Passing on the blame for defective buildings

Who can be held responsible for defects in buildings which give rise to a risk to personal safety? Such claims can be of much significance to those living in an affected property, but where the defects in question were caused many years ago it is often difficult to establish who is  responsible and even if you can, whether those at fault are still  around.

Under the Building Safety Act 2022, claims relating to defective residential property which has been rendered unfit for habitation, or claims relating to any form of property – commercial or otherwise – not built in compliance with the Building Regulations, or any form of property which is subject to some other ‘building safety risk’ (meaning a risk to the safety of people in or about the building resulting from the spread of fire or structural failure), are now subject to new rights where claims are being made.

The new rights include considerably extended limitation periods for commencing such claims.  In the case of defective residential property, for example, a claim under the Defective Premises Act is now subject to a 30-year retrospective claim limit where the defect predates the Act.

Another new right under the BSA 2022 are Building Liability Orders.  Such an order can be made by the court where it is determined to be just and equitable to do so. They extend the liability for safety related defects from those who were originally responsible, such as the  original landlord, developer or contractor, to an associated company.  An associate can be a parent company or sister company.  An associate can then be made liable for such a safety defect claim, even where the original party responsible for the defect  has been wound up. Further, it does not matter if the associate did not fall within what the BSA 2022 defines as being an associate at the time the relevant defect was caused.

In a recent case of Arjun Batish and others v Inspired and others, the court made an order in favour of 18 leaseholders of a block of flats with cladding issues. The claimants were seeking a total of just under £200,000 to cover sums which the leaseholders had become responsible for in regard to remediation works to the external cladding on the property. The claim was made against the freeholder and developer of the building, the developer’s parent company, which was in liquidation, and some individual directors of the developer.

The court accepted that under the provisions of the BSA, that the defects in question were “relevant defects” as the cladding defects constituted a “building safety risk”, being a risk to the safety of the people in or about the building arising from the spread of fire.

It was also accepted that in the circumstances it was just and equitable to make an order in this case given that the leaseholders themselves were not responsible for the defects, but were still being held liable under their service charge.

The order was in the end only made against the developer, not the parent company, which was in liquidation, nor against the individual directors – the BSA does not provide for claims against individuals. Where such orders are made, they will be treated as fact specific and the circumstances which will be relevant to whether it is just and equitable to make such an order in any one case is likely to be the subject of much debate in each situation.

In the meantime, landlords, leaseholders and related parties will need to pay close attention to developments in this new area of law.