Brady Solicitors’ very own Jeremy Weaver has recently worked alongside Robert Bowker of Tanfield, to close the First-tier Tribunal (FTT) case of St John Street Property Services Ltd v Riverside Group Ltd, regarding cladding remediation, waking watch costs and further related costs recovery.
Importantly, this is one of the first cases of its kind and will therefore help to continue the developing body of case law around the Building Safety Act 2022. It will then be used to aid property solicitors in advising their clients on similar matters and may also be referred to in similar FTT cases to substantiate a verdict.
FTT case details
The case concerned a mixed-use developments that included a supermarket, offices, as well as private residential and social housing flats. The external wall system of the development was deemed a substantial fire risk, as it contained ACM, HPL and polystyrene insulation. Due to this the property required a waking watch and urgent remediation work. The freeholder proceeded with the necessary work and then looked to recover the cost incurred via the service charge.
The cost of works and related costs were settled with both the commercial and private residential tenants. However, the respondent for the social housing provider disputed its liability.
The main issues to be considered by the FTT when coming to a decision were:
- Whether the lease in question enabled the cost if cladding remediation, waking watch and associated costs to be recovered, and whether it was consistent with the principles in Waaler v Hounslow.
- Had the freeholder failed to evidence that they had taken steps to establish whether any third-party funding was available to pay for the remediation work, waking watch and associated costs (i.e whether the costs in question were therefore ‘reasonably incurred’ under section 19 of the 1985 Act).
- The payability and reasonableness of the apportionment of additional charges to the respondent.
- The year it was originally built Whether, and to what extent, the potential for a successful claim under the Building Safety Act 2022 affects the payability of the service charge costs.
- Whether the respondent housing association’s payment of the service charges, notwithstanding its disputing liability, affected the Tribunal’s decision.
The decision
Although the decision is thorough, totaling around 170 paragraphs, which can be read here, we’ve summarised the decision below.
A key aspect of the housing association’s case was that the freeholder should have, before recovering costs via the service charge, applied for a remediation contribution order under section 124 of the Building Safety Act 2022 or claimed damages under the Defective Premises Act 1972. It particularly relied on the decision in Avon GR v Cowley.
The FTT stated that they were satisfied that the freeholder had taken sufficient steps to establish whether third party funding was available, and as it wasn’t, that the service charge costs where therefore reasonably incurred. Furthermore, the FTT reasoned that the likelihood of a successful funding application is so small. Therefore, the Tribunal is unable to come to the conclusion that the applicant failed to take reasonable steps to pursue third parties or to determine that any part of the remediation costs were not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the housing association.
Further impact
The implications on this FTT decision will be vast, with the determination in relation to third party funding probably the most significant since the Building Safety Acts introduction in the eyes of managing agents, freeholders and leaseholders. The case will be of particular interest when a freeholder or managing agent has decided not to apply for a remediation contribution order and has gone on to recover costs via the service charge.
