On 13 January 2023, the First-Tier Tribunal ("FTT") awarded the first Remediation Contribution Order.

What is a Remediation Contribution Order?

A Remediation Contribution Order ("RCO") requires corporate bodies or partnerships to pay for costs incurred, or to be incurred, in remedying defects that create a risk to the safety of people due to the spread of fire or the collapse of a building.

It is a new power, introduced by the Building Safety Act 2022 (the “Act”). RCOs are made where the FTT considers it just and equitable to do so.

The Facts

In September 2020, lessees at 9 Sutton Court Road were served notice informing them of ISL's ("the Landord") intention to replace unsafe ACM and HML cladding and to rectify or replace all balconies either deemed unsafe or a fire safety hazard. 

In March 2021, the lessees were notified of the award of the contract and the commencement of the works. The final estimated sum was £3,716,593.68.

In August 2022, Arjun Batish, on behalf of 18 of the leaseholders, applied for a RCO of £192,635.64 on the basis that they had made service charge payments for the remediation of the defects and should have those payments returned. 

Decision

The FTT made an RCO in the sum of £194,680.62.

In reaching this conclusion they found that 9 Sutton Court Road, being structurally detached and having at least 5 storeys, was a “relevant building” under the Act and that the lessees held legal interests. The defects were also considered “relevant defects” and a “building safety risk” as they posed a risk to the safety of people in or around the property arising from the spread of fire.

In considering whether the RCO was “just and equitable”, the FTT was satisfied that the lessees had paid for works where the costs should have been met by the Landlord.  The Act provides that no service charge is payable under a lease for defects that a landlord is responsible for. Therefore, the costs were not regarded as relevant costs to be taken into account when calculating service charge pursuant to paragraph 10 of Schedule 8 of the Act.

Comment 

In reaching this conclusion, the FTT has provided useful guidance as to the interpretation of certain provisions of the Act, as well as the requirements for a claim being just and equitable. However, it should be noted that this remains the first, and only, RCO granted by the FTT and it is likely that further applications will continue to develop our understanding of how the FTT will approach the Act and any claims for RCOs made under it.

This article was written by James Sutherland, Sarah Taylor and Charlie Gray