The Building Safety Act 2022 introduced ground-breaking reforms to provide tenants and owners with more rights and powers to make homes across the country safer, including certain protections from the costs associated with remediating historical defects affecting building safety. The Act provides an ambitious toolkit of measures to hold those responsible for building safety defects to account. These measures include remediation orders and remediation contribution orders.
This article considers remediation contribution orders, detailing why they have been introduced, what needs to be established before they are made and whether an application can be defended.
Remediation orders issued under the Act can require those with repairing obligations to remedy defects caught by the Act by a specified time. Remediation orders can be made against building owners, as well as management companies with repairing obligations, freeholders and superior landlords.
Broadly, a remediation contribution order is an order that can be made by the Property Chamber of the First-tier Tribunal to require a ‘specified body corporate or partnership’ to make payments to meet, or make contribution towards, the costs incurred/to be incurred in remedying certain types of defect in a relevant building. These costs could include those incurred by a landlord or any other relevant person under the Act.
The fundamental purpose of remediation contribution orders is to ensure that the building’s end users are not left absorbing the potential multi-million pound costs of remediation work to fix historical defects over which they had no control or responsibility. Failure to comply with a remediation contribution order can have serious consequences – it is punishable by a fine or up to two years in prison.
Applying for a remediation contribution order is not entirely straightforward. There are a number of threshold issues that the applicant has to overcome before a remediation contribution order will be made. These include establishing the presence of the following five factors:
A ‘relevant building’, is a building in England which is a self-contained or is part of a self-contained building in which there are at least two dwellings. There is a minimum qualifying height threshold of either 11 metres or five storeys.
There are some exceptions and extensions to this definition which are beyond the scope of this article. Legal advice should be sought to establish whether a building meets the criteria.
An ‘interested person’ can be a number of varied bodies, entitles or people, including for example, the secretary of state, a local authority for the area in which the relevant building is situated, as well as any person with a legal or equitable interest in the relevant building or any part of it.
A ‘relevant defect’ under the Act broadly means a defect which:
A remediation contribution order will only be made if the First-tier Tribunal considers it ‘just and equitable to do so’. This will turn on the specific facts of each case. Legal advice and an independent technical expert’s view on the nature and impact of the suspected defects would almost certainly be needed on a case by case basis as to whether the ‘just and equitable’ threshold is likely to be met.
It is not a straightforward task to establish whether all of the above threshold criteria have been, or are likely to have been met. Remediation contribution orders are a new remedy and, at present, there is limited specific guidance from the tribunal or courts on the criteria. Potential applicants for, and defendants against, remediation contribution orders should take legal advice on the merits of their positions to be as well informed as possible before committing to a course of action. The First-tier Tribunal can make orders for costs against persons who have acted unreasonably in bringing, defending or conducting proceedings.
An order may require:
It is possible to defend an application for a remediation contribution order. Any defence will be based on one or more of the above threshold criteria not having been met, most commonly the question of whether it is just or equitable for a remediation contribution order to be made in all the circumstances. For example, it may be that the applicant’s proposed remedial scheme extends beyond the matters for which the defending party could reasonably be considered to be responsible.
There is no mandatory formal pre-action protocol which must be followed before an application for a remediation contribution order is made, albeit pre-action engagement is sensible in that it allows the parties to exchange key evidence and potentially narrow the issues in dispute.
However, anyone threatened with a potential application for a remediation contribution order must be mindful that applicants can issue their application without waiting for any pre-action procedure to run its course. Time can therefore be of the essence in making preparations to defend an application, including obtaining legal and expert technical advice.
Our construction and infrastructure team and property disputes team can advise developers, building owners, management companies and leaseholders in relation to bringing and defending applications for remediation contribution orders. We also work closely with experts on these applications, where required.
For more information, please contact Sian Barrett or Sophie Michaelides.
For more information on the Building Safety Act 2022, please visit our Building Safety Hub.
