Summary

The English High Court has ruled in the case of London Trocadero (2015) LLP v Picturehouse Cinemas Ltd and others,¹ that a landlord responsible for insuring leased premises cannot charge tenants for landlord commissions under standard lease terms. The judgment could trigger widespread claims from commercial tenants seeking reimbursement of commissions previously paid. 

Facts

The case involved a landlord and tenant dispute relating to premises which form part of the Trocadero Centre in London. London Trocadero 2015 LLP (the Landlord)—part of Criterion Capital—was obliged under the terms of the lease to obtain insurance for the whole centre and was entitled to recover the cost from the various tenants. One of the key issues in dispute concerned the liability of Picturehouse Cinemas Limited (the Tenant)—part of Cineworld subgroup—to pay the full amount of their share of the insurance premium. The Tenant objected to the fact that part of the premium was paid back to the Landlord by way of commission, arguing this did not form part of the premium payable. 

Decision

In a legal Judgment dated 23 May 2025, Mr Justice Richards concluded that, on a proper construction of the terms of the lease, Landlord commissions were not bona fide “premiums payable … for keeping [the] Centre insured” and thus were not recoverable from the Tenant. While the Landlord commissions were ostensibly payable as part of the premium, their purpose was not to keep the centre insured. The Landlord commissions (in contrast with insurance broker commissions) had been engineered for the Landlord’s benefit and did not represent compensation for any services provided. The Tenant was entitled to recover overpaid sums (circa £700,000 in total) representing Landlord commissions spanning over several years). The Court also accepted that the lease included an implied term that insurance must be negotiated at arm’s length; which meant the absence of any intention designed solely to confer a benefit on the Landlord at the Tenant’s expense.

Why the Decision Is Important

This is a landmark ruling that landlord commissions, though commonplace in the insurance context, cannot be charged to the tenant without express authorisation under the terms of the lease. The case has wider implications in so far as thousands of commercial tenants may now scrutinise service charges for undisclosed commissions. While claims in restitution will turn on their own facts, the Courts are likely to take a strict approach to the interpretation of relevant clauses in the lease and, even if the wording is unclear or ambiguous, implied terms may enable tenants to recover commission charges. The case is certainly consistent with recent residential reforms (Leasehold and Freehold Reform Act 2024), with the commercial property market potentially likely to face new transparency standards.

Recommended Action Points

For Landlords

• Review insurance clauses in leases: Ensure any relevant fees or commissions are expressly permitted.
• Audit current arrangements: Restrict broker commissions to genuine market-level amounts.
• Improve transparency: Fully disclose any commission sources and amounts to tenants.
• Legal compliance: Seek legal advice on possible lease amendments (or express disclaimers) and prepare for possible restitution claims.

For Tenants

• Formal requests: ask the landlord for full disclosure on insurance fees and commissions.
• Assess period of exposure: Gather evidence (relevant leases, broker agreements, policies, invoices and details of net premium charged).
• Explore claims: Seek legal advice on possible restitution claims for any insurance rent or commission overcharges.

Conclusion

This High Court decision signals a turning point in commercial lease transparency. Landlords and tenants alike must reassess insurance charging mechanisms—failure to act may lead to costly repayments and reputational damage. Proactive lease reviews and documentation of insurance practices are now essential.

¹ [2025] EWHC 1247 (Ch)