Property: Empire Square, 34 Long Lane, London SE1 4NH

LON/00BE/BSB/2024/0602

This was a decision of the First-tier Tribunal (“FTT”). The lessees of Empire Square sought a Remediation Order (“RO”) under section 123 of the Building Safety Act 2022 (“BSA”) against the landlord (Fairhold Athena Ltd), in relation to a number of defects including defective cladding. The landlord in turn sought a Remediation Contribution Order (“RCO”) under section 124 of the BSA against the developer (Berkeley Homes) including ongoing waking watch costs as well as legal and expert costs.

The position of the leaseholders was that they were “stuck in the wings” while the landlord and developer continued to argue about what should be done and to what standard. Works subject to an Improvement Notice (“IN”), which should have been completed by November 2025, were “nowhere near done” and some had not even commenced. Priority should be given to the practical needs of the leaseholder, not the dispute about standards. The leaseholders did not consider that either party had:

“in mind their very real problems of living in an unsafe building causing them stress and anxiety, with skyrocketing insurance costs, and barely any opportunity to mortgage (or remortgage) or sell while the known issues exist, whether in order to get away from the risk or for some to simply move on with their expanding families and the like.”

The leaseholders observed that progress had only been made by bringing the matter before the FTT. The landlord said that it would not be fair and just to make an RO. The developer was responsible for defects. Further, the landlord was not a construction company. If they had to remediate, it would be a much longer process. Alternatively, the landlord said that an RO should be made only if an RCO was also made. This would ensure that the purpose of the BSA – that innocent parties should not pay for remedial work required because of developer defects – was given full effect.

The developer took a neutral view of whether an RO should be made. It remained of the view that the RO could not and did not bind it. Another issue the FTT had to take into consideration was whether it could issue a RO in circumstances where, as here, the developer had stated its intention to carry out the remediation works. Further, the developer had, in April 2022, signed the Developer Pledge, promising to take responsibility for remediation/mitigation works to address defects in buildings it had developed.

The FTT noted that the BSA was:

“solution focussed rather than blame focussed, it is concerned with the building not with the parties to the application. We must take a purposive approach - ask ourselves what the best answer is in this application, to achieve remediation of the relevant defects in the building for the safety of the leaseholders. The outcome of that assessment must be within a range of reasonable decisions, but would not be open to challenge unless no reasonable decision maker, on the facts know to it, could have come to the same decision. That is qualitatively different from an argument that a decision is not just and equitable because of some key feature or behaviour of a party.”

The FTT accepted that, with ROs, the focus was not on providing redress for non-compliance with a legal obligation (i.e. specific performance) but on remediation of life-threatening building safety defects in tall residential buildings. Here, the FTT was satisfied that the defects were relevant defects under the BSA.

Whilst the relevant defects had been known about for a very long time, the developer and landlord had not agreed a Remedial Works Agreement. Further, the INs did not offer any reassurance. The landlord was at all times under an obligation to comply with them, but major issues remained unresolved. Given the substantial period of time during which the landlord and developer had failed to agree even the scope of the works, the FTT had “no faith” that if they did not make an RO, the pace of progress would increase. Making the RO was more likely to result in an increase in activity resulting in making the building safe, than not making an order.

When it came to the RCO, the landlord, sought an order for incurred (and continuing) waking watch costs, expert reports, management costs and legal costs. Under section 124(2A) of the BSA, the costs incurred in taking “relevant steps” towards remediation can be recovered under RCOs. Here, the FTT was satisfied that it was a reasonable decision on the part of landlord, to stand up a waking watch, and to retain it even after a fire alarm system was installed. The FTT also was satisfied that it was fair and just to make an order that the developer pay the reasonable costs of management incurred by reason of the need to remedy the relevant defects or take the steps needed to get the remedial works carried out.

The FTT also agreed that the landlord was entitled to claim its legal costs and the costs of expert reports:

“We are satisfied that it is within our jurisdiction under section 124(2) to therefore include legal costs within the very broad ambit of costs described per that section. There is nothing in the Act that we find prohibits us from doing so. … To interpret section 124 otherwise would result in absurdity.”

It was only this litigation that had driven any progress. The legal proceedings were brought about because of the poor construction. In other words, the FTT would not have been here but for those defects. The FTT noted that the BSA has at its heart:

“… a non-fault based purposive approach to remediating buildings that pose a risk to the safety of people in and about the building arising from something used (or not used) as soon as reasonably possible, for the protection of leaseholders.”

The principal goals of the BSA are that buildings that require remediation are remediated as quickly as possible, and that those not responsible for the defects that require remediation do not pay for it. To establish that a defect is a relevant defect, all that needs to be established is that it is one which causes a “building safety risk”. This risk is widely defined as: “‘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 part of it”. Whilst the standard of remediation to be imposed by any RO was not specified in the BSA, in the caselaw to date, that standard had been interpreted to mean that remediation works should meet an outcome that satisfies the building regulations/standards in force at the time of their remediation.

In all the circumstances, the FTT considered that it was fair and just to make an RCO, both for the incurred costs and for the estimated sums that the landlord would incur in remediating the building. The FTT then suspended both the RO and RCO, saying that this was, in their view, the best way to achieve the remediation of the identified items in the RO in the shortest possible period by the appropriate body (i.e. the developer). The FTT had adopted this “pragmatic” approach because the developer and landlord had shown that they could cooperate, particularly under the pressure of litigation. If they did not work together, then the RO and RCO would take effect.

Back to the previous page

Click to download PDF