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"In Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 1354 (TCC) the TCC delivered another significant judgment on responsibility for cladding remediation in a post‑Grenfell context."
In Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 1354 (TCC) the Technology and Construction Court (“TCC”) delivered another significant judgment on responsibility for cladding remediation in a post‑Grenfell context, particularly involving buildings outside the scope of the Building Safety Act 2022.
The case concerned the presence of Category 3 ACM cladding with a polyethylene core on a multi‑storey hotel, which both experts agreed posed an ‘intolerable risk’ of fire and required removal.
The court held that the landlord was in breach of both the ‘good condition’ covenant and the ‘legal obligations’ covenant under the lease by failing to remove and replace the cladding. It ordered specific performance requiring removal within six months and replacement within eighteen months.
Crucially, the judgment confirms that extensive building safety remediation works, including wholesale replacement of dangerous cladding systems, may fall within conventional repairing and compliance obligations in commercial leases. The court rejected arguments that mitigation measures could serve as a proportionate alternative, emphasising that “replacement is the only permanent solution”.
The decision has potentially wide implications in relation to legacy defects, allocation of risk under historic contracts and the legal treatment of remediation works following evolving safety standards.
Factual background
The dispute concerned the Ibis London Wembley hotel, a 16‑storey building reclad in 2005/2006 with Reynobond ACM panels containing a polyethylene core. At the time, the material was widely used and not generally understood to pose the severe fire risks later exposed following the Grenfell Tower fire in June 2017.
The court accepted that prior to Grenfell there was no sufficient basis to conclude that the tenant, which had procured the recladding works, knew or ought to have known of the risks inherent in Category 3 ACM panels. The evidence demonstrated a “general lack of knowledge of the fire safety risks of using ACM with a PE core” at the time of installation.
Following a sale and leaseback in 2007, the tenant became the operator under a lease which divided repairing obligations along traditional lines, with the structure and exterior (including cladding) ultimately falling to the landlord after a contractual ‘cut-off date’ in May 2017.
Post‑Grenfell investigations eventually revealed that the hotel was entirely clad in Category 3 ACM. Independent reports in 2024 confirmed that the cladding system presented a significant fire risk and required removal. Hydrock engineers assessed the risk as ‘high’ and emphasised that removal of ACM was ‘crucial’.
In July 2025, following expert advice that continuing operation could expose the tenant to prosecution and severe life safety risk, the hotel was closed. The landlord disputed liability for remediation works, leading to proceedings.
Legal points
The claimant advanced three principal legal bases for requiring the landlord to undertake remediation works. First, it relied on the landlord’s covenant to keep the structure and exterior in good and substantial repair and condition. Secondly, it relied on the landlord’s obligation to comply with statutory requirements, particularly under the Regulatory Reform (Fire Safety) Order 2005. Thirdly, it alleged that the landlord’s failure to address the cladding constituted a derogation from grant.
The claim was framed in substance as an attempt to secure what the court described as “a building safety remediation order” through private law mechanisms, in circumstances where statutory regimes such as the Building Safety Act did not apply to hotels.
The landlord’s defence rested on two primary arguments. It contended that the works were not within the scope of its lease obligations. In particular, it sought to characterise the works as remediation of inherent defects rather than repair, suggesting that such obligations should fall outside the lease framework. It also relied on the tenant’s historical involvement in specifying and installing the cladding system and on indemnity provisions under the original lease prior to the 2017 cut‑off date.
"The claimant advanced three principal legal bases for requiring the landlord to undertake remediation works."
The landlord further argued that removal was not necessary or proportionate, relying on mitigation measures including fire safety management strategies and proposed building modifications. It submitted that a risk‑based approach under the Fire Safety Order allowed for consideration of proportionality and cost.
Finally, it challenged the reasonableness of the tenant’s decision to close the hotel, suggesting alternative solutions could have avoided closure.
Court’s decision
Building safety risk and the necessity of remediation
The court began with the factual and technical question of whether the cladding system required replacement. It noted that both fire safety experts agreed that the building presented an ‘intolerable risk’ under PAS 9980 principles.
