Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point

Hearing dates: 17, 18 and 21 March 2025

Further written submissions: 27 May 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 08 July 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

The question raised by this appeal is whether the Building Safety Act 2022 (“the BSA”) prevents the appellant, Adriatic Land 5 Limited (“Adriatic”), from recovering service charges from tenants of a building it owns in respect of certain costs which it had incurred before the relevant provisions of the BSA came into force. The Upper Tribunal held that it does. Adriatic now challenges that decision in this Court.

In the same week that we heard this appeal, we heard another relating to the BSA: Triathlon Homes LLP v Stratford Village Development Partnership (CA-2024-001256) (“ Triathlon”). By an order dated 14 October 2024, Lewison LJ directed that the two appeals should be heard sequentially by the same constitution. While, however, there is some overlap between the cases, they raise distinct issues. We have therefore written separate judgments for each matter.

On 21 May 2025, the Supreme Court gave judgment in ( URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21, [2025] 2 WLR 1095) (“ URS”), in which one of the issues was whether section 135 of the BSA applied to the facts of that case. The parties to both the present appeal and Triathlon filed written submissions addressing potential implications of that decision.

Basic facts

The building at issue is Hippersley Point in Abbey Wood, London. Hippersley Point was constructed in about 2015 by Development Securities (Abbey Wood) Limited, a subsidiary of Land Securities plc. It has 10 storeys, is more than 18 metres in height, and contains both a commercial unit (on the ground floor) and 32 residential flats which are the subject of long leases.

Adriatic was registered as the freehold proprietor of Hippersley Point on 12 April 2017. A witness statement made on behalf of Adriatic by Mr Eyvind Andresen explains that the company holds residential freehold and long leasehold assets and is a subsidiary of entities whose purpose is to issue securities to liability driven investors (pension funds and life insurance companies) so that the investors can receive the long-dated inflation-linked income for which long leases provide. Mr Andresen further explains that the total ground rent payable for Hippersley Point as a whole is at present £9,250 per year. In a second witness statement, Mr Andresen estimates Adriatic's financial interest in the building, having regard to the limited rents to which it is entitled and the value of the long leases held by tenants, at 2.52%.

In the latter part of 2020, it emerged that substantial remedial works were required to deal with defects in the external construction of Hippersley Point which gave rise to fire risk. Interim fire safety works were needed, too.

As would be expected, the leases of the flats at Hippersley Point all include service charge provisions. However, section 20 of the Landlord and Tenant Act 1985 (“the L&TA 1985”) barred Adriatic from recovering more than £250 per flat by way of service charge as regards the requisite works unless the “consultation requirements” prescribed by the Service Charges (Consultation Requirements) (England) Regulations 2003 were either complied with or dispensed with.

Adriatic applied to the First-tier Tribunal (Property Chamber) (“the FTT”) for the consultation requirements to be dispensed with in respect of the works. In a decision dated 20 December 2021, the FTT acceded to that application. The FTT explained in its decision that “the building is presently unsafe in terms of fire risk” and that it was “simply not an option to delay works to unsafe premises”. It therefore had “no hesitation in confirming that dispensation should be given unconditionally”. It added, however:

“The Tribunal does … consider that the Applicants should be precluded from pursuing any costs in relation to this application from the leaseholders themselves. It is considered that they would be unlikely to do this however the Tribunal makes such a determination pursuant to section 20C of the Landlord and Tenant Act 1985.”

Following a request for a review of its decision, the FTT substituted the following in a revised decision dated 30 June 2022:

“The Tribunal does … consider that the Applicants should be precluded from pursuing any costs in relation to this application from the leaseholders themselves. This is because dispensation is essentially a forbearance by the Tribunal and it would be unfair for the landlord to recover costs from any of the leaseholders living at Hippersley Point in the present case. Although not all of the leaseholders raised objections the Tribunal were satisfied that those that did were making general submissions which applied to all leaseholders. Accordingly, the dispensation is given on condition that the Applicants are prohibited from seeking their costs of this application from the leaseholders at Hippersley Point.”

The FTT thus reversed its order under section 20C of the L&TA 1985 but instead made dispensation conditional on Adriatic not being entitled to recover costs of the dispensation application from tenants.

Adriatic sought permission to appeal to the Upper Tribunal (Lands Chamber) against the costs condition. The Deputy President, Martin Rodger KC, granted permission, but he pointed out that an issue arose as to the possible application of paragraph 9 of schedule 8 to the BSA, which had come into force on 28 June 2022.

The appeal came before Edwin Johnson J (“the Judge”), the Chamber President. In a decision dated 13 November 2023 (“the Decision”), he concluded that the FTT's imposition of the costs condition could not be upheld. He also, however, concluded that paragraph 9 of schedule 8 to the BSA applied, with the result that Adriatic could not recover any of the costs of its dispensation application from tenants with “qualifying leases” within the meaning of section 119 of the BSA. The Judge summarised his conclusions as follows in paragraph 180 of the Decision:

“(1) The decision of the FTT to impose the Costs Condition was wrong in law, both as a matter of procedure and as a matter of substance. For the reasons which I have set out, the decision cannot be upheld as lying within the legitimate scope of the discretion which the FTT were exercising.

(2) By virtue of Paragraph 9, and for the reasons which I have given, the Costs are not recoverable, by the Service Charge, from those of the Respondents who hold qualifying leases within the meaning of Section 119. The Reviewed Decision was, for this reason, incomplete. The Costs were not recoverable in any event from those of the Respondents who hold qualifying leases. In this context I should also repeat that it does not seem to me that it would be fair to criticise the FTT for this omission.”

In the meantime, Adriatic had been informed in June 2023 that Land Securities, as the original developer of Hippersley Point, had agreed to manage and fund all “life-critical fire safety works necessary for your building” pursuant to the “Developer Remediation Contract” (as to which, see paragraph 36 below).

The Building Safety Act 2022

The BSA's long title identifies one of the purposes of the Act as “to make provision about the safety of people in or about buildings and the standard of buildings”. Part 5 of the BSA, comprising sections 116–160, contains, as its heading states, “Other provision about safety, standards etc”. Section 116(1) explains that sections 117–124 and schedule 8 “make provision in connection with the remediation of relevant defects in relevant buildings”.

Schedule 8 to the BSA is introduced in section 122. As section 122 states, schedule 8:

“(a) provides that certain service charge amounts relating to relevant defects in a relevant building are not payable, and

(b) makes provision for the recovery of those amounts from persons who are landlords under leases of the building (or any part of it).”

Subject to certain exceptions, a “relevant building” is “a self-contained building, or self-contained part of a building, in England that contains at least two dwellings and (a) is at least 11 metres high, or (b) has at least 5 storeys”: see section 117(2). “Relevant defect” is defined by section 120(2) to refer to “a defect … that (a) arises as a result of anything done (or not done), or anything used (or not used), in connection with relevant works, and (b) causes a building safety risk”. By respectively section 120(5) and section 120(3), “building safety risk” is “a risk to the safety of people in or about the building arising from (a) the spread of fire, or (b) the collapse of the building or any part of it” and “relevant works” means any of the following:

“(a) works relating to the construction or conversion of the building, if the construction or conversion was completed in the...