On 14 June 2024 the Court of Appeal found in favour of the Secretary of State for the Home Department (SoS) in an appeal bought by Redrow (the appellant) in relation to the dismissal of their renewed application for permission to bring judicial review proceedings challenging the SoS' decision to allocated funds from the Building Safety Fund (BSF).
The appellant developers had built two high-rise buildings which had been identified as requiring cladding defect remedial works. Liability for the works had been accepted by insurers for a number of the long leasehold owners who had acquired 10-year home warranty insurance policies when purchasing their homes. Despite this, the SoS made a funding application to the BSF for funds to carry out the necessary remedial works, and funds were awarded from the BSF for the purpose of undertaking the cladding defect remedial works at the two blocks.
As developers, the appellants had committed to reimburse the BSF in circumstances where funding had been allocated. However, as insurers had accepted liability in these circumstances, the appellant appealed the decision.
The Court of Appeal upheld the decision of the lower court and did not allow the appeal. It said that given the urgency of the remedial works needed at both blocks, and as there was no reason to believe the insurers would pay out proceeds in time for the projected start date of the works, the SoS were correct to make a funding decision in relation to the BSF.
The court went on to find that if the insurers did pay out proceeds in due course, they could be netted off once available.
This case may come as unwelcome news to developers who could find themselves on the hook to reimburse the BSF even in circumstances where a third party has accepted liability for the works in question and where they will be paying out imminently.
