Introduction

On 28 April 2022, the Building Safety Bill received Royal Assent and became the Building Safety Act (the “Act”). Certain sections of the Act came into force on 28 June 2022. The first High Court judgment concerning liability for installing combustible cladding products has also been handed down recently. This blog looks at the legislation which has come into force and this important case.

Recap

Since our last blog, the Government has attempted to distribute accountability for unsafe higher-risk buildings more equally between the various parties involved in their design and construction, and residential developers are not the only ones who need to beware. Manufacturers, suppliers, builders, architects and designers will now all have increased liability under the Act. This is in contrast to the approach we saw taken by the Secretary of State for the Department of Levelling Up, Housing and Communities, Michael Gove, back in February this year.

Extension of liability and limitation

The Defective Premises Act 1972

The Act imposes a new duty under section 2A of the Defective Premises Act 1972 (the “DPA”) on anyone who takes on work in relation to any part of a “relevant building”, defined as a building consisting of or containing one or more dwellings.1 Non-compliance with Building Regulations does not automatically lead to liability under the DPA; the scope is wider. Anyone who takes on work in relation to any part of a relevant building owes a duty to ensure that work is done in a workmanlike and professional manner, utilising proper materials so that the relevant building is fit for habitation upon completion.2

At present, there is no case law concerning the meaning of “unfit for habitation” under the Act. However, it has been considered in the context of the DPA when the Court held that a dwelling will be fit for habitation, within the meaning of section 1 of the DPA, if, on completion:

  • it is capable of occupation for a reasonable time without risk to the health or safety of the occupants; and
  • it is capable of occupation for a reasonable time without undue inconvenience or discomfort to the occupants.3

The Court also held that: “If, at the time of completion, the state of an apartment is such that a local authority with knowledge of its condition would not approve it as fit for occupation under the building regulations (for example, for lack of suitable means of escape in the case of fire), it is probably unfit for habitation …4

Extended limitation periods

The Act now extends the limitation period for prospective claims brought under sections 1 and 2A of the DPA from 6 years to 15 years from the date of practical completion (including latent defects at the time of completion).5 For retrospective claims, the limitation period is now 30 years, before the Act coming into force, for claims accrued under section 1.6 The practical effect of these new, extended limitation periods means that developers or leaseholders who had considered certain claims to be time barred may now have them resurrected and have a new limitation date expiring in the future. These changes have been brought into force as of 28 June 2022.

The Building Act 1984

An additional cause of action has been introduced by the Act, which gives effect to section 38 of the Building Act 1984 (the “Building Act”). This gives private individuals the right to claim damages, including for death or injury, where they suffer harm as a result of work on a building if it has not met the Building Regulations’ standards. This includes all buildings and is not limited to just domestic premises. This has the potential to include work done by builders, designers and architects.

The limitation period under The Building Act is 15 years prospectively. This new limitation period came into force on 28 June 2022. However, whilst it was envisaged that s.38 of the Building Act would also come into force on this date, this has not yet happened.

" The Act now widens the scope of potential liabilities; it is not just residential developers that are at risk."

The introduction of increased retrospective liability may come under some scrutiny. Retrospective liability comes with human rights concerns under the European Convention on Human Rights (“ECHR”). Retrospective legislation may be challenged, for example, under Article 6 of the ECHR, a right to a fair trial; where it is designed to influence the outcome of a previously time barred claim, such legislation will only be compliant where there are “compelling grounds in the public interest”.7

The European Court of Human Rights has also emphasised that “Limitation periods serve several important purposes, namely to ensure legal certainty and finality, protect potential defendants from stale claims which might be difficult to counter and prevent any injustice which might arise if courts were required to decide upon events which took place in the distant past on the basis of evidence which might have become unreliable”.8 The Courts may, therefore, be asked by defendants to weigh up these competing criteria.

Construction and Cladding Products

The Act also introduces a new cause of action under sections 146 to 150 and Schedule 11 which enables claims to be brought against “construction product” manufacturers and sellers. Such claims may be brought prospectively up to 15 years from the date the right accrued.9 In respect of cladding products, the limitation period is 15 years prospectively and 30 years retrospectively.

