Liability for building safety remediation
The Building Safety Act 2022 (the BSA) protects leaseholders from bearing the financial burden of remediation costs to rectify building safety defects in relevant buildings by shifting the responsibility to those with a connection to the building's development or ownership. The BSA thus places primary liability for remediating building safety defects on developers and/or landlords (including freeholders and head lessees). Problems arise when developers are wound up or dissolved, or (as is often the case) the freehold or superior leasehold interest is held by a thinly capitalised company such as a special purpose vehicle. But, while the freeholder or developer itself may have limited capital, these entities are often part of well-resourced wider group structures.
Remediation contribution orders
So the BSA introduced Remediation Contribution Orders (RCOs) that require a specified body corporate or partnership (not individuals) to make payments by way of contribution to the cost of rectifying relevant defects and, since 31 October 2024, certain other incidental/connected costs of relevant defects. This enables funding to be accessed to facilitate the timely remediation of building safety defects and holds those responsible (or associated with those responsible) to account. An RCO can be made against a landlord or the building’s developer, as well as an entity associated with any of these parties, which would include parent companies and companies that share a board member or director with the developer or landlord, amongst others (see our detailed Building Safety Briefing for more detail on Associated Persons). This is a significant departure from traditional corporate law principles, where separate corporate identities are typically respected.
Implications for associated entities
These wide associate provisions mean that the mere presence of a shared director at the relevant time could create a sufficient link to establish liability of a corporate entity to make payment under an RCO - in theory even where the companies are completely unrelated and the associated company played no role in the construction or remediation of the relevant building. There is, however, a fetter on the First Tier Tribunal's (FTT's) jurisdiction to make an RCO; it must consider that it is "just and equitable to do so". There is no definition of "just and equitable" in the BSA; it is a question of judicial discretion. The FTT thus has a wide decision-making remit in RCO applications; it must weigh up the wider public interest in securing the safety of buildings and the rights and interests of the entity against whom an order might be made. Much will turn on the facts of each case.
The application of "just and equitable"
The exercise of the Tribunal's "just and equitable" discretion in the context of RCOs against associated companies has only arisen in two cases: (1) the FTT decision in Grey GR Limited Partnership v Edgewater (Stevenage) and others ("Vista Tower"), and (2) Triathlon Homes LLP v Stratford Village Development Partnership (both at first instance (February 2024) and by the Court of Appeal (July 2025)).
In Vista Tower, the FTT recognised that the associate provisions in the BSA could include very remote associates. It found that it should not be automatically presumed that associated entities should be liable to make payments under an RCO unless they can show good reasons why they should not have to pay, particularly where they are associated only by common directorship. However, the existence of a link between companies in addition to sharing a director will be sufficient to call for an explanation and/or evidence of countervailing factors for an associated entity to resist an RCO.
In Triathlon, the Court of Appeal considered a hypothetical scenario (in the context of whether an RCO would be "just and equitable") where a director of a landlord was also a director of other companies engaged in entirely different businesses that had no connection with the landlord or its group or the development, or where a director of the landlord had given their time voluntarily as a director of a charitable company. In this scenario, Lord Justice Nugee, giving the leading judgment, commented that it would not be "obviously just and equitable" to make RCOs against such associated companies, even if the effect of refusing to do so would mean that the remediation costs would instead be met by the Building Safety Fund (essentially borne by the public).
Mishcon de Reya comment
Undoubtedly, the BSA represents a fundamental shift in the allocation of liability for building safety defects, significantly extending potential financial responsibility beyond the traditional confines of corporate separateness. For companies that may be deemed "associated" whether by virtue of group structures or something as limited as shared directorships-this gives rise to legitimate concerns around exposure to RCOs. While the “just and equitable” test offers an important safeguard, its application is heavily fact-dependent and subject to the FTT's broad discretion.
However, in Triathlon Lord Justice Nugee acknowledged the potential unfairness of imposing liability on companies that, although technically “associated”, have no real connection to the defective building or to the responsible party’s business. While his comments were obiter and not a binding precedent, they offer a strong judicial indication that mere technical association such as a shared director alone-will not automatically justify the imposition of an RCO. This reinforces the likelihood that the FTT will adopt a balanced and fact-sensitive approach, focusing on the substance of the relationship rather than its formalities.