Remediation orders under s.123 of the BSA 2022: what might fetter an unfettered discretion? 10 July 2024
Secretary of State for Levelling Up, Homes and Communities v Grey GR Limited Partnership CHI/00HN/HYI/2023/0008: The Chocolate Box, Bournemouth
- The First-tier Tribunal has now twice rejected an argument that the power of the Tribunal to make a remediation order under s.123 must be exercised where the threshold criteria are met.
- Rather, the provision in the BSA regulations is permissive: the Tribunal has a discretion as to whether or not an order should be made.
- Neither the BSA nor the regulations set out in detail the nature of that discretion, nor the factors to be considered. However despite the contrast in this respect between s.123, and the provisions at s.124 and s.130 of the BSA which require the Tribunal to be satisfied that it is ‘just and equitable’ to make a relevant order, the FTT has recently concluded that the approach to exercise of the discretion “cannot be far” from this.
- The Chocolate Box decision contains a detailed discussion of the factors relevant to the making of a remediation order in the circumstances of that case, which are likely to provide a useful framework for future applications.
The application(s)
The first application by the Secretary of State (‘SoS’) for a remediation order under s.123, made against Grey GR Limited Partnership (‘the Respondent’) in respect of the Vista Tower in Stevenage (‘the Vista application’), was the subject of the recent article by Daniel Black, which can be found here.
A second application against the same Respondent was made by the SoS just under a year later, in relation to a building in Bournemouth known as The Chocolate Box, consisting of 59 residential flats over 12 storeys.
It was agreed by the parties that the building was a ‘relevant building’ for the purpose of s.117(2) of the BSA; that the Respondent was a ‘relevant landlord’ within s.120(5); and that there were ‘relevant defects’ in the building which required remediation: so the ‘threshold criteria’ for the grant of a remediation order under s.123 were met.
In February 2023 a number of these defects had been the subject of an Improvement Notice served on the Respondent by the local authority under the Housing Act 2004. By the date of the hearing, in April 2024, the remedial works necessary to comply with the notice (as subsequently varied in August 2023) were the subject of a JCT contract with a construction company, and works had begun.
As summarised by the FTT, the dispute between the parties “was on one level simple and narrow, namely should the Tribunal make a Remediation Order”; although the Tribunal noted that the simplicity with which the dispute could be stated belied “the complexities of the determination required and the extent of the arguments advanced”.
Mandatory or permissive?
The primary position of the SoS was the same as that it had taken in the Vista application: that where on an application for a remediation order the threshold criteria under the BSA were met, the Tribunal was required to make such an order; and the only matter for consideration was the terms of the order to be made. The Respondent argued that this was wrong, and that where the threshold criteria were fulfilled, the FTT had a discretion whether or not to make any order.
Here, as in Vista, the SoS’s argument was rejected. The BSA regulations provide that, where the necessary requirements were met, the Tribunal ‘may’ make a remediation order. The Tribunal was not persuaded that this was required to be read as ‘must’.
The decision in Willingale v. Global Grange Ltd (2001) 33 HLR 17, on which the SoS relied, was not of assistance: although the Court of Appeal had, there, concluded that ‘may’ effectively meant ‘must’ for the purpose of the particular statutory provision (in the Leasehold Reform, Housing and Urban Development Act 1993), that was a consequence of the specific context of the relevant Act, in a situation distinct from that under the BSA.
Nor did the Tribunal accept that the SoS could find any support from the previous decision of the FTT in Waite v. Kedai. The statement in that decision that s.123 gave a very wide power to the Tribunal did not fit with the assertion by the SoS that the Tribunal’s power was limited in the way claimed.
The nature of the discretion
Having concluded that the power in the BSA regulations gave the Tribunal a discretion as to whether or not a remediation should be made, the question was as to nature of that discretion. The Tribunal noted that neither the BSA nor the regulations set out the factors to be considered. They could have done: but did not. The discretion was expressed in effectively the widest terms it could possibly be.
