Practical impacts of the Building Safety Act

On 4 October, the Society of Construction Law and the Institution of Civil Engineers hosted a joint event aimed at looking at the practical impacts of the Building Safety Act. The event was a sell-out. Patently the construction industry is keen to understand how things will work in practice.

Dame Judith Hackitt (whose independent review of building regulations and fire safety led ultimately to the Building Safety Act) gave an excellent keynote speech reminding us about the Flixborough disaster in 1974, which killed 28 and seriously injured 36 of the 72 people on site. That disaster involved a swift equipment modification where although virtually all of the plant management had chemical engineering qualifications, there was no on-site manager with mechanical engineering expertise. Mechanical engineering issues with the modification were thus overlooked by the managers who approved it.

Dame Judith stressed the importance of collaboration and cross-fertilisation among the array of professionals involved in the construction industry. A panel session including an architect, insurer and several lawyers then looked at potential impacts of the act. So, how did the industry react?

While all appear to applaud the new legislation, there is a tangible anxiety. Three particular concerns emerged

The act runs to over 260 pages. It amends, among other legislation, the Defective Premises Act 1972, the Landlord and Tenant Act 1985, the Building Act 1984, the Health and Safety at Work etc Act 1974, and the Regulatory Reform (Fire Safety) Order 2005. The rights and obligations of all those involved during the design and construction and the occupation phases of a building have now changed radically.

While all appear to applaud the new legislation, there is a tangible anxiety. Three particular concerns emerged from the joint event:

Claims under the Defective Premises Act 1972

The act extends the limitation period such that work completed up to the middle of 1992 will potentially become subject to a DPA 1972 claim. This amendment will not start time running afresh for leaseholders whose claims have already been struck out on limitations grounds (see for example, Sportcity 4 Management Ltd and other companies vs Countryside Properties (UK) Ltd [2020] EWHC 1591 (TCC), [2020] All ER (D)). Those whose claims have already been struck out will now have to attempt to seek permission to bring a second claim under CPR 38.7. A concern raised was whether liability can now arise in respect of defects that have arisen solely as a result of a failure to carry out work in a professional manner and with proper materials? In other words, there is a concern that the act may have (inadvertently) removed the requirement for the dwelling to be unfit for habitation when completed as a consequence of the failure.

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Building liability orders

A Building liability order can be made in respect of liability under the Defective Premises Act. In essence, the High Court (which in this context will likely apply to the specialist Technology and Construction Court) will have the power to pierce the corporate veil and extend liabilities (on a joint and several basis) for construction projects owned by a subsidiary to other companies associated with the subsidiary. The purpose is to ensure that claimants are able to bring claims, and enforce decisions, against parties with sufficient assets to meet such claims. The tangible concern in the industry relates to insurance and how such liability orders will be issued. The act also provides certain parties with the ability to obtain an information order compelling a specified body corporate or its “associates” to provide information or documentation which a claimant may require to consider whether to apply for a building liability order. There is a concern about the breadth and scope of the information to be disclosed.

The ability to make changes during the gateway process

The new Building Safety Regulator is now responsible for building control of higher-risk buildings. This will be achieved through the proposed three-stage gateway approval system (intended to ensure that deep consideration is given to building safety risks at each stage of the design, construction, completion and occupation of a higher-risk building). As readers will know, there are three stages to the gateway regime:

• Gateway 1 – The planning stage where applicants will need to demonstrate that fire safety matters have been taken into account.
• Gateway 2 –There will be a hard stop on construction which cannot begin unless the Building Safety Regulator has approved the application.
• Gateway 3 – At completion of construction. There will be a hard stop on occupation to allow the Building Safety Regulator to carry out final inspections and issue a completion certificate.

The concern raised was whether design or other changes will be feasible after gateway 2. In practice, the time and cost impact of delayed approval of changes may well mean that developers decide against making changes after gateway 2. It may also mean that there is a greater focus on completing design at an earlier stage (although this may open up derivative debates on whether overall procurement routes for higher-risk building may now need to be adjusted).

With the recent case of Martlet vs Mulalley and noting that there are thousands of higher-risk buildings in the UK, it can be no surprise that the Building Safety Act creates serious questions and tangible anxiety in the industry. Sadly, substantive or conclusive answers may take a while.

Hamish Lal is a partner in Akin Gump Strauss Hauer & Feld