The First Tier Tribunal has considered the first substantively contested application for a Remediation Contribution Order under the Building Safety Act 2022.
Triathlon Homes LLP v (1) Stratford Village Development Partnership (2) Get Living plc (3) East Village Management Limited [2024] UKFTT 26 (PC)
The First Tier Tribunal ("FTT") considered the first substantively contested application for a Remediation Contribution Order ("RCO") under section 124 of the Building Safety Act 2022 ("BSA"). The decision gives guidance on when the FTT will consider it "just and equitable" to make an RCO and what is meant by a "relevant defect". Further, the FTT determined that an RCO can be made in respect of costs incurred before the BSA came into force.
Background
This case concerned the cost of remediating fire safety defects in five blocks of flats in East Village, Stratford.
East Village Management Limited ("EVML") undertook investigations in late 2020 into the materials used in the construction of East Village. Various building safety defects were identified, including the presence of aluminium composite material ("ACM") in cladding, as well as other materials and defects that caused fire safety risks, all of which required remedial works.
As a temporary safety measure, a waking watch was put in place while a remedial scheme was designed and tendered. The remedial works included the removal and replacement of the cladding at the cost of more than £24.5million. The programme of works, which was in the process of being implemented, was being funded through the Government's Building Safety Fund ("BSF").
Triathlon Homes LLP ("Triathlon Homes") leased flats at the development. Triathlon Homes sought orders to require the developer, Stratford Village Development Partnership ("SVDP"), and SVDP's owner, Get Living PLC ("GL"), to reimburse the expenditure associated with remedying the defects and pay for the expenditure for interim fire safety measures, investigative and preparatory works, and service charges. The sum claimed totalled £16.03 million.
Key points
Just and equitable
There is no guidance in the BSA on determining whether it is "just and equitable" to grant an RCO. In this case, the FTT determined it was just and equitable to grant an RCO against SVDP, as they were the original developer, which was in line with the policy of the BSA. The FTT also granted an order against GL, on whom SVDP relied for financial support.
In this hierarchy of liability, the developer responsible for the defect (or anyone associated with it) should be first in line. Although funds for the remediation works had been obtained through the BSF, that did not prevent the making of the order. There was an additional public interest element in securing the reimbursement of those funds as a matter of urgency so that they could be used to remediate other buildings, rather than a party well able to fund remediation works relying on the 'public purse'.
Costs incurred before 28 June 2022
The FTT concluded that costs incurred before the commencement of the BSA (being 28 June 2022) could be included in the RCO. Paragraph 73 of the judgement notes that the FTT is "in no doubt" these costs are capable of being subject to RCOs, and it was further noted that the language in this section is "unlimited...extending to costs which have been incurred and those which are yet to be incurred".
It is consistent with the purpose and structure of Part 5 of the BSA that the "radical protection" it extends to leaseholders should not be "restricted by precise distinctions of time". Any interpretation to the contrary would create serious inconsistencies in the operation of Schedule 8 of the BSA, which, by way of reminder, places a restriction on costs being charged to leaseholders via the service charge.
Costs incurred in preventing or reducing the severity of risk
The respondents argued that a distinction is drawn in the BSA between:
- costs incurred in remedying relevant defects and;
- the costs of measures taken to prevent a building safety risk from materialising or reducing the severity of any incident resulting from a building safety risk which does materialise.
The FTT held the costs for which an RCO can be made to cover the repair and replacement of defective work and materials, as well as other steps, which counteract harm or risk caused by the defect in question.
Conclusion
The granting of an RCO is a no-fault, standalone remedy and consequently, the party ordered to pay under an RCO may not necessarily be the party at fault. The FTT granted RCOs against SVDP and GL, which required the money to be paid to EVML, who were ultimately the party incurring the costs of the works. The determination of whether it is just and equitable to make an RCO against specified persons involves careful analysis of various factors, and this judgement shows that the FTT will not be shy in prioritising the policy aims of the BSA.
This article was authored by Trainee Solicitor Nikki Forde.
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.
