QDIME LTD v (1) BATH BUILDING (SWINDON) MANAGEMENT COMPANY LTD (2) VARIOUS LEASEHOLDERS AS IDENTIFIED IN THE LVT DECISION
Decision date: 10 June 2014
Neutral citation: [2014] UKUT 261 (LC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether a landlord could recover the cost of terrorism insurance from leaseholders at Bath Building under a lease requiring insurance against "the usual comprehensive risks in accordance with the CML recommendations" and "such other risks as the Landlord may in its reasonable discretion think fit to insure against." The Upper Tribunal held that insurance of "the usual comprehensive risks" includes explosion risks and therefore encompasses terrorist-caused explosions, and alternatively that the landlord had validly and reasonably exercised its discretion to procure terrorism cover. The LVT's contrary findings were set aside and the Tribunal substituted a decision permitting recovery of terrorism insurance costs.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a lease requires insurance of "the usual comprehensive risks" in accordance with CML recommendations, that phrasing can include explosion risks which, in ordinary meaning, extend to explosions caused by terrorism; and where a lease permits the landlord to insure "other risks" in its reasonable discretion, recoverability of such insurance depends on whether the landlord has shown a bona fide exercise of a reasonable discretion — tribunals should assess whether the decision was within the range of reasonable choices rather than substituting their own judgment.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment indicated that RICS management guidance (approved by the Secretary of State) carries significant weight when assessing the reasonableness of procuring terrorism insurance, and that insurance covenants should be construed by reference to the ordinary meaning of insured risks (insurance covers the risk itself, not the particular cause).