Citation: [2025] EWCA Civ 846
This was, effectively, a leapfrog appeal to the Court of Appeal (Newey, Nugee and Holgate LLJ) against the decision of the First Tier Tribunal (“FTT”) (made up of the President of the Upper Tribunal (Lands Chamber), Edwin Johnson J, and its Deputy President, Martin Rodger KC) who had to consider applications for a remediation contribution order (“RCO”) under section 124 of the Building Safety Act 2022 (“the BSA”). It was the first major case in that context, heard in conjunction with an appeal in Adriatic Land 5 Ltd v The Long Leaseholders at Hippersley Point. The Court of Appeal described the FTT’s decision as “thorough and careful” and the submissions from all counsel as “well-argued”.
There were two grounds of appeal, both of which were dismissed. Ground 1 was that the FTT erred in concluding that it was just and equitable to make RCOs against SVDP and Get Living in ten respects. Ground 2 was that the FTT were wrong to conclude that an RCO could be made in respect of costs incurred before section 124 came into force on 28 June 2022.
By way of reminder, the facts were these. The applications concerned the cost of rectifying fire safety defects in five tower blocks in the former Olympic Village in Stratford, London (“the Blocks”), one application per Block. They were made by Triathlon Homes LLP (“Triathlon”), who is the long leaseholder of all the social and affordable housing in the Blocks.
The Blocks had been developed by the First Respondent (“SVDP”), which is a limited partnership whose three partners are ultimately owned (through subsidiaries) by the Second Respondent (“Get Living”). SVDP is also the beneficial owner of the freehold to the development.
Get Living did not own SVDP at the time the development of the Blocks was undertaken: at that time, the development was owned by the Olympic Delivery Authority (“the ODA”).
Through subsidiaries, Get Living also owns the long leases to all the private rented housing in the Blocks.
There was no dispute between the parties that the “jurisdictional” or “gateway” requirements which need to be met before an RCO can be made had been satisfied. There were “relevant defects” in a “relevant building”. Triathlon is an “interested person” and both SVDP and Get Living can be a “specified body corporate or partnership”. The principal issue between the parties was whether it was “just and equitable” to make the order sought in respect of the remedial work that is currently being carried out to the Blocks.
Ground 1 – Just and Equitable
When dealing with the respects in which it was said that the FTT had erred, each of which the Court of Appeal rejected, the Court made the following points:
- The policy of the BSA was to place primary responsibility on the developer and, as between the landlord and the developer, the developer sits at the top of the hierarchy: [61]. The Supreme Court in URS v BDW accepted that a central purpose of the Act was to hold those responsible for building safety defects accountable: [61].
- The FTT was justified in making the point that public funding was a matter of last resort: [63]. The Building Safety Fund stands outside the BSA as a potential funder of remedial works and in fact pre-dates it: [88]. If, as the FTT concluded, it was prima facie just and equitable for SVDP as developer and Get Living as associate to pay, then it was not a reason not to make an RCO that the works were being funded by the Fund: [88].
- Since the BSA has taken away the contractual right of the management company to look to service charges for funding, it put in place mechanisms to enable those costs to be passed to others. Section 124 was one of those mechanisms. There is no reason to think that the Building Safety Fund was intended to displace the provisions of the BSA: [64].
- There may be cases where it would not be just and equitable to make an RCO even if the result was to leave the costs to be funded by the public. Examples may include associated companies, engaged in an entirely different business, who had nothing to do with the development, or a charitable company in which a common director had given his time voluntarily: [65].
- The FTT was right to refer to Regulation 3 of the 2022 Regulations as demonstration of the clear illustration of the policy that costs should fall on the original developer. It was not relevant, for that purpose, that Triathlon itself could not have invoked Regulation 3: [69/70].
- It was not necessary for the FTT to resolve any issues as to Triathlon’s motivation for making the applications. Parties who have legal rights and remedies are entitled to pursue them without having to explain why they do so. Absent malice or the like, subjective reasons for litigating are usually irrelevant: [78].
- The fact it was Triathlon, rather than EVML or the Secretary of State, who sought the order did not change the nature of the order sought, or the answer to the question whether it was just and equitable to make such an order: [80].
- One of the purposes of the BSA was to ensure works that are required are actually done. But another purpose is to deal with the “who pays” question for which the BSA provides a complex set of answers: [87].
- The BSA does not contemplate that taxpayer funding, through the Building Safety Fund, should provide the solution to the problem. Instead, it provides for costs to be allocated between those who have relevant connections to the building: [87].
- It was not unfair for Triathlon to take advantage of its ability to apply for an RCO instead of pursuing other claims or potential claims available to it. The policy that the costs of remediation should primarily fall on developers was not intended to await the outcome of other claims but to be available from the outset: [97].
- The funding provided by the Building Safety Fund was not an out-and-out grant: [110]. It was only intended as temporary funding pending recovery from those who can be made legally liable: [111]. One cannot infer that the public bodies concerned had no interest in RCOs being made where appropriate: [112].
Ground 2 - Retrospectivity
The FTT was right to conclude that an RCO could be made in respect of costs incurred before s.124 came into force.
Passages from the Supreme Court’s decision in URS v BDW (notably (84) to (87) and (273/4)), were self-evidently strongly in favour of s.124 being given a retrospective interpretation. Even though that was not technically part of its ratio, it was a carefully considered statement of the position which ought to guide the Court of Appeal unless it was convinced that it was wrong: [149].
It was not wrong. S.124 had to be interpreted so as to give effect to the purpose of Part 5 of the BSA. It was consonant with the purposes of the BSA to interpret s.124 as providing the statutory mechanism for leaseholders who have already paid service charges for costs that would now be caught by Schedule 8 to seek to pass on those costs that had already been incurred: [151].
Any unfairness arising from the fact that this remedy may be applied to payment of service charge made, say, 25 years ago was capable of being addressed by the requirement that it be just and equitable to make the order: [153].
A retrospective construction makes the BSA work as a whole. If s.124 cannot be used to pass on costs incurred before the commencement of the Act, a management company with no income other than service charges may be left without an obvious remedy: [154].
Newey LJ added some additional reasons of his own for concluding that s.124 was retrospective.
Counsel:
Jonathan Selby KC was instructed by Mishcon de Reya LLP (with Cecily Crampin) for the Appellants.
Alexander Nissen KC was instructed by Gowling WLG (UK) LLP for the First Respondent (with Paul Letman)
The full judgment can be found here.