Case summary
The case related to three blocks in central London that were built in around 2004 to 2006 (the “Property”). Residential leaseholders sought a remediation order (“RO”) against the freeholder under s 123 of the BSA, and the freeholder sought an RCO against the developer under s 124 of the BSA.
The applications followed a history of delay in remediating fire safety defects at the Property. The existence of defects had been suspected as long ago as 2011. In 2020, the managing agent of the freeholder applied to the Building Safety Fund for funding to carry out remediation works. On 13 March 2023, the developer entered into the Self-Remediation Terms contract with the Secretary of State for Levelling Up, Housing and Communities (the “SRTs”), which required the developer to remedy fire safety defects but also prevented the managing agent from accessing the Building Safety Fund. The leaseholders made their RO application on 26 June 2023. In October 2023, Southwark Borough Council served notices of improvement in respect of various fire safety defects at the Property. By the date of the hearing (April 2025), the scope of the remedial works had not been agreed, and the developer maintained that its remediation obligations were limited by the SRTs to reducing risks in the Property to a “tolerable” level.
The FTT granted both applications and, in doing so, made a number of novel findings about the scope of ROs and RCOs.
The freeholder contended (relying on the earlier Chocolate Box decision) that ROs should only be granted where it would be ‘fair and just’ to do so. It submitted that an RO would not be fair and just in circumstances where the developer was responsible for the defects and required to remedy them under the SRTs, and where it would take longer for the freeholder to remedy the defects because it was not a tier 1 contractor or house builder.
The FTT disagreed with the tribunal in Chocolate Box that ‘fair and just’ is the applicable test for making an RO. The words do not appear in s 123 of the BSA; whereas the phrase “just and equitable” does appear in connection with RCOs in s 124 of the BSA. That suggests the two order are to be approached in different ways. The discretion order an RO is “unfettered”. The FTT considered that i was necessary to take a “purposive approach” and to “what the best answer is in this application, to achieve remediation of the relevant defects in the building for the safety of leaseholders”. The FTT issued an RO because, given the history of delay, “making an order is more likely to result in an increase in activity resulting in making the building safe, than not making an order.”
The developer in turn suggested that it would not be “just and equitable” to issue an RCO, in circumstances where it was willing and bound to carry out the works in accordance with the SRTs. Given the delay to the remedial works, that submission was unsurprisingly rejected. More interesting was the FTT’s consideration of the differing standards required under the SRTs and the BSA. The SRTs required developers to remediate so that there remained no more than a “tolerable risk”. The FTT described the SRTs as a “minimum” approach, whereas the BSA demands more.
The FTT also held that the freeholder was entitled to recover its legal costs as part of the RCO, meaning in this instance its costs of responding to the RO and the costs of applying for the RCO. Such costs fell within the scope of s 124(2) of the BSA permitting recovery of “costs incurred or to be incurred in remedying, or otherwise in connection with, relevant defects.” Among other things, the FTT noted that landlords were not permitted to pass on legal costs to qualifying leaseholders under paragraph 9 of Schedule 8 of the BSA. If legal costs were not recoverable as part of an RCO, landlords would have to bear those costs, or they would have to be passed on to non-qualifying leaseholders. The irrecoverability of costs might also have the effect of discouraging Right to Manage companies from seeking RCOs. Those outcomes would not be consistent with the purposes of the BSA.
Finally, the FTT decided that it could and should issue suspended ROs and RCOs (save insofar as the RCO related to costs that had already been incurred). This would give the developer a last opportunity to carry out the works itself, in circumstances where it was likely to be able to do so more quickly and cheaply than the freeholder.
Permission to appeal was refused.
Commentary
The Empire Square case follows the trend of other decisions of the FTT and the UT in interpreting the FTT’s jurisdiction very broadly (i.e. awarding costs where no procedural power to do so existed under the FTT procedural rules; issuing a suspended order despite no language in the BSA contemplating suspension of an order), while at the same time refusing to set clear limits on how the FTT should exercise its discretion to issue orders.
In rejecting any fetters on its discretion to issue ROs, the FTT reflected that lawyers are such people as tend to “prefer a framework that can lead to an ‘answer’ that can be applied repeatedly”. However, that preference does not just arise from the limited nature of lawyers’ imaginations – it also reflects most people’s idea of what ‘law’ should aspire to be. It is striking that the FTT did not accept that whether an RO would be ‘fair and just’ was even a relevant consideration. Instead, the relevant question is to ask what will achieve the remediation of the defects. The answer to that question is almost inevitably going to be making an order.
The FTT acknowledged the inconsistencies between the standard of defect remediation required under the SRTs and the threshold for building safety defects under the BSA. In the Empire Square case, this did not have serious practical consequences because the remedial works had not yet been carried out. It does, however, raise a question for the future. If a developer has carried out remedial works under the SRT to reduce fire safety risks in a building to a ‘tolerable’ level, could it still become liable under an RCO for works required to reduce the risks still further? We shall wait and see.
