32 Clarendon Court, Stitchill Road
- The building
- A single block built in or about the 1960s with 36 flats, together with grounds including a block of 12 garages, other parking and gardens.
- What was applied for
- A determination under section 27A of the Landlord and Tenant Act 1985 of the payability and reasonableness of service charges over several years, principally the insurance premium, with section 20C and paragraph 5A applications.
- The figures
- 36 flats. Insurance allowed at £8,250 for one year and 8,500 for the next, against 11,915 and 13,092 charged. Directors' and officers' item £223.32 disallowed. Reserve fund £63,202.20 at March 2024.
- Costs
- Section 20C and paragraph 5A both granted, so no legal or litigation costs may be recovered as service or administration charges. The landlord was ordered to reimburse £317 in fees.
What Happened
The estate had been insured alongside twelve other properties owned by the previous freeholder, with premiums rising year on year to £13,092. The leaseholder introduced a new broker in 2021 who obtained quotes far below what was being paid. After the freehold transferred in 2023 the premium fell to £7,066.
What the Tribunal Held
The premiums for two years were reduced. The tribunal rejected the claims-history defence because the 2021 quotation itself recorded the relevant claim, holding it abundantly clear that one way or another the insurer had the claims history information. On the landlord's conduct it found that the respondent was too laissez-faire about the insurance cost and did too little to ensure the premium was at a reasonable level, and that simply leaving matters entirely to the agent or broker and taking no discernible interest was not a rational approach and did not achieve a reasonable outcome. It declined to go back to earlier years, the unknowns being too great with no alternative quote. Directors' and officers' cover was not recoverable: the lease contained no provision for it and it is a company expense not related directly to the building. A formal revaluation at every renewal was not required. Reserve fund demands were payable, but the tribunal criticised the fund having been used as a sort of general slush fund.
What it means for a block here. A director who hands insurance renewal to the agent and takes no discernible interest risks the premium being cut on a challenge, and directors' and officers' cover is not recoverable unless the lease expressly allows it.