Landlord and tenant – Building safety – Regulatory Reform (Fire Safety) Order 2005 – Claimant tenant of hotel claiming defendant owner responsible for removal of external cladding from multi-storey tower block – Defendant denying liability – Claimant seeking specific performance under landlord’s “good condition” and “legal obligations” covenants in lease – Whether defendant liable under covenants on proper application of law and facts – Claim allowed
The claimant, as the tenant and operator of the Ibis London Wembley hotel, said that the defendant, as its landlord and the owner of the hotel, was responsible for undertaking major building safety works to remove external cladding from the multi-storey tower block which housed the hotel. Fire safety experts agreed that the external cladding panels represented an “intolerable risk” of fire and had to be removed, due to the fact that they were a sandwich, with outer aluminium sheets and an inner, highly combustible, polyethylene (PE) core (aluminium composite material (ACM)).
The claimant argued that the defendant was responsible for their removal pursuant to (amongst other things): (i) the landlord’s “good condition” covenant in the current version of the lease made between them; or (ii) a combination of the landlord’s “legal obligations” covenant in the current lease and the Regulatory Reform (Fire Safety) Order 2005.
It sought an order for specific performance against the defendant requiring it to replace the category 3 ACM panels with non-combustible cladding panels. The claimant also sought to recover its losses flowing from its decision to close the hotel on 29 July 2025.
The claimant’s arguments were novel in that it was relying on the landlord covenants under a commercial lease to obtain what was, in substance, a building safety remediation order, where the Building Safety Act 2022 did not apply to certain categories of buildings, including hotels.
Held: The claim was allowed.
(1) A covenant which required the landlord to keep the building in “good and tenantable condition” went beyond merely “to repair”. The obligation was to put the building in good and tenantable condition which, given the property’s age, character and locality, would make it reasonably fit for the occupation of a reasonably minded tenant of the class likely to take it. Moreover, the required condition in which the premises were to be put and kept was to be judged by reference to the requirements of a hypothetical reasonably minded tenant of the class likely to take that building: in Credit Suisse v. Beegas Nominees Ltd [1994] 4 All ER 803 considered.
The weight of authority pointed towards a general presumption that a duty to keep in good condition would not, without more, include a duty to undertake works to put demised premises into a safe condition where the lack of safety resulted from an intrinsic defect which had not led to any actual damage or disrepair or other physical consequences. However, that was a general presumption which could be displaced where justified by the circumstances in which the current lease was entered into, so that there was no invariable rule of interpretation to that effect: Post Office v Aquarius Properties Ltd [1987] 1 All ER 1055, Welsh v Greenwich London Borough Council [2000] 3 EGLR 41, Fluor Daniel Properties Ltd vShortlands [2001] 2 EGLR 103, Mason v Totalfinaelf UK Ltd [2003] 3 EGLR 91 and Alker v Collingwood Housing Association [2007] PLSCS 28; [2007] 1 WLR 2230 considered.
(2) In the post-Grenfell period it ought to be the case that, where there was a multi-storey building providing accommodation in which people lived and slept (including, for present purposes, a hotel) an obligation entered into 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: (i) created a significant fire safety risk; and (ii) required remediation, both to make the building reasonably safe for occupation and to comply with the obligations imposed on the responsible person under the Regulatory Reform (Fire Safety) Order 2005.
On an objective interpretation of the current lease as at the date it was entered into, having regard to the identified relevant circumstances known to both parties at the time, the landlord’s repairing covenant ought to be construed as including an obligation to put and keep the building into that condition which, as a tower block exceeding 18 metres in height intended and required to be used as a hotel, would make it reasonably fit for such use as regards fire safety risks.
(3) There was no basis in this case for an application of any principle that remedying safety defects could not fall within the scope of a good condition covenant because there was no liability without physical manifestation of the defect or loss of amenity caused thereby. The evidence showed that once the fire safety defect was known there was a lack of amenity, since from that time onwards the hotel could not be used in the way in which it was plainly intended without remediation works being carried out within a reasonable timeframe.
Accordingly, the defendant was in breach of the good condition covenant in failing to remove and replace the cladding.
(4) The 2005 Order was the principal legislation governing fire safety in buildings in England and Wales. It imposed duties on the “responsible person” (the defendant) to undertake and record a fire risk assessment and to put in place and maintain such general fire precautions as might reasonably be required to ensure that the building was safe for persons on the premises or in its immediate vicinity, including taking measures to reduce the risk of fire and the spread of fire on the premises. It also imposed a duty to replace dangerous substances so far as reasonably practicable with a substance or process which either eliminated or reduced the risk to relevant persons.
In the present case, as the polyethylene core of the panels constituted a “dangerous substance” under article 12 of the Order, the defendant was also, independently, in breach of the legal obligations covenant in the lease. The claimant was entitled to an order requiring the defendant to remove the cladding within six months; and replace it with a suitable alternative within 18 months.
(5) Since the claimant’s decision to close the hotel was caused, in fact and law, by the defendant’s breaches and was a reasonable decision in the circumstances, it was entitled to proceed to an assessment of damages.
Simon Allison KC, Martyn Naylor and Ashley Thompson (instructed by Keystone Law Ltd) appeared for the claimant; Nicholas Trompeter KC and Emma Hynes (instructed by Ronald Fletcher Baker LLP) appeared for the defendant.
Eileen O’Grady is a barrister
Click here to read the full transcript of Essendi UK Hotels 2 Ltd v London Property Co Ltd
