Adriatic and Triathlon in the Supreme Court: BSA retrospectivity to be clarified

Two significant appeals are due to be heard by the Supreme Court in November: Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point [2025] EWCA Civ 856 (Adriatic) and Triathlon Homes LLP v Stratford Village Development Partnership [2025] EWCA Civ 846 (Triathlon).

They relate to different questions of retrospectivity under the Building Safety Act 2022 (the BSA) and the Secretary of State for Housing, Communities and Local Government is an intervener in both appeals. The decisions will be important in establishing how far the statutory scheme can change the financial consequences of events and expenditure predating 28 June 2022.

The time before those judgments are handed down, however, is also significant. It may provide a strategic window of opportunity to negotiate settlements before the Supreme Court delivers greater certainty.

For the purposes of this review, we focus on the retrospectivity arguments in each case as it is only these issues that will be considered by the Supreme Court.

Adriatic: Background

As we reported in our review of the Court of Appeal decision in July 2025, this dispute relates to Hippersley Point – a mixed use property constructed in around 2015 which is over 18 metres in height, with 10 storeys. There is a commercial unit on the ground floor and 32 residential flats which are subject to long leases.

In 2020, it became apparent that there were fire safety defects in the external construction of the building and extensive remediation works would be needed. These proceedings initially arose when Adriatic, the freeholder, made an application to the First-tier Tribunal (the FTT) to dispense with the consultation requirement for the remedial works under the Landlord and Tenant Act 1985 to try and avoid any delay to the works. The dispensation was granted by the FTT on the condition that Adriatic could not recover the costs of the application from the leaseholders.

On appeal, the Upper Tribunal did not uphold the FTT’s costs condition but reached a similar conclusion via another mechanism following the passing of the BSA. It held that paragraph 9 of schedule 8 of the BSA applied and, consequently, Adriatic could not recover the costs of its dispensation application from tenants with “qualifying leases”.

Schedule 8 of the BSA and the Court of Appeal in Adriatic

Schedule 8, paragraph 9(1) provides that:

“No service charge is payable under a qualifying lease in respect of legal or other professional services relating to the liability (or potential liability) of any person incurred as a result of a relevant defect”

The Court of Appeal Justices were split in their approach. The majority (Lord Justice Nugee and Lord Justice Holgate) considered that, from 28 June 2022, relevant service charges are not payable by qualifying leaseholders even where the underlying costs have already been incurred or demanded, provided they have not already been paid.

Lord Justice Newey dissented on the basis that the protection should apply only where the liability for the relevant services was incurred after 28 June 2022. He emphasised the legal presumption that a statute does not have 'retrospective' effect, unless a contrary intention is clear. The majority considered that this presumption was displaced and one of the key factors was the underlying statutory purpose behind Schedule 8 of the BSA and the BSA in general.

The dispute in Adriatic is centred on paragraph 9 of Schedule 8 of the BSA but, as the Court of Appeal acknowledged, the finding is also likely to apply to paragraphs 2-4 and 8 of Schedule 8 (all relating to further restrictions on the costs that can be passed on to leaseholders through the service charge).

Adriatic: Issue before the Supreme Court

Does paragraph 9 of Schedule 8 preclude the recovery of legal or professional costs by way of service charge from leaseholders holding a qualifying lease where those costs were incurred before the BSA 2022 came into effect?

Triathlon: Background

The dispute in Triathlon relates to the remediation of fire safety defects in the external walls of five blocks of apartments in the East Village Estate in Stratford in East London. Triathlon has long leasehold interests in the social housing units and initially obtained Remediation Contribution Orders (RCOs) from the FTT against the original developer, Stratford Village Development Partnership (SVDP) and an associate, Get Living (GL), under s124 of the BSA.

Section 124 of the BSA and the Court of Appeal in Triathlon

By way of brief recap, s124 of the BSA enables the FTT, where it considers it “just and equitable” to do so, to make an RCO requiring a landlord, developer, or a person associated with a landlord or developer to contribute towards costs incurred, or to be incurred, in remedying or otherwise addressing relevant defects in a relevant building. This enables the RCO regime to reach beyond the entity directly responsible for the building to associated companies or partnerships within the relevant corporate group.

The RCOs in these proceedings required SVDP and GL to pay Triathlon’s share of the remediation costs and to enable Triathlon to recover other costs incurred as a result of the defects, including those relating to the waking watch and a temporary fire alarm system. The RCOs extended to costs incurred before 28 June 2022, when s124 of the BSA came into force.

The appeal was heard by the Court of Appeal on two primary grounds: (a) whether the FTT erred in concluding it was “just and equitable” to make the RCOs; and (b) whether RCOs could be made for costs incurred before the relevant part of the BSA came into force on 28 June 2022, which covered around £1.1 million of Triathlon’s claims.

SVDP and GL did not persuade the Court of Appeal and both grounds of appeal were dismissed. The Court of Appeal agreed with the view of the FTT at first instance that s124 of the BSA does have retrospective effect which means that RCOs can be made in respect of costs incurred before 28 June 2022.

SVDP and GL have been granted leave to appeal in respect of the retrospectivity argument “b” (above) only.

