Building Safety: Remediation Contribution Orders: Triathlon Court of Appeal judgment handed down... Adriatic Land 5 Limited also handed down

The Court of Appeal has now handed down judgment in the appeals in the Triathlon Homes and Adriatic Land cases.

Triathlon Homes was the first decided case on remediation contribution orders (“RCOs”) under the Building Safety Act 2022 (“BSA”). RCOs allow certain parties, including current owners, to claim the costs of remediating building safety defects in higher-risk buildings from developers who were responsible for those defects and associated entities. Claims can also be made against the current landlord or the person who was landlord on 14 February 2022. The test for making an RCO is whether it is “just and equitable” for an order to be made.

The Triathlon Homes case concerned 5 buildings constructed as part of the 2012 Olympic Village. The development was undertaken by Stratford Village Development Partnership (“SVDP”), a company originally owned by the Olympic Authority but sold to Get Living PLC after the development had been completed. Triathlon Homes (“Triathlon”) itself is a social housing provider which holds long leases of the 5 buildings, all of which suffered from serious fire safety and cladding defects. The overall costs of remediating the defects was around £27.5m.

The First-tier Tribunal decided it was just and equitable for RCOs to be made against both SVDP  and Get Living and also that the claim could include costs incurred before the Building Safety Act came into force. Get Living appealed.

The Court of Appeal agreed with the First-tier Tribunal on both points. The overall policy of the BSA is to make developers liable for remediating defects for which they were responsible. As a general presumption, therefore, it will usually be just and equitable for a developer to be made to pay the costs of remediation under an RCO. Availability of public funding does not affect that presumption because public funding should be a matter of last resort. The change in the beneficial ownership of the developer – from the Olympic Authority to Get Living – also did not affect the justice of making an RCO. The purpose of the BSA provisions is to ensure that defective buildings are remediated. In acquiring SVDP as an investment, Get Living had taken on the company’s liabilities as well as its assets. It was therefore fair that a wealthy parent of the developer should be made liable for remediation costs.

The retrospective application of the BSA – in this case the provisions protecting tenants from paying certain remediation costs via service charges - was also the issue in Adriatic Land. In line with its decision in Triathlon Homes, the Court of Appeal decided that these provisions operate retrospectively and so also apply to costs incurred before the relevant sections of the BSA came into force. Service charges which were demanded and paid before that date are not affected by the decision.

Both cases underline the fact that the courts will seek to give effect to the overall policy of the BSA that developers should bear, and that leaseholders should be protected from, the costs of remediation.