Stephanie Geesink, counsel, and Dom Turner-Harriss, associate, of Watson Farley & Williams LLP
Here, we consider the implications of Triathlon Homes LLP v Stratford Village Development Partnership, Get Living Plc and East Village Management Limited [2024] UKFTT 26 (PC).
Prior to the 2012 London Olympics, Stratford Village Development Partnership developed five residential blocks within the former athletes’ village in Stratford, London. The majority of these residential blocks are between eight and 12 storeys in height. Some of the units within the blocks are owned by Get Living Plc and others by Triathlon Homes LLP.
In November 2020, significant fire-safety risks and defects were discovered in the blocks, and the cost of the planned remediation works amounted to approximately £24.5m.
Triathlon applied for Remediation Contribution Orders (RCOs), pursuant to section 124 of the Building Safety Act 2022. The RCOs would require the developer, Get Living, and the management company to contribute approximately £18m between them in relation to the five blocks. These contributions were for costs associated with the remedial scheme, and included costs that were incurred prior to the date on which the Building Safety Act came into force (28 June 2022).
Pre-Building Safety Act costs
It was contended by Get Living and the management company that the RCOs could not be made to cover any costs that were incurred prior to the commencement of the Building Safety Act. However, this was swiftly rebutted by the tribunal, which was in no doubt that section 124 of the Building Safety Act allowed for RCOs to be made for costs incurred prior to the commencement of the Act.
Section 124 allowed for “costs incurred or to be incurred in remedying relevant defects”, and the drafting explicitly covered pre-Building Safety Act costs.
Further to the clear wording, the tribunal also commented that it would be “inconceivable” for Parliament to have intended for buildings that had already been remediated to have no ability to seek an RCO and consequently to bear the full remedial costs incurred.
Just and equitable
The acid test of whether an RCO should be granted is whether it would be “just and equitable” to do so. In the alternative to the above, Get Living and the management company therefore submitted that it would not be “just and equitable” for an RCO to be made for costs incurred prior to the date on which the Building Safety Act came into force.
The tribunal commented that it was well versed in making decisions on the basis of what was just and equitable, even though there was no guidance on this within section 124 of the Act.
The tribunal said that when considering whether the RCOs were just and equitable, an important factor was the core policy of the Act, namely that the cost of remediation should be the responsibility of the original developer. While Get Living and the management company argued that it could not be just and equitable for RCOs to be ordered in circumstances where funding from the Building Safety Fund had already been obtained, the tribunal disagreed.
The tribunal’s view was that it was difficult to see how it would be just and equitable for parties, who could fund the relevant remediation works, to claim that the works should be subject to public funding instead. The tribunal 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”.
Triathlon was ultimately successful in obtaining an RCO for approximately £18m.
Conclusion
This tribunal has provided important clarification to the industry that:
- Costs incurred in carrying out remedial works prior to the commencement of the Building Safety Act can be included in RCOs; and
- RCOs can be granted to cover costs even when funding was secured from the Building Safety Fund.
It will be of great interest to the sector to see how the tribunal, by reference to what is “just and equitable”, has decided to award the RCOs in this case. This is the first time that the just-and-equitable test has been considered in the context of the Building Safety Act, and this is likely to be reviewed and developed in any future proceedings on a case-by-case basis.
