“No service charge payable for defect for which landlord or associate responsible 2 (1) This paragraph applies in relation to a lease of any premises in a relevant building. (2) No service charge is payable under the lease in respect of a relevant measure relating to a relevant defect if a relevant landlord— (a) is responsible for the relevant defect, or (b) is associated with a person responsible for a relevant defect. (3) For the purposes of this paragraph a person is “responsible for” a relevant defect if— (a) in the case of an initial defect, the person was, or was in a joint venture with, the developer or undertook or commissioned works relating to the defect; (b) in any other case, the person undertook or commissioned works relating to the defect. (4) In this paragraph— “developer” means a person who undertook or commissioned the construction or conversion of the building (or part of the building) with a view to granting or disposing of interests in the building or parts of it; “initial defect” means a defect which is a relevant defect by virtue of section 120(3)(a); “relevant landlord” means the landlord under the lease at the qualifying time or any superior landlord at that time.” (a) is responsible for the relevant defect, or (b) is associated with a person responsible for a relevant defect. (a) in the case of an initial defect, the person was, or was in a joint venture with, the developer or undertook or commissioned works relating to the defect; (b) in any other case, the person undertook or commissioned works relating to the defect. “developer” means a person who undertook or commissioned the construction or conversion of the building (or part of the building) with a view to granting or disposing of interests in the building or parts of it; “initial defect” means a defect which is a relevant defect by virtue of section 120(3)(a); “relevant landlord” means the landlord under the lease at the qualifying time or any superior landlord at that time.”
“(a) works relating to the construction or conversion of the building, if the construction or conversion was completed in the relevant period; (b) works undertaken or commissioned by or on behalf of a relevant landlord or management company, if the works were completed in the relevant period; (c) works undertaken after the end of the relevant period to remedy a relevant defect (including a defect that is a relevant defect by virtue of this paragraph).”
“124 Remediation contribution orders (1) The First-tier Tribunal may, on the application of an interested person, make a remediation contribution order in relation to a relevant building if it considers it just and equitable to do so. (2) “Remediation contribution order”, in relation to a relevant building, means an order requiring a specified body corporate or partnership to make payments to a specified person, for the purpose of meeting costs incurred or to be incurred in remedying relevant defects (or specified relevant defects) relating to the relevant building. (3) A body corporate or partnership may be specified only if it is— (a) a landlord under a lease of the relevant building or any part of it, (b) a person who was such a landlord at the qualifying time, (c) a developer in relation to the relevant building, or (d) a person associated with a person within any of paragraphs (a) to (c). (4) An order may— (a) require the making of payments of a specified amount, or payments of a reasonable amount in respect of the remediation of specified relevant defects (or in respect of specified things done or to be done for the purpose of remedying relevant defects); (b) require a payment to be made at a specified time, or to be made on demand following the occurrence of a specified event. (5) In this section— “associated” : see section 121; “developer”, in relation to a relevant building, means a person who undertook or commissioned the construction or conversion of the building (or part of the building) with a view to granting or disposing of interests in the building or parts of it; “interested person”, in relation to a relevant building, means— (a) the Secretary of State, (b) the regulator (as defined by section 2), (c) a local authority (as defined by section 30) for the area in which the relevant building is situated, (d) a fire and rescue authority (as defined by section 30) for the area in which the relevant building is situated, (e) a person with a legal or equitable interest in the relevant building or any part of it, or (f) any other person prescribed by regulations made by the Secretary of State; “partnership” has the meaning given by section 121; “relevant building” : see section 117; “relevant defect” : see section 120; “specified” means specified in the order. (6) The Secretary of State may by regulations provide that this section applies, with or without modifications, in relation to a building that would, but for section 117(3), be a relevant building.”
“The public interest in securing reimbursement of those funds as quickly as possible seems to us to point strongly in favour of making an order.”
“265. The first is that SVDP was the developer of East Village. The policy of the 2022 Act is that primary responsibility for the cost of remediation should fall on the original developer, and that others who have a liability to contribute may pass on the costs they incur to the developer. That policy is most apparent from the LPI Regulations which give every landlord who has contributed to the cost of relevant measures the right of recoupment from the responsible landlord (meaning the person who was, or was in a joint venture with, the developer or who undertook or commissioned work relating to the defect – regulation 3(2) and (8), LPI Regulations and paragraph 2(3) of Schedule 8, 2022 Act). SVDP (or to be strictly accurate, SVPH-1 and SVPH-2 which hold the freehold on trust for SVDP) is the responsible landlord in this case and it, and its associates, would therefore be under an obligation to pay costs of remediation which had been met by other landlords if they were served with notices under regulation 3. That is not the route to recovery which is being pursued in these applications, and section 124 requires us additionally to be satisfied that it is just and equitable to make an order against SVDP, but the availability of an alternative, and unanswerable, route to recovery against its trustees is a strong indicator that it is likely to be just and equitable for SVDP to be ordered to pay.”
