Last week, Get Living was ordered to contribute £18m to remediate fire safety issues at the Olympic Village in East London.
The First-tier Tribunal decided that it was “just and equitable” to grant the remediation contribution order (RCO) against the original developer of the Olympic Village and its current owner, Get Living. The decision was rather fact specific, but it confirmed some important principles in relation to RCOs and the Building Safety Act 2022 (BSA) that highlight the worrying implications for landlords around building safety more generally.
The Tribunal reaffirmed that the policy of the BSA is to create a hierarchy or cascade of liability in relation to building safety defects, and that primary responsibility for the cost of remediation should fall on the original developer. Others who have a liability to contribute to such costs (e.g. leaseholders via service charges) may pass on the cost they incur to the developer by RCOs. “Responsibility is not synonymous with fault” – so while a developer may have done all that could be reasonably expected of it to build a safe building, it can still be responsible for relevant defects caused by others (e.g. those responsible for design or construction). The developer will likely have recourse to those responsible for design/construction, but such potential claims will not be a shield against a RCO.
The purpose of a RCO was highlighted – to ensure remediation work is carried out without delay. Where the remediation works may already be funded by the Building Safety Fund and underway, the Tribunal considered there is a public interest also in securing reimbursement of those funds as quickly as possible from the liable person. The “public purse” should only be used to address relevant fire risks where building owners are unwilling and unable to afford to do so.
Where the development has been carried out by a thinly capitalised or insolvent development company, a wealthy parent company or other wealthy associated entity will have to shoulder responsibility despite a separate corporate personality. This is true of each such entity that has subsequently bought in to the corporate structure of the original developer, such as was the case for Get Living.
The Tribunal decision also confirmed that the BSA extends liability retrospectively. Therefore, RCOs can be made in relation to costs incurred before the commencement of the relevant provisions on 28 June 2022. Finally, it was clarified that RCOs can be made in respect of costs incurred in preventing risks or reducing the severity of building safety incidents in the same way as for costs incurred in remedying the defects.