Remediation Contribution Orders cover preventative and historic costs

Remediation  Contribution Orders

Section 124 of the Building Safety Act 2022 ("BSA") allows anyone with a legal estate in a relevant building (or part thereof), the Building Safety Regulator, Local Authorities or Fire and Rescue Services to apply to the FTT for a new remedy introduced by the BSA - the Remediation Contribution Order (“RCO”) - to meet the cost of remedying  relevant defects (i.e., a defect that arises out of something done or not done which causes a building safety risk).

An RCO can be made against a landlord, anyone that was a landlord as of 14 February 2022, the developer of the building or anyone associated with those parties; if an RCO is made, it will require the relevant person to make payment towards the cost of remedying building safety risks that are a result of the construction of the building or any work undertaken within the last 30 years.

The FTT’s jurisdiction to award RCOs is discretionary and will only be done when it is ‘just and equitable’. Accordingly, any decision will be of great interest in terms of guidance.

Triathlon Homes LLP -v- (1) Stratford Village Development Partnership (2) Get Living Plc (3) East Village Management Limited [2024] 

This case concerned fire safety defects identified in the East Village of the former 2012 Olympic athletes’ village. Stratford Village Development Partnership was the original developer of the site and East Village Management Limited was responsible for the repair and maintenance. Triathlon Homes owned all the social and affordable housing in the development and Get Living owned private rental  properties.

Following the Grenfell disaster, East Village Management (jointly owned by Get Living and Triathlon) carried out work to identify the materials used and whether they posed any safety risks. Fire safety defects were discovered in November 2020 and a waking watch was put in place until temporary alarm and heat detection systems were installed as temporary measures.

Remedial works commenced in April 2023, to be completed in or around April 2025, to be funded by grants from the Building Safety Fund.

Triathlon applied for RCOs in relation to all  blocks at the development; these RCOs would require Stratford Village Development and Get Living to contribute towards the temporary measures and investigations which Triathlon it had funded/would fund via the service charge provisions, as well as remediation costs being  funded by public money.

Judgment

It was argued that costs incurred before the commencement of section 124 (28 June 2022) could not be claimed. However, the FTT decided that RCOs do have retrospective effect. The purpose of the BSA was to place responsibility on original developers and not on individuals; so, time barring claims before June 2022 would be inconsistent with the purpose of the act.

“We therefore conclude that the fact that some of the costs, payment of which is sought by the applications, were incurred prior to 28 June 2022 does not constitute a sufficient reason or a contributory reason to conclude that it would not be just and equitable to make remediation contribution orders in respect of those costs.”

It was also argued that the wording of section 124 limits the scope of RCOs to only the costs of rectifying the ‘relevant defect’ - i.e., just the cost to fix the defect that actually causes the building safety risk. But again, the FTT disagreed. The FTT's view was that it would not have been Parliament's intention for RCOs to be so restricted and have leaseholders pay for the (potentially) huge cost of interim measures while the substantive remedial  works were undertaken. 

“We would therefore have no difficulty, whether simply as a matter of ordinary language, or additionally in view of the definition of relevant defect, in concluding that any measure… which is part of a larger programme of measures for that purpose, is capable of being the subject of a remediation contribution order.”

Key Points to Note 

As an FTT judgment, it is not binding on future decisions; but this judgment provides welcomed guidance for lawyers, and leaseholders, on the approach that the FTT will likely take in relation to RCOs in the future and its interpretation of ‘just and equitable’  circumstances.

It is clear that the FTT will consider the purpose and function of the BSA when making decisions - namely, to maintain the idea that developers are to pay for these costs, not individuals (or public funds); this is reflected in  the confirmation that  historic or preventative costs are claimable  under an RCO.

Therefore, an RCO represents a useful route to secure funding for  remediation (and associated) costs while avoiding  becoming embroiled in complex, lengthy and expensive litigation.

If you would like any further information, please contact James King and Zoe McLean-Wells.