“We say this because Mr Selby KC’s attempts to justify this result cut across two of the principal objectives which section 124 was plainly intended to achieve.”
“278. First, section 124 contains a list of persons against whom a remediation contribution order may be made. Section 124, combined with the LPI Regulations, creates a hierarchy or cascade of liability in relation to a relevant defect. The taxpayer does not appear in section 124 or in this hierarchy, save in so far as a taxpayer funded entity may constitute a body corporate or partnership within the terms of section 124(3) or a landlord within the terms of the LPI Regulations. Given this position, it is difficult to see how it could ever be just and equitable for a party falling within the terms of section 124(3) and well able to fund the relevant remediation works to be able to claim that the works should instead be funded by the public purse. We do not see that this point loses any of its essential force in circumstances where it is said that the public purse will eventually be reimbursed from the fruits of successful litigation against third parties. Even if we were persuaded that the Building Safety Fund could be confident of this result on the facts of the present case, and we are not in a position to be so confident, we do not see why the public purse should act as interim funder and underwriter of the risk of failure, while claims against third parties wend their way to a conclusion. We agree with a point made by Mr Nissen KC in opening, which is that public funding is a matter of last resort, and should not be seen as a primary source of funding where other parties, within the scope of section 124, are available as sources of funding.”
“266. …The obvious purpose behind the association provisions is to ensure that where a development has been carried out by a thinly capitalized or insolvent development company, a wealthy parent company or other wealthy entity which is caught by the association provisions cannot evade responsibility for meeting the cost of remedying the relevant defects by hiding behind the separate personality of the development company. It seems to us that the situation of SVDP, with its relatively precarious financial position and its dependence for financial support upon Get Living, its wealthy parent, constitutes precisely the sort of circumstances at which these association provisions are targeted.”
“246. We do not think it is relevant to the exercise of our discretion to draw conclusions about Triathlon’s motivation in bringing these applications. Triathlon directors who gave evidence stressed the importance to them of ensuring the safety of the leaseholders and complying with Triathlon’s responsibility to the Homes and Community Agency to maintain standards of building safety. The respondents suggested that the real motivation was to ensure that Triathlon was not called on to meet any of the cost of remediation itself. It was not suggested that that was an improper motive, nor could it have been, and no doubt it is part of Triathlon’s thinking. In the absence of any submission that Triathlon was acting out of malice towards the respondents or some other motivation which might be said to taint its case, we do not need to make any findings about why it seeks these orders. Parliament has made them available and Triathlon is entitled to take advantage of them.”
“271. The first point Mr Selby KC made was that the application would have been stronger if it had been made by the Secretary of State or the GLA, and was weakened by the fact that Triathlon’s only real interest was in protecting itself from having to pay for remediation, rather than protecting the public purse. That was clear from the form of the order it sought, covering only its share of the costs of remediation. We have already said that we do not think the motivation of an applicant will usually be of much significance and nor do we think it matters much who the applicant is. Any eligible applicant coming within section 124(5) will have an interest in the building or an interest or responsibility for building safety and we do not see why the basis of their eligibility should be significant.”
“279. Second, as we have already noted, it was plainly the intention of Parliament that an application for a remediation contribution order should provide a route to securing funding for remediation works without the applicant having to become involved in, or to wait upon the outcome of other claims arising out of the relevant defects, which might involve complex, multi-handed, expensive and lengthy litigation. If the Building Safety Fund was left to fund the works while the claims against Galliford Try are resolved, the respondents would effectively achieve the very thing which, as it seems to us, section 124 is intended to avoid.”
“276. None of these points [ie those advanced by Mr Selby] seem to us to provide a good reason why the respondents should not now be the subject of a remediation contribution order, or a justification as to why the works should be funded at public expense.”