Taking the same view as had the FTT in Vista, the Tribunal did not accept that the approach should be dictated by the principles applicable to specific performance (an order for which will be made where ‘necessary and desirable’); or to the grant of a mandatory injunction. It also noted the obvious contrast between the lack of any particular test in the terms of s.123 (and the relevant regulations), and the requirement that for the making of a remediation contribution order under s.124, or a building liability order under s.130, the Tribunal must be satisfied that it is “just and equitable” to make an order. The Tribunal said (at [221]):
“A test of whether a Remediation Order is just and equitable (or perhaps less likely some other form of words) is one which Parliament might well have quite reasonably applied. The Tribunal is not persuaded that the application of that specific test is appropriate, where Parliament did not provide for it and neither do the BSA Regulations.”
Notwithstanding, the Tribunal observed that ‘just and equitable’ is the most common basis upon which a court or tribunal approaches the exercise of discretion. The approach to exercise of the discretion could not (therefore), in the view of the Tribunal, be far from ‘just and equitable’. As the Tribunal will not make a remediation order unless it considers it just to do so; and given that equitable essentially means fair, it concluded that the test cannot be far from one of justice and fairness.
The conclusion of the Tribunal was that it should take into account in the exercise of its discretion such factors as it considered to be relevant, and give them such weight as it considers appropriate; while not taking account of such factors as it considered not to be relevant, and should not be given weight. It is, the Tribunal said, a balancing exercise, to be undertaken against the background of the purpose of the legislation: namely, ensuring the remediation of defects with residential buildings and protecting the safety of occupiers.
Inevitably, this broad approach is going to render the outcome of each application under s.123 highly fact-, and Tribunal-, specific.
Exercise of the discretion: to make an order?
The Tribunal went on to conduct this exercise on the facts as found: and determined that a remediation order should in this case be made.
The decision contains a full summary of the Tribunal’s finding of facts (from [150] to [185]), and the factors in the exercise of its discretion. It is worth noting in particular the following:
- the Tribunal observed that works on site had started by the date of the hearing, and a contract was in place. However the fact was that the Respondent had not done all that it could reasonably be expected to in order to alleviate the fire safety risks to the building and occupiers within a reasonable time, taking account of the nature of the risk;
- as in Vista, it was argued for the Respondent that a remediation order might in effect get in the way of undertaking works under the JCT contract already in place: but, taking the same approach as the FTT in that previous case, the Tribunal rejected the suggestion that this should prevent a remediation order being made. This was not sufficient to outweigh the making of an order, not least where the contract had only just been entered into at the date of the hearing, the works were in their infancy and there was a long way yet to go;
- moreover, the previous approach taken by the Respondent, including the fact that it needed to be compelled to progress the undertaking of works by an Improvement Notice (which the Tribunal had found to be the ‘game-changer’ in the progress of the works), and the focus on obtaining BSF funding before undertaking any remediation, effectively prioritising avoiding cost above occupiers’ safety, meant that the Tribunal was not confident that the Respondent would retain the necessary focus on the BSA works being completed without avoidable delay
- although accepting that it was not unreasonable for the Respondent to pursue BSF funding, this did not provide an answer to the lack of undertaking any works. The obligation on a landlord to undertake BSA works did not arise only on receipt of such funding; and the Tribunal was critical of the fact, as found, that the Respondent gave too great a priority to seeking BSF funding and failed to focus on its responsibilities sufficiently. In this respect the approach of the Tribunal appears to be noticeably different to that taken by the FTT in Vista. In that case the SoS had suggested that the Respondent should have ‘forward funded’ the works rather than wait for BSF funding; but this was rejected by the Tribunal as impracticable ‘and even unreasonable’, given the scale of the Respondent’s portfolio and the cost of the works.
The Tribunal’s detailed consideration of the various factors at play in this decision makes for interesting reading. In the light of the various differences between the approach taken in this case, and the previous Vista application, it will be even more interesting to see how the FTT’s approach to the exercise of this broad discretion continues to evolve in future cases.
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