Building safety & cladding remediation: Responsibility for remediation of defective cladding on a commercial building
The High Court has determined liability for remediation of defective cladding on a building used for commercial purposes, and which is therefore outside the scope of the Building Safety Act 2022.
The background
Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] concerned a 16-storey, purpose-built building in London used as the Ibis London Wembley hotel. The building was constructed in 2002 by Essendi, and replacement ACM cladding installed in around 2005. The material was widely used prior to the Grenfell Tower tragedy, and there was generally a lack of understanding around the fire safety risks presented by the material at the time it was installed.
Following a sale and leaseback in 2007, Essendi remained responsible for the cladding until a cut-off date of 22 May 2017. Following this date, the landlord assumed responsibility for repair of the structure, exterior and cladding.
The defendant landlord acquired the freehold in 2018, granting a new lease to Essendi in 2019 which included landlord’s repairing obligations in respect of the structure and exterior. No specific provisions relating to cladding were included in this new lease.
A 2024 report identified that the cladding system presented a significant fire risk, and its urgent removal was required. The hotel has been closed, and the landlord disputes its liability for remediation works to the cladding arguing that Essendi remained responsible for, or otherwise indemnified the landlord in respect of, cladding defects.
Essendi brought a claim for breach of covenant by the landlord in respect of two provisions:
- A covenant requiring the landlord to put and keep the exterior of the building in good condition; and
- A covenant requiring the landlord to comply with all legal obligations, in this case its obligations under the Regulatory Reform (Fire Safety) Order 2005.
The Building Safety Act 2022 does not apply to commercial buildings or commercial leases, and therefore did not apply in this matter.
The landlord argued that remediation works to cladding fell outside the scope of its lease covenants, and instead sought to classify the works as remediation of inherent defects for which it would not be liable under the lease. The landlord further argued that full removal and replacement of the cladding system was not necessary, and contended that the decision to close the hotel was not reasonable.
The decision
The High Court found the landlord to be in breach of both covenants. Essendi was therefore entitled to an order for specific performance that required the landlord to replace the ACM cladding, together with an award of damages.
- The covenant requiring the landlord to maintain the building’s exterior in good condition extended to replacement of the cladding in order to make the building reasonably safe for occupation and to comply with the Regulatory Reform (Fire Safety) Order 2005.
The court stated that, post-Grenfell, “it ought to be the case that, where there is a multi-storey building providing accommodation in which people live and sleep…an obligation entered into…to put and keep the premises in good condition would include an obligation to remove and replace cladding”.
- The landlord had breached its covenant to comply with legal obligations. The landlord was the “responsible person” under the Regulatory Reform (Fire Safety) Order 2005, and as such it was required to eliminate or reduce as far as reasonably practicable the risk presented by a “dangerous substance”, which in this case was the polyethylene core of the ACM cladding panels. The landlord was therefore required to remove and replace the cladding.
Under an order for specific performance, the landlord was required to remove and replace the cladding within a total period of 18 months.
Essendi has closed the hotel while the cladding issues are resolved on the basis of advice from an expert, incurring commercial losses. The closure of the hotel was found to be reasonable by the court. As a result of the finding of breaches of covenant in the present case, Essendi has been awarded damages, to be assessed, arising as a result of the hotel’s closure.
Advice and action for landlords
This is the first decision from the High Court relating to liability for cladding replacement in a commercial building and carries broad impact across the industry. Notably, the court considers prioritisation of occupant safety and taking a broad interpretation of contractual terms and obligations where required to ensure immediate safety issues are addressed.
The court has found that the landlord was the “responsible person” for the purposes of the Fire Safety Oder and that it had failed in its obligations to maintain the building’s exterior in good condition, and to comply with its legal obligation to remove risk presented by a “dangerous substance”. Further, the landlord is liable for damages as a result of the commercial losses incurred through the closure of the business.
Landlords should be aware of the court’s broad approach to building safety liability in both commercial and residential buildings, even where buildings were constructed many years earlier. With occupant safety a priority, liability is likely to be interpreted widely.
