Easy as 1, 2, 3? Section 123 of the Building Safety Act and supporting Regulations create a power and a discretion to make remediation orders 28 May 2024
Secretary of State for Levelling Up, Homes and Communities v Grey GR Limited Partnership CAM/26UH/HYI/2022/0004
(FTT, 29 April 2024)
Key takeaways
- Remediation orders under s.123 of the BSA. A novel remedy, not akin to specific performance.
- First ever first application by the Secretary of State for a remediation order under s.123 of the Building Safety Act 2022, under powers conferred by reg.2(1) of the Building Safety (Leaseholder Protection) (Information etc.) Regulations 2022.
- FTT also likely to make remediation orders where relevant defects exist, subject to the facts of each case.
- FTT likely to take a pragmatic approach to the “myriad circumstances that will inevitably present themselves” in such applications.
We know and are familiar with the mischiefs the BSA seeks to address. We now know too how the FTT is likely to approach applications for remediation orders under s.123.
Our story centres upon the Vista Tower in Stevenage. But it starts with ss.120 & 123 of the BSA.
3 key provisions
Section 120 defines “Relevant defects”:
“(2) “Relevant defect”, in relation to a building, means a defect as regards the building that—
(a) arises as a result of anything done (or not done), or anything used (or not used), in connection with relevant works, and
(b) causes a building safety risk.
Section 123 provides, insofar as is germane:
“(1) The Secretary of State may by regulations make provision for and in connection with remediation orders.
(2) A “remediation order” is an order, made by the First-tier Tribunal on the application of an interested person, requiring a relevant landlord to remedy specified relevant defects in a specified relevant building by a specified time.
(3) In this section “relevant landlord”, in relation to a relevant defect in a relevant building, means a landlord under a lease of the building or any part of it who is required, under the lease or by virtue of an enactment, to repair or maintain anything relating to the relevant defect […]”
Next come the Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022. By regulation 2(2):
““The First-tier Tribunal may, on an application made by an interested person, make a remediation order under section 123 of the Act.”
A broad definition
This is, said the FTT of the definition of relevant defect, a “deliberately broad” and “wide” formulation. The reason is – in the language of previous case law – “to enable the tribunal to respond appropriately to the “myriad circumstances that will inevitably present themselves in applications of this type”.”
The Vista Tower’s myriad circumstances
By these proceedings, the Secretary of State (“SoS”) made its first ever application for a remediation order under s.123. The Respondent, a subsidiary of Railpen, is the freehold owner of Vista Tower in Stevenage. It is the tenants’ landlord with no intervening leases.
The Vista Tower has been the subject of extensive press coverage. In some quarters it had been highlighted as a particularly striking example of the need to carry out cladding remediation. Built in the late 1950s/early 1960s the Tower is:
“a detached 16-storey block, more than 45 metres high, which accommodates 73 residential flats. Most of the ground level is a car park, an obvious fire risk factor…the building has a sprinkler system which is said not adequately to have been commissioned”.
Under clause 5(e) of the leases, the landlord covenanted to provide the “Services”, which included at paragraph 1 of the Fifth Schedule: “Maintenance in good and tenantable repair and condition of (a) The main structure of the Building including the exterior walls … and the window frames …”
The issues
The application was made in October 2022 and the case was then subject to heavy case management. By the time of the application the issues were:
(i) whether the tribunal has discretion to make a remediation order, and if it does whether to make such an order and what considerations are relevant for that purpose; and
(ii) the terms of any order.
The hearing
By the time of the hearing the Respondent had entered into a contract for remedial works to be undertaken. It had engaged contractors who had started work on site. Moreover, the parties had in fact agreed works for the purpose of remedying agreed building safety defects.
But the SoS still wanted his order. The Respondent resisted: s.123(7) provides that a remediation order is possibly subject to contempt of court sanctions. The Respondent wished to avoid this risk.
For his part, the SoS said the agreed works lacked “pace”, one of the reasons it continued to seek remedy. To this the Respondent said the works were complicated and expensive, that the “pace” allegation was arbitrary.
Power or discretion?
The SoS submitted that, unlike orders under s.124 (contribution orders) or s.130 (building liability orders), s.123 says nothing about the Tribunal needing to be satisfied that an order is just and equitable. This, he submitted, was a strong indicator that Parliament intended that where the Tribunal was satisfied there were relevant defects, it must make an order. Further “may” in regulation2(2) of the Regulations did not provide a true discretion, it merely provided a power.
By contrast, the Respondent submitted that the Tribunal was empowered only with a discretion. The Applicant itself, it was pointed out, had made the Regulations and had chosen the word “may” not “shall”.
A wholly new statutory power
The FTT held that the 2022 Regulations gave the Tribunal both the power and a discretion on whether to make a remediation order, the word “may” always being a question of construction of the statute in question.
Further, it decided to make a remediation order, so that the SoS was successful in its application. This was despite the works being ongoing.
The form of order that the Tribunal made sought to afford primacy to the contracts it had made to enable remediation works (the funding contract for which also contained obligations to complete the remediation of the Tower within a particular timescale).
Banished too are the previous (if obiter) hints from the FTT that remediation orders are analogous to specific performance. Different considerations, we are told, apply.
What is critical to understand is that the focus of the remedy is not on providing redress for non-compliance with a legal obligation (qua damages or specific performance), but rather the remediation of life-threatening building safety defects in tall residential buildings. “In particular,” the Tribunal concluded “if the pre-qualification criteria set out in section 123 apply and there are relevant defects we consider that it is likely that the tribunal will make an order, subject to the facts of each case”.
Legacy?
And now we know.
The making of the order on the facts of this case can be seen as an indication that the FTT is likely to seek to assist leaseholders in bringing to pass required remediations, seeing them done quickly and efficiently. A jurisdiction focussed on responsible, practical remedy. The true importance of this decision may soon be seen to lie there.
Adam Rosenthal KC of Falcon Chambers successfully appeared for the SoS.
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