The acrimonious dispute between Cineworld-owned Picturehouse Cinemas and the landlord at its flagship Trocadero site in central London looks set to continue.
Last Friday (May 23), Picturehouse won a judgment against the landlord London Trocadero LLP over the overcharging of commission on insurance rent at Picturehouse Central, with the landlord now required to repay the cinema operator an amount reportedly above £700,000.
However, contacted by Screen, London Trocadero LLP, part of the Criterion Group of companies, confirmed it would be appealing against the judgment.
“Whilst we respect the decision of the Learned Judge, we disagree with it. Indeed, no doubt many in the industry will be surprised to learn that a “premium” for keeping a property insured does not include any portion of brokerage which is legitimately shared by insurance brokers with their landlord clients. We will be seeking permission to appeal the decision,” commented a spokesperson at the property giant, whose controversial billionaire CEO Asif Aziz has been described as “Mr West End”.
Picturehouse Cinemas declined to comment on the court’s ruling.
The Trocadero landlord is obliged to secure insurance for the whole centre and then claw back the costs from its various tenants.
Picturehouse Central is a seven-screen venue in the centre with a gross internal floor area of 62,000 square feet. In the court case, Picturehouse raised safety concerns, arguing that the landlord had failed to maintain a sprinkler system at the centre that would have been effective if a fire had broken out. This meant that its insurance premiums had gone up.
According to the judgment, the Criterion Group includes property-owning companies with a portfolio of real estate worth over £4bn.
Last week’s judgment follows on from earlier court cases pitting Picturehouse against London Trocadero. Post-Covid, the landlord successfully brought legal action against Picturehouse over the non-payment of rent arrears in a claim valued at around £2.9m.
The cinema operator had argued that it shouldn’t be liable for rent for a period when cinemas had been forced to close by the pandemic, but lost the case.
Ongoing disuputes
The Criterion Group has also recently been at loggerheads with another of its cinema tenants, the Prince Charles Cinema off Leicester Square – a venue that has been in existence since the early 1960s and is known for its cult and indie programming.
Over 164,000 signatures have been gathered in a petition to protest against any attempts by the landlord Zedwell LSQ Ltd (a subsidiary of Criterion Capital) to “bully” the Prince Charles out of its building once its existing lease ends in September 2025.
Earlier this month, Westminster Council recognised the Prince Charles Cinema as an Asset of Community Value and as “a treasured part of the cultural landscape”.
Whether being identified as a site of community value will help the cinema secure a long-term lease on affordable terms remains to be seen.
Nonetheless, last week’s insurance judgment against the Trocadero is regarded as significant.
“Landlords have been getting away with massive surcharges. It applies across the property industry and is not specific to cinema,” commented exhibition veteran John Sullivan.
“This is not the first dispute between these parties to reach trial, and it almost certainly won’t be the last. However, this judgment has the potential for far-reaching consequences for landlords and tenants and could open the floodgates to similar claims,” commented Chris Perrin, real estate disputes partner at Addleshaw Goddard.
“Payment of commissions for placing insurance is not unusual, but the level of commission in this case, together with the Court’s finding on the degree of the landlord’s control, may be.”
It remains to be seen if Picturehouse and London Trocadero can resolve their differences. Other court proceedings between the two parties are also underway over the status of the Picturehouse leases at the Trocadero.
“It is fairly unusual for a landlord and a tenant to have so many pieces of litigation in a short period of time. Is it possible that Picturehouse can stay? Clearly it must be a profitable site and [Picturehouse Central] is their flagship property so they appear desperate not to let it go. Equally, it appears that the landlord wants to get rid of them,” Perrin commented.
The real estate expert also cautioned that last week’s judgment might not be for the long-term benefit of tenants.
“If you think about it, if a landlord is receiving a commission to place insurance, they have a vested interest in looking at the market, testing the market, getting the best insurance, spending time doing it because they might get some money back for doing it.
“If the landlord doesn’t get that commission, will they just place insurance with anybody, not really spend much time thinking about it? That could be to the detriment of the tenants,” said Perrin.
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