Mark Rowlands v Berni Inns Ltd: CA 1985

The plaintiff owned the freehold and had let the basement to the defendant. The plaintiff insured the building. The defendant covenanted to pay to the plaintiff an insurance rent equal to the proportionate cost of insuring the part of the building occupied by the defendant, and did pay such rent. The building was destroyed by fire caused by the negligence of the defendant. The insurer paid the plaintiff the sum due under the policy and brought an action in the name of the plaintiff to recover its outlay from the defendant. The defendant was not named as a co-insured in the relevant insurance policy. The issue came to whether the tenant had an interest in the landlord’s fire insurance policy and an insurable interest in the premises which were destroyed by fire.
Held: ‘this ancient statute’, Section 2 of the 1774 Act (which makes it unlawful not to name, as the tenant was not named, ‘the person interested’ in a policy to which the Act applies) had no application to indemnity insurance but only to insurances which provide for the payment of a specified sum upon the happening of an insured event. Lucena was the classical definition of an insurable interest.
Kerr LJ said: ‘The intention of the parties, sensibly construed, must therefore have been that in the event of damage by fire, whether due to accident or negligence, the landlord’s loss was to be recouped from the insurance moneys and that in that event they were to have no further claim against the tenant for damages in negligence. Another way of reaching the same conclusion, on which Mr. Harvey also relied, is that in situations such as the present the tenant is entitled to say that the landlord has been fully indemnified in the manner envisaged by the provisions of the lease and that he cannot therefore recover damages from the tenant in addition, so as to provide himself with what would in effect be a double indemnity. Although the receipt of insurance moneys by an innocent party is of course normally no defence to a wrongdoer (see Bradburn v. Great Western Railway Co. (1874) LR 10 Ex 1), Mr. Harvey relied on a number of passages in Parry v. Cleaver [1970] AC 1, 13 to show that considerations of ‘justice, reasonableness and public policy’ (per Lord Reid) may require exceptions to this general principle. I do not think it necessary to elaborate upon this line of argument in the present case save to say that I accept it and regard it as complementary to the conclusion which is to be derived from the construction and effect of the terms of the lease itself, as indicated above.’ and (after citing Canadian authorities) ‘In each of the cases the minority concluded that the absence of any provision expressly or impliedly exonerating the tenant from negligence was fatal, but the majority view was that there was no need for any such provision, since it was sufficiently clear from the terms of the leases and the landlords’ covenant to insure against fire, including fire caused by the tenants’ negligence, that the landlord could not maintain an action for negligence against the tenants, and that the landlords’ insurers’ right of subrogation could therefore equally not be enforced.’


Kerr LJ


[1986] 1 QB 211, [1985] 3 All ER 473, [1985] 2 Lloyds Rep 437, [1985] 3 WLR 964, [1986] ANZ Conv R 501


Insurance Act 1774 2


England and Wales


AdoptedLucena v Craufurd HL 1806
Before the declaration of war, against the United Provinces, His Majesty’s ships took possession of several ships belonging to Dutch East India men, and took them to St Helena. The Commissioners then insured the ships for their journey from St . .
CitedPetrofina (UK) Ltd v Magnaload Ltd 1983
A finding of double insurance requires the same insured to be covered in respect of the same property against the same risks.
Lloyd J held that: ‘a head contractor ought to be able to insure the entire contract works in his own name and the . .
CitedCommonwealth Construction Co Ltd v Imperial Oil 1977
(Supreme Court of Canada) de Grandpre J said: ‘On any construction site, and especially when the building being erected is a complex chemical plant, there is ever present the possibility of damage by one tradesman to the property of another and to . .

Cited by:

AppliedSiu Yin Kwan and Another v Eastern Insurance Co Ltd PC 16-Dec-1993
Insurers are liable to undisclosed principals on an indemnity policy, provided it was made with the range of their authority. The claim arose out of the death of two seamen on their employers’ vessel but the employers were not named in the relevant . .
CitedFeasey v Sun Life Assurance Company of Canada and Another: Steamship Mutual Underwriting Association (Bermuda) Ltd v Feasey ComC 17-May-2002
The fact that there was more than one insurance policy in place for the same interest would not preclude a claim under one of them. A mutual underwriting group insured members against personal injury and so forth through ‘lineslip’ policies. The . .
CitedYarm Road Ltd and Another v Hewden Tower Cranes Ltd TCC 4-Nov-2002
. .
CitedLondon Borough of Barking and Dagenham v Stamford Asphalt Company Limited and Others CA 20-Mar-1997
. .
CitedCo-Operative Retail Services Limited and others v Taylor Young Partnership and others HL 25-Apr-2002
Whilst a substantial new building was being constructed, it was damaged by fire caused by the negligence of several contractors. The case concerned apportionment of liability.
Held: The appeal failed. The parties could by agreement vary the . .
CitedMatalan Discount Club Limited v Tokensprire Properties Limited and Richmond Cladding Systems Limited TCC 4-Jun-2001
. .
CitedHeathfield v Owen CA 16-Jul-1999
. .
CitedCo-operative Retail Services Ltd v Taylor Young Partnership, Hoare Lea and Partners (a Firm) and Others CA 4-Jul-2000
A building owner entered into a standard form of building contract for the construction of office premises. Under its terms the contractor was required to take out and maintain a policy in the names of the owner, the contractor and specialist . .
CitedHIH Casualty And General Insurance Limited and Others v The Chase Manhattan Bank and Others CA 31-Jul-2001
Parties syndicating finance for a film obtained the security of an insurance which is designed to pay up to the sum insured, if the revenues generated by the film were insufficient to repay the loan finance plus associated expenses. The polices were . .
CitedScottish and Newcastle plc v GD Construction (St Albans) Ltd CA 22-Jan-2003
The employer and main contractor had contracted under the JCT conditions. The employer had been obliged to insure the property for fire in their joint names, but had not done so. After a fire caused by the negligence of a sub-contractor, he sued. . .
CitedQuirkco Investments Ltd v Aspray Transport Ltd ChD 23-Nov-2011
The defendant tenant said that it had exercised a break clause in the lease held of the claimant. The claimant said the break notice was ineffective because the defendant was in breach of the lease, not having paid an iinsurance service charge, and . .
CitedGard Marine and Energy Ltd and Another v China National Chartering Company Ltd and Another SC 10-May-2017
The dispute followed the grounding of a tanker the Ocean Victory. The ship was working outside of a safe port requirement in the charterparty agreement. The contract required the purchase of insurance against maritime war and protection and . .
Lists of cited by and citing cases may be incomplete.

Insurance, Landlord and Tenant

Updated: 03 August 2022; Ref: scu.184479