First-tier Tribunal Upholds Reasonableness of Service Charges for Building Insurance

OUTCOME: Dismissed

Case Reference : MAN/00BN/LSC/2024/0148 Property : Various Flats within [ADDRESS], [POSTCODE] Applicants : [redacted] and others – See Annex A Respondents : [redacted] (2) [NAME]) [COMPANY] (3) [NAME]) [COMPANY] Respondents’ Counsel : [redacted] (2) [COUNSEL] (3) [COUNSEL] of Application : Landlord & Tenant Act 1985 – s 27A Landlord & Tenant Act 1985 – s 20C Commonhold & Leasehold Reform Act 2002 – para 5A sch 11 Tribunal Members : Judge Richard M. Dobson-[NAME] & Venue of Hearing : Video hearing online Date of Decision : 11 September 2025 © CROWN COPYRIGHT 2025

DECISION (1) The Tribunal determines that the service charges for the Property in respect of the building insurance charges in policy years 2021/2022, 2022/2023, and 2023/2024 are reasonable. (2) The Tribunal determines that the additional legal costs charged by the First Respondent to some of the Applicants for sending letters of claim are reasonable. (3) The Tribunal declines to make an order under s 20C Landlord and Tenant Act 1985 and / or para 5A sch 11 Commonhold and Leasehold Reform Act 2002.

REASONS Background 1. The Application relates to a 15-story block of 144 flats now known as the [ADDRESS], [POSTCODE] (“the Property”) (previously known as Block 7, Green Quarter, [ADDRESS], Manchester) and is brought in respect of various flats within the Block (“the Flats”).

2. The Lead Applicant is [APPELLANT], the long leaseholder of [ADDRESS], [POSTCODE], being one of the Properties.

3. The First Respondent, [RESPONDENT], is the immediate landlord of the Applicants.

4. The First Respondent’s managing agents for the Block have at all material times been [NAME].

5. The [NAME] Respondent is [NAME]) [RESPONDENT], being the freehold owner of the Block from 13 May 2016 to 28 November 2023.

6. When the [NAME] Respondent was the freeholder (see below), its asset managers were [RESPONDENT] (“[NAME]”).

7. The [NAME] Respondent is [NAME]) [RESPONDENT], being, since 29 November 2023, the freehold owner of the Block. The application 8. On 6 March 2024, the Applicants made an application for an order under s 27A LTA 1985 for a determination as to the reasonableness and payability of the service charges relating to the Property in relation to building insurance charges in policy years 2021/2022, 2022/2023, and 2023/2024 (“the Disputed Insurance Charges”), additionally alleging that issues in respect of Sch 8 Building Safety Act 2022 (“the BSA”) arise (“the Application”).

9. The Applicants seek further orders in respect of s 20C Landlord and Tenant Act 1985 (“LTA 1985”) and para 5A sch 11 Commonhold and Leasehold Reform Act 2002 (“CLRA 2002”) to restrict the recovery of the costs of the proceedings as service charges and / or administration charges. The leases

10. The Applicants’ interest in the Flats is derived from various Leases dated 10 February 2020, each for a term of 150 years commencing on 1 August 2006 and all in materially the same form (“the Leases”).

11. The First Respondent is the underlessee of the Block pursuant to a Supplemental Underlease dated 30 November 2015 made between (1) the [NAME] Respondent and (2) [NAME] [RESPONDENT] and [COMPANY], for a term of 999 years less 3 days (“the Underlease”). By clause 4, the Underlease was made upon the same terms as the Headlease (referred to below), save for some immaterial exceptions.

12. The reversion immediately expectant on the termination of the Underlease was subsequently assigned to the [NAME] Respondent, and the Underlease was varied by Deed of Variation dated 26 October 2020.

13. Prior to acquiring the freehold of the Block, the [NAME] Respondent was the tenant, and the [NAME] Respondent was the landlord, under a headlease dated 13 June 2007 made between (1) [COMPANY] and (2) [COMPANY] (North West) [COMPANY] and [COMPANY], for a term of 999 years less 3 days (“the Headlease”).

