Triathlon Homes LLP v Stratford Village Development Partnership & others

In a significant case applying the Building Safety Act 2022 (“BSA”) the First Tier Tribunal (“FTT”) has made an £18 million contribution order against a developer, which includes waking watch costs.

The case of Triathlon Homes LLP v Stratford Village Development Partnership & others is the first major case before the FTT. Whilst the decision of the FTT will not be binding on future tribunals, it will carry significant weight and be highly persuasive in future cases.

Remediation contribution orders (“RCOs”) were introduced by s.124 of the BSA. Currently, they only apply in England. They shift the cost burden of remediation works for certain building safety defects, most notably unsafe cladding on tall buildings, allowing remediation costs spent doing those works to be reimbursed by another party (usually the original developer or a landlord).

To make an RCO, the Tribunal must be satisfied that it is ‘just and equitable’ to do so. Whilst it was clear RCOs were introduced for the purpose of placing the responsibility for remediation costs on developers and landlords, it was not clear on the face of the BSA whether RCOs could allow for the recovery of interim risk reducing measures and/or costs spent on remediation works prior to commencement of the BSA.

In its recent decision, the FTT has now confirmed that both those costs are in principle recoverable under an RCO. This is a welcome decision for leaseholders and management companies who were facing uncertainty about how they may recover costs of interim measures such as waking watch, often mandated by local fire enforcement officers or brigades.

The decision will be equally welcomed by leaseholders in buildings which benefited from external funding from the government’s Building Safety Fund (BSF), a developer under the Pledge or a third-party such as NHBC and had secured funding for remedial works, but where temporary safety measures prior to the remedial works often fell outside the scope of the funding.

What was the case about?

The case itself involved an application by Triathlon Homes LLP (“TH”), who is a co-owner of a block of flats which was home to athletes during the London 2012 Olympics. They are not occupied by residential tenants on long leases.

The respondents were Stratford Village Development Partnership (“SVDP”), the developer, and Get Living Plc (“GL”), co-owner of blocks of flats and parent company of SVDP (together, the “Respondents”). A third respondent, East Village Management Limited (“EVML”), which had commissioned the remedial works, was joined to the application by the Tribunal and invited to participate but solely on the basis that Triathlon was seeking that the payment under the order was made to EVML.

TH was seeking the reimbursement of over £18mil. The bulk of this was remediation costs for works done to replace unsafe ACM cladding, inadequate cavity barriers and defective firestopping, but it also included interim fire safety measures and investigative and preparatory works.

What was the decision?

The key issues were:

1. Whether a RCO could be made for costs incurred before the commencement of the BSA 2022?

The Respondents argued that RCOs came into force via the BSA on 28 June 2022, therefore making an RCO for costs before that date with give the BSA retrospective effect – they argued the BSA wasn’t clear enough to give that effect.

The FTT rejected that argument, it said the wording did give that power the that the BSA explanatory notes provided for “wholesale intervention”.

2. Whether a RCO could be made for costs incurred for interim fire safety measures or other measures to prevent or reduce the severity of the building safety risks?

The Respondents argued that the language of the statute (“incurred in remedying relevant defects”) was limited, and did not refer to any interim measures relating to the relevant defects, such as the waking watch costs. They argued that remedying defects was confined to carrying out works to permanently remediate the defects (e.g. replacing combustible cladding with alternatives).

The FTT did not agree. They said the word “remedying” was akin to alleviating the severity of risks or preventing them from happening. They also said to interpret the scope of RCOs narrowly was against the BSA’s intention.

3. Whether it would be ‘just and equitable’ for the Tribunal to make the RCO?

The Tribunal recognised this was a broad test which conferred on it a lot of discretion. It ultimately accepted the argument of the TH that, as a whole, it would be just and equitable to make the RCO where on the facts this was a situation where ultimately the developer was responsible for the defects and should be held responsible for the remediation costs as the BSA intended.

The Tribunal also referred to the fact that it was intended that RCOs be a no fault mechanism to allow the cost of remediation to be recovered without arguments as to liability, which would be required in other civil claims.

Finally, the FTT also considered that the order should be made for the Respondent developers to pay the cost of remediation rather than the taxpayer paying the cost via the Building Safety Fund.

If you have any questions about how the BSA affects you, whether you are a leaseholder, management company, managing agent, developer or freeholder, get in touch with our Building Safety Team on buildingsafety@ellisonssolicitors.com.