Walker Morris secures a further landmark remediation contribution order in Hallings Wharf judgment

The Hallings Wharf judgment marks a significant development in understanding how Tribunals will approach RCOs under the Building Safety Act 2022 (BSA 2022). Notably, this is the first RCO obtained by the Secretary of State.

Led by our Real Estate Litigation team, including Lewis Couth (Partner), Martin McKeague (Partner), Asia Munir (Director) and Georgina Gamble (Senior Associate), the outcome reflects the team’s long‑standing experience in providing strategic risk management and dispute resolution advice in complex, high‑profile building safety cases under the BSA 2022.

The First-tier Tribunal ordered Hollybrook (UK) Limited, an “associate” (within the meaning of section 121 of the BSA 2022) of the original developer to pay £3,682,997.78 in respect of the costs of remedying serious fire safety defects at the property. The original developer, EDR, is now in liquidation.

The Tribunal provided helpful clarification on how it will assess arguments that remediation works could have been carried out more cheaply. It confirmed that:

• The relevant test is whether the works undertaken fall within the range of reasonable responses to the relevant building safety risks; and
• The existence of a cheaper alternative scheme does not, of itself, justify reducing or refusing an RCO.

This reinforces a practical and risk-based approach, recognising the urgency and complexity often inherent in remediation decisions.

The judgment also addresses the issue of whether litigation costs can be recovered under an RCO:

• The Tribunal expressed doubt as to whether it had jurisdiction to include litigation costs in an RCO.
• In any event, it departed from the approach in the Empire Square decision, instead finding that litigation costs were not recoverable here because the remediation works had already completed and so were not incurred “in connection with” remediating the building and it was not “just and equitable” to include litigation costs on the facts of this case;

This aspect of the decision introduces some uncertainty and suggests that recovery of litigation costs under RCOs may be more limited than previously suggested from the Empire Square decision.

The decision also offers clarity on several additional points:

• VAT: It rejected the argument that including VAT in an RCO would lead to double recovery by the Government.
• Betterment: Hollybrook’s betterment arguments were rejected due to insufficient supporting evidence.

PAS 9980 assessments: The Tribunal agreed with the Secretary of State that the RTM Company acted reasonably and in accordance with professional advice, to proceed with remediation without obtaining a PAS:9980 assessment, given the delay this would have caused. Focus was also given to the wider context here, that being the ongoing safety risks to those residing in the building.

Lewis Couth, Partner in Real Estate Litigation at Walker Morris, commented:
“The judgment marks a further important contribution to the developing body of law on remediation contribution orders and provides valuable clarity on how Tribunals will approach reasonableness and recoverability under the Building Safety Act.”

The judgment can be read in full here.