Retrospectivity and the Building Safety Act 2022 in the Court of Appeal

This note concerns the retrospective effect of two provisions in the Building Safety Act 2022, as interpreted by the Court of Appeal in Adriatic Land 5 Limited v Long Leaseholders at Hippersley Point and Triathlon Homes LLP v Stratford Village Development Partnership.

In Adriatic Land, the landlord of flats at Hippersley Point had applied for dispensation from the consultation requirements in section 20 of the Landlord and Tenant Act 1985 in respect of fire safety interim measures and remediation works. Paragraph 9 of Schedule 8 of the Building Safety Act 2022 (BSA) provides: 

9(1) 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 costs of the dispensation application were incurred before the commencement of Schedule 8 and the question before the Court of Appeal was whether paragraph 9 prevented recovery of these ‘pre-Act’ costs from qualifying leaseholders, that is, does it apply retrospectively? The Court of Appeal recognised that the decision on retrospectivity ‘is likely to apply’ to the other Schedule 8 provisions apart from paragraph 9 [177], and so the case has wide implications in relation to the recovery of the costs of remediation works. 

In Triathlon Homes, the First Tier Tribunal had made a remediation contribution order (RCO) under section 124 of the BSA against SVDP (the developer of five blocks at East Village Estate in Stratford) and Get Living (now, in effect the owner of SVDP [1]). This order covered costs incurred before section 124 came into force.  Again, the Court of Appeal had to address retrospectivity: could a section 124 order include pre-Act costs? 

In Adriatic Land, the Court of Appeal split 2-1 on the construction of paragraph 9. Nugee LJ, with whom Holgate LJ concurred, found that the provision should operate retrospectively, with the effect that no service charge billed but unpaid at the date of commencement of paragraph 9, or not yet billed, was payable by qualifying leaseholders even though the costs were incurred before commencement. This would cause unfairness to landlords but reflected Parliament’s decision [203]. Newey LJ, by contrast, would have held that paragraph 9 should not apply retrospectively – there was therefore no prohibition on the landlord recovering the dispensation costs incurred prior to commencement.

In Triathlon Homes, the Court unanimously found that section 124 of the BSA did have retrospective effect. Nugee LJ gave the lead judgment, with which Holgate LJ agreed. But Newey LJ gave a concurring judgment, agreeing with Nugee LJ’s outcome via his own reasoning. It was therefore common ground that section 124 did have retrospective effect: an RCO can be made in relation to costs incurred before its commencement.

How did the Court arrive at its conclusion in each case? To do so, the Court had to grapple with presumption against retrospectivity and the circumstances under which such a presumption can be dislodged. 

A presumption against retrospective effect

One aid to statutory interpretation is the presumption that enactments are ordinarily supposed to have prospective, rather than retrospective, application. As Lord Rodger noted in Wilson v First County Trust, “at common law there is a presumption that a statute does not have retrospective effect” ([186]). But the effect and application of this presumption is contested, and the relevant case law pulls in different directions. 

One strand of case law suggests that the presumption should apply as a rule, and that exceptions should be narrowly construed, perhaps only by explicit wording: as Lord Hughes said in R v Docherty, “the general rule of English law… is that a statute is prospective rather than retrospective in effect unless it distinctly says otherwise” ([17]), and as Lindley LJ stated in Lauri v Renad [1893] 3 Ch 402, “it is a fundamental rule of English law that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such a construction” (421).

Another strand of case law emphasises what Lord Neuberger said in the case of Odelola v Secretary of State for the Home Department: the presumption against retrospectivity does not operate as “some sort of substantive or even procedural legal right” nor is it even really a “a rule of construction” but rather a mere “factor to be taken into account when interpreting a statute or rule” ([55]). This more pragmatic stance sees the presumption as just one consideration amongst many (see L’Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 Lloyd’s Rep 25), and the presumption, if it is a presumption, can be rebutted by context and implication, rather than express wording.  

Although they agreed that the law on retrospectivity was “well settled” (Adriatic Land, [134]) it seems that Nugee and Newey LJJ each emphasised a different strand of the case law.  Newey LJ cited authorities suggesting that the presumption should ordinarily only be usurped by express wording; Nugee LJ cited authorities allowing the rebuttal of the presumption on wider grounds. Newey LJ was comfortable calling the non-retrospectivity principle a strong presumption; Nugee LJ preferred Lord Neuberger’s characterisation of it as a simple rule of construction. 

Displacing the presumption

Indeed, when it came to displacing the relevant presumption (if that is what it is), the two judges adopted different approaches. In Adriatic Land, Nugee LJ focused on construing the BSA in line with its underlying purpose: [145]-[176]. Achieving a result which aligned with the “aims of the BSA” was of cardinal importance. For him, the precise wording of the provision was of less relevance (although he did draw upon the language of the provision to support his conclusion: [199]-[201]). 

By contrast, Newey LJ placed more weight on the fact that the statutory provisions in question did not feature any express terms which suggested they should apply retrospectively: the provisions were “not expressed to be subject to any temporal limitation” ([73]). Because the legislature could well have explained that the provision should operate to prohibit charging for past works, “but nothing to that effect is to be found in paragraph 9” ([73]), this could be used to infer that the provision was intended to be prospective only. 

Similarly, although the two judges came to the same conclusion in Triathlon Homes, their reasoning differed in some respects. Nugee LJ focused on the need to give effect to the purpose(s) of the BSA as a whole when construing section 124 ([151]) and considered it important to adopt an interpretation which made the Act workable as a whole ([154]). Newey LJ, by contrast, seemed to care more about the language of the statute ([160]) (although he too considered the wider purpose of the scheme [162] and noted that section 124 does not alter already-accrued rights but allows a ‘fresh liability’ [164]).

Conclusion

The role of the presumption against retrospectivity – if indeed it is a presumption – is a tricky thing. Sometimes it is framed as a strong presumption, where only express wording will oust it. Sometimes, it is framed as an aid to interpreting and applying the underlying purpose of the statute, with its application dependent on the applicable context. In Adriatic Land and  Triathlon Homes, this difference can be seen when comparing the judgments of Nugee LJ (who seems to favour the latter approach) and Newey LJ (who seems to favour the former approach). Sometimes these twin approaches can lead to the same conclusion, as in Triathlon Homes. But sometimes they can lead to different places, as the (relatively novel) split in the Adriatic Land case shows. 

Given the importance of the issues at stake, an appeal to the Supreme Court may well be forthcoming. Our highest court should take up the opportunity to issue authoritative guidance on the operation of the presumption against retrospectivity, both in respect to this case and for the purposes of statutory construction in general.