Case summary
The freeholder and leaseholders applied for an RCO under s 124 of the BSA in respect of 1–9 Planetree Path, London, E17 7FW (“the Building”). It was common ground that the threshold requirements for the making of an RCO were satisfied: the applicants were “interested persons”; the first respondent (the developer) was a “specified body corporate”; the second respondent (a property maintenance company) was “associated” with the developer; and there were “relevant defects” within a “relevant building” (although the scope and extent of the defects was in issue).
The respondents did not attend the hearing. They initially defended the claim in their statement of case on the basis that (among other things) it was not just and equitable to make an RCO
The battle lines
The decision The respondents contended that it would not be just and equitable to make an RCO against the developer because:
The developer had not generated any profit from the project and had no assets to speak of.
- It would be more appropriate to make an order against the freeholder because the freeholder had considerably greater assets than the developer and had purchased the freehold at arm’s length after the Building was designed and constructed; the principle of caveat emptor should apply.
As against the property maintenance company, the respondents contended:
- The property maintenance company was not involved in or responsible for any defects in the Building.
- Whilst it was accepted that the respondents shared a common director during the relevant period rendering them “associates” for the purposes of the BSA, they were not otherwise linked in any way in terms of their businesses; the developer’s sole business was constructing the Building whereas the property maintenance company was involved solely in property maintenance.
- This was not a case where the two companies were effectively conducting business as part of the same corporate group and with the developer operating with minimal assets for the purpose of evading liability; it “just so happens” that the director decided to incorporate the property maintenance company shortly before the Building was complete.
The respondents did not adduce any evidence in support of their assertions.
In response, the applicants submitted that it was just and equitable to make an RCO against both respondents because:
- The developer was responsible for any relevant defects in the Building. Its net asset position was irrelevant.
- The director of both companies during the relevant period was also a majority shareholder in both companies.
- Both respondents are in the property industry.
- The property maintenance company was incorporated following substantial cash receipts by the developer and, whilst the applicants could not go as far as to say that the proceeds from the development could be traced from the developer to the property maintenance company, the applicants submitted that this was “more than coincidental: R2 is a phoenix company incorporated from the ashes of R1.”
The decision
The tribunal made the RCO against both respondents jointly and severally. It was just and equitable to make the RCO against the developer because it was responsible for the relevant defects. The tribunal did not consider it necessary to make any further findings in relation to the developer.
The position was “less straightforward” in relation to the property maintenance company [63]. However, the tribunal was satisfied that the connection between the respondents’ businesses was sufficient for it to be just and equitable to make the RCO against the property maintenance company also. It was particularly “significant” to the tribunal that the respondents’ common director (who was the director of the developer at the time of construction) was also a majority shareholder in both companies [65]. There was insufficient evidence to trace the development’s proceeds from the developer to the property maintenance company, but this did not affect the tribunal’s decision.
Comment
The decision is consistent with points made in Triathlon Homes LLP v Stratford Village Development Partnership & Others [2024] UKFTT 26 (PC) (as upheld by the Court of Appeal [2025] EWCA Civ 846) namely that: (a) primary responsibility for the costs of remediating historical building safety defects rests with the developer; and (b) the fact that the developer has shallower pockets than other parties (including the applicant) is unlikely to be a good or sufficient reason for not making an RCO against it. Indeed, the developer’s means did not factor into the tribunal’s decision in this case at all.
As for associated bodies corporate, if the identity of the person or persons who ultimately control both bodies is the same, and that person also controlled the original body at the time of construction, it seems likely that, all other things being equal, this will weigh heavily in favour of granting an RCO against the associated company.
Further, this decision shows that associated bodies do not have to carry on precisely the same business as the original body corporate for it to be just and equitable to make an RCO against them. It was enough in this case for both bodies to operate within the “property industry” albeit one as a developer and the other as a property maintenance company.
This was not, therefore, an example of a case contemplated by the Court of Appeal in Triathlon in which it would not be just and equitable to grant an RCO because the bodies were engaged in entirely different businesses, or one was a charitable company to which the director had given his time voluntarily.1 It is therefore yet to be seen how different an associated body’s business needs to be before it is no longer just and equitable to make an RCO.
1 [2025] EWCA Civ 846 at [65].