14.

Accordingly, at all times material to the Application: - a. The First Respondent has been the immediate landlord of the Applicants under the Lease. b. The [NAME] Respondent has been the immediate landlord of the First Respondent under the Underlease. c. Prior to 29 November 2023, the [NAME] Respondent was the freeholder and immediate landlord of the [NAME] Respondent under the Headlease.

d. Since 29 November 2023, the [NAME] Respondent has been the freeholder and only relevant [NAME].

15. The relevant terms of the Leases regarding the Disputed Insurance Charges are as follows: - a. By clause 5.4 of the Leases, the tenant is required to pay, as a separate charge, the “Insurance Charge”, defined as: - “a fair and proper proportion of the cost to the [NAME] of effecting and maintaining the Insurance Policies or procuring the effecting and maintaining of the Insurance Policies including where relevant the costs of assessing any insured amounts” b. “Insurance Policies” are defined as insurance policies maintained in respect of the Block covering damage by the Insured Risks, public liability and other matters. c. “Insured Risks” are defined by reference to the usual and common insurable risks, including terrorism (where affordable at reasonable commercial rates) and other risks provided for in the [NAME]. d. “[NAME]” and “[NAME]” are defined by reference to a lease or leases in reversion to the term created by the Leases. e.

Accordingly, both the [NAME] Respondent and the [NAME] Respondent have at all times been the “[NAME]” for the purposes of the relevant insuring covenants. f. The terms of the Underlease and Headlease (whose terms are materially the same) require the landlord (by the covenant at clause 7.2.1) to keep the Block, including the Landlord’s fixtures and fittings, insured with an office or

underwriters of repute and through any agency as decided from time to time by the Landlord in the name of the Landlord against loss or damage by the Insured Risks. g. “Insured Risks” are defined by reference to the usual and common insurable risks, including terrorism (where affordable at reasonable commercial rates) and “such other risks as the Underleases may from time to time require to be covered and / or the Landlord reasonably thinks fit”; Underleases being defined as a lease of a Flat or a Car Parking Space. h. By clause 6.3 of the Underlease and Headlease, the tenant is obliged to pay the “Insurance Charge”, defined as the cost to the Landlord of effecting and maintaining the Insurance Policies including where relevant the cost of assessing any insured amounts. i. The First Respondent was therefore required to pay the Insurance Charges to the [NAME] Respondent under the Underlease, and the [NAME] Respondent was in turn required to pay the same Insurance Charges to the [NAME] Respondent under the Headlease, until the [NAME] Respondent acquired the freehold on 29 November 2023. j. The definition of “Insured Risks” in the Headlease and the definition of “Insurance Policies” and “Insured Risks” in the Leases oblige and / or permit the [NAME] to effect and maintain insurance cover for Buildings Insurance, Terrorism and Property Owners Liability Insurance, which it has done since 2020. The law 16. The Tribunal is given jurisdiction to decide the reasonableness and payability of service charges by s 27A Landlord and Tenant Act 1985 (“LTA 1985”), which provides: -

(1) An application may be made to the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to— (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable.

17. Subsection 2 provides that the application may be made whether or not any payment has been made by the Applicants.

18. The meaning of the expression “service charge” is set out in s 18(1) LTA 1985, meaning: “…an amount payable by a tenant of a dwelling as part of or in addition to the rent- (a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements, or insurance or the landlord’s costs of management, and (b) the whole of any part of which varies or may vary according to the relevant costs.

19. In making any determination under s 27A LTA 1985, the Tribunal must have regard to ss 19(1) & (2) LTA 1985 which state: (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period- (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly

(2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise. 20. “Relevant Costs” are defined for these purposes by s 18(2) LTA 1985 as: The costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a [NAME], in connection with the matters for which the service charge is payable.

