The First-tier Tribunal (FTT) has granted the first Remediation Order under the Building Safety Act 2022 (BSA) against Kedai Limited, freeholder and landlord of 2 – 4 Leigham Court Road.
Together with Remediation Contribution Orders, Remediation Orders form part of what are collectively referred to as the "leaseholder protections" established by the BSA. These aim to protect leaseholders in multi-occupied residential buildings from the costs associated with remediating historical building safety defects.
We outline below the relevant provisions of the BSA concerning Remediation Orders before examining the recent FTT decision in more detail.
What is a Remediation Order / Remediation Contribution Order?
A Remediation Order (RO) is an order that may be made by the FTT under section 123 of the BSA on the application of an "interested person", requiring a "relevant landlord" to remedy specified "relevant defects" in a "relevant building" (see below for further details on these definitions) by a specified time.
Remediation Contribution Orders are concerned with the funding of those remedial works. Under section 124 of the BSA, the FTT may, on the application of an interested person – and if it considers it "just and equitable" to do so – make a remediation contribution order, requiring a company to make payments in connection with the remediation of relevant defects. In January 2023, we reported on the first Remediation Contribution Order that the FTT made in respect of the remediation of building safety defects at a high-rise residential block at 9 Sutton Court Road, London.
What is a "relevant building"?
A "relevant building" for these purposes is a self-contained building or part of a building containing at least two dwellings which is at least 11 metres in height, or which has at least five storeys, but excluding leaseholder-owned buildings.
This differs from the definition of "higher-risk buildings" under Parts 3 and 4 of the BSA, which, as we reported in an earlier article ("What are higher-risk buildings?") refers, during the occupation phase, to buildings that are at least 18m in height or have at least seven storeys and contain at least two residential units. During the design and construction phase only, care homes and hospitals are also included within the definition of HRBs.
What is a "relevant landlord"?
In this context a "relevant landlord" is a landlord under a lease of the building, or any part of it, who is required to repair or maintain anything relating to the relevant defect.
What is a "relevant defect"?
Section 120 of the BSA defines a relevant defect as a building defect that arises "as a result of anything done (or not done), or anything used (or not used), in connection with relevant works" that also causes a building safety risk. A "building safety risk" is widely defined as a risk to the safety of people in or about the building arising from the spread of fire or the collapse of the building or any part thereof.
Remediation costs under "qualifying leases"
Section 122 of the BSA, in conjunction with Schedule 8, provides that certain service charge amounts relating to relevant defects in a relevant building are not payable and that such sums are recoverable from landlords under leases of the building or any part of it.
What is a "qualifying lease"?
Section 119 of the BSA confirms that a lease is a "qualifying lease" if:
Background to the application to the FTT
In this case, there were two composite applications for remediation orders in relation to 2-4 Leigham Court Road (the "Development") – a former office development which had been converted to residential flats and a commercial unit in 2015/2016.
Following the Grenfell Tower fire in June 2017, concerns were raised and various reports were commissioned in relation to the external wall systems of the Development and, in particular:
- the ACM cladding;
- the limited and / or lack of horizontal / vertical cavity barriers;
- the type of insulation used; and
- the internal compartmentation.
The first application to the FTT was made by Ms. Sarah Waite, a long leaseholder in one of the two blocks at the Development. A second application in respect of the other block was commenced later, and a number of other leaseholders also joined the proceedings (the "Applicants").
The freeholder, Kedai Limited, agreed with the Applicants that certain defects at the Development - including the ACM cladding, the lack of fire-stopping cavity barriers and compartmentation and both the ACM and fibre cement external wall systems – constituted a "relevant defect" causing a "building safety risk", and required to be remediated. Kedai disputed however, that certain other defects met the statutory test for "relevant defects", including the insulation, fibre cement rainscreens, balcony soffit boards, and ceramic tiles.
The Applicants also applied for an order under section 20C of the Landlord and Tenant Act 1985 that Kedai should not be permitted to pass on its costs relating to the proceedings through the service charge.
