Welcome to the third edition of RED Alert of 2025.
Also featuring in this update:
On 8 July 2025, the Court of Appeal delivered a pivotal judgment in Triathlon Homes LLP v Stratford Village Development Partnership, unanimously dismissing the appeal and upholding Remediation Contribution Orders (RCOs) worth over £17 million against the original developer and its associated companies. This landmark decision provides crucial appellate guidance on the Building Safety Act 2022's 'just and equitable' test and confirms the retrospective effect of RCO provisions.
Background
The dispute concerns five residential blocks at East Village, Stratford— developed as the Athletes' Village for the 2012 Olympics. Stratford Village Development Partnership (SVDP) was the original developer, initially owned by the Olympic Delivery Authority but later sold into the private sector and ultimately owned by Get Living PLC. Triathlon Homes LLP holds long leasehold interests in 129 social and affordable housing units across the blocks. The development was managed by East Village Management Limited (EVML).
Following the Grenfell Tower tragedy in 2017, comprehensive fire safety inspections revealed serious building safety defects across the development requiring extensive remediation. The remediation scheme, costing over £27 million, was funded through the Government's Building Safety Fund. Under the BSA's protective provisions, Triathlon was shielded from over £16 million in service charges. Triathlon subsequently applied for RCOs against SVDP and Get Living to compel them to cover these costs as well as for a reimbursement of certain costs which had already been incurred by Triathlon.
First instance decision
The First-tier Tribunal (FTT) granted five RCOs totalling over £17 million against both SVDP and Get Living. This included a payment to Triathlon of over £1 million as a reimbursement for costs it had incurred in connection with a waking watch, fire evacuation offer and tender. The FTT concluded that the BSA's central policy places primary responsibility of remediation costs on original developers, emphasising that well-resourced companies should bear such costs rather than the public purse. The FTT found both defendants had the financial means to meet their obligations and that it served the public interest to secure reimbursement of Building Safety Fund monies.
Court of Appeal decision
Ground 1: The 'Just and Equitable' Test
The Court of Appeal, led by Lord Justice Nugee, comprehensively dismissed all ten sub-grounds challenging the FTT's 'just and equitable' assessment. In particular, the Court made the following points:
- Policy framework: The Court endorsed the FTT's analysis that the BSA establishes a clear hierarchy with developers at the apex. Drawing on the Supreme Court's analysis in URS v BDW, the Court confirmed that the Act prioritises developer accountability over public funding.
- Developer liability policy: The Appellants argued that the FTT had wrongly relied on the Leaseholder Protections Regulations to support its finding that BSA policy prioritises developer liability. The Court upheld the FTT's reasoning, noting that while Regulation 3 might not directly apply to non-landlord developers, it clearly illustrates BSA policy. Crucially, EVML could claim against SVDP's trustees (the superior landlords) under Regulation 3, effectively reaching SVDP's assets—providing an alternative, non-discretionary route that strongly supported the RCO decision.
- Applicant motivation: The Court of appeal agreed that Triathlon's motivation for seeking the RCO was irrelevant and emphasised that parties with legal rights are entitled to pursue them without explaining subjective reasons. Triathlon, as long leaseholder and landlord to many tenants, had legitimate interests in defect remediation and funding security. The applicant's identity did not alter the fundamental question of whether RCOs were just and equitable.
- Public funding as 'Last Resort': The Court characterised the Building Safety Fund as operating "outside the Act" rather than within its statutory hierarchy and that it was never intended to displace BSA provisions requiring connected parties to contribute to remedial costs. This distinction establishes a presumption favouring developer liability where the means exist to satisfy RCO obligation, although there may be exceptions to this presumption, such as where the connection to the developer is tenuous. The Court further found that the fact that the parties had secured public funding did not determine whether developers should ultimately bear costs of reimbursement. The statutory scheme's clear hierarchy and the Grant Funding Agreement's reimbursement requirements demonstrated that public funding was intended as temporary measure pending recovery from ultimately responsible parties.
- Alternative claims: The Court rejected the argument that Triathlon should have pursued other available claims before seeking RCOs. The Court emphasised that section 124 provides a new, independent, largely non-fault-based remedy designed to secure funding without awaiting complex litigation outcomes. The BSA's policy prioritises developer responsibility regardless of other potential claims.
- Corporate ownership changes: The appellants argued that changes in beneficial ownership should be relevant to the assessment. The Court firmly rejected this, emphasising that investors 'take the risk of unforeseen liabilities' attaching to companies they acquire.
- Grant funding agreement restrictions: The appellants alleged that the Grant Funding Agreement prohibited claims against Get Living as a defined 'Leaseholder'. While acknowledging potential relevance, the Court accepted that the prohibition only applied to claims against leaseholders in their capacity as parties to lease documents, not in other capacities such as associates of freeholders. This interpretation prevents developers from avoiding RCOs by purchasing flats in buildings they developed.
Ground 2: retrospectivity
The Court agreed with the FTT and confirmed that section 124 has retrospective effect, allowing RCOs to cover costs incurred before the BSA's commencement on 28 June 2022. Nugee LJ emphasised that section 124 must be interpreted to give effect to Part 5's dual purposes of protecting leaseholders and ensuring developer accountability. Relying heavily on the Supreme Court's judgment in URS v BDW, which stated that 'retrospectivity is central to achieving the aims and objectives of the BSA', the Court rejected the notion that Parliament's intention would have been to effectively 'penalise leaseholders who had already paid service charges (for example because their landlords had proactively investigated and remedied defects) and leave them unable to recover such sums already paid.
Crucially, the Court of Appeal found that section 124's "just and equitable" discretion would provide an added layer of protection against unfairness and would ensure that the legislative regime retains flexibility to prevent unjust outcomes whilst achieving its protective purposes.
Practical implications
This is a landmark case which will undoubtedly have numerous ramifications across the industry. We have summarised the key takeaways below:
- The Court's emphatic rejection of arguments based on changing beneficial ownership fundamentally alters risk assessment for property sector acquisitions. The principle that investors "take the risk of unforeseen liabilities attaching to that company" when acquiring development entities means purchasers cannot rely on warranties or releases to shield them from BSA liability. This may prompt more detailed due diligence on building safety compliance and influence acquisition structures, with buyers potentially preferring asset purchases over share acquisitions.
- Confirmation of section 124's retrospective effect substantially broadens the scope for RCO applications. Developers and landlords should therefore be cognisant of the risk of claims from leaseholders seeking to recover sums they have already paid and, where necessary, seek to proactively manage such risk.
- The characterisation of the Building Safety Fund as 'last resort' funding establishes a clear presumption favouring developer liability and may prompt Fund recipients to expedite RCO proceedings.
- The judgment also significantly strengthens accountability for developers and associated companies. The Court's rejection of arguments based on corporate ownership changes confirms that sophisticated structures will not shield beneficial owners from BSA liability.
Conclusion
The Triathlon Homes decision represents a watershed moment in building safety law, providing definitive guidance on key BSA provisions. The judgment's robust endorsement of developer accountability, combined with confirmation of the legislation's retrospective effect, significantly strengthens the position of leaseholders seeking to recover building safety costs. While preserving the FTT's 'just and equitable' discretion as a safeguard against unfair outcomes, the decision establishes a strong presumption that those responsible for building safety defects should bear the financial consequences rather than leaseholders or the public purse. Whether the decision will result in a flurry of RCO applications remains to be seen so watch this space!
