AC-2024-LON-0001595 - [2025] EWHC 2182 (Admin)

The Contract is in two parts: a deed of contract and a Schedule containing the SRTs. By Clause 2 of the Contract, the SRTs “are part of and will be deemed incorporated into this Contract”.

The SRTs make clear that Participant Developers’ (“PDs’”) obligations extend not only to buildings they developed, but also to buildings developed by other companies in their group. Clause 20.4 of the SRTs, for example, provides:

“To the extent that a PD Group Company [as defined] that is not the Participant Developer played a relevant role in the Original Works, any obligation on the Participant Developer in respect such Building under these Self-Remediation Terms and/or the Contract and any reference to the Participant Developer doing or being obliged to do any act in respect of such Building under these Self-Remediation Terms and/or the Contract, will also comprise an equivalent obligation on the relevant PD Group Company and accordingly an undertaking by the Participant Developer to procure that the relevant PD Group Company undertakes such obligation or carries out such act.”

As regards buildings for which applications have been made to the Funds, the basic scheme of the SRTs is that PDs agree to repay monies that have been paid towards remediation projects for their buildings, but buildings may be ‘transferred’ out of the relevant Fund for the PD to carry out remediation work themselves.

Whether and in what circumstances a building may be transferred depends on what stage of the application process it has reached. For these purposes buildings within the Funds are divided into four stages, A to D. For the purposes of these proceedings, Stages C and D are the most relevant (Annex 1, SRTs):

“‘Stage C Fund Building’ means a Building for which [at the date of the Contract]:

(A)

DLUHC has communicated an award of funding…; and

(B)

DLUHC has not signed a funding agreement with the applicant Responsible Entity …

‘Stage D Fund Building’ means a Building for which [at the date of the Contract]:

(A)

DLUHC has communicated an award of funding…; and

(B)

DLUHC has signed a funding agreement with the applicant Responsible Entity …”

Stage C Fund Buildings, where an award of full funding has been communicated but a grant funding agreement (“GFA”) has not yet been signed, by default remain within the Funds. Clause 13.1 requires PDs to reimburse all monies paid or agreed to be paid by the Fund, subject to Clause 13.2:

“… a PD will not be required to make a payment in accordance with Clause 13.1 if it requests in writing to DLUHC (and DLUHC, acting reasonably, accepts such request) that the relevant Stage C Fund Building is transferred out of the relevant Fund to the PD, for the PD to carry out and complete the Works in respect of it.”

In order to request a transfer under Clause 13.2, the PD must “[confirm] in writing that the target dates for completing the Works are not later than the corresponding dates that would apply to that Building should it not be transferred from the relevant Fund to the PD (or unless DLUHC otherwise consents to such transfer)” (Clause 13.3, SRTs). Beyond this, the factors which the SoS may take into account are not prescribed by the Contract, nor is there a specific procedure to be applied in so doing.

To assist in considering whether or not to transfer Stage A, B and C Fund Buildings under the terms of the Contract, the SoS has adopted non-binding internal guidance in the form of a policy document – the “Revised criteria for developer transfer: Policy for requests for BSF transfers” (“Policy Document”) which provides “8 non-exhaustive circumstances of when this discretion can be reasonably exercised. In practise the discretion will be used in a minority of transfers.” These include: (i) whether the SoS has confidence in the PD’s stated timescales for carrying out the works; (vii) whether the PD’s financial standing is in doubt; and (viii) whether they are a Designated PD.

Where a building has reached Stage D (i.e. a GFA has been signed) it must remain within the relevant Fund.

Where a building is transferred, the PD is obliged to: (i) reimburse any costs incurred by the relevant Fund up to the point of transfer; and (ii) carry out or procure suitable remediation works or fund the Responsible Entity (“RE”) to do so (Clauses 12.4-12.5, 12.12-12.13, 13.5-13.6, SRTs). Where a building is not transferred, the obligation is to reimburse any expenditure incurred by the BSF (Clauses 12.7, 12.15, 13.1, 13.8, SRTs), subject to a process of challenge: Clauses 13.17-13.25 of the SRTs.

Where a PD is a ‘Designated PD’, the foregoing provisions are supplemented by Clause 7.7 of the SRTs. Annex 1 of the SRTs defines a ‘Designated PD’ as, broadly speaking, any PD that the SoS considers “unfit” to carry out remediation works by reason of: (A) the PD being subject to a criminal prosecution for an offence relating to building safety; (B) the PD being subject to an investigation for a criminal offence; (C) the PD’s conduct being under consideration by a public inquiry; and (D) the PD being repeatedly in material breach of its obligations under the Contract. For present purposes (C) of the definition is the most relevant. In full, it provides that a Designated PD is a PD that:

“…has been the subject of significant criticism in the findings of a public inquiry, or is currently a person whose conduct is under consideration by a public inquiry, regarding their performance or behaviour in connection with building safety matters such that the PD is reasonably considered by DLUHC to be unfit to carry out or procure the carrying out of Works in accordance with these Self-Remediation Terms and/or the Contract…”

Where the SoS considers a PD meets this definition, she may make a direction under Clause 7.7, whereby the Department may:

“… either in relation to all relevant Buildings Requiring Work or such Buildings Requiring Work as it may determine, elect in its sole discretion (but acting reasonably) to:

(A)

require the PD to fund the Responsible Entity… to undertake or procure the Works in accordance with Clause 6.1(iii), and not to undertake or procure the Works at its own cost in accordance with Clauses 6.1(i) and/or 6.1(ii) …

(B)

require the PD not to undertake or procure the Works at its own cost…, and to designate the PD’s Buildings as Stage D Fund Buildings, such that the PD will reimburse the relevant Fund in accordance with Clause 13.”

Annex 1 to the SRTs also specifies that the “Standard” to be achieved in respect of external wall construction is the Publicly Available Standard PAS 9980 (“PAS 9980”). This is a code of practice which sets out the current methodology for carrying out a Fire Risk Appraisal of External Walls (“FRAEW”).

Previous guidance issued by the Department as to the standard to be achieved in respect of a building’s external walls was set out in a Consolidated Advice Note (“the CAN”). The CAN was withdrawn on 10 January 2022 and replaced by PAS 9980 because of concerns that in some cases the CAN standard was being wrongly interpreted and used to justify an excessively risk-averse approach to building safety.