Background
The flats are in two blocks, a converted office block (North Block) and behind it a new build block (South Block), in Streatham Hill, London. On completion in January 2016, the works were deemed compliant under the Building Regulations 2010 by the appointed approved inspector.
Various reports commissioned by the freeholder (Kedai) between October 2019 and March 2023 identified major failings including a lack of cavity barriers, no cavity closers around external openings, an unacceptable level of internal compartmentation and the presence of aluminium composite material (ACM) and Kingspan K15 insulation in the external cladding.
Application under section 123
Various leaseholders applied to the Tribunal as “interested persons” for a Remediation Order under section 123 of the BSA against Kedai as the “relevant landlord” in respect of “relevant defects” in a “relevant building”.
The key definitions and their application in this case are as follows:
- An “interested person” includes any person with a legal or equitable interest in the building, the Building Safety Regulator, a local authority, a fire and rescue authority and the Secretary of State. The leaseholders had a legal and equitable interest.
- A “relevant landlord” is a landlord under a lease of a relevant building or any part of it who is required to repair or maintain anything relating to the relevant defect. Kedai confirmed it was a “relevant landlord”.
- A “relevant building” is a structurally detached building containing at least two dwellings and at least 11 metres high or with at least five storeys. Both blocks satisfied each of these points. Incidentally, both exceeded 18 metres which enabled Kedai to apply to the Building Safety Fund to cover the remediation costs.
- A “relevant defect” includes a defect arising as a result of construction works completed between 28 June 1992 and 28 June 2022 and causing a “building safety risk” (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). The parties agreed the following were a “relevant defect”: (1) ACM cladding (2) lack of cavity barriers, fire stopping and internal compartmentation and (3) the external wall systems (EWS) (a combination of the rainscreen panels (ACM or fibre cement) together with the K15 insulation behind it and the cavity barrier elements).
Relevant defects
The Tribunal was satisfied that the ACM, the lack of cavity barriers, fire stopping and internal compartmentation, and the EWS were relevant defects and needed remediation.
While Kedai accepted that the EWS were a relevant defect, it disputed the leaseholders’ position that, in isolation, the K15 insulation and the fibre cement cladding were relevant defects as individual elements. It submitted that both could be retained as part of remediated systems that complied with Building Regulations and/or met the performance set out in BR 135 when tested in accordance with BS 8414.
The Tribunal concluded that, both as an element on its own and as part of some remediation scheme, the K15 insulation is a relevant defect. It is not of “limited combustibility” and it presents a risk from fire spread. A reasonable alternative EWS involving the retention of K15 on the buildings had not been satisfactorily proven. The Tribunal was also satisfied that the broken and cracked fibre cement panels were a relevant defect given the risk of fire spread.
Guidance on section 123
The Tribunal confirmed it has a “very wide power” and was not restricted by reference to other statutory provisions or case law. The objective is simply to remove a relevant defect. Whether or not the works complied with the Building Regulations at the time of construction is not the issue. The question is whether the work creates a building safety risk at the date of the hearing in the light of today’s knowledge of building materials and processes.
Applicants must a establish a prima facie case that there were relevant defects causing a building safety risk, but it was not then necessary to assign formal burdens of proof on either party. Instead, the Tribunal’s approach was an evidence-based exercise, informed by inspection reports, expert evidence, its own experience and expertise in building matters and its own inspection.
The Tribunal held that it is important for any Remediation Order to be sufficiently precise so that the respondent can know what it must do to remedy the relevant defects and for enforcement purposes before the county court. However, it emphasised that the BSA is not prescriptive as to the works that will be necessary to remedy the relevant defects. A full specification might be provided but sometimes a broad schedule will suffice.
In this case, the Tribunal made a Remediation Order against Kendai in general terms to achieve a clearly specified result, namely, to remedy the relevant defects. Kedai has the right to apply for a variation of the order to retain an item within the remediation scheme but Kedai must show a prima facie case that the item can be retained safely.
Whilst no standard is specified in the BSA, the Tribunal ordered that the remediation works must comply with the Building Regulations applicable at the time the remedial work is carried out and be capable of achieving a satisfactory EWS1 Form. The Tribunal held that the specification of works will usually have to be prepared at the cost of the developer or landlord because leaseholders cannot afford to do this and will not have the required access to the property or an appropriate management regime. The advantage to landlords and developers who are subject to a Remediation Order is that it leaves the choice of remediation more open to them.
The applicants pressed the Tribunal to determine that all remediation works must be completed within 18 months. Kedai asked for (and was granted) 26.5 months based on its estimates. The Tribunal considered Kedai’s proposal was not overly excessive. Further, Kedai can apply to extend the time for compliance.
The Tribunal did not have jurisdiction under section 123 to determine whether the costs of the works are payable as service charges. However, Kedai indicated it would not seek to recover the costs as it was prohibited from doing so by paragraph 2 of Schedule 8 to the BSA. This states that no leaseholder is required to pay a service charge in respect of a “relevant measure” relating to a relevant defect if the relevant landlord is responsible for the defect.
Costs of the proceedings
The Tribunal held that it is a “no costs” jurisdiction, save where a party has acted unreasonably in the conduct of proceedings which is a high threshold. That threshold had not been met as Kedai had cooperated during the proceedings.
The Tribunal did however make an order under section 20C of the Landlord and Tenant Act 1985 that 80% of Kedai’s cost of the proceedings may not be passed on to non-qualifying leaseholders through the service charge. The qualifying leaseholders were protected against payment of any costs by reason of paragraph 9 of Schedule 8 to the BSA.
Analysis
This is the first time a decision on a Remediation Order has been reported. Will leaseholders be more emboldened to apply for remediation orders given the Tribunal’s express recognition that a purpose of the BSA is to protect leaseholders? Or will leaseholders be put off by the fact that the Tribunal will only award them costs if the respondent acts unreasonably? In this case, the leaseholders did not instruct an expert but in other cases they might be required to do so which can be expensive.
Non-qualifying leaseholders may be disheartened as they may have to fund part of the landlord’s cost of the proceedings through their service charge. In this case, the Tribunal ordered that only 20% of those costs could be passed on to them. However, that may still be a sizeable amount and there is no guarantee such a low percentage would be ordered in other cases.
Developers and landlords will be concerned by the outcome-focused approach. The Tribunal indicated that the BSA must work for leaseholders in a “straightforward way”. Its focus was on applying the BSA to ensure a building is safe and would not allow process to interfere with this. Full disclosure was not required and no burden of proof was assigned to either party. A potential upside is that this ought to make the cost of proceedings less expensive than court proceedings.
The Tribunal’s focus is on whether the works comply with the Building Regulations in force at the time of the hearing rather than as at completion. This contrasts with claims brought in contract, tort or under the Defective Premises Act 1972. Given the Building Regulations have become more stringent since the Grenfell disaster, remedial schemes are more likely to be required and potentially at greater cost. Equally, however, it again removes the need to hear a whole swathe of evidence about whether a building complied at the time of construction which can inflate the cost of proceedings.
A final key takeaway is that the remediation schedule of works ordered by the Tribunal does not need to be particularly prescriptive. This will give landlords and developers a certain degree of flexibility on how they approach remedial works.