Tribunal warning ‘essential reference point’ for other developers, says law firm

A tribunal ruling which ordered a developer to pay £46.5 million to the government after the discovery of fire safety defects at seven buildings in Manchester will be the “essential reference point” for other developers, according to experts at national law firm Clarke Willmott.

Investigations at the high-rise buildings, developed by Urban Splash between 2000 and 2008, were carried out following the Grenfell Tower tragedy in London in 2017.

The Manchester sites were alleged to have combustible facade materials and insulation, ineffective cavity barriers and fire-stopping, and compartmentation failures that created routes for fire spread.

The extent of the defects was disputed but they have now been fixed at a cost of more than £60 million, with £51.5 million paid from the government’s Building Safety Fund, established in the wake of Grenfell.

The Department of Housing, Communities and Local Government subsequently sought an application for £46.5 million in remediation contribution orders (RCOs) under the Building Safety Act (BSA) 2022.

It brought a case to a specialist First-tier Tribunal (FTT), seeking an order for the developer to contribute towards the cost of the works paid from the taxpayer-supported fund.

Last week the tribunal ruled that Urban Splash and other associated entities – which did not own the buildings at the time of the remediation – should pay the £46.5 million sum.

Judge Jonathan Holbrook, sitting at the tribunal, said there was a “powerful case” for the developer “rather than the taxpayer, to bear the remediation costs”.

“We accept that Urban Splash provided useful and responsible assistance with the post-Grenfell investigations into the safety of these buildings. But there is an important distinction between assisting those investigations and accepting financial responsibility for the resulting remediation.”

Tom Plow, an associate in the construction team at Clarke Willmott, said: “The Urban Splash decision is a landmark in the development of RCOs and the BSA.

“It confirms that developers sit at the head of the liability hierarchy, and the wider enterprise (not just the original development vehicle) may face exposure where there is sufficient continuity of ownership, control, and commercial purpose. The judgment provides clear guidance on how challenges to remedial schemes need to be presented and how defects should be defined.

“With the Building Safety Fund having funded billions of pounds of remediation nationally, further proceedings against other developers and their associated entities are likely to follow. The Urban Splash judgment will be the essential reference point for all of them.”

Harriet Atkin, partner in contentious construction at Clarke Willmott, added that the ruling will be of wider importance to parties dealing with cladding and fire safety claims in the FTT and Technology and Construction Court.

Harriet said: “The FTT held that ‘defect’ is a broad concept, which can include any deficiency in a building assessed by reference to current building standards.

“The practical implication of this is potentially very significant and, although FTT rulings do not set legally binding precedent it will no doubt be the subject of much further debate as to whether ‘relevant defects’ can/should be measured against modern standards as opposed to the applicable standards at the time of construction.

“It may also be relevant, strategically, as to whether parties choose to progress their claims in the FTT or the Technology and Construction Court.”