“261. …The ability to make a claim for a remediation contribution order under section 124 is a new and independent remedy, which is essentially non-fault based. The remedy has been created by Parliament as an alternative to other fault-based claims which a party may be entitled to make in relation to relevant defects. It seems clear to us that Parliament did not intend that the availability of other claims or potential claims should either disqualify an applicant from making a claim for a remediation contribution order or delay the making of that claim. It also seems clear to us that Parliament intended that an application for a remediation contribution order should provide a route to securing funding for remediation works without the applicant having to become involved in, or to wait upon the outcome of other claims arising out of the relevant defects, which might involve complex, multi-handed, expensive and lengthy litigation. By the same token, and concentrating on the question of what is just and equitable, we can see nothing unfair in making remediation contribution orders on the applications, without requiring Triathlon to hazard the pursuit of other claims which it may have. 262. The same reasoning applies to the argument that Triathlon should follow the contractual route constituted by the network of agreements relating to the sale and development of East Village and, in particular, to the argument that Triathlon should respect the agreement constituted by clause 7 of the Members Agreement. The 2022 Act, and its creation of the independent remedy of a remediation contribution order postdates all of this. The same applies to the new legislative restrictions which now operate on EVML’s ability to fund the remedial works by the service charge. Parties cannot contract out of this new statutory regime. In all these circumstances we see nothing unfair in Triathlon taking advantage of the ability which it has been given to act independently of the network of contractual provisions relied upon by the respondents, or in our making remediation contribution orders on the applications.”
“a reason against the public purse argument is that the parties were always working on the basis that the remedial works would be funded through the BSF. And that culpable contractors, such as Galliford Try, would be pursued. And that is clear from the lengthy discussion in cross-examination with Mr Lipton of events between 2021 and 2023.”
“269. If the funding of the Major Works is subject to only a small shadow of doubt, and if they will properly remedy the defects (as we are sure they will) what reason is there for making an order at this stage? Why not leave the work to be funded by the Building Safety Fund and allow EVML to pursue its contractual remedies against the contractors who built East Village, with SVDP then picking up any shortfall? In short, why shouldn’t the costs of remediation be borne for the time being by the public?”
“Save where there has been an assignment under Clause 5.4.4, the Applicant shall use all reasonable endeavours to pursue reasonable remedies available to it in respect of the Unsafe Non-ACM Cladding on any Building (including, without limitation, any claims against insurers, any relevant contractors and/or manufacturers and/or warranty providers responsible for the manufacture and/ or installation of the Unsafe Non-ACM Cladding and/or with any liability in relation to the Building) ("Non-ACM Remedies").”
“251. We give no weight to the changing identity of the ultimate beneficial owners of SVDP and Get Living. Mr Selby KC submitted that the SVDP of today is not the SVDP that designed and built the Blocks. That SVDP was owned by the ODA; today’s SVDP is owned by QDDAV and its various investors. He argued that since the Act ignores the distinctions between corporate entities in its search for pockets close enough to the original developer and deep enough to pay for remediation, it was also relevant to take account of the changes which have occurred in beneficial ownership. We do not agree, and we consider that it is unnecessary to go higher up the corporate chain than Get Living when considering what is just and equitable in his case. 252. Mr Selby is right that the Act erodes and elides corporate identity and deprives it of some of its main advantages, but it does so for specific purposes and within specific limits. It does not require or permit the normal consequences of incorporation to be ignored for different purposes. When QDD opted to acquire SVDP it could instead have taken a transfer of the land and buildings, leaving the liabilities of the developer behind, but it chose not to do so for its own reasons, knowing that it was acquiring not only the assets of the partnership but also its liabilities, including latent and consequential liabilities. The same is true of each of the investors who has subsequently bought in to the corporate structure above SVDP. Each willingly assumed the risks associated with their investment. In our judgment it is not open to any of them to ask that the timing and circumstances in which they made their investment in those assets be taken into account in determining whether it is just and equitable for the companies in which they invested to be the subject of contribution orders. 253. The same applies to the fact that Get Living was inserted in the corporate structure only as late as 2018; when it acquired East Village it acquired both its assets and its liabilities. Additionally, as Mr Millett KC put it, Get Living is the latest holding parent in a group which has been involved as owner of East Village since 2014 and as prospective purchaser since 2011. 254. As for the fact that SVDP was originally in public ownership, through the ODA, that is also irrelevant for the same reasons. In any event, QDDAV had rights against the ODA which it has released for valuable consideration.”
“The Applicant undertakes and warrants to DLUHC and the GLA that: … (d) it shall not claim the cost of any Qualifying Expenditure funded by the Funding … from any Leaseholder, and shall recompense Leaseholders for any expense they have incurred in paying for Works reimbursed by the Funding (including repaying any deductions from a sinking fund) irrespective of whether that Leaseholder is a Protected Leaseholder with such recompense paid directly to the bank account of the relevant Leaseholder or such other appropriate payment method of the Leaseholder's choosing promptly following the first payment of Funding to the Applicant under this Agreement and by no later than the date of second payment of Funding under this Agreement.
