Introduction
This article will assess the implications of the hierarchy of liability for the costs of remedying historical building safety defects which has been endorsed by the Court of Appeal in Triathlon Homes LLP v Stratford Village Development Partnership & Others [2025] EWCA Civ 846 in respect of the granting of an RCO.
A detailed overview of the decision can be found here.
(1) The applications for RCOs concerned the cost of rectifying fire safety defects in five tower blocks in the former Olympic Village in Stratford, London (“the Blocks”), on application per Block.
(2) The applications were made by Triathlon Homes LLP (“Triathlon”), who is a long leaseholder of all the social and affordable housing in the Blocks.
(3) The Blocks had been developed by the First Respondent (“SVDP”), which is a limited partnership whose three partners ultimately owned through subsidiaries by the Second Respondent (“Get Living”).
(4) SVDP is also the beneficial owner of the freehold to the development.
(5) Get Living did not own SVDP at the time of the development of the Blocks. At that time, the development was owned by the Olympic Delivery Authority, a public body.
(6) Get Living also owns the long leases to all the private rented housing in the Blocks.
(7) The Government Building Safety Fund granted funding up to £24.5 million (later increased to £27.5 million) toward the remediation costs. By the time of the FTT hearing the funding had been dispersed.
Legal framework of associated persons
Section 124 of the BSA empowers the FTT to make RCOs. It provides as follow, inter alia:
(1) The making of the order must be “just and equitable” in relation to a relevant building.
(2) The class of bodies who may be required to contribute is limited to a body corporate or partnership (if it is a landlord, a former landlord, a developer, or a person associated with any of those).
Section 121 of the BSA defines “associated persons” for the purposes of sections 122 to 124 and Schedule 8 of the BSA as a partnership or body corporate associated with another person in the following circumstances:
1. Where a person’s interest in a relevant building was held on trust at the qualifying time, any partnership or body corporate which was a beneficiary of the trust at the time.
2. A partnership is associated with any person who was a partner in the partnership, other than a limited partner, at any time in the period 5 years ending at the qualifying time, 14 February 2022 (“the relevant period”).
3. A body corporate is associated with any person who was a director of the body corporate at any time in the relevant period.
4. A body corporate is associated with another body corporate if –
(a) At any time in the relevant period a person was a director of both of them; or
(b) At the qualifying, one of them controlled the other or a third body corporate controlled both of them.
How Triathlon dealt with the issue
There was no dispute between the parties that the jurisdictional or gateway requirements had been satisfied. It was common ground that there were “relevant defects” in a “relevant building”. That Triathlon was an “interested person” and both SVDP and Get Living can be a “specified body corporate or partnership” pursuant to section 121 ([266] FTT decision).
However, the Respondents argued that in circumstances where the works have already been commissioned and are fully funded and on target there was no reason to make an RCO.
In rejecting this submission, the FTT found that public funds are intended as a last resort, and the existence of a government grant does not excuse or eliminate the responsibility of developers or their associates. At [278] it said “… 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”.
On appeal, the Respondent’s took issue with this, contending that the FTT had “created a presumption that an RCO should be made against a developer with means” ([60] [2025] EWCA Civ 846).
The Court of Appeal rejected this submission and in doing so it said, in summary:
1. That, where possible, those connected to a building (like developers or landlords) who can afford to pay for remedial works should do so, rather than relying on public funding.
2. The purpose of these mechanisms (such as for an RCO) under the BSA are to pass costs onto developers or landlords, which the availability of public funds does not override.
3. The FTT was justified in concluding that it was unreasonable for the public to fund the remediation works in this case, given the developer and its associates could afford to pay.
4. While supporting the FTT’s conclusion in this specific case, the judge cautioned against a blanket rule that it could never be just and equitable for public funds to cover costs, especially in situations involving loosely associated companies ([63] to [65] [2025] EWCA Civ 846).
The presumption
The judgment leaves no doubt in reinforcing the policy position that primary responsibility for the costs of addressing historic building safety issues lies with original developers and their related entities.
However, whilst the Court of Appeal rejected the submission that a presumption had been created, the Court’s strong endorsement of the FTT’s position that the BSA establishes a clear “hierarchy” of liability with developers at the top and that it saw no reason the public should fund the works when the developer and its wealthy associate could afford to do so, is in essence tantamount to enforcing a presumption that an RCO should be made against a developer with means. After all, who would pursue a developer with no means to fund the remedial works required?
