Named insurer — Unilateral change of insurer by defendants — Breach of covenant — Application to High Court for declaration that defendants in breach — Whether court had power to vary insurance provisions of headlease — Declaration granted
The plaintiff was a charity which owned a large number of properties in north London; one was 2 Hamilton Terrace, London NW8 (“the property”). It was subject to a lease dated March 25 1947 for a term of 99 years. The lessee converted it from a single house into six self-contained flats. In September 1985 the lease was assigned to the defendants. The property was insured with Phoenix Assurance Office Ltd in accordance with clause 2(20) of the lease. In 1984 Phoenix became a member of Sun Alliance Group. Thereafter policies were issued in the name of Sun Alliance. In 1993 without reference to the plaintiff, the defendants decided to change their policy and took out a policy with Commercial Union commencing on October 1 1993. The plaintiff asserted that this was a breach of covenant.
Section 40 of the Landlord and Tenant Act 1987 provided that any party to a long lease of a dwelling might apply to the court for an order varying the lease on the grounds that the lease failed to make satisfactory provision with respect to any matter relating to the insurance of the dwelling. The defendants argued that the definition of “dwelling” in section 60 as “a building or part of a building occupied or intended to be occupied as a separate dwelling …” had to be read in the light of the Interpretation Act 1978 section 6(c) (whereby the singular was to be read as the plural unless the context otherwise required). Thus, a building which consisted of a number of separate dwellings was itself a dwelling and therefore fell within section 40. The fact that it included six-dwelling units did not exclude it under section 40(4) because in that context flats were not treated as dwelling (section 40(5)). Therefore the property as a whole fell within the jurisdiction conferred by the section and the court had power to vary the insurance provisions of the headlease.
Held The declaration for the plaintiff was granted.
1. On the evidence, when in November 1993, the defendants cancelled the Sun Alliance policy without any prior notice to the plaintiff, it acted in breach of covenant. Although Sun Alliance was not named in the policy and had not been formally nominated, the parties had acted for eight years on the basis that it was the correct company. The defendants did not give any notice of its intention to depart from that undertaking.
2. Similarly the insurance effected with Commercial Union was a breach of covenant. Clause 2(20) contained not only a requirement to insure with the named company, but prohibition against insuring with any other office unless nominated by the lessor.
3. The reference to a building or part of a building showed that attention was directed at individual units of occupation, ie at particular parts occupied separately for the purpose of individual dwellings. The property comprised “separate dwellings”, but it was the individual parts which were “occupied” as such. In the context of section 40, the Interpretation Act did have a role. Section 40(1) might be read “any party to a lease of a dwelling or dwellings”. However, that did not assist the defendants since for section 40 purposes flats were not dwellings. Thus, a lease of six flats fell outside the section.
Anthony Radevsky (instructed by Lee & Pembertons) appeared for the plaintiff; Romie Tager QC (instructed by Wallace & Partners) appeared for the defendants.
