CGU has won a landmark test court case by successfully defeating a landlord's £1 million claim for the repair of a dilapidated office block.
The high court accepted such repairs would have been irrelevant.
Instead, the court accepted CGU's argument that a future tenant would pay more for the freehold if the premises in New Barnet, North London, was redeveloped into residential flats.
The case arose as CGU's lease on the 1970s building expired in 1998.
It is expected the case will have far-reaching implications for landlords of such blocks, built in the 60s and 70s.
In accepting CGU's argument, the court agreed that the landlord had suffered no diminution in the value of its reversion.
Under current law, the landlord is not entitled to recover any damages for breach of tenant's repair obligations.
CGU's solicitor, Andrew Olins, said: "Negotiations for a cash settlement of dilapidation claims are now likely to be more complicated.
"The landlord's surveyor will need to show not only that repairs which the outgoing tenant ought to have carried out would survive a refurbishment programme but also that the best financial return for the building is continued office use."
