In a recent case where, by mistake, a lease contained no express clause for the landlord to recover the insurance premium from the tenant, it was held that there was no basis for implied recovery.
In Sadd v. Brown (2013), the lease required the landlord to carry out work and spend money on the building, including repairing the structure and exterior, insuring the building, decorating the exterior, and providing such other services as the landlord considered reasonable. The lease obliged the tenant to pay a service charge in respect of the cost of repairs; it was silent on the costs of insuring, decorating, and providing other services.
The lease also contained the usual tenant covenant to pay and indemnify the landlord against “all rates, duties, charges, assessments, and outgoings” that might be imposed in respect of the property, and it was suggested by the landlord that the insurance premium was an “outgoing” covered by that clause. It was also argued that a term could be implied into the lease requiring the tenant to reimburse the landlord’s insurance premium expenditure.
The argument that the premium was an “outgoing” was dismissed. The Court thought that these clauses only dealt with charges made by other people, not amounts due under contracts that the landlord voluntarily signed. They also did not agree with the idea that there was an implied term. It said that a term may only be implied if doing so is necessary to give business efficacy to the lease. The lease was not unworkable without the term, and including the implied term would have involved rewriting the lease.
It was noted that the landlord probably had alternative remedies. A claim for rectification could be made, as could a lease variation application under the Landlord and Tenant Act 1987 as the matter related to a long residential lease.
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