LODGE: A Living Sector Update Winter 2025
Court Of Appeal Backs FTT on Fire-Safety Defects Remediation
By Michael O'Connor and Mark Barley
LODGE: A Living Sector Update Winter 2025
Court Of Appeal Backs FTT on Fire-Safety Defects Remediation
By Michael O'Connor and Mark Barley
We previously reported on the decision of the First Tier Tribunal (FTT) in Triathlon Homes LLP v Stratford Village Development Partnership (1) Get Living Plc (2) and East Village Management Limited (3) [2024] UKFTT 26 (PC) (see link).
Parts of that decision were the subject of an appeal that was heard by the Court of Appeal in Spring 2025. The Court of Appeal has now issued its judgment. As the FTT noted in its decision “the ability to make a claim for a remediation contribution order under section 124 of the BSA is a new and independent remedy, which is essentially non-fault based.” Therefore, this is an important judgment as it represents high authority concerning the circumstances in which remediation contribution orders (RCOs) are made. Of course, the Court of Appeal may not have the final word if this is appealed to the Supreme Court. Nevertheless, this case is of immense interest to:
- developers who could be faced with substantial claims to remedy buildings that they developed;
- landlords, who may be stuck being unable to use service charges to remedy their building and who may be searching for well-resourced parties to claim against to help ensure funding or who may be the target of an application for an RCO;
- ‘associates’ of developers or landlords who may find themselves the wrong side of an application for an RCO by virtue of the very broad terms of section 121 of the Building Safety Act 2022 (BSA);
- leaseholders who may want to take advantage of the retrospective application of this remedy in respect to remediation costs incurred prior to June 2022.
The Background
The wider case concerns the making of RCOs in favour of Triathlon Homes LLP (Triathlon) against (1) Stratford Village Development Partnership (SVDP) and (2) Get Living Plc (Get Living). Under s124 of the BSA, the FTT can make an RCO against an “associated” corporate entity if it is satisfied that it is “just and equitable” to do so. The FTT originally decided for Triathlon, granting it RCOs against SVDP and Get Living and required them to also compensate Triathlon for costs incurred before s.124 BSA came into force.
The Appeal
Get Living and SVDP appealed on two grounds:
- Ground 1 - the FTT erred in concluding that it was just and equitable to make RCOs against SVDP and Get Living. Get Living and SVDP said the FTT erred in 10 separate respects and, had it not done so, it would have made alternative RCOs.
- Ground 2 - the FTT was wrong to conclude that an RCO could include costs incurred before s.124 of the BSA came into force.
Ground 1
The Court of Appeal dismissed the appeals on all 10 “just and equitable” grounds, in most cases backing what the FTT had decided. The precise 10 grounds can be found in the Schedule to this article. There were, however, interesting points where the Court of Appeal departed from the FTT.
Ground 1.1
Although deciding it was just and equitable in the circumstances of this case, the Court of Appeal criticised the FTT judgment that: “[Given this position], it is difficult to see how it could ever be just and equitable for a party falling within the terms of section 124(3) and well able to fund the relevant remediation works to be able to claim that the works should instead be funded by the public purse.” The Court of Appeal said that the FTT, by this wording, expressed themselves more widely than was needed and there may be cases where it would not be just and equitable to make an RCO, even if the result was to leave costs to be funded by the public purse. The Court of Appeal gave an example where it was not obvious that it would always be just and equitable to make RCOs: “[a situation where] a director of a landlord was also a director of other companies which have no other connection with the landlord or its group; such companies might have had nothing to do with the development and be engaged in entirely different businesses, or might include a charitable company to which the director had given his time voluntarily”.
Ground 1.7
As part of this Ground, the Court of Appeal considered the FTT’s approach that the public interest is in securing reimbursement of the Building Safety Fund. Get Living and SVDP put forward an argument to the Court of Appeal that the public interest could suggest that the Building Safety Fund would not expect SVDP and Get Living to provide forward funding for remedial work. This was argued to be the case because there is a national housing shortage and pushing developers and investors to remediate fire safety defects could impact on capital for new housing. The Court of Appeal considered this point to be speculative and dismissed it, concluding that it is not supported by the BSA nor is there any suggestion that this formed part of the Government’s thinking.
