Remediation contributions, liability and what is 'just and equitable' under the Building Safety Act

'Non-fault based' – a burden that should fall on 'the broadest shoulders': the recent Triathlon judgment has made it clear if it wasn't already that the Building Safety Act 2022 is a very different kind of legislation from any we've seen before – and has arguably led to a very particular kind of meaning being given by the courts to the words 'just and equitable'.

The Building Safety Act 2022 and its associated regulations (the BSA) arose out of a particular tragedy, but one that exposed a number of perceived issues in the way construction and development of residential blocks had been allowed to proceed in the previous decades. Procurement that put the emphasis on lowest price, a deregulation of health and safety, the outsourcing of building control, building regulations that specified standards but not products, and a lack of oversight on the marketing of building materials, were all seen to have contributed to a growing problem of unsafe high-rise and complex residential buildings.

When the scale of the problem became apparent after Grenfell, the issue of who would pay for cleaning up this very particular mess remained unresolved for some time. Whilst the Building Safety Bill was in the late stages of the Parliamentary process, the Government under Michael Gove took steps to ensure that two categories of potential payees who would be the funders of last resort only: the government itself, and individual leaseholders. In order to achieve this, amendments to the Building Safety Bill were made very late in the Parliamentary process.

Faults and responsibilities

Much has been made of the introduction via the BSA of extended backwards-facing liability under the Defective Premises Act – against the usual convention that the law does not operate retrospectively. But while retrospectivity is one area in which this legislation is causing ripples, it's becoming clear that there are a number of other ways in which it is altering standard legal meanings and putting responsibility for cleaning up building safety defects on entities that may have had nothing to do with the original faults.

The insertion into the BSA of the ability to trace connections between companies that simply shared directors subverted over 100 years of company law. While the intention was to overcome some of the ways companies could escape liability for acts for which they were responsible, these rules, together with the wider rules on 'associated companies', also brought into the net of responsibility for building safety defects companies that may have had nothing whatsoever to do with the development and made no profit from it.

The wide net cast by the 'associated companies' rules was apparently tempered by the restriction on the making of a 'remediation contribution order' (requiring such a company to pay for remediation of defects) that the tribunal must consider it 'just and equitable' to make such an order. 

There must be many who considered that it would only be 'just and equitable' (as those words have long been interpreted by the law) when the company bore some blame, or made some profit from the development in question.

This has however been comprehensively rejected by the FTT in Triathlon, who have identified in the BSA an entirely 'new and independent remedy, which is essentially non-fault based' and where the notion of what is 'just and equitable' amounts to an assertion that those who are caught by the web of association with the developer designed by the legislation, and have the ability to pay, are justifiably expected to pay, regardless of whether it might seem 'fair' on a more standard fault-based analysis.

Get Living plc, against whom the FTT made a Remediation Contribution Order for defects affecting a number of blocks at the former Olympic Village, became the parent company of the original developer, Stratford Village Development Partnership (SVDP), in 2018, after the development had taken place. In its decision, the FTT was not persuaded by the argument that Get Living had no direct involvement in or responsibility for the defects, instead stating: 'we give no weight to the changing identity of the ultimate beneficial owners of SVDP and Get Living'. As the tribunal pointed out: 'the Act erodes and elides corporate identity and deprives it of some of its main advantages … for specific purposes and within specific limits.' The purposes are to ensure building safety defects are paid for by parties other than leaseholders or the public purse, and the limits are simply that the party falls 'within the terms of s.124(3) and [is] well able to fund the relevant remediation work.'

This particular meaning to the expression "just and equitable" was in part a conclusion drawn by the tribunal from the existence of an alternative and perhaps less well-known remedy, that found in the Leaseholder Protection (Information) Regulations 2022 (the LPI). Here, a notice under regulation 3 could have required Get Living to pay the remediation costs incurred by Triathlon without any consideration of whether it was 'just and equitable' and no ability to defend the claim except by showing that the costs had not in fact been incurred or that it was not, in fact, the responsible landlord.

Wider implications?

This is a very particular regime, aimed at solving a very particular problem, and restricted to works that took place in the period from June 1992 to June 2022. In that sense, the particular interpretations taken of terms like 'just and equitable' are unlikely to affect judgments outside that regime.
 
However, within the regime of building safety remediation costs, the wide reaching nature of the definition of associated person, together with the fact that many of the companies involved in such development may have been bought and sold several times since the development was completed, means that further applications may come forward where companies at some remove from the actual development are targeted with a remediation contribution order application. 

If you would like any further specific advice on the tracing of liability via the BSA, please do contact us.