Commercial landlords usually bear the burden of arranging building insurance and any failure to do so can expose all concerned to the risk of catastrophic loss. In one case, a landlord who failed in that duty received a stiff fine for breaching a High Court order.
The corporate landlord of a large Victorian civil building had covenanted with its tenants that it would arrange comprehensive buildings insurance. As expiry of the policy then in place approached, however, the insurer had required a large number of safety improvements to be made to the premises before it would be renewed.
The landlord failed to arrange fresh insurance and, after the policy came to an end, the tenant of part of the premises had no choice but to arrange alternative cover at their own expense. The tenant launched proceedings and the landlord gave a formal undertaking to the Court that it would meet its obligations under the lease and ensure that the required insurance cover was in place by a particular date.
That deadline was missed by more than two months and the tenant issued contempt proceedings. The landlord agreed cover with insurers shortly before the hearing of the case and apologised after admitting that it had breached the undertakings. After the Court inquired into the extent of their resources, the landlord and its sole director were each fined £3,750. The director was warned that, in default of payment, he would serve six weeks’ imprisonment.
Ian Powell – [email protected]