Section 124 of the Building Safety Act 2022 (BSA) gave the First-tier Tribunal (FTT) a bespoke power to make Remediation Contribution Orders (RCOs), requiring developers, landlords and their associated companies to contribute to the cost of fixing building safety defects. Two recent sets of proceedings show how quickly this jurisdiction is developing, and why parties facing an RCO claim need to think about both the merits and the mechanics of how these disputes are managed and assessed.
Testing the merits: EDR Builders and Hollybrook
The first development concerns how the FTT decides whether, and how much, a respondent should pay under an RCO. In Secretary of State for Housing, Communities and Local Government v EDR Builders (1) Hollybrook (UK) Limited (2), the Secretary of State had funded remedial works at a residential development and sought to recover those costs from the developer and its associated company via an RCO.
The FTT's decision provides insight as to the application of the just and equitable test, the meaning of ‘relevant defect’ and how the FTT will address the question of the reasonableness of remedial works.
The FTT noted that the power given to them to make RCOs where they consider it ‘just and equitable’ to do so is a wide one and that it was not possible or desirable to limit or redefine the test of ‘just and equitable’. This means the factors which might be taken into account in any particular case when determining whether it is just and equitable to make an RCO will depend on the circumstances of that case.
On the definition of a "relevant defect" under section 120 of the BSA, the FTT held that the assessment involves a single question – whether a building safety risk has arisen from relevant works – and that compliance with Building Regulations at the time of construction does not prevent a defect from being a relevant defect if it still gives rise to a building safety risk.
On quantum, the FTT rejected the argument that the "just and equitable" test under section 124 allows a respondent to re-open the reasonableness of the remedial scheme simply because a cheaper alternative existed. The FTT found that provided the remediation actually carried out falls within a band of reasonable responses, the fact that cheaper alternatives exist is not, on its own, a basis for reducing the amount of an RCO.
The FTT also provided some guidance on arguments of betterment. They noted that betterment may in some circumstances be relevant to the just and equitable test but here there was insufficient evidence to make a finding as to the extent of any betterment or the value to be attributed to it and so the RCO was not reduced for any betterment factor. The FTT noted that a relevant question is who benefits from the alleged betterment. In this case, the benefit accrued to the leaseholders rather than to the Government applying for the RCO, and in any event the betterment here was an unavoidable consequence of carrying out the remedial works.
The FTT doubted that litigation costs could be recovered as part of the RCO claim. Importantly here the litigation costs were not costs ‘in connection with’ the remediation of the building because the remedial works had already been completed..
Testing the process: Durkan Estates and Wallace Estates
The second development shows what happens when an RCO claim is filed alongside a related contractual dispute and how the relevant courts and tribunals have adapted their management processes to accommodate this scenario.
In 2024, Durkan Estates Limited (Durkan) and Wallace Estates Limited (Wallace) entered into a remediation agreement under which Durkan agreed to remedy, at its own cost, relevant defects at Centrillion Point in Croydon. These were the subject of a Remediation Order made against Wallace under section 123 of the BSA. When the FTT refused to extend the completion deadline in the Remediation Order, Wallace terminated the remediation agreement, took over control of the remedial works itself, and then issued its own RCO claim against Durkan in the FTT. This prompted Durkan to issue Technology and Construction Court (TCC) proceedings seeking a declaration that the termination was unlawful (the termination dispute).
That sequence resulted in two judgments that, taken together, illustrate the practical reality that an RCO rarely arises in isolation. In the first judgment, dealing with the termination dispute, the TCC refused Wallace's application for reverse summary judgment of Durkan's claim that the termination was unlawful, holding that the arguments about time for completion of the remedial works and whether the termination was preceded by adequate notice, all raised fact-sensitive issues that could only be resolved at trial.
The second judgment involved the ordering of a first-of-its-kind joint Case Management Conference in relation to the RCO proceedings in the FTT and the termination dispute in the TCC. This means that both sets of proceedings will be managed together by a TCC judge and an FTT judge sitting with "both hats on". In this case, the joint case management directions included the parties being permitted to use the same disclosed documents, witness statements and expert evidence across both sets of proceedings.
In practice
These decisions chart the direction the regime is now travelling in. On the merits, the FTT is generally applying the just and equitable test in a way that favours applicants: a reasonable remedial scheme will likely be upheld even if cheaper options existed and associated companies cannot escape liability simply because they cannot pass on costs contractually.. Whilst procedurally, the TCC and FTT are proving willing to adapt their procedures to deal with the split between the FTT's exclusive RCO jurisdiction and the TCC's broader construction jurisdiction, rather than allowing that split to produce inefficiency or inconsistent findings.
For developers, landlords, associated companies and their insurers, the practical message is twofold. First, resisting an RCO on cost or scope grounds requires more than showing a cheaper alternative existed. Second, where an RCO claim overlaps with a separate contractual dispute about responsibility for remedial works, parties should expect, and can now request, co-ordinated case management between the FTT and the TCC, and should plan their cost budgeting and evidence gathering with that joint process in mind.