21. S 20C LTA 1985 provides that the Tribunal may restrict the recoverability of the costs of the proceedings as service charges, where it states: - (1) A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings before…the First-tier Tribunal…are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application. (2) The application shall be made… (ba) in the case of proceedings before the First-tier Tribunal, to the tribunal. (3) The…tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances.

22. Para 5A sch 11 CLRA 2002 mirrors s 20 LTA 1985 above but applies to costs that may be recovered as administration charges, as opposed to service charges.

23. The Tribunal is given jurisdiction to decide the reasonableness and payability of administration charges by s 158 Commonhold and Leasehold Reform Act 2002 (“CLRA 2002”), which provides: - Schedule 11 (which makes provision about administration charges payable by tenants of dwellings) has effect 24. Para 5 sch 11 CLRA 2002 provides that: - (1) An application may be made to the appropriate tribunal for a determination whether an administration charge is payable and, if it is, as to— (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable.

25. Para 2 sch 11 CLRA 2002 states that: - A variable administration charge is payable only to the extent that the amount of the charge is reasonable 26. The meaning of the expression “administration charge” is set out in para 1 sch 11 CLRA 2002, meaning: “…an amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable- (c) in respect of a failure by the tenant to make a payment by the due date or on behalf of the landlord or a person who is party to his lease otherwise than as landlord or tenant, or (d) in connection with a breach (or alleged breach) of a covenant or condition in his lease

27. Insofar as the BSA is concerned, para 2 Sch 8 BSA states that: - (1) This paragraph applies in relation to a lease of any premises in a relevant building. (2) No service charge is payable under the lease in respect of a relevant measure relating to a relevant defect if a relevant landlord- (a) is responsible for the relevant defect, or (b) is associated with a person responsible for a relevant defect. (3) For the purposes of this paragraph a person is "responsible for" a relevant defect if— (a) in the case of an initial defect, the person was, or was in a joint venture with, the developer or undertook or commissioned works relating to the defect; (b) in any other case, the person undertook or commissioned works relating to the defect. (4) In this paragraph— "developer" means a person who undertook or commissioned the construction or conversion of the building (or part of the building) with a view to granting or disposing of interests in the building or parts of it; "initial defect" means a defect which is a relevant defect by virtue of section 120(3)(a); "relevant landlord" means the landlord under the lease at the qualifying time or any [NAME] at that time. 28. “Relevant building” is defined by s 117 BSA as follows: - (2) "Relevant building" means a self-contained building, or self-contained part of a building, in England that contains at least two dwellings and— (a) is at least 11 metres high, or (b) has at least 5 storeys. This is subject to subsection (3).

29. “Relevant measure” is defined by para 1 BSA as: - in relation to a relevant defect, means— (a) a measure taken to remedy the relevant defect, or (b) a relevant step taken in relation to the relevant defect. 30. “Relevant steps” is defined by s 120(4A) as: - in relation to a relevant defect, means steps which have as their purpose— (a) preventing or reducing the likelihood of a fire or collapse of the building (or any part of it) occurring as a result of the relevant defect, (b) reducing the severity of any such incident, or (c) preventing or reducing harm to people in or about the building that could result from such an incident. 31. “Relevant defect” is defined by s 120(2) BSA as follows: - (2) "Relevant defect", in relation to a building, means a defect as regards the building that— (a) arises as a result of anything done (or not done), or anything used (or not used), in connection with relevant works, and (b) causes a building safety risk. 32. “Building safety risk” is defined by s 120(5) BSA as follows: - (5) For the purposes of this section— "building safety risk", in relation to a building, means a risk to the safety of people in or about the building arising from— (a) the spread of fire, or (b) the collapse of the building or any part of it. Directions

33. Directions were made by a Legal Officer on 3 March 2025 (“the Directions”) requiring, inter alia, provision of financial information by the [NAME] to the Applicants, sequential filing and service of the parties’ statements of case and evidence in support, with the opportunity for the Applicants to reply.

