The case concerned Essendi UK Hotels 2, the claimant and hotel operator, and London Property Company (LPC), the defendant and landlord.
The Technology and Construction Court found that the landlord’s obligation to “put and keep” the building in “good and substantial repair and condition” included removing and replacing combustible aluminium composite material (ACM) cladding panels.
The court held that the obligation applied even though the ACM cladding was not in physical disrepair. This was contrary to a previous 1994 case law ruling, highlighted Gowling WLG.
Remediation exposure within lease provisions
The claimant undertook investigations in 2024 that revealed highly combustible cladding, previously installed by Essendi in 2005 as the former freeholder.
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However, the 12-year leaseback arrangement expired in May 2017. The responsibility for repair was therefore passed onto LPC, said RPC Legal.
Essendi closed the hotel after fire safety advice.
Arguments regarding the estimated £5m to £7m cost of the works or the absence of any physical manifestation of the defect were overturned.
The court ruled that the costs associated with the closure and the removal and replacement of cladding were ultimately the responsibility of LPC.
The judgment indicated that buildings not within the scope of the BSA still carry significant remediation liabilities, as part of the “good condition” clause.
