The Travelodge chain has failed in a bid to completely strike out a claim against it from the landlords of one of their hotels at Tunbridge Wells in Kent. The court action has been taken after the landlords had to accept a lower rent in the wake of financial difficulties suffered by Travelodge.
Now the landlords will be entitled to their day in court, where they will argue that Travelodge's failure to refurbish the hotel properly robbed them of the option of finding a new tenant.
One of the country's leading judges, Mr Justice Edwards-Stuart, ruled today that the owner of the premises, Oakrock Ltd, run by a Mr and Mrs Cappellazzi, were not entitled to claim for the direct loss of rent that resulted from a Company Voluntary Arrangement (CVA) approved by creditors and entered into by Travelodge in September 2012.
He found that a claim for that was barred by the terms of the CVA, under which the rent for the hotel was reduced by 25% for three years - a total reduction of more than £300,000.
However, the judge found that Oakrock - which formerly ran the New Wellington Hotel before letting it to Travelodge in 2007 - was entitled to claim that refurbishment works had not been carried out, with the result that it would have been unable to find an alternative tenant that would have paid more than Travelodge's reduced rent under the CVA.
Under the 35-year lease agreed in 2007, Travelodge committed to carry out refurbishment work, to be funded by Oakrock up to a total of £1.8m. The rent payable before the CVA was £434,000.
However, the Cappellazzis say that when they were faced with the CVA proposals, they visited the hotel and found the work had been badly carried out or, in some cases, not performed at all.
As a result, they allege that they had no option but to accept the lower rent under the CVA.
Describing the claim, the judge said: "The claimant's case is that the condition of the hotel was so poor as a result of Travelodge's failure to carry out the work properly that it could not be let for even 75% of the original contractual rent."
Ruling that this aspect of the claim should go to a full trial, he said that the answer was not sufficiently clear for him to determine it on an application for summary judgment.
In addition, he said that an additional claim in respect of furniture and equipment Oakrock says it was entitled to have returned to it could also proceed, saying: "I do not consider that this is a claim which is bound to fail."
The Cappellazzis have spent their working lives in the hospitality business, and bought and refurbished the New Wellington Hotel in 2001. However, they let it to Travelodge when they decided they had too much work.