34. By Order dated 29 May 2025, the [NAME] Respondent was added to the proceedings and the relevant deadlines for the above steps extended. The hearing 35. The hearing took place by way of a video hearing on 11 September 2025.

36. The Applicants submitted a Statement of Case dated 1 May 2025 and a bundle of documents annexed thereto.

37. The First Respondent submitted an undated Statement of Case and a bundle of documents annexed thereto, along with witness statements of [NAME] dated 17 June 2025, [NAME] dated 29 May 2025, and [RESPONDENT] dated 17 June 2025.

38. The [NAME] Respondent submitted a Statement of Case dated 19 June 2025 and a bundle of documents annexed thereto.

39. The [NAME] Respondent submitted a Statement of Case dated 18 July 2025 and a bundle of documents annexed thereto, along with a witness statement of [NAME] dated 18 July 2025.

40. Finally, the Applicants submitted an Applicants’ Reply dated 26 July 2025 with a number of attachments. Preliminary applications

The Applicants’ preliminary application 41. The Applicants made an application dated 9 September 2025 seeking: - a. An order limiting payment of the landlord’s costs pursuant to para 5A Sch 11 CLRA 2002. b. The inclusion of the Applicants’ Statement of Case and supporting documents, as these had been omitted from the hearing bundle.

42. Since the Application already included a request for an order per para 38 a. above, and a revised hearing bundle containing the Applicants’ Statement of Case and supporting documents had been filed, the Applicants’ preliminary application was considered otiose and dismissed. The [NAME] Respondent’s preliminary application 43. By email dated 10 September 2025 at 12.01 pm, the solicitors acting for the [NAME] Respondent filed and served a Witness Statement of [RESPONDENT] of the same date.

44. At the commencement of the hearing, the [NAME] Respondent made an oral application to rely on the same, submitting that it should be allowed under Rule 8 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (“the Rules”), that it caused no prejudice to the other parties as it did not introduce any additional evidence and merely spoke to the information contained within the [NAME] Respondent’s Statement of Case.

45. When asked by the Tribunal why it had been filed and served so late, the [NAME] Respondent did not have an explanation.

46. The [NAME] Respondent’s preliminary application was not opposed by the First Respondent and the [NAME] Respondent.

47. However, it was opposed by the Lead Applicant, on the grounds that it was very late, having been produced the day before the hearing, but without asserting any prejudice that had been caused by the same.

48. The Tribunal allowed the [NAME] Respondent’s preliminary application, pursuant to Rule 8 of the Rules, on the basis that it provided a useful insight into the process followed by the [NAME] Respondent in placing the insurance for the Block (during the period for which the [NAME] Respondent was responsible for doing so) and did not raise any new issues, therefore causing no real prejudice to the other parties and being of assistance in determining the Application. The Issues 49. During his submissions (at the end of the hearing), the Lead Applicant withdrew the issues that the Applicants had raised in relation to the BSA.

50.

Accordingly, the issues to be decided by the Tribunal were the reasonableness of the Disputed Insurance Charges, as follows: - a. In respect of 2021/2022 in the total sum of £163,891.25, which the [NAME] Respondent was responsible for placing. b. In respect of 2022/2023 in the total sum of £183,015.14, which the [NAME] Respondent was responsible for placing. c. In respect of 2023/2024 in the total sum of £124,687.04, which the [NAME] Respondent was responsible for placing.

51. In addition, the Tribunal was required to decide whether the additional legal costs charged by the First Respondent to some of the Applicants for sending letters of claim were reasonable. Determination Applicants’ evidence 52. The Applicants did not file a witness statement but the Lead Applicant (with the agreement of the Respondents) briefly explained the comments set out in his Statement of Case.