Triathlon: Issue before the Supreme Court

Was the Court of Appeal wrong to conclude that a RCO under s124 of the Building Safety Act 2022 can be made in respect of costs incurred before that provision came into force on 28 June 2022?

Areas of focus in both Court of Appeal decisions

The Supreme Court decision in URS Corporation Ltd v BDW Trading Ltd [2025]

The judgment last year in URS Corporation Ltd v BDW Trading Ltd (Rev1) [2025] UKSC 21 (URS) remains the only Supreme Court decision to date on the Building Safety Act 2022. Unsurprisingly, it figured significantly in the Court of Appeal judgments in both Adriatic and Triathlon on retrospectivity, as discussed below.

Whilst Lord Justice Nugee in Triathlon explained that what was said in URS on certain sections of Part 5 (which included s124 and Schedule 8) may not technically be part of the ratio of the URS decision, he stated that it was nonetheless “a carefully considered statement of the position not a casual aside, and one that [the Court of Appeal] ought to be guided by unless convinced that it was wrong”.

Purpose and policy of the BSA

The pivotal issue in both Court of Appeal decisions was the “central purpose and policy of the [BSA]…to hold those responsible for building safety defects accountable” which was cited in Triathlon from the joint leading Supreme Court judgment of Lords Hamblen and Burrows JJSC in URS who describe both Schedule 8 and section 124 of the BSA as falling within the “four sets of provisions [that] have retrospective effect”.

In Adriatic, Lord Justice Nugee noted that Lords Hamblen and Burrows JJSC described the BSA as “both forward and backward-looking” and that the “backward-looking provisions are set out in Part 5”. They then proceeded to list key provisions in Part 5, including s124 and Schedule 8, stating that “[a]ll four sets of provisions have retrospective effect” and emphasising “the importance of retrospectivity to Part 5”.

Legislation: retrospectivity and fairness

Delivering the leading judgment in Triathlon, Lord Justice Nugee cited the first-instance FTT decision in the Triathlon dispute as a summary of the relevant principles on this point:

“61...It is common ground that, as a matter of legal policy, changes in the law should not take effect retrospectively. Nevertheless, Parliament clearly has power to enact legislation which has retrospective effect, but it is presumed not to intend to do so unless that intention is clear. How clearly Parliament’s intention must appear depends on the degree of unfairness which would result from giving the legislation retrospective effect”.

In Adriatic, the majority held that the balance of fairness tilted in favour of leaseholders:

“The only way to give effect to the Parliamentary intention of breaking the logjam and protecting leaseholders is to my mind to interpret the provisions that “no service charge is payable” as meaning what they appear to say, namely that from the date of such provisions coming into force no such service charge is indeed payable”.

Lord Justice Nugee (in Adriatic) pointed out that the unfairness towards landlords primarily lay in depriving them of their contractual entitlement to pass certain costs on to leaseholders through the service charge. Once that decision had been made, the decision to deprive them of accrued rights did not add much in terms (in his view) of additional unfairness; to the extent that it did, the Court of Appeal did not consider it would justify reading the BSA in a way that “cut across the legislative purpose of providing protection to leaseholders against unaffordable bills in the way that Parliament obviously intended”.

It was ordered that the two appeals in Adriatic and Triathlon should be heard sequentially by the same constitution of the Court of Appeal. As Lord Justice Nugee set out in his judgment in Triathlon, there was a progression from the finding in Adriatic to that in Triathlon which is that where the Court of Appeal finding in Adriatic applies, the leaseholder protection in paragraph 9 of Schedule 8 “only provides protection from being required to pay; it does not enable payments that have been made to be recovered”. This, however, is addressed by the Court of Appeal finding in Triathlon that s124 provides “the statutory mechanism for leaseholders who have paid to seek to pass on the costs they have already incurred – whether before or after the Act came into force”.

Headline points

The appeals in Adriatic and Triathlon impact allocation, not extinction - a favourable outcome for one group will transfer pressure to another group in the ownership, development or construction chain. If landlords and management companies cannot recover historic building safety expenditure through service charges, they will seek to move that loss down the contractual chain to developers, contractors and / or consultants.

The Supreme Court decisions will affect the urgency with which parties pursue these contractual or statutory routes, with historic losses moving more quickly towards the next available solvent participant. One option for claimants will be adjudication for a swift (temporarily) binding decision, and we expect an increase in referrals once the judgments are handed down.

As mentioned at the outset, timing at this stage is strategically important. If a dispute is impacted by s124 or Schedule 8 of the BSA, once the Supreme Court hands down its judgment, there will be greater certainty, but potentially less flexibility to negotiate a deal and cap losses. Until the judgments are published, a particular outcome cannot be guaranteed, and this creates a commercial window in which both sides can price litigation risk before the negotiating parameters move.

The Supreme Court could uphold the existing decisions, reverse them, or adopt a different construction of the statutory boundaries. Whatever the outcome of these appeals, the decisions are likely to immediately impact settlement leverage, and it may therefore be prudent to conduct a strategic review now of any disputes which include these types of claims.