12 days of Christmas – Day 1

As the festive season is now upon us, our team of Real Estate Litigation elves have been searching through the archives for the most interesting and important legal developments this year. In our "12 Days of Christmas" feature, we will take you on a whistlestop tour of the most interesting of developments that hadn't made it into our new blog.

Day 1 finds us looking at one of the first cases to come out of the Building Safety Act 2022 on the topic of liability under Remediation Contribution Orders, also known as RCOs.

Triathlon Homes is the long leaseholder of social and affordable housing located within five tower blocks at the former Olympic Village in Stratford, London. It brought applications for RCOs under section 124 of the Act against Stratford Village (the developer) and Get Living (an associate of the freeholder of the blocks). The application request contributions totalling nearly GBP18 million to help cover the costs of rectifying fire safety defects in the blocks. The following important issues were decided in this case.

First, the Tribunal determined that RCOs could be awarded in respect of costs that had been incurred prior to the commencement of the Act, because of the specific wording of section 124, which covered costs "incurred or to be incurred". The Tribunal considered the construction to be fair, and consistent with the radical protection that the Act conferred on leaseholders.

Secondly, the Tribunal set out some helpful guidance on factors that it considered were important in deciding whether it was just and equitable to grant an RCO. Factors the Tribunal thought were relevant included:

1. The policy behind the Act, being that the primary responsibility for costs should fall upon the original developer;
2. The purpose behind the association provisions was to prevent wealthy group companies from hiding behind poorly capitalised development companies;
3. The Tribunal put limited weight on the availability of funding on exercising its discretion, making it clear that they were not persuaded by arguments that wealthy companies who could afford to fund the works should evade an RCO purely by being able to point to the availability of funding from public money.

Conversely, the Tribunal did not think that the following factors were relevant to discretion:

1. That the ultimate beneficial owners of the defendants had changed since the buildings were constructed;
2. Whether the defendants were at fault (as RCOs were a non fault-based remedy); and
3. Whether there may be other claims available to the applicant.

Triathlon Homes is appealing the Tribunal's decision on the grounds that the tribunal erred in its interpretation of the Act and in its application of the just and equitable test. The appeal is due to be heard in March next year so watch this space for further updates.

If you have managed to read this far, we thought we would reward you with a festive joke to get you in the Christmas spirit: Two Snowmen standing in a field, one says to the other "can you smell carrots?"!!