53. He was asked by the [NAME] Respondent about the Form EWS1: External Wall fire Review dated 21 October 2020 which ticked box B1 which stated that the fire risk was ‘sufficiently low that no remedial works are required’ and responded by saying that it did not mean that the building does not have combustible material in it. He was also asked whether he accepted that [NAME] (another Greenquarter building that he had used as a comparison with the Property) was differently constructed, replying that he did not know the details of its construction but that they both have issues with fire risk due to cladding.

54. The Tribunal asked whether he had an issue with the process for obtaining insurance used by the [NAME], to which he confirmed that this issue was not his concern, it was the fact that the quote was higher because the Property had issues and risks due to its construction. First Respondent’s evidence 55. The First Respondent called Mr [RESPONDENT] to give evidence, which primarily addressed the construction of the Property, a water ingress issue in January 2021 which was ultimately remedied by April 2025.

56. The Lead Applicant asked him a series of questions regarding the cause of the issue and whether this related to the construction of the Property, which Mr [NAME] answered by saying the defects were to 32 of the flats due to missing end gap gaskets and sealant not doing its job. [NAME] Respondent’s evidence 57. The [NAME] Respondent called Mr [RESPONDENT] to give evidence, which addressed the process used to place building insurance for the Property for the periods 2020/2021, 2021/2022, and 2022/2023, and the increase in the latter 2 periods (being the periods disputed by the Applicants).

58. The Lead Applicant asked whether the [NAME] Respondent was required to provide details of any issues, claims or defects when obtaining insurance, which Mr [RESPONDENT] confirmed.

59. The [NAME] Respondent asked Mr [RESPONDENT] about the email exchange in November 2022 where the First Respondent ‘challenged the 2022/2023 insurance charges totalling £183,015…including on the basis that an indicative quote of c. £115,000 had been obtained from [NAME] (“the Emails”), which was a company associated with the [NAME] Respondent. Mr [RESPONDENT] said, inter alia, that he was not provided with a copy of the quote upon which the lower figure was based and had already placed the insurance at that point. He also said that he offered the [NAME] Respondent the opportunity to vary the Headlease so that they could potentially procure cheaper insurance using the buying power of its large portfolio of properties, but this did not come to fruition until the following year.

60. Mr [APPELLANT] was asked by the Lead Applicant when the [NAME] were consulted about the available options regarding the insurance, who replied to say that no consultation took place; that the [NAME] Respondent had a legal obligation

to insure the Property, that it had tested the market and had effected insurance at the best possible price that it could obtain. [NAME] Respondent’s evidence 61. The [NAME] Respondent called Mr [RESPONDENT] to give evidence, which focussed on the process followed by the [NAME] Respondent in placing the insurance for 2023/2024.

62. He was asked by the [NAME] Respondent whether he was aware of the Emails. He told the Tribunal that in 2022 he had heard, late in the day, that the [NAME] Respondent was having problems placing the insurance and so the [NAME] Respondent had obtained an indicative quote on the basis of it being placed on its portfolio, but no formal quotation was obtained.

63. The First Respondent asked Mr [RESPONDENT] about his statement that the Property had incurred ‘considerable claims costs to [NAME] in comparison with [NAME]’, and was asked if this related to 1 or 2 claims. He explained that it was in relation to 2 claims, and when asked whether they related to leaking pipes, internal damage and putting it right, he agreed.

64. The Lead Applicant then asked further questions about those claims, whereupon Mr [NAME] told the Tribunal that the claims were in August 2024 and January 2025. The Lead Applicant went on to ask about the level of insurance premiums for the Property versus [NAME], where Mr [NAME] stated that the excess for [NAME] was £400 as against £7,500 for the Property, and accepted that the higher occurrence of water damage would equal a higher excess. The Lead Applicant asked Mr [APPELLANT] what the reason was behind the increased excess for the Property, to which he replied that the claims record and reports to the insurer would inflate it. Applicants’ submissions

