News

“Just and equitable” under section 124 of the Building Safety Act 2022 – Triathlon Homes LLP v SVDP, Get Living and EVML [2024]

27 February 2024

By Alex Rosenfield

The First Tier Tribunal (“the FTT”) has decided that it was “just and equitable” to make a Remediation Contribution Order (“RCO”) against the respondent developers under section 124 of the Building Safety Act 2022 (“the Act”).

The decision is the first to consider an RCO under the Act, and raises some interesting implications for Building Liability Orders (“BLOs”), another type of order available under the Act.

What is an RCO?

RCOs can be issued by the FTT to require present or former landlords, developers, or other persons “associated” with the aforementioned to contribute towards the cost of remediation work “incurred or to be incurred” by someone else.

RCOs are “non-fault” 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 “building safety risk” – meaning “a 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”.

If the relevant qualifying conditions are met, the FTT may make an RCO if it considers it “just and equitable” 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 “a 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”.

Background

The case concerned a number of residential blocks in East London which were developed by the first respondent, Stratford Village Development Partnership (“SVDP”), to house athletes participating in the 2012 Olympic Games in London. The blocks are now occupied by tenants on long leases.

The applicant, Triathlon Homes (“Triathlon”), is the co-owner of the blocks, which brought proceedings against the respondents after discovering significant building defects which included unsafe ACM cladding.

The respondents were (1) SVDP; (2) Get Living PLC (“Get Living”), which acquired an interest in the blocks long after the blocks were constructed; and (3) East Village Management Limited (“EVML”), 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.

The decision

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.

The FTT was equally satisfied that the other grounds for making a RCO were met i.e., there was a “relevant defect” in a “relevant building” (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.

Fundamentally, the FTT was also satisfied that the “just an equitable” 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’ 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 “just and equitable” to make the order. That is because, in the FTT’s view, Get Living acquired not only the assets of EVML, but also its liabilities, which included latent and consequential liabilities.

Fundamentally, the FTT found that it was “not 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.”

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.

Implications for BLOs

Although made under a different section of the Act, the decision raises some interesting implications for BLOs, which employ precisely the same “just and equitable” test.

In particular, if one assumes that the same wide decision-making remit is afforded to the High Court as it would the FTT, then a BLO is capable of being made against parent companies (and potentially those higher up the corporate chain) even where they were not involved with the work at the time it was carried out.

That thinking would appear consistent with the fact that BLOs can be made against corporate entities that have been “associated” with the entity that undertook the work during the very widely drafted “relevant period” i.e., from the date of the commencement of the work to the date any BLO would be made.

Conclusion

The decision in Triathlon Homes is a sobering reminder to those involved in construction that simply being “plugged in” to a corporate structure months or years after the work has been done by another entity will not constitute sufficient grounds to resist an RCO, and the same principles are likely to apply in relation to BLOs.

It remains to be seen precisely how the High Court will approach BLOs, albeit the first decision on that is expected shortly in the matter of 381 Southwark Park Road RTM Company Ltd & Ord v Click St Andrews Ltd & Ors.

Alex Rosenfield is an Associate Partner at Fenchurch Law