Hallings Wharf: Remediation Costs And The Range Of Reasonable Responses Test

The First-tier Tribunal's (FtT) decision in Secretary of State for Housing, Communities & Local Government v EDR Builders Limited & Hollybrook (UK) Limited (issued on 21 May 2026) represents a significant marker in the evolving landscape of building safety litigation.

The case resulted in a remediation contribution order (RCO) for fire-safety remediation costs of £3.6 million against Hollybrook (UK) Limited (Hollybrook) - a company associated with the original developer - and its reasoning carries important implications for developers, their associated entities, and landlords.

Case overview: Hallings Wharf Studios and the £3.6 million RCO

Property: Hallings Wharf Studios comprised residential blocks with external wall/fire-safety defects, including Expanded Polystyrene (EPS) render, timber cladding and metal spandrel issues.

Respondents: EDR Builders was the developer but was in liquidation at the time the RCO was sought. The live dispute was against Hollybrook, which was associated with the developer.

Key issues in dispute: Hollybrook argued that it would not be just and equitable for the FtT to make an RCO against it. It contended that the remedial scheme was "overengineered" and could have been done more cheaply through an alternative scheme. Hollybrook also challenged the claim on litigation costs.

Outcome: the FtT made a RCO for £3.6 million.

Associated companies at risk under Building Safety Act 2022

A notable takeaway for corporate groups is that the RCO was made not against the original developer (which has been in liquidation since 2018) but against Hollybrook, an associated company owned and controlled by the same family.

Hollybrook accepted that it was "associated" with the developer within the meaning of section 121 of the Building Safety Act 2022 (BSA), and the FtT found it "just and equitable" to make the order against it by virtue of that connection, noting that no evidence was called to demonstrate that the two companies' positions were materially distinguishable.

For developers operating through corporate group structures, this decision illustrates the breadth of the BSA's reach. Even where the actual developer entity is defunct, associated companies - particularly those sharing common ownership or control – may face potential remediation costs.

Low threshold for "relevant defect" under the BSA

Following the Upper Tribunal's decision in Edgewater (Stevenage) Limited & Ors v Grey GR Limited Partnership (Vista Tower) [2026] UKUT 18 (LC), the FtT confirmed that the threshold for establishing a "building safety risk" – and therefore a "relevant defect" (as defined in section 120 of the BSA) - is extremely low.

Under section 120(2) and 120(5) of the BSA, a "relevant defect" must have arisen in connection with relevant works and must cause a "building safety risk" to people from the spread of fire or structural collapse. Under the BSA, a "building safety risk" is not specified or quantified and therefore, as concluded in the Vista Tower judgment, the reference to a "risk" "does not refer to any particular level of risk and is not gradated. It refers to any risk".

Therefore, the threshold for finding whether there is a "building safety risk" is very low. The assessment is focused on whether a risk exists, not whether the original construction complied with the Building Regulations then in force.

Challenging quantum: "range of reasonable responses" test

On quantum, Hollybrook argued that the remediation project was 'overengineered' and that the defects could have been addressed at significantly lower cost - a difference of approximately £1.4 million.

The FtT rejected this, holding that the test is whether the works were "reasonable" and in particular, whether the remediation scheme fell within the "band of reasonable responses" to the defect. If it did, then the fact that it could have been carried out more cheaply does not of itself justify reducing the RCO.

This has implications for both sides. For developers and landlords facing RCO applications, it narrows the grounds for challenging quantum. The practical implication is that attacking the costs of a completed scheme will be difficult where it was carried out on professional advice and falls within a band of reasonable responses. However, for landlords who commission remediation, it may provide confidence (albeit it is a FtT decision and is not binding) that a professionally advised scheme is likely to be upheld even if hindsight reveals cheaper alternatives.

PAS:9980

The FtT observed that PAS:9980 came into effect on 31 January 2022, following the withdrawal of the Consolidated Advice Note (CAN) on 10 January 2022. Hollybrook argued that the project should have been paused following the withdrawal of the CAN to adopt the risk-based PAS:9980 methodology. Although the FtT acknowledged the importance of PAS:9980 as a methodology, they found that on the chronology of this particular project - where specifications, funding applications, and planning permission were already well advanced - it was not unreasonable to proceed without carrying out a PAS:9980 assessment.

Litigation costs were not granted

Finally, the FtT declined to include the Secretary of State's litigation costs (exceeding £1 million) within the RCO. It expressed doubt as to whether section 124(2) of the BSA can be construed so as to include litigation costs. It noted in particular that the FtT is a no-cost jurisdiction, and that section 124(2A) of the BSA does not list litigation costs among the non-exhaustive illustrative examples. Finally, the FtT distinguished the earlier Empire Square¹ decision (where legal costs were held to be recoverable for RCO proceedings) on its facts.

Key takeaways for developers, landlords and corporate groups

Developers, their associated companies, and landlords face a low threshold for establishing defects, and potential liability even where the original developer is insolvent (recognising that dormant or dissolved developer vehicles will not shield the wider group).

The decision in Hallings Wharf is understood to be the first time the FtT has considered the principles applicable to recoverability where it is alleged that works carried out could/should have been done more cheaply. The FtT's decision (although not binding) may provide comfort to those undertaking remediation schemes that – provided the scheme they select cannot be "branded as unreasonable" – the fact that alternative, or lower cost schemes might be available is unlikely, of itself, to justify reducing the amount of any RCO sought.

Finally, there are now two FtT decisions considering whether legal costs are recoverable in the context of RCOs, with differing conclusions, but distinguishable on their facts. How this will be decided in future remains to be seen – ultimately, the decision is likely to be case and fact-sensitive.

Footnote

1 Robert Zampetti & Ors v Fairhold Athena Limited v Berkeley Group Holdings plc, LON/00BE/HYI/2023/0013 LON/00BE/BSB/2024/0602.

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