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"Of particular significance is the court's interpretation of "fitness" to perform remediation works, which extends beyond technical competence to also encompass public trust and confidence."
The case centred on three critical decisions: designating Rydon as “unfit” to carry out remediation works (the “Designation Decision”); directing that remediation should take place through the Building Safety Fund (“BSF”); and determining that the buildings should remain within the BSF rather than being transferred to Rydon.
The court held that in this contractual context, judicial review was limited to claims of fraud, corruption or bad faith – none of which applied. Even considering the merits, all grounds for judicial review failed. The judgment clarifies the relationship between contractual and public law obligations in the building safety regime and establishes important precedents regarding developer responsibilities for historic building safety defects. Of particular significance is the court’s interpretation of “fitness” to perform remediation works, which extends beyond technical competence to also encompass public trust and confidence.
Factual Background
The Rydon case emerges from the tragic aftermath of the Grenfell Tower fire of 14 June 2017, in which 72 people lost their lives. The Grenfell Tower Inquiry concluded that the rapid spread of the fire was primarily due to combustible materials in the cladding installed during refurbishment works carried out between 2014 and 2016. Rydon Maintenance Limited, a subsidiary of the claimant, was the principal contractor for that refurbishment.
Following Grenfell, the government established emergency funding schemes, including the BSF, to ensure remediation of the most critically at-risk buildings. However, recognising it was not practicable to remediate all unsafe buildings through public funding, in January 2022, the Secretary of State called on developers to fund or undertake remediation at their own cost (“self-remediation”). This was formalised in March 2022 through a voluntary pledge letter that developers could sign.
Between July 2022 and January 2023, the Secretary of State negotiated with industry representatives to develop binding Self-Remediation Terms (“SRTs”). Although Rydon was contacted multiple times, it did not engage with these negotiations, considering itself an SME rather than a “large housebuilder” at which the initiative was aimed.
The Building Safety Act 2022 received Royal Assent on 28 April 2022, establishing a new regulatory framework for building safety. This was followed by the Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023, which created the Responsible Actors Scheme (“RAS”). The regulations required eligible persons to enter into Self-Remediation Contracts or face serious prohibitions, including being barred from carrying out major developments of 10 or more homes.
On 21 July 2023, Rydon was invited to apply to join RAS. On the same date, Rydon was informed by managing agent KDG that Resident Management Companies had applied to the BSF for the Cable Street Buildings – three high-rise residential buildings for which Rydon was the developer. On 15 September 2023, Rydon entered into the contract and immediately applied to request transfer of the Cable Street Buildings from the BSF to allow Rydon to undertake the remediation works itself.
Following objections from the Deputy Mayor of London and the Resident Management Companies, and after reviewing various submissions, the Secretary of State issued the three contested decisions on 28 February 2024. The Grant Funding Agreements (“GFAs”) for the Cable Street Buildings were signed on 1 March 2024, and remediation work began on 18 March 2024.
Legal Analysis
Rydon advanced several grounds of challenge, primarily arguing that the decisions were amenable to full judicial review despite their contractual context. Rydon contended that it was effectively compelled to enter into the contract to avoid severe regulatory consequences, meaning the agreement was not truly voluntary or commercial in nature.
On procedural fairness, Rydon claimed there was unlawful procedural unfairness in the Secretary of State’s failure to provide an opportunity to respond to third-party representations before making the decisions. Rydon argued it should have been given “the gist of the case” it had to answer, citing established principles of natural justice.
Rydon also alleged a breach of the Tameside duty, contending the Secretary of State failed to adequately investigate whether Rydon was fit to carry out remediation works. Specifically, Rydon argued the Secretary should have requested documentary evidence of lessons learned since Grenfell and considered that Rydon had successfully remediated other buildings.
Further grounds included failure to take account of material considerations, predetermination, improper motive, and irrationality. Rydon submitted that the Secretary failed to properly distinguish between Rydon and Rydon Maintenance, disregarded Rydon’s successful remediation of other buildings, and ignored civil servants’ views that the buildings “should be transferred” to Rydon.
"The Secretary of State maintained that in the contractual context, judicial review was limited to fraud, corruption or bad faith."
The Secretary of State maintained that in the contractual context, judicial review was limited to fraud, corruption or bad faith. The Secretary argued that the SRTs were the product of negotiations in which Rydon chose not to participate. On procedural fairness, the Secretary contended there was no contractual right to information or to make representations prior to decisions. On the Tameside duty, the Secretary submitted that there was no obligation to investigate further unless not doing so would be unreasonable. The Secretary denied all allegations of predetermination, improper motive, and irrationality.
Court’s consideration and decision
Mr Justice Choudhury dismissed the claim, first holding that in this contractual context, judicial review was limited to claims of fraud, corruption or bad faith – none of which applied. The judge rejected Rydon’s argument that it was “compelled” to enter the contract in a way that changed its character:
“It is not unusual for a private entity to have to enter into a contract with a particular provider (e.g. with an insurer) as a condition of participating in a given market. Moreover, the terms of the Contract in this case were not imposed ‘from on high’ but were the subject of extensive negotiations with the HBF, the representative of the building industry” (para 72).