Ground 1.9
Under the terms of the Grant Funding Agreement between East Village Management Limited (EVML) and the Government, EVML were prevented from pursuing “Leaseholders” (as defined by the Grant Funding Agreement) for the costs of remedial works. Get Living was a “Leaseholder” under the Grant Funding Agreement. Accordingly, Get Living argued this was relevant to whether Get Living should be required to pay costs to EVML under any RCO, even though Get Living was also caught as an associate of a landlord under s.124(3) BSA. Whilst accepting that Get Living’s position vis-à-vis the Grant Funding Agreement was a relevant consideration in the determination of whether it would be “just and equitable” for Get Living to make payments to EVML under any RCO, the Court of Appeal decided that the prohibition of pursuing “Leaseholders” under the Grant Funding Agreement did not prevent EVML from pursuing Get Living in their other capacity as an associate of a landlord. Accordingly, the Grant Funding Agreement did not prevent RCOs from being made in favour of EVML.
Ground 2
The Court of Appeal dismissed this Ground, concluding it was necessary to interpret s.124 in such a way that gives purpose to Part 5 of the BSA (in which s.124 sits) - to protect leaseholders from financial risk or to ensure that risks from historical defects are remedied without leaseholders having to bear the potentially very large costs. The Court of Appeal considered it was very difficult to believe that Parliament intended leaseholders who had not paid a contribution to fix fire safety defects should be able to take advantage of s.124 but those who had paid could not. Such logic would also apply to landlords or management companies who, only relying on service charge income, are prevented from using the service charge to carry out remedial works and are forced to apply for an RCO. In considering this Ground, the Court of Appeal referred to the decision they had handed down at the same time, Adriatic Land 5 Ltd v The Long Leaseholders at Hippersley Point. My colleague, Oliver Park, has written about this judgment here.
Conclusion
The Court of Appeal’s comments on Ground 1.1 are important. It has now been made clear that good arguments could be run (and be successful) to militate against an RCO being made against an associate company of, for example, a developer in circumstances where the public purse is making the ultimate recovery. Many had been concerned that the FTT’s comments in their decision effectively made it all but impossible for ‘associates’ to argue out of reimbursing the public purse. However, we suspect that such successful arguments will be few and far between. Ground 2 represented an unsurprising conclusion. The context of the BSA and what Part 5 of the BSA set out to achieve would have raised eyebrows if the Court of Appeal had decided that costs incurred before s.124 came into force were not recoverable. It is, however, a useful clarification. It remains to be seen whether this may lead to a wave of leaseholders taking the opportunity to try to open up service charges which were previously thought to have been settled long ago; a concern raised by the SVDP and Get Living in this case. Overall, for developers, this judgment underscores the policy of the BSA that primary responsibility for the cost of remediation should fall on the original developer. This means that developers (and their associate companies), even if they are no longer involved with the building, are at risk of being held liable for substantial costs related to remedying historical building safety defects. For landlords, the judgment clarifies that the BSA provides protections for leaseholders against service charges for remediation costs. However, landlords who incur costs due to these protections may be able to pass these costs onto others, which could include a previous landlord and/or the developer and the developer’s associates.
Conclusion
The Court of Appeal’s comments on Ground 1.1 are important. It has now been made clear that good arguments could be run (and be successful) to militate against an RCO being made against an associate company of, for example, a developer in circumstances where the public purse is making the ultimate recovery. Many had been concerned that the FTT’s comments in their decision effectively made it all but impossible for ‘associates’ to argue out of reimbursing the public purse. However, we suspect that such successful arguments will be few and far between. Ground 2 represented an unsurprising conclusion. The context of the BSA and what Part 5 of the BSA set out to achieve would have raised eyebrows if the Court of Appeal had decided that costs incurred before s.124 came into force were not recoverable. It is, however, a useful clarification. It remains to be seen whether this may lead to a wave of leaseholders taking the opportunity to try to open up service charges which were previously thought to have been settled long ago; a concern raised by the SVDP and Get Living in this case. Overall, for developers, this judgment underscores the policy of the BSA that primary responsibility for the cost of remediation should fall on the original developer. This means that developers (and their associate companies), even if they are no longer involved with the building, are at risk of being held liable for substantial costs related to remedying historical building safety defects. For landlords, the judgment clarifies that the BSA provides protections for leaseholders against service charges for remediation costs. However, landlords who incur costs due to these protections may be able to pass these costs onto others, which could include a previous landlord and/or the developer and the developer’s associates.
Schedule
Schedule
Ground 1.1
Ground 1.1 was that the FTT wrongly created a presumption (without expressly saying so) that it is just and equitable to make an RCO against a developer, or indeed any body corporate or partnership who are caught by s.123(3) of the BSA, namely (1) a relevant landlord, (2) a person who was a landlord at the qualifying time (14 February 2022), (3) a developer, or (4) any person ‘associated’ with any of the aforementioned persons.
Ground 1.2
Ground 1.2 was that the FTT wrongly decided that the policy of the BSA is that primary responsibility for the costs of remediation should fall on the developer and that others may pass on the costs they incur to the developer.
