Almacantar Centre Point Nominee No. 1 Ltd & Anor v de Valk & Ors: furthering the debate on cladding and the Building Safety Act 2022

The meaning of cladding under the Building Safety Act 2022 continues to be debated, this time in the case of Almacantar Centre Point Nominee No. 1 Ltd & Ors v Penelope de Valk & Ors. Earlier this summer, the Upper  Tribunal affirmed the First Tier Tribunal’s earlier decision that the respondent leaseholders would not have to pay a service charge towards upcoming works at Centre Point House as the  works constituted cladding remediation and fell within Paragraph 8 Schedule 8 of the Building Safety Act 2022 (BSA 2022). The cost of the works, the Upper Tribunal upheld, would be borne by the appellant landlord. The case has helped clarify  when  works will fall into the ambit  of ‘cladding remediation’, as well as raising some interesting questions on when a lease can be classified as a ‘qualifying lease’ under s 119(2) BSA 2022.

Centre Point House  is currently in use as a block of 26 residential flats. The appellant was the freeholder and landlord of the flats; the respondents were 13 of the leaseholders who all held ‘qualifying leases’. Centre Point House was facing increasing issues with the timber-framed façade, including water ingress; timber rot; and general degradation. The Landlord had proposed various works to combat the disrepariand applied to the First Tier Tribunal to determine if the cost of the proposed  works could be recovered by way of service charge. The First Tier Tribunal found that the leaseholders who held qualifying leases would not have to pay a service charge towards the cost of the works as the works  constituted ‘cladding remediation’ as defined in Paragraph 8 Schedule 8 BSA 2022. The Landlord appealed this decision on multiple grounds.

Cladding remediation and the ‘relevant defect’

The Landlord’s first argument on appeal was that Paragraph 8 Schedule 8 of the BSA 2022 must be read alongside the rest of the BSA 2022, and that Paragraph 8 should be read as limited to including only ‘relevant works’ and ‘relevant defects’, and the cladding must have been installed in the ‘relevant period’. The Landlord argued that the works in question  did not constitute “relevant works” to fix “relevant defects” and that the original cladding had been installed outside of the “relevant period”. The Upper Tribunal disagreed and upheld the First Tier Tribunal’s decision, that Paragraph 8, Schedule 8 BSA 2022, should not be limited to ‘relevant’ defects. The Tribunal were of the view that the statutory wording was  ‘clear and unambiguous’.

Cladding

The Landlord’s central argument on appeal was that Centre Point House did not have cladding, or a cladding system, as defined by Paragraph 8 Schedule 8 BSA 2022. The Landlord also argued that the cladding was not ‘unsafe’ as defined under the 2022 Act.

The Upper Tribunal upheld the First Tier Tribunal’s findings that Centre Point House did have cladding, preferring the interpretation advanced in the earlier case of Lant Street and further clarifying that  ‘unsafe’ should be defined with its  ordinary meaning. As per the First Tier Tribunal’s findings, the cladding on Centre Point House was deemed unsafe.

Qualifying leases

Under Paragraph 13 Schedule 8 BSA 2022, there is a presumption that certain leases meeting statutory conditions under the Act, are to be treated as qualifying leases, to which certain leaseholder protections under the Act apply (including protection from the costs associated with historical building safety defects, including unsafe cladding).  This presumption can be rebutted if the Landlord takes reasonable steps to obtain a leaseholder deed of certificate. However, in Almacantar, the Landlord had not made any steps to obtain such certificates when the case was originally heard by the First Tier Tribunal and argued on appeal that the First Tier Tribunal should not have applied this presumption. The Upper Tribunal upheld the original decision, citing the Landlord’s failure to take ‘reasonable steps’ as the evidence of why the presumption should not have been departed from.

Conclusion

This case has provided some much-needed clarification on the definitions of cladding, cladding remediation, cladding systems and ‘unsafe’ under the BSA 2022. Following this appeal, the court’s position is to read Paragraph 8 Schedule 8 of the Act widely, taking the statutory words as ‘clear and unambiguous’ with the intention of protecting leaseholders from paying service charges for works which fall under Schedule 8.

This appeal has revealed how widely the courts are willing to define Schedule 8 BSA 2022, which has potential ramifications for Landlords with upcoming or foreseen cladding works. We can provide landlords or tenants with strategic advice and guidance.

We anticipate that Almacantar may be subject to further appeal and we will report on any further key developments.