Leaseholders applied for an RO under s123 of the BSA in respect of The Central, 163-165 Iverson Road. It was common ground that the pre-qualification criteria were met, i.e. the application was made by an “interested person”; the respondent was a “relevant landlord”; the building was a “relevant building” and contained “relevant defects”.
The leaseholders benefited from Premier Guarantee policies of insurance and, via a participation agreement, ceded control of the tribunal proceedings to the underwriter, AmTrust. Relying on these matters, the landlord submitted that (1) the leaseholders were entitled under the policies to be indemnified in respect of the cost of rectifying the relevant defects, and (2) in view of that, the tribunal should exercise its discretion to refuse an RO¹.
In support of those submissions, the landlord argued that to accede to the application would be contrary to the policy of the BSA: A supplier is excluded if:
- Parliament’s intention in enacting the BSA was (so it was said) to ensure that dangerous buildings were made safe, not to give insurers a windfall by transferring their obligations to landlords.
- Similarly, it was argued that, in view of the participation agreement, the “real” applicant was AmTrust, i.e. an insurer seeking to shift its liabilities elsewhere, and that the application should be viewed in that light.
In response, the leaseholders submitted that:
- The means available to leaseholders (including insurance monies) were irrelevant to whether an RO should be granted. Applications under s123 are not means-tested.
- Even if the availability of insurance might, in principle, be relevant, in the present case the effect of Schedule 8 to the BSA was that the leaseholders were not liable to fund remediation works via the service charge. Thus, they had suffered no loss capable of being indemnified under the policies.
- Further, AmTrust had not accepted cover without qualification; had not waived any of the terms of the policies; and had not in fact carried out remedial works. Moreover, the landlord was the only party which was entitled under the leases to carry out works to the external fabric of the building. Consequently, if an RO was not made, the tribunal could have no confidence that the relevant defects would be rectified.
- The provision of financial assistance by AmTrust to the leaseholders to enable them to pursue their claim and ensure that the landlord was held to its responsibility to remediate dangerous defects was consistent with the policy of the BSA.
The tribunal granted the leaseholders’ application, stating:
“we agree with [the leaseholders’] first point that the primary focus in making a remediation order is not on who pays or the parties’ respective means, but rather ensuring that relevant defects are remedied.”
The decisive factors identified by the tribunal in exercising its discretion to make an RO included the facts that (1) the property remained un-remediated, notwithstanding the significant delay which had elapsed since the discovery of relevant defects in July 2019, and (2) the only party permitted to carry out repairs under the terms of the leases was the landlord.
In contrast, the supposed availability of insurance was not given significant weight. The tribunal stated:
“given the wide (and unfettered by statute) discretion of the tribunal, we accept that issues such as the existence of the insurance policy might be something that can be taken into account as part of the tribunal exercising its discretion, but we put it no higher than that.”
The tribunal also stated that “[t]here would appear to be much force in [the leaseholders’] submission that the liability under the policy no longer arises by virtue of schedule 8 to the 2022 Act”. However, in view of the tribunal’s primary conclusions, above, it was unnecessary to decide this point.
Commentary
To some, the decision in The Central might seem a relatively unsurprising application of the principle that the FTT’s jurisdiction under s123 is to be “practically focussed on ensuring the defects are remedied in a responsible fashion” (Vista Tower at [122]). However, the decision was criticised by Walder and Lam in “Unintended consequences of the Building Safety Act 2022” (Estates Gazette, 7 June 2025, p.42):
“The implications of [the decision] seem obvious. Insurers will now seek to avoid liability on any policy of insurance that contains an exclusion clause where the sums due are referenced to the insured’s liability to pay, on the basis the 2022 Act has extinguished any liability to pay. … this ruling … appears to have given carte blanche to insurers to either avoid or stop paying out on policies, and direct their resources to pursuing freeholders and landlords using the names of the lessees.”
This assessment is not especially convincing. As noted above, the tribunal did not decide the Schedule 8 point; even if it had, FTT decisions do not give rise to binding precedent. Moreover, it is not necessarily the case that a landlord would have no recourse in the scenario posited by the authors. The landlord might itself have appropriate insurance. Given the tribunal’s view that there was “much force” in the leaseholders’ argument on Schedule 8, taking out such insurance might now be prudent.
Conversely, if (as the authors contend) Schedule 8 does not extinguish the liability of insurers under policies of this kind, then a landlord might seek relief from the adverse financial impact of the RO by claiming contribution from the insurer under the Civil Liability (Contribution) Act 1978. The viability of such a claim is, as yet, untested.
In an interesting postscript, the landlord applied for permission to appeal on the ground that the tribunal had failed to exercise its discretion consistently with the landlord’s rights under Article 1 of Protocol I to the European Convention on Human Rights. The argument, as articulated in the landlord’s application, was that:
“because of the already potentially ruinous effects of the BSA on the freeholder, any exercise of discretion against it ought to be tempered, and where there is third party culpability (such as an insurer who accepts liability to remedy a defect), and furthermore that third party would receive a windfall, a restraint on the exercise of that discretion ought to be imposed if the effect is to further penalise the freeholder.”
The issues raised by this argument are not straightforward. However, unfortunately for the landlord, the point had not been pursued before the FTT. Thus, as the observed when refusing permission to appeal, the tribunal “cannot be said to have overlooked something relevant to the exercise of its discretion.” However, the possible influence of similar arguments on future applications under ss123-124 should not be overlooked.
Harry Smith appeared in The Central as counsel for the leaseholders.
1 The landlord also argued that the participation agreement was champertous and contrary to the Damages-Based Agreements Regulations 2013. These arguments were rejected by the tribunal and are not addressed here as they do not concern the BSA
