Cladding clawback claim challenged by developer

An important tribunal case gets underway this week, in which the government has applied for a Remediation Contribution Order against Urban Splash, a developer, for c.£48million in respect of monies paid by the government from the Building Safety Fund for remedial works at several properties developed by Urban Splash in Manchester which suffered from building safety issues. Urban Splash argues that it does not have the money to pay for the remedial works and the government’s ‘retrospective’ claim breaches human rights laws, in circumstances where Urban Splash says it complied with building safety requirements at the time of the development.

This is a key test of the Remediation Contribution Order process and will be watched with keen interest by the construction industry. Post Grenfell, the government has made it clear that developers should be responsible for the costs of remedying building safety defects, not tenants or taxpayers. Currently many developers are in the process of remedying building safety defects at their own cost rather than face the prospect of a Remediation Contribution Order. If the tribunal decides in Urban Splash’s favour, this could cause some developers to re-think their position and potentially delay future remedial works and/or require the government to expend more taxpayer’s funds on remedying building safety defects.

As the decision is via a tribunal, it will not create a formal legal precedent, but the tribunal’s reasoning would be likely to be followed in future tribunal decisions. Given the amount of money at stake, and the wider implications for the industry, any decision may be subject to appeal in any event. So far, the tribunal and the courts have strongly supported the government’s policy to make those responsible for the defects pay for remedying the defects. But this case raises new arguments and only time will tell what the tribunal decides. The tribunal hearing is due to take place over the next 6 weeks.