This decision will be welcomed by leaseholders around the country currently affected by building safety defects.
At the beginning of 2023, the First-Tier Tribunal (FTT) made the first ever remediation contribution order, awarding £194,680 to be paid by a landlord to its leaseholders in order to rectify building safety defects affecting their building, and paving the way for leaseholders to recover historic service charges associated with fire safety defects.
This has now been followed by the first ever remediation order made on 9 August 2023, when the FTT made an order under section 20C of the Landlord and Tenant Act 1985 that the landlord shall remedy the relevant defects at their own cost.
What is a remediation order?
The BSA 2022 was introduced as a result of the recommendations made by Dame Judith Hackitt in response to the Grenfell Tower disaster. Schedule 8 of the BSA introduced leaseholder protections in respect of service charge costs arising from certain remediation works. In conjunction with Schedule 8, section 123 of the BSA 2022 provides for applications to be made to the FTT for a remediation order in respect of relevant defects in a relevant building. Further information on remediation orders as well as other remedies introduced by the BSA 2022 can be found in our previous article where this topic is covered in more detail.
The FTT decision
The FTT was satisfied that the statutory conditions for the making of a remediation order against the landlord were met, namely that:
- There were one or more 'relevant defects' in the buildings that comprised the development; and
- The relevant defects posed a 'building safety risk' meaning 'a risk to the safety of people in or about the building arising from either (a) the spread of fire or (b) the collapse of the building or any part of it'; and
- The FTT had the power to make a remediation order requiring the relevant landlord to remedy the specified relevant defects in a specified relevant building by a specified time.
The FTT acknowledged that there is no guidance in the BSA 2022 about how the tribunal should assess the risk to the safety of people in or about the building, or the scope of the works that may be required to remedy the relevant defects, or the standard to which any remedial works must be carried out. Having said that, the FTT agreed that the wording of this Part of the BSA is in deliberately broad terms, to enable the tribunal to find the best and most practical, outcomes-focussed solutions to myriad circumstances that will inevitably present themselves in applications such as this.
The FTT also sought to provide guidance regarding the burden of proof in the context of remediation order applications, although it was keen to stress it is not necessary or helpful to assign formal burdens of proof to either party:
- The burden of proof was on the applicants to establish that there is a prima facie case for the tribunal to consider, namely that defects were relevant defects and to propose the necessary steps to remedy them.
- The applicants having established a prima facie case, it might be said that the tactical burden of proof passes at this stage to the respondent.
Finally, the FTT provided some direction on the content of the proposed remediation order:
- The remediation order should make it clear which of the items to be rectified constitute relevant defects and should be sufficiently precise so that the respondent can know what it must do to remedy the relevant defects and for enforcement purposes before the county court. The extent of precision will vary from case to case.
- A remediation order can be made in general terms, with the landlord being at liberty to make a subsequent application for variation of the order if required. The ability to apply for variation also provides the respondent with protection against unwarranted applications for enforcement by way of contempt of court, if different works are proposed to those originally envisaged by the tribunal.
- The preparation of the specification of works will have to be at the cost of the developer or landlord.
- The remediation order does not need to specify the standard of works required, although all remedial work must of course comply with current Building Regulations and have regard to PAS 9980:2022 (the current methodology for the fire risk appraisal of external wall construction and cladding).
This decision will be welcomed by leaseholders around the country currently affected by building safety defects without having the financial means to rectify the same. Whilst the tribunal was reluctant to be too prescriptive, the remediation order made included a schedule of specified defects and the works required to remedy them, and parties involved in future similar applications should seek to match the same level of detail.
It is worth noting however that pursuing a remediation order in the FTT is under a 'no costs' jurisdiction which means each party must bear its own legal costs, save where a party has acted unreasonably in the conduct of proceedings. This means that in most cases, leaseholders will have to pursue remediation orders at their own cost.
In addition, the FTT has no power to award damages so leaseholders would not be able to recover any losses suffered by being unable to sell, including any devaluation of their leases resulting from a landlord's delay or failure to rectify the defects.
Finally, the concept of burden of proof applicable to remediation order applications remains somewhat uncertain. This poses insurers/ developers with a degree of uncertainty and risk, particularly when coupled with ambiguity as to what reasonable steps a court will require a developer/ freeholder to take in order to remediate a relevant defect. Given that FTT decisions do not create legally binding precedent, no doubt both the burden of proof and reasonable steps concepts will be developed in future applications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.