The Grenfell Tower tragedy in 2017 disclosed the widespread use of combustible cladding on tall buildings, with associated defects that assisted rather than hindered the outbreak of fires. The clamour for a remedy to address the problem was resounding, and led to the passage of the Building Safety Act 2022. The broad purpose of the Act may be said to be to make landlords carry out the requisite remedial works, to be paid for by the developers responsible for the defects. Simple to state; extremely complex to put into effect. And some of the complexities have now been highlighted by the decision in Triathlon Homes LLP v Stratford Village Development Partnership and others [2024] UKFTT 26 (PC); [2024] PLSCS 16.
The case concerned blocks of residential accommodation in part of the Olympic Village in east London known as the East Village, which had been developed by the Stratford Village Development Partnership. Each block comprised a “relevant building” for the purposes of the Act (being tall enough to engage its provisions). The private rented flats in the blocks are owned through subsidiaries by the second respondent, Get Living plc, while the social and affordable housing in the blocks is owned by the applicant, Triathlon Homes LLP.
In November 2020, a management investigation revealed serious fire safety defects in the design and construction of the cladding systems on the blocks, which it was accepted comprised “relevant defects” for the purposes of the Act. In response to these discoveries, a waking watch was implemented, which remained in place until additional alarm and heat detection systems were installed in flats as temporary measures. A programme of work permanently to remedy the defects commenced in 2023, and should be completed by August 2025. For the time being, the remediation work is being funded by grants from the Building Safety Fund. The total cost of the work exceeds £24.5m. This funding is a temporary expedient to ensure necessary work is not delayed by arguments over funding.
The applications
Section 124 of the Act, together with the Building Safety (Leaseholder Protections) (Information etc) Regulations 2022, set out the means by which the party or parties primarily liable for the cost of remediation can be made to pay the whole or part of that cost, under so-called “remediation contribution orders”, where it is just and equitable. Those in the firing line include the landlord who was responsible for the relevant defect, or which is associated with a developer which was responsible for it.
On 19 December 2022, Triathlon applied to the First-tier Tribunal for remediation contribution orders under section 124, requiring SVDP and Get Living to reimburse expenditure of £1.058m already incurred by Triathlon through services charges paid in respect of interim fire safety measures and investigative and preparatory works. They also required them to meet further liabilities of £153,538 in respect of service charges previously demanded which Triathlon had not yet paid, and of £613,899 in respect of costs and anticipated costs which had not yet been the subject of service charge demands. Of more significance, the orders sought would also require SVDP and Get Living to reimburse expenditure of £16.03m incurred or to be incurred in remedying the defects, representing Triathlon’s share of the total remediation costs.
The decision
Of the many issues determined by the FTT, the first was whether a remediation contribution order could be made in relation to costs incurred before the commencement of the Act on 28 June 2022. The tribunal was in no doubt that it could, placing emphasis on the reference in section 124(2) to costs “incurred or to be incurred in remedying relevant defects”. Dismissing the landlords’ arguments directed at the unfairness of retrospective penalisation, the tribunal said: “… the radical protection [the Act] extends to leaseholders should not be restricted by precise distinctions of time. … In this instance parliament has decided that, irrespective of fault, it is fair for those with the broadest shoulders to bear unprecedented financial burdens.”
The tribunal went on to observe the Act provides for 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 has decided are necessary and fair. It agreed with Triathlon’s submission that the Act and its associated regulations disclosed a hierarchy of liability, with the original developer and its associates at the top.
On the question of ability to satisfy any contribution order, the FTT heard evidence that SVDP would be unable to comply with a remediation contribution order in any significant sum without the support of its parent company, Get Living. Get Living, on the other hand, would be more than able to meet any obligation which might be imposed on it in the proceedings. In deciding what order it would be “just and equitable” to make under section 124 of the Act, the tribunal noted that section 124 itself gave no guidance, and it was not possible to identify a particular approach which should be taken. The principal factor emphasised by Triathlon in support of it being just and equitable to make an order against SVDP was the fact it was the developer of each of the blocks, and was therefore ultimately responsible for the presence of the relevant defects. SVDP, by contrast, submitted that there was no presumption an order should be made and if, as in this case, the tribunal could see the necessary remedial works were under way and their funding was secure, it would not be just and equitable to make an order. Instead, Triathlon should be left to its contractual and common law remedies against the contractors and consultants involved in the design and construction of the blocks, with liability being apportioned by the court on normal principles.
Ultimately, the tribunal accepted Triathlon’s arguments, and held that Triathlon was entitled to the remediation contribution orders sought against the respondents. This decision illustrates a robust approach by a vastly skilled and experienced tribunal, which should serve as a warning to other developers in a similar position.
Guy Fetherstonhaugh KC and Joe Ollech are barristers at Falcon Chambers
