Judgment handed down in an important new cladding case of Essendi UK Hotels 2 Ltd v. London Property Company Ltd [2026] EWHC 1354 (TCC)

Martyn Naylor acted for the successful Claimant in the important new cladding case of Essendi UK Hotels 2 Ltd v. London Property Company Ltd [2026] EWHC 1354 (TCC).

The judgment was handed down on 5 June 2026 and deals with a number of significant (and not previously determined) cladding and fire safety issues arising in relation to a commercial lease. The Claimant is the tenant of a high-rise hotel building in Wembley. In late 2024, it discovered that the building was clad in combustible ACM panels – the same type of cladding as had been used on Grenfell Tower.

The Defendant landlord refused to remove and replace the ACM cladding, so the Claimant brought a claim under two covenants in the lease, namely (i) a covenant requiring the landlord to put and keep the exterior of the building in good condition; and (ii) a covenant requiring the landlord to comply with all legal obligations. With respect to the second of these, the Claimant alleged that the Defendant was required to replace the cladding by reason of its obligations under the Regulatory Reform (Fire Safety) Order 2005 (the ‘Fire Safety Order’ or ‘FSO’). This was not a case to which the Building Safety Act 2022 applied because the building in question is a hotel rather than a residential block.

Following a two-week trial in March 2026, the Judge, His Honour Judge Stephen Davies, held that the Defendant was in breach of both covenants relied upon by the Claimant.

In relation to the ‘good condition’ covenant, the Judge held that “in the post-Grenfell period it ought to be the case that, where there is a multi-storey building providing accommodation in which people live and sleep (including, for present purposes, a hotel) an obligation entered into – at least post-Grenfell – to put and keep the premises in good condition would include an obligation to remove and replace cladding or to address some other inherent defect which: (a) creates a significant fire safety risk; and (b) requires remediation, both to make the building reasonably safe for occupation and to comply with the obligations imposed on the responsible person under the FSO.”

In relation to the ‘legal obligations’ covenant, the Judge held that the Fire Safety Order imposed an obligation on the Defendant to remove and replace the ACM cladding, including because the polyethylene core of the panels constituted a “dangerous substance” under Article 12 of that Order, and the Defendant was in breach of the lease by failing to do so.

The Claimant was therefore entitled to an order for specific performance (requiring the Defendant to remove and replace the cladding, with all works to be completed within 18 months) and damages for its loss as a result of the Defendant’s breaches of the lease. Those damages are still to be assessed but are likely to be substantial given the Claimant’s decision to close the hotel to guests in mid-2025 (with the Judge having determined that this closure decision was reasonably caused by the Defendant’s failure to remove the ACM cladding). The Defendant’s counterclaim for an indemnity from the Claimant failed.

This judgment is therefore very significant both as a matter of commercial landlord and tenant law – and the interpretation and application of ‘good condition’ and ‘legal obligations’ covenants in particular – and as being apparently the first decision to consider a party’s obligations under the Fire Safety Order in relation to combustible cladding.

Martyn Naylor (4 Pump Court) and Ashely Thompson, led by Simon Allison KC (both Landmark Chambers), were instructed by Andrew Myers (Keystone Law).

Read the full judgment here.