Case details
Almacantar Centre Point Nominee No.1 Ltd & Anor v Penelope De Valk & 12 Others UKUT 298 (LC) concerned an appeal from the First-tier Tribunal ("FTT") to the Upper Tribunal ("UT"). The appellants, the freeholders of Centre Point House ("Almacantar"), were challenging a determination by the FTT that certain leaseholders were protected from service charge liability for proposed façade remediation works.
Factual background
Centre Point House ("CPH"), located next to the iconic Centre Point Tower at Tottenham Court Road, is a Grade II listed building, constructed between 1963-1966, containing 36 duplex flats across six residential storeys. The building features an unusual hardwood timber-framed glazed façade, that, according to the FTT was "inherently defective from the date it was completed"; its physical condition had consequently deteriorated over time. Almacantar proposed a scheme to repair and secure the façade and sought to charge the cost of the works to CPH's long residential leaseholders through the service charge.
Legal issues and statutory interpretation
A number of leaseholders contended that, by reason of the leaseholder protections afforded by the Building Safety Act 2022 ("BSA"), they were not liable to contribute to the cost of the façade remediation scheme. Paragraph 8 of schedule 8 in particular provides that no service charge is payable under a qualifying lease for "cladding remediation", defined as the removal or replacement of a cladding system that forms the outer wall of an external wall system and is unsafe. A "qualifying lease" is a long lease of a single dwelling in a relevant building, granted before 14 February 2022, with service charge liability where, at that date, the dwelling was the tenant's only or principal home, or the tenant owned no more than two other UK dwellings. The qualifying leaseholders claimed that the proposed remediation works to the CPH façade constituted "cladding remediation" under paragraph 8 of schedule 8, thus they were not liable to contribute to the cost through the service charge.
Almacantar argued that for paragraph 8 of schedule 8 to apply, the defective cladding also had to be a "relevant defect". Section 122 of the BSA introduces schedule 8, stating that it provides that certain service charge amounts relating to relevant defects in a relevant building are not payable, and makes provision for the recovery of those amounts from the building's landlord.
The question of whether or not the defective cladding must be a "relevant defect" is significant because of the BSA definition of "relevant defect", which is a defect that arises as a result of anything done (or not done), or anything used (or not used) in connection with "relevant works" that puts people's safety at risk from the spread of fire or structural collapse. "Relevant works" are works of construction or conversion of the building completed within the period of 30 years ending 28 June 2022.
The CPH façade defects originated from the 1963-1966 construction, falling outside the 30-year period ending 28 June 2022. Thus the defective cladding was not caused by "relevant works" so could not constitute a "relevant defect", which the landlords argued was necessary for the paragraph 8 schedule 8 leaseholder protection to apply.
Tribunal findings
The FTT found that paragraph 8's ordinary meaning treats cladding remediation as a distinct protection not contingent on a "relevant defect", meaning no qualifying leaseholder would pay for unsafe cladding remediation regardless of the 30-year limitation. The FTT concluded that the CPH façade met the definition of cladding, and it was unsafe due to serious degradation creating health and safety risks from potential window detachment or glass panel failure.
The UT agreed with the FTT, holding that paragraph 8's clear and unambiguous words accord with BSA policy and the ministerial statement that no leaseholder would "pay a penny to fix dangerous cladding". Paragraph 8 has its own integrity, applying only to qualifying leases and unsafe cladding, with "unsafe" having a distinct meaning from "building safety risk" in the "relevant defect" definition. The UT upheld the FTT's construction that "unsafe" carries its ordinary natural meaning, encompassing risks beyond fire safety, with no justification for limiting paragraph 8's ambit.
Practical significance
The decision operates within the post-Grenfell context established in BDW Trading Ltd v URS Corporation Ltd, where the Supreme Court recognised the BSA as Parliament's response to unsafe cladding causing the Grenfell tragedy and wider building safety defects including fire safety concerns and structural risks. Paragraph 8 mitigates the 30-year limitation's harsh effects for unsafe cladding, though it also means that leaseholders cannot seek Remediation Orders and landlords cannot seek Remediation Contribution Orders (that can only be obtained where there is a known “relevant defect”) for works outside the main protection scheme.
The judgment confirms that qualifying leaseholders enjoy absolute protection from unsafe cladding remediation costs regardless of when defects originated, significantly impacting landlords' ability to recover costs for older buildings with life-expired cladding systems posing safety risks. This will likely result in landlords carrying out repairs/remediation/maintenance more often to ensure that cladding systems never become "unsafe", which is important and clearly beneficial for leaseholders, but on the other hand, may result in leaseholders being liable for those regular maintenance/repair costs through the service charge.
The landlord has obtained permission to appeal to the Court of Appeal.