Jurisdiction(s):
United Kingdom

Lease construction, not policy, governs Berni Inns; landlord obliged to insure only demised premises may recover for wider building losses: Prezzo v High Point Estates (England and Wales)

Published on: 02 October 2018

Published by a LexisNexis Property expert

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Article summary

Prezzo Ltd v High Point Estates Ltd [2018] EWHC 1851 (TCC) What are the practical implications of the judgment?

In Mark Rowlands Ltd v Berni Inns Ltd [1985] 3 All ER 473, the Court of Appeal articulated a general rule: where a landlord is required to insure the building and the tenant contributes to the premium as insurance rent, that cover operates for the tenant's benefit as well. Accordingly, losses caused by an insured risk arising from the tenant's negligence must be met from the insurance proceeds, leaving the landlord with no additional negligence claim against the tenant. In the later decision of Frasca-Judd v Golovina [2016] EWHC 497 (QB), [2016] All ER (D) 282 (Feb), the High Court revisited Berni Inns and held that, even though a short-term residential lease imposed no duty on the tenant to pay insurance rent, the landlord's insurer could not recover repair costs from the tenant—parties to such short lets expect the landlord to obtain the policy and to be indemnified under it. The court concluded that this position satisfied the standards of reasonableness and aligned with public policy. That approach reflects the parties' expectations and preserves the bargain allocated between them fairly...

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