Construction products are given the same definition as under the Regulation (EU) No. 305/2011:10

any product or kit which is produced and placed on the market for incorporation in a permanent manner in construction works or parts thereof and the performance of which has an effect on the performance of the construction works with respect to the basic requirements for construction work.”11

In order to be liable for “construction products” under section 148 and cladding products under section 149 of the Act (collectively “Product”), several conditions have to be met.

Condition A

  • A person fails to comply with a Product requirement in relation to a Product;
  • a person who markets or supplies a Product makes a misleading statement in relation to it, or
  • a person manufactures a Product that is inherently defective.

Conditions B to D

The Product has to be installed in, applied or attached to a relevant building (or the external wall of a relevant building in the circumstance of cladding products) in the course of construction. The relevant building has to be unfit for habitation and the conditions in Condition A have to have caused the building to be unfit for habitation.

Those who are liable are responsible for paying damages to a person that has a relevant interest in the relevant building for personal injury, damage to property or economic loss suffered by that person as a result of the relevant building being unfit for habitation.12 Liability can in no way be excluded.13

Corporate bodies beware!

Remediation Contribution Orders

An interested person14 under the Act can make an application for a Contribution Order in relation to a relevant building.15 Following such an application, a first-tier tribunal can order that a “specified body corporate” must meet the costs incurred or to be incurred to remedy relevant defects. Specified body corporates include landlords (whether existing or qualified at the time), developers in relation to the relevant building and “persons associated” with a person within any of the three preceding categories.16 This incorporates persons such as directors and certain shareholders. Those in a company that may not have been directly involved with previous developments of the “higher-risk” buildings may now be liable for future and historical development projects.

Building Liability Orders

If claims arise as a result of a building safety risk, under the DPA or the Building Act, the High Court may also make a Building Liability Order (“Order”) if it is equitable and just to do so.17 This is an order providing that any liability of a body corporate relating to a specified building is also:

a) a liability of a specified body corporate; or

b) a joint and several liability of two or more specified bodies corporate.18

Even if the body corporate has been dissolved prior to enforcement of the Act or after the Order is made, an Order can still be made.19

Martlet Homes Ltd v Mulalley and Co Ltd20

Whilst this case does not concern the Act directly, it emphasises the Court’s willingness post-Grenfell to allow building owners to pursue claims against contractors in circumstances where combustible cladding materials are installed.

A design and build contract was entered into in 2005 for the refurbishment works to five tower blocks. The works included the design and installation of an external wall insulation system (StoTherm Classic K), which the defendant used and which contained combustible expanded polystyrene (“EPS”) insulation boards.

The claimant subsequently bought the tower blocks and, before the limitation period had expired, the claimant alleged that the contractor had breached the design and build contract on the basis that there were defects in the tower blocks’ fire barriers, inadequate fixing of the insulation boards and inadequate repair of the underlying substrate. To mitigate this, the claimant decided to replace the StoTherm system with a non-combustible external wall insulation system and carried out a waking watch.

Whilst the defendant admitted some of the defects, it denied that the breaches, in fact, caused loss as the remedial works required after the Grenfell tragedy provoked the building owners’ obligations to replace combustible EPS cladding. The defendant also alleged that the only work necessary to rectify the installation defects involved cutting out and replacing the fire barriers, re-rendering and installing additional dowls through the EPS.

The claimant argued in its reply that the use of the combustible EPS insulation boards in cladding was in breach of the specification at the time of installation by the defendant (the “specification breach case”).

HHJ Stephen Davies (sitting as a High Court Judge) considered the Building Regulations 2000 and 2010, BRE 135 (1988 and 2003 editions), Approved Document B (2002 and 2006 editions) and the BBA Certificates relating to the system (produced in 1995, 2007, 2012 and 2017). In doing so, he decided that there were installation defects and a specification breach; therefore, the claimant was entitled to recover damages by reference to the cost of procuring and installing the non-combustible external wall insulation system, and the costs of the waking watch.

Conclusion

The Act now widens the scope of potential liabilities; it is not just residential developers that are at risk. Developers may now consider the merits of “bringing in” other relevant parties to any claims they may be subject to. It is likely that this will cause a debate as to how the Act is to be interpreted and applied and how the burden is shared amongst those involved. Developers, investors and building owners may now also wish to reconsider any claim they had previously considered to be time barred.