The court rejected the landlord’s reliance on mitigation measures. Whilst acknowledging that additional precautions might reduce risk, it held that such measures could not eliminate the fundamental danger posed by combustible ACM panels. The evidence showed that ignition risk could be reduced but not prevented and that consequences remained severe if ignition occurred.
The court rejected the suggestion that piecemeal measures were a viable alternative, stating that leaving “the vast majority of the highly combustible category 3 ACM cladding panels in place” could not be justified. Replacement was therefore treated as both necessary and proportionate.
Repair, remediation and lease obligations
Although the landlord sought to distinguish between ‘repair’ and ‘remediation’, the court did not treat that distinction as legally determinative. Instead, it focussed on the breadth of the lease obligations.
The good condition covenant was interpreted as extending to remedying fire safety defects in the building fabric, even where those defects arose from original construction. The court treated the presence of dangerous ACM cladding as placing the building out of ‘good and substantial condition’.
In parallel, the legal obligations covenant incorporated duties under the Fire Safety Order. The court held that the presence of ACM cladding amounted to a fire safety risk requiring action by the ‘responsible person’ and that contractual mechanisms permitted enforcement of those duties.
Importantly, the court held that compliance with statutory duties could require substantial capital works, including replacement of cladding systems, and that such obligations could be enforced through lease covenants.
Knowledge, historical responsibility and risk allocation
A central issue was whether the tenant’s historical involvement in the cladding works shifted responsibility back to it. The court rejected this argument, finding that the tenant had no knowledge – and could not reasonably have had knowledge – of the fire risks prior to Grenfell.
The indemnity and remedial provisions in the earlier lease were therefore not engaged. The allocation of risk under the current lease placed responsibility squarely on the landlord for the structure and cladding after the cut‑off date.
This aspect of the judgment is particularly significant for construction professionals, as it underscores that historical compliance with then‑current standards will not necessarily determine liability where risks only become apparent later.
Reasonableness of the closure decision
The court found that the tenant’s decision to close the hotel was reasonable. It relied heavily on expert advice, particularly the opinion that “the hotel should close until the ACM cladding is removed”.
The court emphasised that a party acting on competent expert advice in a safety‑critical context would rarely be found unreasonable. It also recognised the relevance of reputational risk and the risk of criminal liability in assessing commercial decisions.
The closure was therefore held to have been caused by the landlord’s breaches and was recoverable in damages.
Final orders
The court concluded that the landlord was in breach of both the good condition covenant and the legal obligations covenant. It granted an order for specific performance requiring removal of the ACM cladding within six months and replacement within eighteen months.
Further implications
The decision has far‑reaching implications for construction contractors, developers and building owners.
First, it confirms that remediation of fire safety defects may fall within existing contractual frameworks without the need for bespoke statutory intervention. Contractors involved in historic projects may therefore face renewed scrutiny of work carried out in accordance with past standards.
Secondly, the case illustrates that courts will assess building safety obligations through a contemporary lens. Materials that were compliant at the time of installation may nonetheless render a building non‑compliant today, giving rise to substantial remedial obligations.
Thirdly, the judgment does not set practical distinctions between repair and remediation in the legal analysis of obligations. Where contractual language is sufficiently broad, courts may treat large‑scale remediation as falling within ordinary repair or compliance duties. This has immediate implications for how contractors draft warranties, limitation clauses, and risk allocation provisions.
Finally, the reasoning on mitigation and proportionality demonstrates judicial scepticism toward partial solutions where significant life safety risks remain. For contractors involved in remediation packages, this emphasises the importance of holistic design solutions rather than incremental upgrades.
"Essendi v LPC is an important decision in the evolving landscape of building safety litigation."
Conclusion
Essendi v LPC is an important decision in the evolving landscape of building safety litigation. It demonstrates the courts’ willingness to impose substantial remediation obligations through conventional contractual routes and to prioritise life safety over cost or historic compliance arguments.
The message is clear that legacy design choices and material specifications remain legally and commercially relevant long after completion and the boundary between repair and remediation may offer little protection where the contractual allocation of risk is sufficiently broad.
