On 28th June 2023 we marked the one-year anniversary of The Building Safety Act 2022 becoming enforceable. The legislation was enacted on 28th April 2022 as a direct reaction to the Grenfell Tower disaster and the subsequent Hackitt Report, which highlighted the lack of safety regulation relating to high-rise buildings.
The Act is poorly designed, appearing to have been drafted excitedly by my seven-year-old in that long post-Saturday-afternoon-party hour when blood sugar is at its peak. “Guidance”, and I use that term loosely, is constantly being published by government supplementing and often seemingly contradicting the poorly drafted Act, compounding its complexity. This lack of thought and consideration may be as a result of the failure of the legislature to seek consultation from stakeholders (and lawyers) prior to the drafting of the original bill.
Significant features of the Act rely on secondary legislation to “fill the gaps”. Much of that secondary legislation did not exist on enactment, meaning lawyers and other practitioners are batting blind. Parts of the Act, and indeed the secondary legislation that existed on enactment, does not come into force for an indefinite period of time. This complex web means that anyone reading the Act needs Neo-like powers to read the Act’s Matrix.
There are several aspects of the Act that have purist lawyers scratching their heads. The Act brings into play various notices and orders that have substantial effect and carry Old Testament style ramifications. Section 38 of the Act, which unhelpfully amends the Building Act 1984, deals with Compliance and Stop Notices, requiring persons to either take action or prohibit them from taking action1. This draconian power is handed to the building control authority who can seemingly use these notices on the basis of what “appears” to them to have been a contravention of building regulations.
Under section 123 of the Act2, the First Tier Tribunal is empowered to issue Remediation Orders against “relevant landlords”, who may not have caused or been otherwise connected to the creation of defects, where they may not have a cause of action against the true culprit, who may in any event have been dissolved or may be insolvent.
Section 130 of the Act allows the High Court to issue Building Liability Orders “if it considers it just and equitable to do so”3 to “associate” companies. An “associate” of a company is defined at section 131 as circumstances in which a company controls another or a third company controls both of them4.
Similarly, section 99, which deals with Compliance Notices, holds an “accountable person” liable in respect of a higher-risk building where it “appears” to the regulator to have contravened or is likely to contravene a requirement. The notice will require the “accountable person” to take specific steps within a specific period or to remedy a contravention within a specified period5. An “accountable person” is defined at section 72 (1) of the Act as being a person who “holds a legal estate in possession in any part of the common parts” or “a person who does not hold a legal estate in any part of the building, but who is under a relevant repairing obligation in relation to any party of the common parts”6. Subsequent guidance from the Health & Safety Executive (i.e. it is not in the Act and was published more than one year after the enactment) stated that this will be “an individual or organisation that owns or has a legal obligation to repair any common parts of the building [including] … the structure and exterior of the building, corridors, lobbies and staircases” . This wide definition catches any person who has obligations for ensuring fire and structural safety is managed, including, in certain circumstances, a management company, resident management company, right to manage company or a commonhold association.
The Act drives a sword through the corporate veil and holds third parties responsible for issues that may be another’s fault, in circumstances where they do not have a cause of action against that third party or where the third party no longer exists or is insolvent.
Part 2 of the Act creates the Building Safety Regulator, which sits within the Health & Safety Executive, giving it broad, invasive and extensive powers on development. This section of the Act is eight sections long and fails to create an adequate framework within which the Regulator can understand and use its powers or be held to account. Serious concerns persist in relation to the funding, staffing and training of the officers within the body. Section 3 provides totally inadequate provision to set out how the Regulator’s activities are going to be carried out in a way that is “transparent, accountable, proportionate and consistent” . Good luck with that.
Where liability falls on unexpectant third parties in circumstances where claims are of such high value, it is inevitable that disputes will arise. The lack of a fast-track dispute resolution mechanism is a (deliberate?) omission in the Act. This means that claims will be brought in the High Court, leading to fiercely contested, expensive and long running legal battles.
The absence of a statutory defence for those who can demonstrate they acted in accordance with prevailing standards and regulations at the time of construction or maintenance is surprising and gives the impression that the intention of the Act is to find someone (“anyone”) who can be held liable for the cost of remediation. This has been done in a way that does not sit comfortably with the legal holy trinity of privity, remoteness and causation, and by denying parties the protection expected of the corporate veil. The substantial, retrospective extension of limitation adds further dissatisfaction to what is otherwise seemingly well intentioned legislation.
John Wallace is managing director and head of real estate at Ridgemont, a boutique law firm specialising in construction and real estate
Footnotes:
- S 38 Building Safety Act 2022 inserting new s35B, 35C and 35C into Building Act 1984
- S 123 Building Safety Act 2022
- S 130 (1) Building Safety Act 2022
- S 131 (1) (a) & (b) Building Safety Act 2022
- S 99 (1) & (2) Building Safety Act 2022
- S 72 (1) Building Safety Act 2022
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