Tribunal makes first remediation contribution order following application by central government department

Law firm Walker Morris - which acted on behalf of the Secretary of State for Housing, Communities and Local Government - said the decision marks the first time an RCO had been obtained by the Secretary of State.

The case centred around remediation works carried out on a block of flats in North East London.

The Secretary of State sought to recover the costs of the works it had funded from Hollybrook (UK) Limited, an "associate" (within the meaning of section 121 of the Building Safety Act 2022) of the property's original developer.

Hollybrook argued, among other things, that the remediation scheme chosen was excessive and that the building could have been made safe through a much cheaper approach, reducing costs by around £1.4m.

On this point, the tribunal ultimately concluded that: “When considering the purpose referred to in s.124(2) of the BSA, i.e. meeting costs incurred or to be incurred in remedying or otherwise in connection with relevant defects, unless the works in question can properly be branded as unreasonable, it does not matter for the purposes of s.124 whether an alternative scheme might have satisfactorily addressed the fire safety risk at a lower cost.”

The First-tier Tribunal ordered the firm to pay £3,682,997 in respect of the costs of remedying the safety defects.

The Secretary of State had also amended its claim at the pre-trial review stage to include a claim for its legal costs in the proceedings. However, the tribunal ultimately refused to award costs to the Government.

Walker Morris's Real Estate Litigation team acted for the Secretary of State, including Partner Lewis Couth, Partner Martin McKeague, Asia Munir and Georgina Gamble.

In a statement on the decision, the law firm said the judgment “marks a significant development in understanding how Tribunals will approach RCOs under the Building Safety Act 2022”.

The firm said decision provides "helpful clarification" on how it will assess arguments that remediation works could have been carried out more cheaply, confirming that the relevant test is whether the works undertaken fall within the range of reasonable responses to the relevant building safety risks.

It added: “The Tribunal expressed doubt as to whether it had jurisdiction to include litigation costs in an RCO. 

“In any event, it departed from the approach in the Empire Square decision, instead finding that litigation costs were not recoverable here because the remediation works had already completed and so were not incurred ‘in connection with’ remediating the building and it was not "just and equitable" to include litigation costs on the facts of this case.”

Lewis Couth, Partner in Real Estate Litigation at Walker Morris, said: “The judgment marks a further important contribution to the developing body of law on remediation contribution orders and provides valuable clarity on how Tribunals will approach reasonableness and recoverability under the Building Safety Act.”

Adam Carey