The Court emphasised that there was “no nexus between the contractual provisions pursuant to which these decisions were made and any statutory power so as to attract public law remedies” (para 70).
This finding alone was sufficient to dismiss the claim, but the court nevertheless considered each ground on its merits.
On procedural fairness, the court found no breach of natural justice, noting the contract did not provide for information to be made available prior to decisions being made. The court emphasised that “it would be contrary to that contractual scheme if public law rights were to cut across it so as to create rights for Rydon that are not otherwise catered for” (para 82).
Regarding the Tameside duty, the court found no failure to undertake sufficient inquiry. The judge observed that it was not unreasonable to associate Rydon with Rydon Maintenance given the integrated way the group companies operated:
“In the case of Rydon in particular, the evidence of its Group Legal Director, Ms Ivanec as to how the various group entities interrelate is instructive: ‘Each of the 3 main operating companies (Rydon Construction, Rydon Homes, Rydon Maintenance) has its own operational and management teams, its own board of directors and a managing director… The managing directors of each operating company are also members of the more senior boards of the Rydon Group’” (para 96).
Crucially, the court rejected Rydon’s narrow interpretation of “unfitness,” stating that the concept “is not confined to competence alone. It can include other matters relevant to the public interest including, for example, trust and confidence in that PD in relation, in particular, to matters relating to building safety, which may not be a matter that is easily re-established once lost” (para 99).
The court found that all relevant considerations had been taken into account, there was no evidence of predetermination or improper motive, and the decisions were rational and adequately reasoned.
Implications for the UK construction industry
"The construction industry must recognise that building safety is not merely a technical matter but one that involves public trust and confidence."
This judgment has profound implications for construction contractors, particularly those involved in developments with unsafe cladding or other building safety defects:
- first, it confirms the enforceability of the Self-Remediation Terms and the government’s approach to making developers responsible for historical building safety defects. The court’s endorsement of this regime strengthens the government’s hand in ensuring developers fund and undertake necessary remediation works;
- second, the case establishes important principles regarding corporate group liability. As the judgment states: “the approach of the RAS Regulations is not to dissociate one group entity from another for the purposes of determining responsibility for the development or refurbishment of a particular building” (para 96). This means parent companies cannot escape responsibility for the actions of their subsidiaries in building safety matters – a principle with far-reaching consequences for corporate structures in the construction industry;
- third, and perhaps most significantly, the court endorsed a broad interpretation of “fitness” to carry out remediation works. The judgment makes clear that being “unfit” is “not confined to competence alone” but includes “trust and confidence… which may not be a matter that is easily re-established once lost” (para 99). This suggests contractors with a history of building safety issues may face challenges in demonstrating fitness even if they have technical capacity to perform remediation works. As the court observed, “Rydon may well have successfully remediated other buildings but that would not necessarily mean that, in light of the evidence presented to the Inquiry (which could, for example, have had the effect of badly eroding trust and confidence), it would be considered ‘fit’ to remediate the Cable Street Buildings having regard to all relevant considerations” (para 108);
- fourth, the judgment highlights the serious financial implications of being designated “unfit” to perform remediation. In Rydon’s case, the difference between remediation to the PAS 9980 standard (which it proposed) and the CAN standard (ultimately required) was estimated at approximately £10m;
- fifth, the case demonstrates the importance of engaging with industry-wide negotiations. Rydon’s decision not to participate in the development of the SRTs left it bound by terms it had no input in shaping. As the judgment notes, “Rydon had the opportunity at an earlier stage to participate in the negotiations. It chose not to take that opportunity up. It cannot now complain, after the terms have been agreed with the bulk of the industry, that the Department was unwilling to reopen negotiations especially on its account” (para 73); and
- finally, the judgment establishes that decisions under the SRTs are primarily contractual in nature and subject to limited judicial review. This means contractors will generally need to rely on contractual remedies rather than public law challenges to contest decisions they consider unfair.
As quoted in the judgment, the Grenfell Tower Inquiry concluded that Rydon “bears considerable responsibility for the fire. It gave inadequate thought to fire safety, to which it displayed a casual attitude throughout the project and its systems for managing the design work did not ensure that its sub-contractors and consultants properly understood their different responsibilities” (para 4). This case demonstrates that such findings can have long-lasting consequences for contractors, extending well beyond the specific project in question.
The construction industry must recognise that building safety is not merely a technical matter but one that involves public trust and confidence – factors that may prove more difficult to restore than technical capabilities. As the post-Grenfell regulatory regime continues to develop, contractors must be vigilant about both their historical and ongoing building safety obligations, with reputational factors potentially as significant as technical competence in determining their ability to operate in this new environment.
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