In the aftermath of the Grenfell disaster, the drive to rectify defective cladding systems in UK tower blocks continues to be a priority. With ongoing instances of fires in high-rise blocks of flats, the consensus is that swift action is essential to prevent further tragedies. However, the question of who will shoulder the cost of these essential remedial works remains divisive.
In a recent case before the Court of Appeal, the developer Redrow PLC took the unexpected position of objecting to £30M of public money from the Building Safety Fund (the “BSF”) being used to pay for the remedial work on two buildings which Redrow had developed. Their reasoning for this arises out of the complex set of agreements and reimbursements behind the funding.
Redrow, along with several other developers, signed the “Pledge” in 2022, committing to repay any public funds allocated for remediation. This commitment became legally binding in 2023. Because of this, Redrow knew that although the initial funding would come from the government, they would likely be on the hook to reimburse most of the £30M. Instead, Redrow offered an alternative.
The leaseholders had already filed claims under their building insurance policies, and by 2022, the insurer had accepted liability in principle. However, after the BSF funds were granted, the insurer argued that because government funding was available, there was no longer a need for them to pay out.
Redrow contended that BSF applications should only proceed once all other sources of funding had been exhausted. Given that the insurers had acknowledged liability in principle at the time, Redrow argued the BSF funding should have been refused.
The Court, however, disagreed. It ruled that BSF guidance does not require applicants to exhaust all other funding avenues, only that they take “all reasonable steps” to recover funds. In this case, the insurer, which was in administration, had accepted liability but had yet to provide any actual funding.
The Court stressed the overriding importance of addressing remedial work without delay and that this was a fundamental reason for creation of the BSF. In cases such as this, actual funding may have taken many years to be procured, during which time the affected residents would continue to be at risk.
This case also highlights that developers (and potentially others connected to a defective building) remain in the firing line for the cost of cladding remediation works even where the BSF has provided funding. With the BSF seemingly tightening their purse strings, this situation is likely to become more common.
If you need assistance navigating legal issues surrounding cladding remediation or other property-related disputes? Our Property Litigation Team at JMW Solicitors is here to help. Contact us today for expert advice on the latest reforms and legal procedures affecting property law.
Richard Glover, Partner and Mark Knight, Trainee Solicitor at JMW Solicitors LLP
