The Building Safety Act 2022 : Update on key issues for litigators

There are three key themes running through the Act which are of particular relevance to litigators:

1. A move towards the piercing of the corporate veil, by way of remediation contribution orders and building liability orders.
2. New claims on the statute book especially in relation to construction products and an expansion of the Defective Premises Act 1972.
3. The extension of the limitation period in some instances, to either 15 or 30 years.

The first part of Alison's series of November 2022 articles (part 1 here, part 2 here and part 3 here) concentrated on the piercing of the corporate veil and looked at, among other things, remediation contribution orders and building liability orders. We now have some guidance in respect of these orders.

By way of recap:

• A remediation contribution order can be made against those “associated” “with the current landlord; or if different, the landlord as at 14 February 2022 or the developer”. They apply in relation to the costs of remedying a cladding or building safety risk which arose in relation to works undertaken in the 30 years prior to the 28 June 2022. They are limited to buildings which are self-contained, or a self-contained part of a building, and must have at least 2 dwellings and be at least 11 metres high or have at least 5 storeys. 
• A building liability order can be made against those “associated” with a body corporate which is liable under either the Defective Premises Act 1972 or as a result of a building safety risk (which is defined and broadly means a fire or structural safety risk). Such orders can apply to any building of any height.

The definition of “associated” is slightly different for each order (defined at section 121 of the Building Safety Act for a remediation contribution order and at section 131 for a building liability order).

It is also worth bearing in mind that remediation contribution orders are made by the First-Tier Tribunal (Property Chamber) whereas building liability orders are made by the court.

In both cases there is a requirement that it must be just and equitable for an order to be made. 

In recent months we have seen applications for both a remediation contribution order and a building liability order which address what is just and equitable.

Just and equitable

First, in January 2024 came a remediation contribution order in Triathlon v Stratford Village Development Partnership. It involved the Olympic Park Village in East London. The details are complex, but key points to note in relation to the concept of “just and equitable” are as follows:

• Primary responsibility for the costs of remediation should fall on the original developer.
• A remediation contribution order is not about identifying which party is at fault, but who is responsible under the Building Safety Act for paying for rectifying defects. A remediation contribution order is non-fault based.  
• While the applicant may have contractual remedies which enables it to seek recompense for the costs of remediation from third parties, this does not hold much weight in deciding if it is just and equitable to make an order. The purpose of an order is to provide a route to secure funding for remediation works without the applicant having to become involved in potentially complex, lengthy litigation.
• That fact that the works which, in this case, were already in progress and were funded is irrelevant as to whether an order should be made.
• It is not just and equitable for a party to argue that the costs of remediation works should be borne by the taxpayer, by way of the Building Safety Fund.
• Provided there is no malice or some other motivation which “taint the case”, a party’s motivation (in this case Triathlon’s) in seeking an order is irrelevant.
• No weight was given to the changing identity of the ultimate beneficial owners of the respondents.

(For more information on this case click here for an article by Ben Hardiman and Poonaam Bai.)

In March 2024 came a building liability order judgment in Willmott Dixon v Prater. The judgment was given orally, so we only have access to articles about the decision from the solicitors and barristers involved.  From those articles it seems that it was decided that, among other things:

• It is not a pre-condition to a building liability order that it can only be made if the company facing the primary claim has failed to pay.
• It may well be just and equitable to impose an order on an associated entity, even where the primary company has disposed of assets entirely innocently and there has been no asset stripping.

What both cases indicate is that the bar for showing that it is not just and equitable to make either a remediation contribution order or a building liability order is set quite high.  

Cost points on a remediation contribution order

In addition to the just and equitable point, there were two other points dealt with in the Triathlon decision regarding remediation contribution orders which are worth noting:

• An order can be made in relation to costs incurred before the Building Safety Act 2022 came into force (for these purposes, 28 June 2022).

• An order can also be made in respect of both costs incurred rectifying the actual defect so it no longer exists AND costs incurred in preventing risks from materialising or reducing the severity of building safety incidents, so for instance it seems it could include waking watch costs.

Other developments

While this article has concentrated on what just and equitable means for the purposes of remediation contribution orders and building liability orders, there have been some other developments in the field of the Building Safety Act which are worth litigators noting.

On the issue of limitation, the Court of Appeal decision in URS Corporation Ltd v BDW Trading Ltd decided, among other things, that statements of case could be amended to rely on the Building Safety Act (and the new limitation periods), even where proceedings had been commenced before the Act came into force. There are other points to note in this judgment as well, including that the developer, on the facts of the case, could bring a claim under the Defective Premises Act 1972. Please note this decision is being appealed to the Supreme Court.

On the issue of the Defective Premises Act there has also been a recent decision Vainker v Marbank Construction Ltd which touched on the Act and decided the following:

• A defect that is only aesthetic is unlikely to render a dwelling unfit for habitation.
• It may be that a defect means the dwelling is likely to deteriorate over time rendering it unfit for habitation when it does deteriorate.  If so, then it is unfit for habitation at the time of completion.
• When considering whether a failure to carry out works in a workmanlike or professional manner renders a dwelling unfit for habitation, consideration should be given to the aggregate effect of defects.