Ground 1.3
Ground 1.3 was that the FTT erred in finding that it was not necessary to consider the motivation or the identity of Triathlon in applying for this RCO or the basis of the Triathlon’s eligibility.
Ground 1.4 and 1.10
These two grounds were dealt with together, and concerned that the FTT:
- erred in finding that the public purse would be the underwriter of the risk of failure if not reimbursed from the fruits of litigation against third parties, and wrongly found that if the Building Safety Fund was left to fund the works while the claims against the contractor for the original works are resolved, an applicant for an RCO would have to become involved in, or wait upon, other claims; and
- erred in concluding that public funding is a matter of last resort.
Ground 1.5
Ground 1.5 was that the FTT erred in holding that there was nothing unfair in Triathlon taking advantage of its ability to apply for an RCO instead of pursuing other claims available to it.
Ground 1.6
Ground 1.6 was that the FTT failed to take into account that the applications to the Building Safety Fund (to fund the remedial works to the buildings in question) had been made at Triathlon’s request, that the scope of remedial works that were being undertaken was the only scope that met the requirements of the Building Safety Fund, and that the parties were working on the basis that the remedial works would be funded through the Building Safety Fund. It was accordingly, “a kick in the teeth” for Triathlon to then apply for an RCO against SVDP and Get Living.
Ground 1.7
Ground 1.7 is that the FTT failed to take into account that the funding from the Building Safety Fund was provided irrespective of the position under the BSA, such that the public authorities do not expect SVDP and Get Living to provide forward funding. Within this ground was a suggestion by that what is in the public interest is not clear cut. There is for example also a national housing shortage, and it is a political decision as to how hard developers and investors are pushed to rectify fire safety defects in circumstances where they are also needed to invest capital for new housing.
Ground 1.1
Ground 1.1 was that the FTT wrongly created a presumption (without expressly saying so) that it is just and equitable to make an RCO against a developer, or indeed any body corporate or partnership who are caught by s.123(3) of the BSA, namely (1) a relevant landlord, (2) a person who was a landlord at the qualifying time (14 February 2022), (3) a developer, or (4) any person ‘associated’ with any of the aforementioned persons.
Ground 1.2
Ground 1.2 was that the FTT wrongly decided that the policy of the BSA is that primary responsibility for the costs of remediation should fall on the developer and that others may pass on the costs they incur to the developer.
Ground 1.3
Ground 1.3 was that the FTT erred in finding that it was not necessary to consider the motivation or the identity of Triathlon in applying for this RCO or the basis of the Triathlon’s eligibility.
Ground 1.4 and 1.10
These two grounds were dealt with together, and concerned that the FTT:
- erred in finding that the public purse would be the underwriter of the risk of failure if not reimbursed from the fruits of litigation against third parties, and wrongly found that if the Building Safety Fund was left to fund the works while the claims against the contractor for the original works are resolved, an applicant for an RCO would have to become involved in, or wait upon, other claims; and
- erred in concluding that public funding is a matter of last resort.
Ground 1.5
Ground 1.5 was that the FTT erred in holding that there was nothing unfair in Triathlon taking advantage of its ability to apply for an RCO instead of pursuing other claims available to it.
Ground 1.6
Ground 1.6 was that the FTT failed to take into account that the applications to the Building Safety Fund (to fund the remedial works to the buildings in question) had been made at Triathlon’s request, that the scope of remedial works that were being undertaken was the only scope that met the requirements of the Building Safety Fund, and that the parties were working on the basis that the remedial works would be funded through the Building Safety Fund. It was accordingly, “a kick in the teeth” for Triathlon to then apply for an RCO against SVDP and Get Living.
Ground 1.7
Ground 1.7 is that the FTT failed to take into account that the funding from the Building Safety Fund was provided irrespective of the position under the BSA, such that the public authorities do not expect SVDP and Get Living to provide forward funding. Within this ground was a suggestion by that what is in the public interest is not clear cut. There is for example also a national housing shortage, and it is a political decision as to how hard developers and investors are pushed to rectify fire safety defects in circumstances where they are also needed to invest capital for new housing.
Ground 1.8
Ground 1.8 was that the FTT wrongly gave no weight to the changing identity of the ultimate beneficial owners of SVDP and Get Living, in particular that the East Village development had been a public project from which the public, through the ODA, had benefited.
Ground 1.9
Ground 1.9 was that the FTT failed to take into account that the terms of the grant funding agreement between the Government and EVML expressly prohibit a claim against Get Living.
Since this article was published, permission to appeal to the Supreme Court has been granted in part. Permission to appeal relates to the retrospectivity point. This means that the Supreme Court will review whether an RCO can include costs incurred before Section 124 of the BSA came into force.