The First Tier Tribunal (\u201cthe FTT\u201d) has decided that it was \u201cjust and equitable\u201d to make a Remediation Contribution Order (\u201cRCO\u201d) against the respondent developers under section 124 of the Building Safety Act 2022 (\u201cthe Act\u201d).<\/p>\n
The decision is the first to consider an RCO under the Act, and raises some interesting implications for Building Liability Orders (\u201cBLOs\u201d), another type of order available under the Act.<\/p>\n
What is an RCO?<\/u><\/strong><\/p>\n RCOs can be issued by the FTT to require present or former landlords, developers, or other persons \u201cassociated\u201d with the aforementioned to contribute towards the cost of remediation work \u201cincurred or to be incurred\u201d by someone else.<\/p>\n RCOs are \u201cnon-fault\u201d based, and are amongst the suite of measures introduced by government to protect leaseholders from the costs of repairing building safety defects that cause a \u201cbuilding safety risk\u201d \u2013 meaning \u201ca risk to the safety of people in or about the building arising from the spread of fire, or the collapse of the building or any part of it\u201d.<\/em><\/p>\n If the relevant qualifying conditions are met, the FTT may make an RCO if it considers it \u201cjust and equitable\u201d to do so. That term is conspicuously not defined in the Act, albeit the Explanatory Notes state that it is intended to afford the Tribunal \u201ca wide decision-making remit which it is expected will allow it to take all appropriate factors into account when determining whether an order shall be made\u201d.<\/em><\/p>\n Background<\/u><\/strong><\/p>\n The case concerned a number of residential blocks in East London which were developed by the first respondent, Stratford Village Development Partnership (\u201cSVDP\u201d), to house athletes participating in the 2012 Olympic Games in London. The blocks are now occupied by tenants on long leases.<\/p>\n The applicant, Triathlon Homes (\u201cTriathlon\u201d), is the co-owner of the blocks, which brought proceedings against the respondents after discovering significant building defects which included unsafe ACM cladding.<\/p>\n The respondents were (1) SVDP; (2) Get Living PLC (\u201cGet Living\u201d), which acquired an interest in the blocks long after the blocks were constructed; and (3) East Village Management Limited (\u201cEVML\u201d), the management company with responsibility for the repair and maintenance of the blocks, and which was invited to participate solely as the entity to which Triathlon had paid the costs of taking various interim fire safety measures.<\/p>\n The decision<\/u><\/strong><\/p>\n The respondents argued that the Act had no application in this case as the relevant costs were incurred before 28 June 2022 i.e., prior to the Act becoming law. The FTT had no difficulty in quashing that argument, finding that, as a matter of statutory language, section 124 encompassed both historic and future costs.<\/p>\n The FTT was equally satisfied that the other grounds for making a RCO were met i.e., there was a \u201crelevant defect\u201d in a \u201crelevant building\u201d (as those terms are defined in the Act), and that the respondents were amongst the class of persons against whom an RCO could be made.<\/p>\n Fundamentally, the FTT was also satisfied that the \u201cjust an equitable\u201d test had been made out. That aspect of the decision is of particular interest in relation to Get Living. In particular, despite it being accepted that Get Living was not involved in the blocks\u2019 design or construction, and that it derived no financial benefit from its earlier disposals, the FTT found that those factors were irrelevant to the question of whether it was \u201cjust and equitable\u201d to make the order. That is because, in the FTT\u2019s view, Get Living acquired not only the assets of EVML, but also its liabilities, which included latent and consequential liabilities.<\/p>\n Fundamentally, the FTT found that it was \u201cnot open [to Get Living] to ask that the timing and circumstances in which they made their investment in those assets be taken into account in determining whether it is just and equitable for the companies in which they invested to be the subject of contribution orders.\u201d<\/em><\/p>\n Accordingly, the FTT granted the orders sought by Triathlon, which required both SVDP and Get Living to reimburse the expenditure paid by Triathlon thus far, as well as to fund further liabilities which had not yet been paid.<\/p>\n