The First-tier Tribunal has reinforced the principle that developers and their associates can be required to meet the full cost of fire safety remediation where the works undertaken are reasonable. The decision provides important guidance on the meaning of “relevant defects”, the role of PAS 9980 assessments, the limits of arguments about over-engineering, and how the “just and equitable” test should be applied when considering Remediation Contribution Orders.
The case concerned Hallings Wharf Studios, a residential development in Stratford, East London, where significant fire safety defects were identified in the external wall systems.
The Government funded remediation works through the Building Safety Fund and subsequently sought recovery of those costs through a Remediation Contribution Order (RCO).
By the time of the hearing, remedial works had been completed at a cost of approximately £3.68 million. The Secretary of State argued that those costs should be recovered from Hollybrook (UK) Ltd (“Hollybrook”), a company associated with the original developer.
A central issue was whether the remediation scheme had gone further than necessary. Hollybrook argued that the project was “over-engineered”, relying heavily on the introduction of PAS 9980 in 2022 and suggesting that a more proportionate risk-based assessment could have reduced the scope and cost of works by around £1.4 million.
The Tribunal rejected that argument. Although it acknowledged the significance of PAS 9980 and accepted that alternative approaches may have existed, it found that the project was already well advanced when PAS 9980 was introduced. Restarting the process would likely have caused substantial delay to the remediation of an unsafe building. The Tribunal held that it was reasonable for the building managers and the Government to continue with the existing scheme.
Importantly, the Tribunal confirmed that the existence of a cheaper alternative does not necessarily prevent recovery through an RCO. The key question is whether the works undertaken were within the range of reasonable responses. If they were, the fact that another solution may have cost less is not enough to reduce liability.
The decision also provides useful commentary on “relevant defects”. Following recent Upper Tribunal authority, the Tribunal emphasised that the Building Safety Act requires only the existence of “a risk” arising from fire spread or collapse. There is no minimum threshold of seriousness before a defect can qualify.
While the Secretary of State succeeded on almost every substantive issue, the Tribunal refused to allow recovery legal and expert costs which amounted to more than £1million. It held that litigation costs were not recoverable under section 124 in the circumstances of this case.
Ultimately, the Tribunal concluded that it was just and equitable to make an RCO and ordered Hollybrook to reimburse the full remediation costs of £3,682,997.78.
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