Inside Housing – Home – Major house builder to reimburse £30m to Building Safety Fund after judicial review is dismissed

News08.07.24by Stephen DelahuntyMajor house builder Redrow has had a judicial review dismissed after it challenged the lawfulness of a decision for the firm to reimburse money awarded through the Building Safety Fund (BSF).Picture: AlamySharelinesMajor house builder to reimburse £30m to Building Safety Fund after judicial review is dismissed #UKhousing An appeal judgment was handed down last month after the firm appealed a decision by then-housing secretary Michael Gove for it to reimburse the multimillion-pound sum to the fund.
The case came about as Redrow was the developer of two high-rise developments in Birmingham, known as Hemisphere and Jupiter 2.
Both buildings were subsequently found to have cladding defects that required extensive remedial work.
As a result, the leaseholders made claims on the relevant insurance policy. The insurer accepted liability for the cladding defects at Hemisphere in April 2022 and at Jupiter 2 in September 2022. As the case rested on the fact that it looked like the insurer would pay, Redrow argued that no BSF money should be allocated because if it was, it would become liable to provide an equivalent sum to the government. 
At the same time, after the fund was allocated, the insurer stated that it did not anticipate compensating leaseholders, pointing both to the BSF and to Redrow’s liability under the pledge contract.
Redrow signed up to the government’s building safety pledge in April 2022, which would see them help fund the remediation of blocks it had developed that were taller than 11 metres.
The commitment also meant the builders will not claim any money from the government’s BSF to cover the costs of remediation on blocks they own. 
Building on the initial pledge was a building safety contract that Redrow signed in March last year.
This meant the insurer’s position was that Redrow should have to reimburse the BSF even though it had in principle accepted liability for the work before the contract was signed.
In summing up whether he thought funds had been allocated correctly under the BSF, High Court judge Neil Garnham said: “The defendant [secretary of state] was entitled to make a grant under the scheme when the insurers had not paid out on one tower block, Hemisphere, and had not even confirmed liability to make a payment in respect of the other, Jupiter. “The whole point of the scheme was to ensure that the necessary remedial works were carried out as quickly as possible, so as to make the flats safe. To have delayed the work while payment from insurers was obtained, or even assurances about payments was obtained, would, in my view, have been unconscionable. More to the point, a decision not to permit such delay could not possibly be described as unreasonable.”
In response to the decision, Redrow said: “We note and respect the court’s decision on this matter. This legal process revolved around the government allocation of public funds, which we believed was unlawful.
“We have always remained committed to carrying out fire safety remedials in accordance with the self-remediation terms we’ve signed and we continue to make good progress. Our fire experts have assessed all blocks we are responsible for. We’ve committed £200m in fire safety provision with work having already commenced across the majority of our blocks.”
In September 2022, Inside Housing reported that Redrow booked an exceptional charge of £164m to deal with fire safety issues.
In a blog post on this judgment, Susan Bright, a professor of land law at the University of Oxford, said: “It is clearly right that funding should not be held up whilst applicants pursue other avenues for recovery. The complexity of the liability web, and the resistance from all those with potential liability, means that if remediation is to proceed at speed the grant funding is essential. 
“When the FTT [first-tier tribunal] granted a remediation contribution order in the Triathlon case, it was similarly noted that things should not be held up whilst awaiting the outcome of complex litigation.”
In the Triathlon case, Inside Housing reported from the FTT in the dispute from 2023 over who would pay for fire safety remediation work in London’s Olympic Village. Sign up for our fire safety newsletter



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