Remediation Contribution Orders under the Building Safety Act clarified in Hallings Wharf Studios decision
June 2026The First-tier Tribunal’s decision in Secretary of State for Housing, Communities and Local Government v EDR Builders (1) Hollybrook (UK) Limited (2) (the Hallings Wharf Studios case) represents an important development in the law on Remediation Contribution Orders (“RCOs”) under the Building Safety Act 2022 (“BSA”). In its decision dated 21 May 2026, the Tribunal made an RCO in the sum of £3,682,997.78 and addressed a number of issues likely to arise regularly in future claims. These include (1) whether respondents can argue that remediation works were over-engineered or should have been carried out more cheaply; and (2) whether litigation costs are recoverable under an RCO.
For further background on RCOs and the relevant statutory criteria, see our earlier article here.
Key takeaways
This decision provides significant guidance to construction and property professionals facing building safety claims, particularly in clarifying the scope of RCOs and the principles governing the Tribunal’s exercise of its discretion:
- Low threshold for “relevant defects”: The Tribunal’s endorsement of the Vista Tower approach confirms that the concept of a “relevant defect” is intentionally broad. There is no requirement to establish a breach of Building Regulations or to demonstrate a defined severity threshold. This lowers the evidential burden and correspondingly expands potential exposure for construction professionals and insurers.
- Reasonableness, not optimality: Section 124 focuses on whether costs were reasonably incurred, not whether they represent the cheapest or most efficient solution. This significantly constrains attempts to challenge quantum on the basis that works were “over-engineered”. Arguments based on alternative design approaches or hindsight critique will carry limited weight unless the works can be shown to be positively unreasonable.
- Broad scope of recoverable costs: Section 124 captures a wide range of costs associated with remediation, including professional fees, interim measures and ancillary works. This confirms that RCO exposure extends beyond core construction costs to the broad range of expenses required to investigate, manage and implement remediation.
- No recovery of litigation costs under RCOs: The Tribunal’s finding that litigation costs fall outside the scope of an RCO provides important clarity. While liability for remediation may be substantial, respondents are not exposed to adverse litigation costs via the RCO mechanism itself. Absent cost recovery, applicants will need to undertake a more careful cost analysis before making an application. In practice, this may lead to fewer applications being pursued, particularly where the value of the remedial works is relatively modest
- Wide discretion under “just and equitable” test: The “just and equitable” test remains a distinct and important stage of the analysis. However, it must be applied consistently with the statutory purpose of protecting leaseholders. In practice, once relevant defects are established and the costs fall within section 124, there will be limited scope to resist an RCO absent compelling, case specific factors.
Background facts
The application arose from the remediation of fire safety defects at Hallings Wharf Studios, a residential development in Stratford (the “Development”).
The Secretary of State (“SoS”) funded remediation works undertaken by the RTM company, primarily addressing defects in the external wall systems, at a total cost exceeding £3.6 million. The SoS subsequently sought to recover those costs via an RCO against Hollybrook (UK) Limited, an entity associated with the original developer, EDR Builders (now in liquidation).
By the time of the hearing, the existence of “relevant defects” was largely uncontested. The dispute instead focused on whether it was “just and equitable” to make an RCO, whether the full quantum was recoverable, and whether litigation costs fell within its scope.
The decision
Existence of relevant defects
Although largely agreed, the Second Respondent disputed whether certain wall types met the statutory definition of a “relevant defect”, arguing a multi-stage test requiring non-compliance with Building Regulations, an assessment of fire risk, and a determination that the risk was “intolerable” or “unacceptable”.
The Tribunal rejected this approach entirely and endorsed the approach in Vista Tower that a defect exists where there is “any” building safety risk. There is no requirement to establish a breach of Building Regulations or to demonstrate a particular level of severity. The Tribunal rejected the proposed multi-stage test and found that “relevant defects” were present across all of the external wall types.
Approach to remediation and alternative schemes
A central issue was whether the remediation works should have been undertaken differently or more cheaply and if so, whether any RCO should therefore be reduced.
The Second Respondent argued that the works were over-engineered, relying on the now withdrawn Consolidated Advice Note (“CAN”), and that a PAS 9980 risk-based assessment would have led to a more proportionate and less costly scheme. It further submitted that it was unfair for the Government to promote the earlier guidance, fund works on that basis, subsequently adopt a different methodology, and then seek to recover the higher costs incurred.
The Tribunal noted that the project was already well advanced when PAS 9980 was introduced, specifications had been prepared, planning permission obtained, and there was urgency to address the known safety risks.
The Tribunal held it was not unreasonable for the RTM company to proceed without revisiting the scheme under PAS 9980, particularly given the delay that would have resulted. It emphasised that this will be fact-sensitive in future cases and where works are less advanced, a failure to adopt a PAS 9980 approach may be unreasonable.
“Range of reasonable responses”
On the point of whether it was sufficient for a remediation scheme to fall within the range of reasonable responses, the Tribunal agreed with the SoS’s submission that the fact the works could have been carried out more cheaply does not, of itself, justify reducing an RCO.
The Tribunal held that unless the works in question can properly be branded as unreasonable, it does not matter for the purposes of section 124 whether an alternative scheme might have addressed the fire safety risk at a lower cost. The Tribunal considered this approach to be consistent with the wider purpose of Part V of the BSA, namely, to ensure that risks to safety are effectively addressed.
Viability of alternative schemes
The Second Respondent advanced alternative schemes with an estimated saving of £1.4 million. However, the Tribunal found there was doubt as to whether those schemes were viable or would satisfactorily address the risk. In the circumstances, the Tribunal concluded it was appropriate to adopt a more cautious approach and that the scheme implemented was reasonable.
Quantum and recoverable Costs
The Tribunal undertook a detailed analysis of recoverable costs under section 124 and confirmed that, in principle, a broad range of expenses are recoverable where they have been incurred in connection with relevant defects. These include the costs of remediation works themselves, associated fire‑stopping works, expert and professional fees, interim safety measures, and VAT.
Litigation costs
The Tribunal held that litigation costs are not recoverable under an RCO, finding that they fall outside section 124 and the FTT’s general no-costs jurisdiction.
The Tribunal was particularly persuaded by the absence of any reference to such costs in the statutory language, and agreed with the Second Respondent that, had Parliament intended litigation costs to be recoverable, it would have expressly said so.
The Tribunal further stated that, even if it were wrong on jurisdiction, it would not have been just and equitable to award litigation costs in this case as the SoS had only sought such costs at a late stage, and the parties had conducted the proceedings on the shared assumption that there was no adverse costs risk.
“Just and equitable test”
The Tribunal reaffirmed that the “just and equitable” test requires a distinct evaluative exercise but must be applied consistently with the statutory purpose of the BSA, namely, to shift the burden of remediation away from leaseholders and onto those connected with the development.
While there may be fact-specific circumstances in which it is not just and equitable to make an RCO, the discretion should not be exercised in a manner that undermines that objective.
On the facts of this case:
- it was accepted that the Second Respondent was an associated entity of the developer;
- the Tribunal had already found that relevant defects existed; and
- the remediation scheme adopted was within the range of reasonable responses.
In those circumstances, the fact that the works might have been carried out more cheaply did not weigh against making an RCO. Where the chosen scheme was reasonable, it remained just and equitable to order recovery of the full costs incurred.
Conclusion
This article identifies five key takeaways with potentially significant implications for parties involved with building safety remediation projects and disputes. Should you require further information on any of the matters discussed, please contact the authors, your usual Beale & Co contact, or visit our website.
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