Triathlon Homes LLP v Stratford Village Development Partnership and others

Building safety – Remediation contribution order – Building Safety Act 2022 – Cladding defects found in former Olympic village – Works to remedy defects funded by grants from Building Safety Fund – Applicant applying for remediation contribution orders against head landlord/developer and associate under section 124 of 2022 Act – Costs incurred before commencement of 2022 Act – Whether just and equitable to make orders sought – Applications granted Following a fire in Grenfell Tower, a 25-storey block of flats on the Lancaster West Estate in Kensington, which escaped to the exterior cladding of the building and enveloped the entire tower, the Building Safety Act 2022 was enacted which came into force on 28 June 2022. Five residential buildings at Stratford in east London were originally developed by the first respondent, to provide accommodation for the London 2012 Olympic Games (the East Village). Some of the units in the blocks were owned, through subsidiaries, by the second respondent and some were owned by the applicant. The repair and maintenance of the structure and common parts was the responsibility of the third respondent, a company owned jointly by the second respondent and the applicant. Following the Grenfell Tower fire, work was undertaken to identify the materials used in the construction of the East Village and serious fire safety defects were discovered. A programme of work to remedy the defects permanently by the removal and replacement of the exterior cladding was devised and was being implemented by the third respondent. Initially, the remediation work was funded by grants to the third respondent using public money provided from the government Building Safety Fund. The total cost exceeded £24.5m. The applicant applied to the First-tier Tribunal for remediation contribution orders under section 124 of the 2022 Act, requiring the first and second respondents to reimburse expenditure of £1.058m incurred by the applicant through services charges paid to the third respondent in respect of interim fire safety measures and investigative and preparatory works. Held: The applications were granted. (1) It was important to read the 2022 Act as a whole, and to give effect to its different provisions as parts of a complicated scheme with a consistent objective. Section 124 of and schedule 8 to the Act were different routes towards the same destination: the transmission of responsibility for remediation away from individual leaseholders and towards the original developer and its associates. The Upper Tribunal having decided in Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point [2023] UKUT 271 (LC); [2023] EGLR 2 that the schedule 8 leaseholder protections applied to costs incurred before the commencement of the Act, in the absence of some clear direction in the language of section 124, consistency required that it be interpreted in the same way. (2) Section 124, under which the applications were brought, allowed for the making of remediation contribution orders, by which developers, landlords, and their associates might be required to contribute towards the costs of remedying relevant defects. It allowed an interested person (as defined in section 124(5)) to apply to the FTT for an order requiring a current or former landlord or developer of a building, or someone associated with them, to meet costs incurred or to be incurred in remedying relevant defects.  An interested person included any person with a legal or equitable interest in the relevant building or any part of it and therefore included the leaseholder of an individual flat, or a leaseholder of the whole building. The landlord or their associate against whom the order was sought had to be in each case a company or partnership. The circumstances in which one company or partnership would be “associated” with another for the purpose of sections 124 were described in section 121(2) to (5). If the relevant qualifying conditions were met, the FTT might make such an order if it considered it “just and equitable” to do so (section 124(1)). As the proprietor of long leases of all or part of each of the blocks, the applicant was an interested party for the purpose of section 124(5)(e). (3) Section 124(2) allowed an order to be made requiring payments “to a specified person, for the purpose of meeting costs incurred or to be incurred in remedying relevant defects”. The identity of the “specified person” to whom the payment was to be made was left open. In particular, it was not necessary for the “specified person” to be the “interested person” who was applying for the order. Thus, in this case, the applicant was applying for orders for payment to be made to the third respondent. Section 124(4)(a) provided that an order might require the making of payments “in respect of the remediation of specified relevant defects (or in respect of specified things done or to be done for the purpose of remedying relevant defects)”. (4) Under paragraph 2(2) of schedule 8, no service charge was payable under the lease in respect of a relevant measure relating to a relevant defect if a relevant landlord was responsible for the relevant defect, or was associated with a person responsible for a relevant defect. Any landlord (or any right to manage company or leaseholder owned management company) which had paid or was liable to pay the costs of a relevant measure which would have been recoverable from leaseholders but for paragraph 2(2), had the right to pass those costs on to another person who was a “responsible landlord”. Regulation 3 of the Building Safety (Leaseholder Protections) (Information etc) Regulations 2022 allowed a landlord which had paid the costs of a relevant measure to give notice to a responsible landlord making them liable for those costs. The recipient of such a notice might appeal to the FTT, but only on the limited grounds that they were not a responsible landlord or that the sum claimed was more than the costs incurred. There was no right of appeal on the ground that it was not just and equitable for the responsible landlord to have to pay. (5) A “responsible landlord” for the purpose of regulation 3 was any landlord or superior landlord, on 14 February 2022, which was either responsible for the defect in the sense explained in paragraph 2(3) of schedule 8 or was associated with a person responsible for the defect, or any successor in title of theirs after that date. Similar provisions in paragraph 4 and 5 of the 2022 Regulations allowed a landlord, RTM company or leaseholder-owned management company which was prevented by other leaseholder protections in schedule 8 from recovering the costs of a relevant measure for which it had paid, to pass those costs on first to any landlord of sufficient means to satisfy a “contribution condition” (requiring group net worth of more than £2m per group building) and then to any other landlord of the building in proportion to the extent of their interest and obligation to remediate. That entitlement was not subject to appeal on any just and equitable ground. In the present case, taking into account all the relevant circumstances, it was just and equitable to make the remediation contribution orders sought by the applicant. (6) Where statute conferred a discretion on a tribunal, as section 124 did, unless precluded by clear words, the tribunal was likely to have been intended to have an incidental power to impose appropriate terms as a condition of exercising that discretion: Daejan v Benson [2013] UKSC 14; [2013] 2 EGLR 45; [2013] EGILR 41 considered. Therefore, the tribunal had ample jurisdiction, as a condition of making a remediation contribution order, to impose such terms as were required to make the contribution just and equitable. Alexander Nissen KC, Richard Millett KC, Paul Letman and Daniel Benedyk (instructed by Gowling WLG (UK) LLP) appeared for the applicant; Jonathan Selby KC and Cecily Crampin (instructed by Mishcon de Reya LLP) appeared for the first and second respondents. Eileen O’Grady, barrister Click here to read a transcript of Triathlon Homes LLP v Stratford Village Development Partnership and others