Expert Witness Journal Issue 68 August 2026 - Flipbook - Page 35
Signi昀椀cant judgment handed
down in respect of hotel cladding
remediation responsibilities
by Yaasica Hamilton-Haye & Mark Foxcroft, Partners at Devonshires.
ii. A combination of the landlord’s “compliance
with legal obligations” covenant in the lease,
which they argued encompassed duties under
the Regulatory Reform (Fire Safety) Order 2005
(the “FSO”).
Essendi UK Hotels 2 Ltd v. London Property Company
Ltd [2026] EWHC 1354 (TCC)
On 5 June 2026 a signi昀椀cant judgment was handed
down featuring novel arguments relating to the
cladding and 昀椀re safety issues of a commercially
leased high-rise hotel.
iii. Under its obligation as landlord not to derogate
from its grant of the lease.
The external wall system of the hotel had been
covered in ACM cladding panels, which were the
same type as the category 3 panels used on the
Grenfell Tower. Whilst both parties’ 昀椀re safety
experts clari昀椀ed the intolerable degree of risk that
the cladding posed to the property, both parties
were nevertheless convinced that the responsibility
for the required major building safety works lay with
the other party.
Essendi also sought to recover its losses from its
decision to close the hotel due to these issues of
safety. Essendi relied on the expert opinion of its
appointed 昀椀re engineer to make this decision.
Essendi sought an order for speci昀椀c performance
against LPC requiring it to replace the category 3
ACM with non-combustible cladding panels at no
cost to Essendi.
By way of background, in 2005 Essendi engaged
contractors to apply the ACM panels when it held
the freehold of the hotel. Essendi later sold the
freehold, to LPC and then took a leaseback of the
hotel. When LPC bought the freehold, they did so
with an agreed ‘cut-o昀昀 date’ after which the liability
for the cladding would rest with LPC. Crucially, this
‘cut-o昀昀 date’ happened to fall just under a month
before the Grenfell 昀椀re which proved pivotal in
alerting the construction industry to the seriousness
of the 昀椀re safety risks of PE core ACM panels.
The ‘good condition’ covenant
The case addressed whether a covenant to keep
premises in good condition can require the
replacement of cladding where there has been no
deterioration. The answer here was yes, although
it is signi昀椀cant that the lease was entered into post
Grenfell, meaning that the parties’ understanding
of “good condition” was informed by heightened
awareness of 昀椀re safety risks.
The court accepted that authority generally supports
the presumption that a good condition covenant
does not oblige a party to remedy an inherent defect
which has caused no physical damage. However,
that presumption was displaced on the facts, having
regard to the post Grenfell context, the use of
the building as a high rise hotel accommodating
overnight guests, and the absence of any service
charge mechanism for cost recovery.
Since the Building Safety Act 2022 (the “BSA”) only
applies to residential buildings and therefore does
not include hotels, Essendi had to use a novel legal
strategy of building its case on standard commercial
lease covenants, where it argued that the landlord
breached both its ‘good conditions’ covenant and
‘compliance with legal obligations’ covenant.
Essendi argued that LPC, as the landlord and owner
of the hotel, was responsible for the removal of the
cladding due to either:
i.
In those circumstances, the court held that a covenant
to “put and keep” such a building in good condition
requires it to be reasonably 昀椀t for its intended use
in terms of 昀椀re safety. In the judge’s words, in the
LPC’s “good condition” covenant in the lease.
EXPERT WITNESS JOURNAL
33
AUGUST 2026
