It is far from a disgrace, but LX has it wrong in this instance. However, collecting against LX will require a small claims action against LX in the UK (unless OP has a UK address from which he can file through MCOL).
In this particular instance, EC 261/2004 applies as provided under EU and UK precedent because this was a departure from the EU. Under those facts, the reason cited by LX would almost certainly not qualify as an "extraordinary circumstance" and OP will be due his delay compensation.
However, Switzerland is not an EU Member State nor is LX an EU carrier. But, Switzerland has adopted the language of the Regulation. However, Switzerland is not only not bound by EU and UK precedents, but its courts have affirmatively (and wisely) rejected most of the more outlandish holdings. One of those is that technical problems are almost never "extraordinary". Thus, in a Swiss court applying Swiss law, OP would almost certainly lose.
It goes without saying that LX had a duty of care to OP to cover or reimburse his hotel and meals. That applies whatever the reason for the delay.