Lawbite: The FTT orders £3.7 million remediation contribution order in the Hallings Wharf decision

The First-tier Tribunal (“FTT”) has ordered a developer's associated company to pay almost £3.7 million towards the cost of remedying fire safety defects at a London residential development. The decision is significant because it develops our understanding of remediation contribution order ("RCO") applications under s.124 of the Building Safety Act 2022 ("BSA 2022"), including whether remedial works can be challenged as unnecessarily expensive and whether litigation costs can be recovered in such applications. It’s also notable as it is the first successful RCO application brought by the government to recover Building Safety Fund expenditure.

This decision will be of particular interest to developers and those associated with them, building owners, managing agents, landlords, occupiers and funders involved in BSA remediation disputes.

Background

The case concerned Hallings Wharf Studios, Channelsea Road, London E15 2SX (the "Property"), a residential development affected by external wall fire safety defects.

The Secretary of State for Housing, Communities and Local Government (the "SoS") applied for an RCO under section 124 of the BSA against EDR Builders Limited (the developer) and Hollybrook (UK) Limited ("Hollybrook"), a company associated with the developer through common ownership. The application sought recovery of almost £3.7m, representing the actual costs incurred in remediating fire safety defects at the Property.

As the developer had entered liquidation some years ago the claim against it had been stayed. The focus therefore turned to whether Hollybrook, as an associated company, should be required to fund the remediation costs.

Hollybrook accepted many but not all of the underlying defects and further argued that the remedial scheme had been over-engineered. It claimed that the same safety outcomes could have been achieved through a significantly (by approximately £1.4m) cheaper alternative scheme. It also resisted the SoS’ claim for legal costs in excess of £1m.

Decision

The FTT rejected Hollybrook's challenge and held that it was just and equitable to make an RCO against Hollybrook for the full amount claimed, save for litigation costs.

In doing so, it confirmed that the key question is whether the remediation works undertaken fell within the "range of reasonable responses" available to address the defects. If they did, the fact that an alternative and cheaper scheme might also have been available did not, of itself, justify reducing the amount recoverable under an RCO.

The FTT also confirmed the correct test for determining whether a relevant defect exists. Following the Upper Tribunal's decision in Edgewater (Stevenage) Ltd & Ors v Grey GR Ltd Partnership (Vista Tower) [2026] UKUT 18 (LC), the FTT confirmed that the test for a relevant defect is a single inquiry: whether a Building Safety Risk has arisen from relevant works. It rejected a multi-stage approach based on Building Regulations compliance and a probability threshold for fire spread.

In this instance the remediation works were within the range of reasonable responses, and as such, it was for the RTM company as the party undertaking the works to choose which method is adopted. The costs followed that assessment.

On the just and equitable test more broadly, the FTT declined to narrow the section 124(1) discretion to a mere apportionment exercise between responsible parties, holding instead that the relevant factors are deliberately unconfined and not capable of exhaustive classification.

However, the FTT drew the line at litigation costs (exceeding £1 million). Whilst section 124(2) of the BSA allows the Tribunal to make RCOs requiring developers and associated companies to fund remediation costs, it expressed doubt that the provision extends to legal costs incurred in pursuing an application. Even if such costs were recoverable in principle, the FTT concluded that it would not have been just and equitable to award them in this case.

The FTT also rejected Hollybrook's contention that the project should have been halted and reviewed so that it could be reassessed under PAS 9980, the industry-standard methodology for assessing external wall fire risk, introduced in 2022. It held that, in the present case, it was reasonable to continue with the existing remediation strategy rather than delay the works by revisiting a project that was already well advanced, particularly given that the RTM Company and residents were faced with an unsafe building. The position may have been different if the project was less advanced than this one.

The result was an RCO requiring Hollybrook to pay £3,682,997.78 towards the remediation works.

Key takeaways