Developer says scale of the liability is ‘significant’ and it is hoping to find ‘constructive way forward with government’
Urban Splash has been ordered to pay £46.5m to the government in relation to building safety remediation works on seven buildings in Manchester.
A tribunal in Manchester handed down the judgment today following three years of proceedings brought by the Ministry of Housing, Communities and Local Government (MHCLG).
The department claimed money from the government’s Building Safety Fund (BSF) was wrongly used to remediate buildings found to contain fire risks.
The First-tier Tribunal ordered five subsidiaries of Urban Splash to repay funds spent on fixing defects in the buildings including the use of combustible materials, ineffective cavity barriers and failures of compartmentation. Cases involving four further respondents were settled out of court.
It is understood that Urban Splash is not seeking to appeal the decision. A spokesperson for the developer admitted the “scale of the liability identified by the tribunal is significant for a business of our size”.
However, the firm said it is hoping to find a “constructive way forward with government while continuing to deliver much-needed homes and regeneration across the country”.
It said: “Our focus is firmly on the future rather than the past. The challenges created by the Building Safety Act are not unique to Urban Splash. This is not simply about one company. It is about finding a way in which the objectives of building safety, housing delivery and regeneration can all be achieved together.
“The outcome of the tribunal means we are now seeking to implement and work through a plan in partnership with the government, and our other stakeholders.
“Our priority is to protect all stakeholder interests; preserve jobs and our valuable regeneration expertise; and maintain our capacity to deliver the much-needed homes and regeneration projects in our pipeline.”
The works cost a total of £60.6m with £52.5m funded by the BSF. The tribunal said it had ordered the five subsidiaries to pay the lower amount of £46.5m “principally because of our conclusion concerning the government’s shared responsibility for the circumstances which produced the building-safety crisis”.
MHCLG attempted to claim back £23m spent on Burton Place, £15m on the Moho Building, £3.1m on the Chips Building, £2m on Emmeline House, £1.8m on Box Works, £1.5m on the Christabel Building and £589,000 on Sylvia House.
The Building Safety Fund was set up in June 2020 to pay for fire safety remediation works on buildings found to contain defects in the aftermath of the Grenfell Tower fire, which killed 72 people in June 2017.
In May this year, MHCLG argued that Urban Splash had “failed to do the right thing” by not undertaking or funding the remediation itself.
In the tribunal’s ruling handed down today, Judge J Holbrook said: “We do not find that expression helpful” and argued the issue was not whether Urban Splash had “met some undefined moral standard, but whether its conduct affects the fairness of requiring it to contribute”.
While the judgment accepted that Urban Splash had provided “useful and responsible assistance” with the post-Grenfell investigations into the safety of the seven buildings, it argued there was a distinction between that assistance and “accepting financial responsibility for the resulting remediation”.
Urban Splash Limited, a subsidiary of Urban Splash Group which was the primary developer of all seven buildings, is described in the tribunal’s judgment as “technically insolvent”. Urban Splash Developments Limited remains an active property development company with its accounts for 2022 recorded net assets of about £10.5m.
The five respondents liable for the £46.5m are Urban Splash Limited, Urban Splash Developments Limited, Urban Splash Group Holdings Limited, Urban Splash Work Limited and Stubbs Mill LLP.
MHCLG has been contacted for comment.
No comments yet