Furthermore, this framework of liability applies even where the developer is a thinly capitalised special purpose vehicle (SPV) or has undergone structural or ownership changes. Under the BSA’s broad definitions, parent companies and other affiliated organisations remain squarely within the potential reach of an RCO. The broad reach of this framework of liability further reinforces that there is a broad presumption, even if “presumption” is not the label that the Court of Appeal want to use.
The Court of Appeal dismissed arguments in regard to the developers shifting beneficial ownership and the historic public ownership of SVDP. In doing so it has reinforced the strict legal position that acquiring a development entity includes taking on its existing and future liabilities, whether known or unknown.
As a result, corporate transactions involving property development businesses are likely to face heightened legal and commercial scrutiny, with enhanced focus on legacy project liabilities.
Additionally, the Court of Appeal has made a clear statement that the financial burden of remedying building safety defects should not be placed on leaseholders and the Government Fund should be a last resort, instead placing liability on those responsible for the original construction of the development or those who have benefitted from its construction even when they were they did not benefit for decades after the build (i.e. “associates”). The presumption is clear; developers (or individual/entities acquiring them) are at the top of the liability list.
Practical benefits and implications
There are benefits to such a presumption and one can hope that the position will (a) drive a more proactive approach to defect management during the project and (b) ensure that building safety standards are taken more seriously from the outset of a project.
Furthermore, the clear statement that leaseholders should not face the financial burden of remedying these defects should alleviate the concern for prospective purchasers of leasehold flats. There is now less of a concern that the service charge could go through the roof as a result of defects discovered some decades after the developments completion.
However, there are some potential negative consequences, for example, in circumstances where the attribution of a developer entity happened some 20 years before the defects were noted, the “associated” entity and/or individual will often be unable to access documents relating to the works.
As has been noted in Simon Hargreave KC’s recent article - “Could a Contribution Claim be Founded on an RCO?” it is those “associated” with the developer who are likely to be in need of a contribution claim to recover losses paid out pursuant to an RCO.
However, these are precisely the individuals and/or entities who will likely find pleading and proving a claim difficult due to a lack of information and/or documents being available. This will especially be the case in circumstances where a development was completed some three decades ago in a time when RCO’s were not envisaged and the importance of keeping the documents for such a long time was not a reality.
Going forward, developers should make it a priority to save all relevant documentation throughout the lifecycle of their projects and retain these records for many years and potentially decades.
Failing to maintain proper records could seriously jeopardize future claims or the sale of development entities.
Prospective buyers, whether individuals or companies, should exercise caution when considering the acquisition of developer entities that cannot provide well-maintained records of their legacy projects. Legal advisors involved in such transactions must also recognise the critical importance of these historical records.
Does the presumption remain in the absence of public funding?
Finally, despite the Court of Appeal’s ruling that there are limits on when an associate should be subject to an RCO, no limit has been found in any authority thus far.
In Helpfavour Limited & Others v (1) Rosco Ingo Limited & (2) Rosco & Perlini Limited (Lon/00BH/BSB/2024/0500), the FTT considered whether to make an RCO against an “associate” of a developer. Here, the Second Respondent was associated by virtue of the fact that both companies shared the same director during the relevant period for the purposes of s.121(5) of the BSA. The Second Respondent argued that it was not just and equitable to make an RCO as the company’s business are not linked in any way.
This was not a case where the companies were part of the same corporate group, with the developer operating with minimal assets for the purpose of evading liability. The developer’s sole business was constructing the Building. The Second Respondent’s business was property maintenance unconnected with the development at issue. Further, the Second Respondent was incorporated less than 4 months before completion of the building.
Notwithstanding this, the FTT decided it was just and equitable to make an RCO against the Second Respondent. It had particular regard to the fact that:
1. the director was the majority shareholder for both the First and Second Respondent; and
2. both companies are in the property industry.
Whilst not identified as a significant factor by the FTT, it seems relevant that the developer had limited and/or minimal assets to fund any remediation works. This further reinforces the fact that a developers means is a factor to the Tribunals assessment as to whether a developer should pay. As above, the presumption is that developers with means should pay.
Although this decision pre-dates the Court of Appeal’s decision in Triathlon, it also indicates that being engaged in an entirely different business with no connection to the building at issue is not enough to prevent an RCO being made.
