Scope of Judicial Review in a Contractual Context

On 29 August 2025, the High Court handed down its judgment in R (Rydon Group Holdings Ltd) v Secretary of State for Levelling Up, Housing and Communities [2025] EWHC 2182 (Admin), a judicial review claim brought by a developer relating to the building safety crisis that followed the Grenfell Tower fire. The Court found the decisions under challenge were not amenable to judicial review, save on grounds of fraud, corruption or bad faith (none of which applied). The decision provides important guidance on the scope of judicial review in a contractual context.

Factual background

The Claimant (“Rydon”) is the parent company of Rydon Maintenance Limited, which was the principal contractor for the refurbishment of Grenfell Tower before the tragic fire in 2017, and a Core Participant in the subsequent Grenfell Tower Inquiry.

Following the Grenfell Tower fire, the Government introduced various measures to address the fire safety risks of high-rise buildings in England. These measures included the establishment of the Building Safety Fund (the “BSF”) and the development of legislation to reform the building safety system (which became the Building Safety Act 2022 (the “BSA”)).

Additionally, in January 2022, the Secretary of State wrote an open letter calling on developers to agree to fund or undertake at their own expense the remediation of unsafe high-rise buildings that they had developed (“self-remediation”).

The Secretary of State subsequently published a voluntary pledge letter whereby developers could publicly commit to the self-remediation principle. The Department for Levelling Up, Housing and Communities then engaged in negotiations with developers to agree contractual terms to give effect to the self-remediation principle (ultimately resulting in a contract incorporating the Self-Remediation Terms or “SRTs” (the “Contract”)). Rydon was invited to sign the pledge and provide comments on draft terms but did not respond or participate in the negotiations.

The “Responsible Actors Scheme” was established by regulations (the “RAS Regulations”) made pursuant to the enabling power in the BSA. To join the Responsible Actors Scheme, an eligible developer had to take responsibility for remediating fire safety defects by signing the Contract and complying with the SRTs; otherwise, that developer would be placed on a published “prohibitions list”, preventing them from carrying out major developments of land.

Once the SRTs were in final form, Rydon requested that the Secretary of State amend the terms or agree a side letter. The Secretary of State declined to re-open the negotiations and Rydon ultimately signed the Contract and joined the Responsible Actors Scheme in 2023.

In 2024, the Secretary of State made a series of decisions about the remediation of high-rise buildings with fire safety defects that Rydon had developed. Those decisions included a determination that Rydon was ‘unfit’ to carry out the remediation works and a direction that remediation should proceed through the BSF as per the SRTs of the Contract between the parties, with Rydon reimbursing expenditure incurred by the BSF.

Rydon challenged these decisions by way of judicial review.

Judgment: scope of judicial review

The parties accepted that the decisions of the Secretary of State were amenable to judicial review, but disagreed as to the scope of that review.

The established principle is that a public authority’s decision to enter into a contract is only amenable to judicial review on the limited grounds of fraud, corruption or bad faith (Mercury Ltd v Electricity Corporation of New Zealand Ltd [1994] 1 WLR 521). Notwithstanding, Rydon contended that the full range of judicial review grounds should be available for the following reasons:

• Statutory context for the Contract: the BSA and the RAS Regulations provide the ‘statutory architecture’ for the Responsible Actors Scheme, which is given effect by the Contract and SRTs. The Contract, it said, was not a commercial agreement, but a means of enforcing statutory objectives in the public interest.
• Freedom to contract: the Contract and SRTs were neither freely negotiated nor freely entered into by Rydon. This was because (i) the consequence of failing to sign up to the terms was that the company would have been placed on the prohibitions list and (ii) the Secretary of State was unwilling to enter into further negotiations with Rydon or agree to a side letter to amend the terms.

The Court disagreed and dismissed the claim for judicial review in its entirety, finding that – due to the contractual context – judicial review was limited to grounds of fraud, corruption or bad faith, which did not apply here. Mr Justice Choudhury provided the following reasons.

First, the contractual context need not be purely commercial for a limited scope of judicial review to apply, as political and other considerations can also be taken into account by the public authority (State of Mauritius v CT Power Ltd [2019] UKPC 27). In Rydon, the Secretary of State’s decisions were taken in a contractual context, and the fact that the underlying objectives went beyond the purely commercial to include other factors such as public safety did not diminish that contractual context.

Second, a contractual obligation does not become a public law duty merely because a public authority is a contracting party or because that obligation is referenced in the statutory architecture. There must be a ‘relevant and sufficient nexus’ between the contractual obligation and a relevant public law power to attract public law remedies (Hampshire County Council v Supportways Community Services Ltd [2006] EWCA Civ 1035). In Rydon, the Secretary of State’s decisions were made pursuant to contractual terms which were not directly reflective of a particular statutory provision, therefore there was no such nexus between the contractual obligation and any statutory power.

Third, although the consequences of not signing the Contract were severe, it is not unusual for a provider to require a private entity to enter into a contract as a condition of participating in a particular market. In any event, the terms of the Contract were not imposed on Rydon, but were the result of extensive negotiations with the industry which Rydon chose not to participate in.

Finally, it was noted that – even if the contractual remedies available to Rydon would not provide the relief sought by way of judicial review – that was not enough to permit public law remedies to be pursued.

(Choudhury J went on to find that – even if the claim had been amenable to judicial review on the full range of public law grounds – it would have failed on its merits anyway. In doing so, the Judge explicitly focused on each ground ‘in the particular contractual context in which it arises’, so as not to allow the application of public law standards to cut across or undermine the Secretary of State’s contractual position and confer on Rydon some advantage beyond that which was agreed.)

Concluding thoughts

This judgment illustrates that the scope of judicial review of decisions taken in a contractual context can be limited to ‘bad faith’ grounds, which are notoriously difficult to make out, notwithstanding a statutory background and underlying public interest objective.

Interestingly, the judgment comes after R (on the application of Shashikanth) v NHS Litigation Authority & Anor [2024] EWCA Civ 1477, in which the Court of Appeal held that an adjudicator’s decision in a contractual dispute was subject to judicial review as the broader context was statutory. The body of caselaw on judicial review in a contractual context continues to evolve and Rydon is an important reminder that the position is nuanced and context specific, reinforcing the importance of contracting parties considering their specific circumstances carefully.

Sharpe Pritchard’s experienced dispute resolution team advises both public authorities and private companies on a range of public law matters, including complex commercial disputes with public law elements. Please do not hesitate to contact us if we can be of assistance.