“where to do so is deemed necessary by the Applicant (acting reasonably) in order to keep Leaseholders in the building informed as to the progress of any Works…”
“provides for wholesale intervention in and beyond normal contractual relationships in order to transfer the potentially ruinous cost of remediation from individual leaseholders to landlords, and to distribute it between landlords and developers and their associates according to criteria which Parliament has decided are necessary and fair. We agree with Triathlon’s submission that the Act and the LPI Regulations disclose a hierarchy of liability, with the original developer and its associates at the top. An interpretation of the Act which resulted in some leaseholders bearing the cost of remediation, and some developers, landlords and their associates avoiding responsibility, would not give effect to the obvious purpose of the Act to protect leaseholders to the fullest extent possible.”
“78. It appears to us to be inconceivable that Parliament can have intended that the individual leaseholders of flats in a building which had not yet been remediated by the time the leaseholder protections in Schedule 8 came into force on22 June 2022 were to enjoy those protections, but that the leaseholders of an identical building on the same estate which had already been remediated at their expense were to be left to bear the full costs themselves and prevented from seeking a contribution order under section 124. Similarly, it cannot have been intended that a leaseholder who paid a service charge demanded to meet the cost of remedial works before22 June 2022 would be left with no remedy, whereas their neighbour in the same building who had refused or been unable to pay would have full Schedule 8 protection. The sums involved in remediation are too great, and the consequences for individuals too extreme, for such a haphazard pattern of protection to have been Parliament’s intention.”
“61. Legislation is said to be retrospective if it alters the legal consequences of things that happened before the legislation came into force. It is common ground that, as a matter of legal policy, changes in the law should not take effect retrospectively. Nevertheless, Parliament clearly has power to enact legislation which has retrospective effect, but it is presumed not to intend to do so unless that intention is clear. How clearly Parliament’s intention must appear depends on the degree of unfairness which would result from giving the legislation retrospective effect.”
“is part of the Government’s response to the need to identify and remediate historic building safety defects as quickly as possible, to protect leaseholders from physical and financial risk and to ensure that those responsible are held to account.”
“86. The backward-looking provisions are set out in Part 5, which includes section 135. Part 5 makes a number of changes to the law in order to address the problem of historical building safety defects. In summary, the main changes are: (1) Section 135 which provides for a new 30-year limitation period for accrued claims under section 1 of the DPA. (2) Section 124 which provides persons with a legal or equitable interest (such as leaseholders) in medium and high-rise buildings, the Secretary of State, and other bodies, with a new right to seek remediation contribution orders from the First-tier Tribunal against the building’s developer, landlord, or associate. Such an order requires a respondent to contribute to the costs of remedying historical building safety defects if this is considered “just and equitable” (see section 124(1)). Section 124 sits within a broader suite of “leaseholder protections” at sections 116 to 124 of, and Schedule 8 to, the BSA, which provides for a range of new safeguards that ensure owners of “qualifying leases” in medium and high-rise buildings are protected as far as possible from the costs of remediating historical building safety defects that they played no part in creating. (3) Section 130 which provides the High Court with a power to grant “building liability orders”
“Retrospectivity is central to achieving the aims and objectives of the BSA. Many of the building safety issues identified in the wake of the Grenfell Tower fire arise in relation to buildings constructed many years ago…. A retrospective approach provides for effective routes to redress against those responsible for historical building safety defects that have only recently come to light, whatever level of the supply chain they operated at.” ” “Retrospectivity is central to achieving the aims and objectives of the BSA. Many of the building safety issues identified in the wake of the Grenfell Tower fire arise in relation to buildings constructed many years ago…. A retrospective approach provides for effective routes to redress against those responsible for historical building safety defects that have only recently come to light, whatever level of the supply chain they operated at.” ”
“As outlined above, this is reflected not only in section 135 but in all the main changes to the law made by Part 5.”
“273. …The presumption against retrospective operation of a statute does not cease to apply just because the statute is plainly intended to have some retrospective effect. A statute can be retrospective in some respects but not others. Retrospective effect can be a matter of degree. The basic principle requires a court “in a case where some retrospective operation was clearly intended, equally to presume that the retrospective operation of the statute extends no further than is necessary to give effect either to its clear language or to its manifest purpose”.”
“274. The presumption against retrospective operation of a statute is, nonetheless, only a presumption. Sometimes the unfairness to potential defendants of reviving expired rights and corresponding liabilities may be considered by the legislature to be a necessary price of achieving an important policy goal. This was obviously the view taken in enacting the BSA. A central goal of the legislation is to seek to ensure that safety risks in multi-occupied residential buildings resulting from historical building defects are remedied by those who were responsible for the defects in the first place, and without the leaseholders having to bear the (potentially very large) costs. To achieve that goal, Parliament has decided to enable claims to be brought against property developers, contractors and others responsible for the construction of unsafe residential buildings even when the construction work was completed many years ago. That is only made possible by greatly extending the limitation period for bringing such claims, including where the limitation period had already expired before the BSA came into force.”