65. After the evidence had been heard, the Lead Applicant made his submissions to the Tribunal, submitting, inter alia, the following: - a. The insurance charges for the Property had increased from c. £63,000 in 2020/2021, to £163,000 in 2021/2022, to £183,000 in 2022/2023, and come down slightly to £124,000 in 2023/2024. b. The main reasons for the above were due to cladding fire risks and water ingress caused by issues with the external cladding panels, which were a defect stemming from the construction of the Property. c. Although the Property was categorised as low risk for fire safety, there was still the underlying issue of the combustible material being used in the construction which was affecting the insurance premium. d. The indicative quote of £115,000 per the Emails was not selected and instead the quote of £183,015.14 was accepted, which was not reasonable when there were alternatives available. e. The issues regarding the insurance had been reported to the First Respondent by the [NAME] and it had taken a long time to get any responses, and a significant amount of time to rectify the water ingress issue (from 2021 to 2025). f. As above, regarding the issues concerning the BSA, these were withdrawn. g. Regarding the additional legal costs charged by the First Respondent to some of the Applicants for sending letters of claim, the First Respondent acknowledged that ADR or mediation was intentionally denied despite the Applicants having a right to challenge the Disputed Insurance Charges. h. Regarding the recoverability of the costs of the Application, for the above reasons, the Application should be successful. Therefore, each party should pay their own costs, noting that the Applicants had not incurred legal fees as they had not instructed legal representation. First Respondent’s submissions

66. The First Respondent had submitted a Skeleton Argument dated 8 September 2025 and a bundle of case law to which it referred the Tribunal.

67. In summary, the First Respondent submitted, inter alia, the following: - a. The responsibility for placing the insurance was with the [NAME], being required to follow good practice in doing so and to obtain the insurance at market rate. The First Respondent had little to say about that process. b. If the Tribunal found that the insurance for a particular year was not at the market rate and thus unreasonable, then the consequences would be visited upon the Respondent responsible for placing the same. c. Notwithstanding, by the Emails and per Mr [RESPONDENT] evidence, the First Respondent had illustrated that it was not indifferent to the consequences and was sympathetic to the [NAME]. d. If there was no liability regarding the BSA issues in respect of the service charges, then that was the end of the First Respondent’s involvement. This was not a claim for damages for breach of contract and was to be differentiated from a claim such as the Application. The First Respondent referred to the case of LON/00BE/LSC/2023/0219 “[NAME]”, in particular paragraphs 37 to 39, in this regard. e. The First Respondent accepts that the water leak is a defect but is not a relevant defect for the purposes of the BSA; it does not cause a building safety risk within the meaning of the BSA. The panels were not defective and did not need to be remedied. f. Regarding the additional costs of the letters of claim, these were payable as an administration charge under clause 5.21 of the Leases.

g. The First Respondent had explained why the insurance was higher to the Applicants and there had been many exchanges of information and documents regarding the same between the [NAME] and the First Respondent, [NAME], including a s.30A LTA 1985 request (which provides rights to [NAME] with respect to insurance). h.

Accordingly, the First Respondent was justified in sending the letters of claim, which should be considered as precursors to the Application. i. It was not unreasonable for the First Respondent not to engage in mediation due to the cost of the same and the Applicants’ unrealistic and erroneous views of the effect of the BSA. j. As to the costs of the Application, the Applicants had withdrawn the main claim in relation to the BSA during the hearing.

Accordingly, it would take a set of extraordinary facts for the Applicants’ to be successful in opposing the recovery of the First Respondent’s costs. [NAME] Respondent’s submissions 68. The [NAME] Respondent had submitted a Skeleton Argument dated 10 September 2025 to which it referred the Tribunal.

