Further clarification on remediation contribution orders

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On 19 January 2024, the First Tier Tribunal (the FTT) handed down its first remediation contribution order under section 124 of the Building Safety Act 2022 (the BSA).

In Triathlon Homes LLP v (1) Stratford Village Development Partnership (SVDP) (2) Get Living plc (3) East Village Management Limited (EVML) [2024] UK FTT 26 (PC) the FTT had to decide whether it was just and equitable to make remediation contribution orders against a developer pursuant to section 124(1) of the BSA. The FTT’s power is discretionary and is to be exercised having regard to the purpose of the BSA and all relevant factors as it does in other contexts, notably with regard to costs protection under section 20C of the Landlord and Tenant Act 1985 and paragraph 5A(2) of Schedule 11 of the Commonhold and Leasehold Reform Act.

The FTT considered the respondents’ arguments alongside the intention of Parliament when creating the BSA in order to reach its conclusions. This article sets out the key points from Triathlon in relation to the intention of Parliament, the interpretation of the BSA and how the FTT may consider future applications of this type, including the factors that it did and did not place weight on in reaching its decision.

The intention of Parliament

  • Parliament created the criteria under the BSA which it decided are necessary and fair.
  • The ability to make a claim for a remediation contribution order under section 124 is a new and independent remedy, which is essentially non-fault based. The remedy has been created as an alternative to other fault-based claims which a party may be entitled to make in relation to relevant defects.
  • Parliament did not intend that the availability of other claims or potential claims should either disqualify an applicant from making a claim for a remediation contribution order or delay the making of that claim.
  • Parliament intended that an application for a remediation contribution order should provide a route to securing funding for remediation works without the applicant having to become involved in, or to wait upon the outcome of other claims arising out of the relevant defects, which might involve complex, multi-handed, expensive and lengthy litigation.

Factors that the FTT placed weight on

  • Section 124, combined with the Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022, creates a hierarchy or cascade of liability in relation to a relevant defect.
  • The focus of the FTT’s consideration was on the buildings which were the subject of the applications. It was hoped that this decision would avoid the need for the parties to bring proceedings in relation to other buildings.
  • The policy of the BSA is that the 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.
  • The FTT found that the fact that SVDP had third-party rights against contractors and consultants and the recourse to enforce those rights, relevant to the justice and equity of making contribution orders against them. As it was just and equitable to make an order against SVDP, it was also just and equitable to make an order against Get Living, on which SVDP depends for financial support.
  • Get Living was therefore caught by the association provisions in section 124, by virtue of its association with the freeholder and each of the landlords in the relevant chain of title.
  • The FTT gave some weight to the possibility that there might be uncertainty for a time if the Building Safety Fund (the BSF) refused further help, and that there might even have to be further tribunal proceedings to resolve that uncertainty.
  • The fact that claims could be brought against the original contractors was not a reason for the FTT not to make an order against the parties whom the BSA holds responsible.
  • The public interest in securing reimbursement of the funds provided by the BSF as quickly as possible was a point the FTT considered strongly in favour of making an order.
  • The fact that EVML expressed its support for the applications. This is a factor which the FTT considered should carry weight in its decision on whether it was just and equitable to make the remediation contribution orders, both generally and in respect of costs incurred prior to 28 June 2022.

Factors that the FTT placed little (if any) weight on

  • As the works were funded and underway, for this reason alone, the important evidence given by the three leaseholders did not carry the same weight, in relation to the question of what was just and equitable, as the FTT stated that it would expect it to carry in another case.
  • Triathlon’s motivation in bringing the applications (or the identity of any eligible applicant). The FTT held that parliament made these remedies available and any eligible application is entitled to take advantage of the same. Triathlon or any eligible applicant falling within section 124(5) will have an interest in the building or an interest or responsibility for building safety.
  • The FTT did not place any weight on the fact that EVML had not made its own application for a remediation contribution order, or that other parties could have been the subject of different applications.
  • The fact that SVDP was originally in public ownership is not a matter for which the FTT gave great weight.
  • Whilst the FTT found that Get Living had the resources to comply with an order that it made, it highlighted that the source or extent of a respondent’s assets or liabilities do not carry much weight when deciding whether it is just and equitable for it to bear the cost of remediation.
  • The FTT attributed little weight to the risk that the Major Works (being the remediation works in relation to the buildings) would not be completed if the remediation contribution order was made.
  • Even if other claims were available to Triathlon that were viable and worth pursuing, the FTT did not regard this as a factor carrying any material weight in its decision.
  • The contractual obligations in the Members Agreement or in any of the other agreements relating to the sale and development of the East Village to which Triathlon was a party, and pursuant to which Triathlon may have claims, did not carry weight in the application of the just and equitable test.
  • The fact that the applications were said to be a distraction for EVML’s board from the task of getting on with the remediation work, and that they were corrosive of relationships between the directors appointed by each side was not a relevant consideration in deciding whether it is just and equitable to make orders in this case.

Other key points to note

The FTT held that public funding is 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.

A remediation contribution order can be made in relation to costs incurred before the date of commencement of the BSA on 28 June 2022. The legislation permits this result, although, there might be a factor or factors which render it unjust and inequitable to make a remediation contribution order in respect of costs incurred prior to 28 June 2022.

Finally, drawing together all of the above points, the FTT concluded that it was just and equitable to make the remediation contribution orders sought by Triathlon.

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