Cinemas [2025] EWHC 1247 (Ch), the landlord was ordered to repay c.£700,000 in respect of insurance commissions that had been charged to its tenant over an 8-year period.

Under the lease in question, the tenant was obliged to pay "a proportionate part of the total sum… payable by the [landlord] by way of premium for keeping the Centre insured".

Typically, when buildings insurance is procured, a broker acts as an intermediary between the insurer and the landlord. Their role is to help the landlord obtain appropriate insurance cover and negotiate policy terms. If a policy of insurance is placed, the broker usually receives commission, and their commission becomes part of the insurance premium payable by the landlord.

In leases where the landlord is obliged to insure the building, and the tenant contributes to the cost of the insurance premium, the broker's commission would then be paid by the tenant.

However, in London Trocadero v Picturehouse Cinemas, the landlord had asked their insurers to add an extra layer of commission to the insurance premium, which was then paid straight back to the landlord (the landlord's commission).

The landlord's commission, like the broker's commission, was paid by the tenant via its contribution to the cost of the insurance premium. However, unlike the broker's commission, the Court held that, the landlord had not done anything to earn it, and it was not properly recoverable under the tenant's lease.

Accordingly, the landlord was ordered to repay c.£700,000 in respect of landlord's commissions that had been charged over an 8-year period.

Whilst the judgment does not establish any new law, it shines a spotlight on commercial practices which have, in many cases, been going on for decades.

Landlords and tenants should be keeping a close eye on how this particular area of law develops, but also bear in mind that each case will turn on its own facts and the wording of the particular lease in question.

We will provide further updates in due course, to ensure that you are fully informed.