The Building Safety Act 2022 – expanded scope for construction disputes?

The Building Safety Act 2022 (the Act) received Royal Assent on 28 April 2022 and its various provisions will come into effect over the coming months. The Act introduces significant changes to the construction industry in an aim to dramatically improve building safety, following the tragedy at Grenfell Tower. 

This article focuses on some of the first provisions of the Act that come into force on 28 June 2022, namely the widened scope of construction disputes that may now be brought as a result of the following changes introduced by the Act:

1. The increase in the extent of liability in the construction industry as a result of:
   
   a) The widened scope of the Defective Premises Act 1972 (the DPA 1972);
   b) The expected implementation of section 38 of the Building Act 1984 (the BA 1984); and
   c) The introduction of Building Liability Orders.
2. The extended time frames within which claims under sections 1 and 2A of the DPA 1972 and section 38 of the BA 1984 can be brought through the extension of the respective limitation periods.

Claims under the Defective Premises Act 1972

Widening the scope

The DPA 1972 previously only permitted claims connected with the original construction or conversion of a dwelling, where, as a result of the work, the dwelling was unfit for habitation (provided that such work was done in the course of a business).  However, the Act extends this duty to those who do any work on a building that contains a dwelling and therefore expands the right to claim under the DPA 1972.

Extension of the limitation period  

The Act also extends the limitation period (the time in which a claim may be brought before being time barred) for claims under sections 1 and 2A of the DPA 1972 as follows:

Where a Section 1 claim is made retrospectively, the Act includes two safeguards that are intended to ensure fairness, by providing that:

1. A claim must be dismissed if it breaches a defendant’s human rights; and
2. A claim that has previously been settled or finally determined cannot be revived as a result of this change to the limitation period.  

Claims under the Building Act 1984

Implementation of the right to bring a claim

Prior to the Act, section 38 of the BA 1984 was never brought fully into effect but the government has stated its intention to commence section 38 at the same time as the changes to the DPA 1972 come into force.  

The right to bring a claim under section 38 of the BA 1984 will give private individuals the right to claim damages where they suffer harm because work on a building has not met Building Regulations standards (including damages arising from death or personal injury).  Such a right applies to all buildings in England and Wales and is not limited to dwellings or residential properties.

Extension of the limitation period  

The Act extends the limitation period (the time the law permits a claimant to bring a claim against a defendant in court) for claims under section 38 of the BA 1984 to 15 years.  However this change will apply only prospectively meaning that it will apply only to work done after the section comes into force (i.e. after 28 June 2022).

The creation of Building Liability Orders

The Act also introduces Building Liability Orders which provide claimants with an additional means to pursue developers that may otherwise escape liability for safety defects as the works were carried out through shell companies or special purpose vehicles.

Building Liability Orders may be granted by the High Court to extend the liabilities of a company or limited liability partnership to its associates and make them jointly and severally liable, provided that it is “just and equitable” to do so. It does not matter if the original body corporate has been dissolved. The ‘limited’ status of companies may therefore not offer the protection it is expected to in such scenarios.

A Building Liability Order can be made in relation to any claim under the DPA 1972 and section 38 of the BA 1984 or any other claim arising out of a ