When Cladding Defects Meet A 25-year Lease: The TCC Draws A Hard Line On Frustration

In brief

• The TCC held that a tenant could not rely on frustration to escape a 25-year lease, despite life-critical cladding defects requiring remediation likely to outlast the remaining term.
• The lease's wide repairing covenant, narrow insured-risks carve-out, and exclusion of fitness-for-purpose warranties placed latent defect risk squarely on the tenant.
• Post-Grenfell legislation does not, by itself, satisfy the frustration test; tenants withholding rent on this basis risk a substantial arrears judgment, while clear risk allocation in a lease supports landlords seeking summary judgment.

Overview

The case of Into Nominee One Limited and Into Nominee Two Limited v Study Group UK Limited and the Daily Mail and General Trust PLC asked whether a tenant can walk away from a 25-year lease because the building it occupies has life critical cladding defects that will take years, possibly the rest of the lease term, to fix. The Technology and Construction Court's answer was no.