Court of Appeal confirms retrospective costs can be included in Remediation Contribution Orders

The court of appeal has upheld the first instance decision in Triathlon Homes LLP -v- (1) Stratford Village Development Partnership (2) Get Living plc (3) East Village Management Limited [2024] UKFTT 26 (PC) which we wrote about here. 

A recap

As a reminder, remediation contribution orders ("RCO") were created under the Building Safety Act 2022 ("BSA") as a way of protecting leaseholders from the costs of remedying historical building safety defects by allowing the First Tier Tribunal (“FTT”) to order developers to contribute to those costs wherever possible.

The FTT decision was the first time a contested RCO had been issued under section 124 of the BSA.

The FTT decided in favour of Triathlon and made five RCOs (one in respect of each building) against each of the respondents, which added up to the total sums sought. The decision provided the first insight into how key provisions of the BSA are to be interpreted, notably:

• The provision of funding from the Building Safety Fund was not considered a reason for the FTT not to make an award in this case.
• RCOs have been created to be an independent remedy with no need for fault to be shown.
• Section 124 of the BSA allows RCOs to be made in respect of costs incurred prior to the BSA coming into effect (i.e. its effect is retrospective).
• Measures which cause "a building defect to cease to be a relevant defect, or which is part of a larger programme of measures for that purpose", including the interim safety measures, can be the subject of an RCO.
• There is no one size fits all answer to the question of whether it would be "just and equitable" to make an award and each application will be decided on its individual facts, taking account of the purposes behind the BSA.

The Appeal

The Court of Appeal was asked to consider whether:

• the reasoning of the FTT in deciding it was just and equitable to make the RCOs was correct; and
• if costs incurred before the BSA took effect could be included.

The Court of Appeal has now robustly endorsed the FTT’s reasoning. In particular it has confirmed:

• In deciding whether it is just and equitable to make an RCO, it is irrelevant that some or all of the costs were being met by an award from the Building Safety Fund or another source. Rather, primary responsibility for the costs should fall on the original developers wherever possible (consistent with the decision in URS Corp Ltd v BDW Trading Ltd, which we wrote about here) not on the public purse - which should be a last resort.

• It was the clear intention of Parliament that the BSA should have retrospective effect. Were it not to do so there would be “haphazard patterns of protection” for leaseholders, with those who met costs promptly being unfairly penalised because they incurred those costs before the BSA came into effect.

For further information on remedial contribution orders or the Building Safety Act 2022, please see our Building & Fire Safety Hub.