Expert Witness Journal Issue 68 August 2026 - Flipbook - Page 36
post Grenfell era this can extend to addressing an
inherent defect which ‘creates a signi昀椀cant 昀椀re
safety risk’ and necessitates remediation, even if no
damage has yet occurred. The court stressed that
this is fact speci昀椀c and will not apply to every safety
defect. It is a matter of fact and degree.
That being said, it was acknowledged that Article
39 of the FSO states that nothing in the FSO is to
be construed as conferring a right of action in any
civil proceedings. Therefore, Essendi needed to rely
on the compliance with legal obligations covenant
of the lease agreement between the two parties to
demonstrate its claim under the lease in relation
to the obligations imposed by the FSO. The judge
held, against LPC, that the FSO does not expressly
oust private law rights which made available the
enforcement of the legal obligations covenant as
agreed within between the two parties privately.
The ‘compliance with legal
obligations’ covenant
The lease included a covenant on the landlord to
carry out works to the building where the legal
obligations required this. The court found that
this created a stand-alone enforceable contractual
obligation upon the landlord to comply with
all relevant legal obligations in relation to the
premises. This obligation was owed to the tenant
and permitted them to apply for an order for speci昀椀c
performance compelling the landlord to comply
with its legal obligations in relation to the premises
in circumstances where such duties had not been
complied with. Crucially, this was found to be the
case even in relation to legal obligations which the
landlord may have in its capacity as a statutory dutyholder and which are owed not to tenant directly but
rather a statutory enforcing authority, e.g. under the
FSO.
Conclusions
The judge laid out his six conclusions:
Obligations under the FSO
In his conclusion, HHJ Stephen Davies said that
Essendi successfully made its case regarding the
legal obligations clause and the FSO independently
of its claim under the good condition covenant. The
judge held that LPC had control of the structure
and exterior of the building, including the cladding,
which meant that LPC is a responsible person
under Article 3 of the FSO. In addition to this, as
the responsible person, LPC owes a duty to ‘take
such general 昀椀re precautions as may reasonably be
required in the circumstances of the case to ensure
that the premises are safe’ under article 8 of the
FSO.
By failing to remove and replace the category
3 ACM cladding panels, LPC is in breach of the
good condition covenant in its lease agreement.
2.
Additionally, by reference to its obligations
under the FSO, LPC is in breach of the
compliance with legal obligations covenant.
3.
However, LPC has not breached the implied
covenant not to derogate from grant.
4.
Essendi’s decision to close the Hotel was a
reasonable decision to take at the time and was
caused by LPC’s breaches.
5.
Essendi is entitled to an order for speci昀椀c
performance requiring LPC to:
i.
Remove the category 3 ACM cladding
panels within 6 months.
ii. Replace them with suitable alternative
external cladding within an overall period
of 18 months.
6.
Essendi is entitled to proceed to an assessment
of the damages to which it is entitled. The
subject of which will be a further trial.
The novel arguments in the decision will come as a
welcome development to commercial leaseholders
which are not a昀昀orded the same protections as
residential leaseholders under the BSA. However,
we are interested to see whether an appeal will be
lodged by the unsuccessful defendant, given the
outcome of the case.
Furthermore, Essendi relied upon the interpretations
in Article 2(c)of the FSO to argue that the category
3 ACM cladding panels are a dangerous substance,
which the judge strongly agreed with. Under Article
12 of the FSO, ‘where a dangerous substance is
present in or on the premises, the responsible person
must ensure that risk to relevant persons related to
the presence of the substance is either eliminated or
reduced so far as is reasonably practicable’.
The 昀椀ndings of the Court in relation to the
enforceability of the compliance with legal
obligations covenant are also likely to be welcomed
by residential and commercial leaseholders alike
as it provides clear authority that a tenant can rely
upon such covenants to compel their landlord to
comply with legal duties the landlord has in relation
to the relevant premises even when those duties are
not owed directly to the tenant.
Therefore, given that the judge held that LPC is a
responsible person under the FSO, and that the
cladding is a dangerous substance as de昀椀ned under
article 2(c) of the FSO, it followed that LPC was
required to remove the cladding in order to eliminate
or reduce the risk that the cladding caused.
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