Triathlon Homes LLP v Stratford Village Development Partnership & Others
[2024] UKFTT 26 (PC)
The decision of the First-Tier Tribunal is the first to consider a contested remediation contribution order (“RCO”) under section 124 of the Building Safety Act 2022 (“BSA”).
Section 124 allows for the making of RCOs, by which developers, landlords and their associates may be required to contribute towards the costs of remedying, what are termed, relevant defects. Section 120 of the BSA defines relevant defects as being: “a defect as regards the building that— (a) arises as a result of anything done (or not done), or anything used (or not used), in connection with relevant works, and (b) causes a building safety risk”.
Triathlon brought the proceedings in respect of five residential blocks at the former athletes’ village for the London 2012 Olympics at Stratford, now known as East Village. Starting in 2017, work was carried out to identify the materials used in the construction of the East Village and to determine what risks they might present. In November 2020, serious fire safety defects were discovered, relating both to the design and the construction of the various cladding systems adopted for the external facades. In response to these discoveries, a waking watch was implemented in all blocks in November 2020 which remained in place until additional alarm and heat detection systems were installed in flats as temporary measures. A programme of work to remedy the defects at East Village permanently by the removal and replacement of the exterior cladding was implemented which is planned to see the remediation of the blocks by August 2025. The total cost of the work was said to exceed £24.5 million.
Triathlon sought a contribution of some £18 million towards the remediation costs from SVDP the developer and its parent company (the “Respondents”). These costs represented Triathlon’s share of the total and included historic costs that had been paid.
In relation to the historic costs, the Respondents argued that a remediation contribution order could not be made in respect of costs incurred before the commencement of the BSA on 28 June 2022. This would reduce the sum claimed by some £1.1 million. The Respondents further argued that the fact costs were incurred before the date of commencement of the BSA was either a sufficient reason, or a contributory reason, as to why it would not be just and equitable for a remediation contribution order to be made against them in relation to those costs.
The Tribunal was in “no doubt” that section 124 “allows remediation contribution orders to be made in respect of costs incurred before 28 June 2022”. The language was clear and there was no temporal limitation or transitional provision. Further, paragraph 1012 of the Explanatory Notes comments that one of the circumstances in which it is said leaseholders might wish to seek a remediation contribution order against a developer is where they have already contributed towards the costs of remediation works before the coming into force of the leaseholder protections. The Tribunal noted that this was:
“consistent with the purpose and structure of Part 5 that the radical protection it extends to leaseholders should not be restricted by precise distinctions of time … Parliament has decided that, irrespective of fault, it is fair for those with the broadest shoulders to bear unprecedented financial burdens”.
The BSA provided for the wholesale intervention in and beyond normal contractual relationships in order to transfer the potentially ruinous cost of remediation from individual leaseholders to landlords, and to distribute it between landlords and developers and their associates according to criteria which Parliament had decided was necessary and fair.
Triathlon accepted that jurisdiction under section 124 was limited to the costs of remedying relevant defects but argued that all of the costs in issue in these applications were costs of remedying relevant defects, including the costs of the waking watch, fire detection equipment and other precautionary measures. The Tribunal agreed. Section 124 focused “on the practical outcome of the things which have been done, or are to be done, rather than any interpretation which tends to narrow the scope of the remediation provisions”. A remediation contribution order could be made in respect of costs incurred in preventing risks from materialising or in reducing the severity of building safety incidents.
The Tribunal could only make an RCO if it considered it “just and equitable” to do so. This was a discretion for the Tribunal. On the facts here, relevant issues included:
- Interested persons, such as Triathlon, were entitled under the BSA to seek an RCO. Their motivation was, therefore, not relevant.
- The ability to make a claim for a remediation contribution order under section 124 was a new and independent remedy, which was essentially non-fault based. It had been created by Parliament as an alternative to other fault-based claims which a party may be entitled to make in relation to relevant defects.
- It was relevant that SVDP was the developer. The policy of the 2022 Act was that primary responsibility for the cost of remediation should fall on the original developer, and that others who have a liability to contribute may pass on the costs they incur to the developer.
- SVDP was financially dependent on the second defendant, its parent company. It seemed to the Tribunal that the situation of SVDP, with its relatively precarious financial position and its dependence for financial support upon Get Living, its wealthy parent, constituted precisely the sort of circumstances at which the association provisions of the BSA were.
- The fact that the works were to be fully funded under the BSA was not relevant. Public funding was “a matter of last resort, and should not be seen as a primary source of funding where other parties, within the scope of section 124, are available as sources of funding”.
Triathlon was entitled to the RCOs it had sought.
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