69. In summary, the [NAME] Respondent submitted, inter alia, the following: - a. The Tribunal should refer to the test as set out in the case of [NAME] v Hounslow LBC [2017] 1 W.L.R. 2817 and ask itself, i) was the landlord’s decision-making process reasonable, and ii) is the sum to be charged reasonable in light of the market evidence.

b. There are always a number of possible outcomes that can be reasonable, and if the landlord has chosen a course of action that leads to a reasonable outcome, then the challenge is not valid, even if there were other cheaper outcomes that were also reasonable. c. The Applicants are required to show a prima facie case regarding the unreasonableness of the Disputed Insurance Charges. To that end, they have relied on the Emails. The Tribunal should consider the case of [COMPANY] v Nicholson [2017] UKUT 382 (LC) which confirmed that in determining the reasonableness and recoverability of insurance premiums, the Tribunal should consider alternative quotes provided by the tenants but only insofar as they “compare like with like”. d. Mr [NAME] evidence that the best achievable policy was obtained should be adopted. The [NAME] Respondent had a single asset policy, hence the difference between the insurance which it could obtain versus, say, the [NAME] Respondent (who had a larger portfolio). e. As to the Emails, the alternative hypothetical quote was only made known to the [NAME] Respondent after the policy had been taken out, and no formal quote was obtained. The policy that was taken out by the [NAME] Respondent should be preferred to the ‘informal arrangement’ between the [NAME] which would have been required to accept the hypothetical quote, if indeed that quote was in fact available and accepted. f. Mr [NAME] gave evidence as to the difference between [NAME] and the Property, which was significant, particularly as the former has a remediation plan in place and the construction types are different. They are not therefore “like for like”. g. As to the costs of the Application, insofar as the Applicants’ application to disallow or limit the recoverability of these, the [NAME] Respondent adopts the position that the “loser pays”. A lot of work has gone into dealing with the BSA

issues which were belatedly withdrawn by the Applicants, who did not produce enough evidence to establish their prima facie case regarding reasonableness of the Disputed Insurance Charges – which was drawn to the attention of the Applicant by the [NAME] Respondent’s Statement of Case. [NAME] Respondent’s submissions 70. The [NAME] Respondent had submitted a Skeleton Argument dated 9 September 2025 and a bundle of authorities to which it referred the Tribunal.

71. In summary, the [NAME] Respondent submitted, inter alia, the following: - a. The test was, as above, set out in the [NAME] case. b. There was no argument that the charges were not recoverable under the terms of the various leases or that the Property was improperly insured. c. Per the COS case, the landlord is required to explain the process by which the particular policy and premium have been selected, with reference to the steps taken to assess the current market. The [NAME] Respondent uses [NAME] which goes to the market and finds the best deal. The insurance agent role is tendered every 3 years and is an incredibly rigorous process. The large portfolio of the [NAME] Respondent leverages a favourable insurance rate, for the benefit of the Applicants. d. The Applicant relied on the Emails as evidence of a cheaper quote, but was then critical of the insurance obtained by the [NAME] Respondent for the period 2023/2024, which was a good and competitive rate. e. The reasons why the insurance had increased were set out in Mr [NAME] witness statement, which included the claims history, the presence of the

combustible items used in the construction of the Property, reinstatement cost inflation, and the effect of the building safety regulations. f. As to the [NAME] comparable relied on by the Applicants, per Mr [NAME] evidence, this was not a “like for like” property, therefore, the Applicants had not produced any comparable evidence. g. As to the costs of the Application, the Tribunal does not have any jurisdiction to make an order in respect of the Headlease or the Underlease under s 20C LTA 1985 or para 5A sch 11 CLRA 2002. The [NAME] has no ability to make such a charge as there is no contract between the parties. The Tribunal’s determination 72. The Tribunal determined as follows: - a. The Applicants’ withdrawal of the BSA issues was accepted. b. Insofar as the reasonableness of the Disputed Insurance Charges are concerned, it is trite law that the Applicants are required to show a prima facie case that they are unreasonable in amount. c. The Applicants have therefore relied upon i) as regards policy year 2021 / 2022, the significant increase in the cost of the insurance premium compared to the prior year, ii) as regards policy year 2022 / 2023, the quote referred to in the Emails, and iii) as regards policy year 2023 / 2024, the comparison [NAME] comparison. d. Whilst it is generally accepted that the insurance premium for policy year 2021 / 2022 was significantly more than that in the prior policy year, the Applicants did not provide any comparable evidence in respect of the same to show that

