Remediation contribution orders and the risks for directors

Section 124 of the Building Safety Act 2022 (BSA) empowers the First‑tier Tribunal to make a remediation contribution order (RCO) where it’s just and equitable to do so. An RCO requires a specified entity to contribute to the costs of remedying, or costs connected with remedying, ‘relevant defects’ in a building.

Crucially, an RCO can only be made against a ‘specified body corporate or partnership’; it can’t be made against an individual in their personal capacity. The eligible targets are:

• a) A current landlord;
• b) A landlord at the qualifying time (February 2022);
• c) A developer in relation to the building; and
• d) A person associated with any of the above. Section 124 then expressly directs you to section 121 for the meaning of ‘associated’.

How section 124 affects directors

• The BSA’s RCO mechanism doesn’t impose personal payment liability on an individual director because orders can only be made against bodies corporate or partnerships;
• Directors are nevertheless relevant because their relationships can pull companies into scope through section 121’s association rules. If a landlord or developer is an individual, companies with which that individual is associated under section 121 can be targeted. If a landlord or developer is a company, other companies associated via common directors or control can be targeted; and
• Tribunals have indicated caution where the only link is a common directorship and the associated company is otherwise remote from the defective development. This may weigh against it being just and equitable to make an RCO. However, recent case law suggests tribunals may cast a wide net to ensure leaseholders are not left carrying the bill.

Former directors: why they still matter

Section 121 uses a five‑year look‑back to capture prior relationships at the qualifying time. Specifically, a body corporate is associated with any person who was a director of it at any time in the five years ending at the qualifying time (the ‘relevant period’). This means an association can arise even if the directorship ended before the qualifying time, provided it fell within that five‑year window.

This has two practical effects:

• If the relevant person for section 124(3) is an individual (for example, a developer or landlord), any company of which that individual was a director in that five‑year period can be an ‘associated person’ and therefore within scope for an RCO; and
• If the relevant person for section 124(3) is a company (for example, a developer company), companies linked by common directorships during the relevant period are associated for the purposes of section 124, even if the shared directorship has since ceased. Whether an RCO is then made will depend on the just and equitable test and factual remoteness of that association.

Because section 124(3)(d) captures a ‘person associated with’ a landlord or developer, these section 121 links can significantly widen the set of bodies corporate that may be required to contribute. This remains subject to the Tribunal’s just and equitable discretion. Early commentary highlights that while section 121 is deliberately broad, the Tribunal will guard against imposing liability on ‘very remote associates’ where the justice of doing so is not made out.

Tribunals also apply a discretionary just and equitable test; there’s no automatic liability merely because an entity falls within an associative link. Commentary on early decisions emphasises that association alone does not create a presumption and remoteness matters, particularly where the only link is a shared director.

Practical takeaways for boards and corporate groups

• Directors are not personally liable under section 124, but their current or historic directorships within the five‑year relevant period can associate other companies with the landlord or developer and expose those companies to RCO applications. Group structures and past governance therefore matter;
• The Tribunal will scrutinise whether it’s just and equitable to make an order against an associated company. A common directorship without substantive involvement may be insufficient where the association is remote; and
• Amendments in 2024 broaden what costs can be recovered under RCOs, increasing potential exposure once association is established.