The FTT decision
The FTT found that, on the evidence, the conditions for making a remediation order against Kedai Limited were satisfied. It ordered Kedai to remedy specified relevant defects by 19 September 2025. Amongst other things, the FTT found that:
- the Applicants have to establish a prima facie case (i.e. there are relevant defects causing a building safety risk that would entitle a tribunal to make a remediation order). The FTT was satisfied that the application was prima facie within its jurisdiction under s.123 and a remedy was available;
- for the items that were agreed as being a "relevant defect" causing a "building safety risk", the FTT had jurisdiction to make a remediation order;
- it is important for any RO to be sufficiently precise so that the Respondent can know what it must do to remedy the relevant defects and for enforcement purposes before the county court. However, the extent of the precision will vary from case to case. In this case, a detailed schedule was attached to the order with Kedai being granted the right to make an application to vary the order if so required;
- although the BSA 2022 specifies no benchmark for the standard of the remediation works to be carried out, it was the FTT 's view that the works must:
- comply with Building Regulations applicable at the time the remedial work is carried out; and
- at the very least, a post-works Fire Risk Appraisal of External Walls (FRAEW) pursuant to PAS 9980:2022 should not prevent a satisfactory EWS1 External Wall Fire Review Form being issued.
With respect to costs, the FTT held that it is a "no costs" jurisdiction except in circumstances where a party has acted unreasonably in the conduct of proceedings, which is a very high threshold. In this instance, there were no grounds upon which it could be said that the Respondent has acted unreasonably and as such, the Applicants were not entitled to their costs in pursuing the remediation order.
The FTT also noted that Schedule 8 of the BSA protects qualifying leaseholders against paying for the landlord's costs of proceedings relating to relevant defects.
As for non-qualifying leaseholders, these are not offered any such protection by Schedule 8. However, the FTT confirmed that "non-qualifying leaseholders may still benefit from protection under section 20C" of the LTA 1985.
The FTT observed that the discretion given to a tribunal is to make a section 20C order if it considers it "just and equitable" to do so (a similar "just and equitable" test applies to other remedies under the BSA, as we discuss below).
In light of the conduct of both parties, and noting that the "whole intention of the BSA" is that it is "incumbent upon [Kedai] to remedy" relevant defects "largely at its own cost", it granted the section 20C order sought by the Applicants. This ordered that 80% of Kedai's costs incurred in these proceedings may not be passed onto non-qualifying leaseholders (i.e. Kedai could only pass on the remaining 20% of its costs through the service charge).
Kedai was the first substantive hearing by the FTT of an application for an RO under the BSA. As the FTT observed in its decision, this is an "entirely new area of law" with "very little, if any, guidance as to the statutory test to be applied". As such, the decision provides useful guidance on how the FTT will interpret the various statutory provisions to allow leaseholders to benefit from the protections afforded to them by virtue of the BSA.
However, as the FTT noted in its decision, the statutory remedy for an RO is a "simple" one and arises from "certain limited criteria being satisfied". The "just and equitable" test, which applies to other remedies under the BSA, namely Remediation Contribution Orders and Building Liability Orders (as well as to section 20C orders under the LTA 1985), does not apply to Remediation Orders. As such, provided the criteria set out in section 123 of the BSA (which we describe above) are satisfied, then – as noted by the FTT in this case – it will be within a tribunal's jurisdiction to make an RO to ensure remediation of the "relevant defect".
This gives effect to one of the stated aims of the BSA, i.e. to ensure that essential remediation works needed to remedy building safety defects take place, particularly in circumstances where landlords are slow to fulfil their obligations with regard to building safety. Despite each party having to bear its own legal costs for pursuing / defending these applications, the case is a helpful reminder of the Tribunal's wide-ranging powers under s.123 of the BSA, and it provides clarity on the conditions that need to be satisfied for a successful application for a remediation order.
If you have any questions about this article, please contact Sue Ryan, Adain Bailey or Sean Garbutt.