The FTT has made a remediation contribution order for £13 million against 76 companies associated with the original developer of Vista Tower, Stevenage.
Background
Vista Tower is a 16-storey block of flats in Stevenage. The block was converted from offices into flats in 2015 by a developer, Edgewater (Stevenage) Limited, from whom Grey GR purchased the freehold in 2018 on behalf of Railpen, the railway workers pensions fund.
The conversion included combustible panels on the outside of the walls, and there were a number of serious defects with regard to fire stopping and compartmentation. While Grey GR had made attempts to start work on remediation, progress was slow and it was last year subject to a Remediation Order brought by the Government. Grey GR brought the RCO application (as well as a separate application for a Building Liability Order, currently in the Technology and Construction Court) in order to seek recovery of the majority of its costs of these works from the original developer and companies associated with it, pursuant to s.124 of the Building Safety Act 2022 (the BSA).
Liability of the developer
The judgment is the first major RCO application to be decided since Triathlon and confirms the approach taken by the FTT in that case on the issues of liability and the 'just and equitable' test. As with Triathlon, where the FTT talked about a 'waterfall effect', the judgment in this case dismissed the argument that Grey GR, being well funded, could afford to pay for the remediation. The FTT held that the developer was positioned at the top of a 'hierarchy of liability' and it was part of the purpose of the BSA regime to seek costs from those at the top before calling on contributions from those lower down, including a landlord that was not responsible for the defects, but also and importantly protecting leaseholders.
Relevant defects, relevant steps
Much of the judgment was taken up with an analysis of the particular defects and the costs of rectification already expended, and here it will be of interest to those dealing with the BSA that the Tribunal took a wide approach to the identification of relevant measures, finding that the developer was responsible for many of the costs that Grey GR had incurred that were arguably unrelated to any relevant defect (strictly defined), but had been carried out in the context of a need to make the building safe.
For example, the Tribunal allowed the costs of replacing all fire doors, regardless of whether these in fact dated from the original construction (and so could not be relevant defects by virtue of not arising from works carried out between 1992 and 2022). The Tribunal, while noting that 'in another case …it might not be appropriate to include the … costs in an RCO' nevertheless ordered that these costs be paid as the works were undertaken 'to seek to reduce the severity of or prevent or reduce harm to occupants that could result from, a fire' and could therefore be included as the costs of 'relevant steps'.
Other measures, that might not have been necessary had remediation of all the defects in the building been completed, were nevertheless allowed as costs due to the need to work quickly to reduce risks while more extensive rectification works were on hold.
Just and equitable
The part of the judgment that will be of particular interest to developers or those who might be seeking an RCO is the careful consideration of the just and equitable test as it applied to the many respondents.
The tracing of associated persons under s.121 of the BSA includes any company which shared a director in the period between 14 February 2017 and 14 February 2022. Of the 96 respondent companies, all shared at least one director with the developer and so were 'associated' by virtue of these provisions.
The BSA, however, does not automatically make such companies responsible: the FTT has to consider whether it is 'just and equitable' to make the order. In Triathlon, it was considered just and equitable on the basis that Get Living plc was the parent company of the developer.
This is the first judgment that has had to grapple with how 'just and equitable' it is to make a company linked only by a common director responsible for defects over which it may have had no control or involvement.
The Tribunal looked at funding and flows of profit between the various respondents; it also looked at representations (in brochures for example) that many of the companies were part of the 'Edgewater Group', regardless of whether there was in fact a formal group structure. For a large core of the respondent companies there was:
- a clear pattern of directors and/or shareholders being drawn from a relatively small pool of connections, related by family links or longstanding business association;
- involvement in similar enterprises in the property development and construction sector; and
- relatively weak accounting structures and 'opaque' and unreliable records but such records as there were appeared to show 'a complex and interconnected web of relationships and interdependencies'.
On this basis, the Tribunal found 76 of the respondents 'jointly and severally' liable for £13 million of remediation costs, while leaving it open to any individual company to appeal.
It remains to be seen firstly, how 76 companies will be able to agree between them how to pay a £13 million liability, and secondly, whether all or some will appeal the judgement, but for now the case sheds valuable light on the tribunal's approach to some of the trickier questions related to RCOs.
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