the increase was itself unreasonable. Furthermore, the Tribunal accepted Mr [NAME] evidence regarding the challenges which the [NAME] Respondent encountered in obtaining insurance for the Property for this period, explaining that the insurer for the prior year, [NAME], had declined to renew the policy due to concerns regarding the results of its inspection of the building. In particular, Mr [NAME] explained that the attitude of [NAME] had changed towards the cladding used in the construction of the Property, as had the majority of the market, making the Property almost uninsurable at that time, meaning that the cover obtained for that period was the only buildings insurance cover available. Whilst the Tribunal is sympathetic to the Applicants’ concerns regarding the size of the increase, it had no evidence before it to show that such an increase was unreasonable. e. Turning to the policy year 2022 / 2023, the Tribunal finds that the quote referred to in the Emails was brought to the attention of the [NAME] Respondent after it had already taken out the policy for that policy year. Importantly, Mr [NAME] confirmed to the Tribunal that this was not a formal quote and so was not available to be accepted by the [NAME] Respondent, not least because it could only have been taken out by the [NAME] Respondent, who had more buying power in the market due to its larger portfolio. Mr [RESPONDENT] also told the Tribunal that the [NAME] Respondent did not benefit from risk spread associated with larger portfolios, being a single asset policy, that the premium was also affected by the increase in building cost, and that there was a reduced number of insurers which were prepared to take on new business. The renewal was at a comparatively small increase from the previous policy year. There was no evidence put before the Tribunal to traverse what [NAME] said in this regard. f. As to policy year 2023 / 2024, the Tribunal accepted the evidence of Mr [NAME] and Mr [NAME] where they explained that the quote for [NAME] was not ‘like for like’, noting that [NAME] has a remediation plan in place, and the construction types of the two properties are different, as are

their claims histories. Mr [NAME] also provided an explanation as to the process followed by the [NAME] Respondent in obtaining insurance, including what the Tribunal determined to be a rigorous regular tendering process in respect of its insurance agent and market testing strategy, noting that it had obtained a reduction from the prior year’s premium. g. Whilst the Tribunal notes that the issues regarding the cladding and water ingress / leaks may have affected the insurance premium, and that it took a substantial period of time for the latter to be remedied, this does not go to the issue of reasonableness of the Disputed Insurance Charges, as confirmed in [NAME] case. h. On the basis of the foregoing, therefore, the Tribunal is not satisfied that the Applicants have successfully raised a prima facie case that the Disputed Insurance Charges are unreasonable. i. Finally, the Tribunal determined that the additional legal costs are payable as an administration charge pursuant to clause 5.21 of the Leases, being solicitors’ costs incurred by the First Respondent incidental to the preparation and service of proceedings on account of arrears of Service Charge. The costs were reasonable and incurred against a backdrop of the First Respondent having previously entered into correspondence with the Applicants regarding their concerns over the Disputed Insurance Charges and provided them with related information. Costs 73. The Applicants sought an order that each party pays their own costs of the Application under s 20C LTA 1985 and para 5A sch 11 CLRA 2002.

74. The Tribunal notes that it is generally a costs neutral venue, save in the exceptional circumstances provided in r 13, which include where a person has acted unreasonably in bringing, defending or conducting proceedings.

75. It makes no such finding and reflects that the Application was unsuccessful.

76. The Tribunal therefore declines to make the order regarding the costs of the proceedings that are sought by the Applicants on the basis that it would not be just and equitable in the circumstances to make them. It is not therefore necessary for the Tribunal to determine whether it has jurisdiction to make an order under s 20C LTA 1985 and para 5A sch 11 CLRA 2002 against the [NAME] and / or [NAME] Respondent. Judge Richard M. Dobson-Mason 11 September 2025

ANNEX A List of Applicants