Remediation Contribution Orders

Remediation Contribution Orders

Important decision of the First Tier Tribunal

On 24 January 2025, the First Tier Tribunal (“FTT”) made a Remediation Contribution Order against the developer and 75 ‘associated’ companies in respect of fire safety defects at Vista Tower, Stevenage (the “Property”).

We examine the recent Decision of the FTT in Grey GR Limited Partnership -v- Edgewater (Stevenage) Limited and others.

What are Remediation Orders and Remediation Contribution Orders?

For those less familiar, the concepts of a Remediation Order (“RO”) and Remediation Contribution Order (“RCO”) were introduced by sections 123 and 124 of the Building Safety Act 2022 (“BSA”) respectively.

In relation to buildings which are at least 11 metres in height or at least 5 storeys, an interested person, including the Government, Building Safety Regulator or those with an interest in a building (e.g. leaseholders), may apply to the FTT for a RO. A RO will require a relevant landlord (i.e., a landlord who has an obligation to repair or maintain the building) to remedy any ‘relevant defects’.

A ‘relevant defect’ is defined in the BSA as a defect that has arisen from anything that has been done (or not done), or anything used (or not used), in connection with relevant works, and causes a building safety risk. Examples of relevant defects could include unsafe cladding systems, lack of compartmentation between flats and defective foundations.

The purpose of a Remediation Contribution Order (“RCO”) is to allow a building owner or leaseholder to seek a contribution from other parties (including the original developer, and any person ‘associated’ with them) towards the cost of remediation works, where it is ‘just and equitable’ to do so.

Taken together, the purpose of ROs and RCOs are to ensure that building safety defects are remedied swiftly. Further, such orders seek to ensure that end-users are not required to absorb potentially significant sums to remedy historic defects, and that public money put towards remedial costs by way of grant funding, can be recovered. 

The facts

• The 16-storey Property was constructed in the early 1960s as used as offices. 

• In 2014, Edgewater (Stevenage) Limited (“Edgewater”) purchased the freehold of the Property for circa £4m and subsequently converted the Property into residential accommodation, providing 73 flats.

• The Grenfell Tower tragedy on 14 June 2017 subsequently prompted widespread concern in the industry as to the fire safety in high-rise residential buildings. 

• In 2018, Grey GR Limited (“Grey”) purchased the freehold of the Property from Edgewater as part of a wider portfolio of properties acquired by Grey on behalf of a pension fund, the Railpen Group.

• On 2 November 2022, the UK Government made an application against Grey for a RO in respect of building safety defects. 

• On 10 May 2024, the FTT made a RO against Grey requiring the completion of remedial works. The remedial action required in relation to the Property included the:

  • removal of combustible insulation and replacement with non-combustible materials;

  • installation of vertical cavity barriers including around window openings; and

  • installation of effective firestops around the vent ducts and opening.

• Prior to the making of the RO, Grey applied to the FTT for an RCO against 96 respondents, seeking a contribution to the remedial works from the developer, Edgewater, and those ‘associated’ with Edgewater. The costs of the remedial works were anticipated to be in the region of £14m.

Decision of the FTT

The FTT considered at great length the scope of the ‘relevant defects’, associated remedial works and costs of the same. The FTT ultimately found that the costs of the remedial works were in the region of £13.2m.

Of interest, the FTT also decided that the costs of rectifying defects which were not, pursuant to the BSA, ‘relevant defects’, should in any event form part of the quantum of any RCO e.g. the costs of replacing the fire doors at the Property. The basis for this was that given the wide range of very serious relevant defects (largely relating to the external wall system), it would be appropriate to include such costs as “relevant steps” in order to, “seek to reduce the severity of, or prevent or reduce harm to occupants” pending remediation of the other ‘relevant defects’.

In terms of any liability to contribute towards such costs, the FTT found that Edgewater, as developer, was at the top of the hierarchy of liability, or “waterfall”. 

Whilst the FTT noted that Edgewater had little or no remaining assets, it confirmed that impecuniosity of any of the respondents was not “a significant reason” for not making an RCO. In doing so, the FTT cited the earlier decision of the FTT in Triathlon Homes LLP -v- Stratford Village Development Partnership & Ors [2024] UKFTT 26 (PC) and confirmed that it would be “an unusual case” where a company’s financial position would “carry much weight when deciding whether it is just and equitable to order it to bear the cost of remediation”.

The FTT also examined whether it was just and equitable to make RCOs against various of the other respondents alleged to be ‘associated’ with Edgewater.

As to whether the other respondents were ‘associated’ with Edgewater, the FTT applied the test in s.121 of the BSA, which includes group companies (in this case, group companies of Edgewater) and instances of common shareholders and/or directors.

If a respondent was deemed to be ‘associated’ with Edgewater, then the FTT decided whether it was just and equitable to make a RCO against said respondent. 

Ultimately, the FTT found Edgewater and 75 other respondents jointly and severally liable to Grey for the remediation costs, together in the region of £13.2m. 

The Decision will be of significant interest to both developers of buildings, and those with a current legal or equitable interest (owners, landlords, leaseholders).