Building Safety Act 2022: First-tier Tribunal makes first Remediation Contribution Order under the BSA 2022 (Batish and others v Inspired Sutton Ltd and others – 2023)

S.124 of the Building Safety Act 2022 introduces Remediation Contribution Orders, which may be made by the First-tier Tribunal to require a specified party to make payments to a specified person(s) in order to meet costs incurred, or to be incurred, in remedying relevant defects to a building.

“Relevant defects” are defined in s.120 as:

“…a defect as regards the building that:

• arises as a result of anything done (or not done), or anything used (or not used), in connection with relevant works; and
• causes a building safety risk.”

The definition of “relevant works” includes works relating to the construction or conversion of the building completed within a relevant period (30 years up to the point the BSA 2022 came into force), works undertaken or commissioned by or on behalf of a relevant landlord or management company, and works undertaken after the end of a relevant period to remedy a relevant defect.

The First-tier Tribunal has recently made its first Remediation Contribution Order under the Act.

The background

In Batish and others v Inspired Sutton Ltd and others [2023], an application for a Remediation Contribution Order was made by one leaseholder on behalf of a group of 18, which collectively held 15 long leases in a residential block in London.

Inspired Sutton Ltd was the developer and freeholder of Sutton Court and is the respondent in this case. Following inspection, defects in the building were identified which presented fire safety hazards; in particular, unsafe external cladding and render to the building’s façade, and remedial and replacement works to balconies.

S.20 Landlord and Tenant Act 1985 notices were served on leaseholders by the freeholder. Once works had begun, invoices were delivered to leaseholders and paid. The leaseholders then made the application for a Remediation Contribution Order on grounds that service charge payments had been made for remediation of relevant defects, and leaseholders were seeking repayment of those sums, and the service charge costs paid fell within the provisions of the BSA 2022. Leaseholders argued that a Remediation Contribution Order was just and equitable.

The decision

The FTT made the Remediation Contribution Order against Inspired Sutton Ltd, which was ordered to repay £194,680 to leaseholders within 14 days. Importantly, Inspired Sutton Ltd had not contested the application and this decision was made without a hearing.

A separate application made in respect of action against individual directors was dismissed, as the Remediation Contribution Order refers only to corporate or partnership bodies and not individual directors.

The FTT found that the costs specified by the leaseholders related to ‘relevant defects’ and the defects specified constituted a ‘risk to the safety of people in or about the building arising from the spread of fire’ within the meaning of a ‘building safety risk’ under the BSA 2022.

The FTT considered whether the leaseholders had made payment for works which should have been the responsibility of Inspired Sutton Ltd. Under the BSA 2022, leaseholders are not liable for service charge payments in respect of defects for which a relevant landlord (or person associated with a relevant landlord) is responsible. Inspired Sutton Ltd was the developer and landlord, and was responsible for the relevant defects. The Remediation Contribution Order was made in the leaseholders’ favour.

Advice and action for landlords

This decision, and key first RCO grant, is of critical importance to JB Leitch’s landlord and developer sector clients, and is central to our team’s work in respect of the Building Safety Act 2022.

However, it is important to note that the freeholder did not contest this application and the RCO was made without a hearing. As a result, the decision gives little detailed guidance on the FTT’s interpretation of the legislation or statutory test and further decisions will be needed before clearer advice can be given on this.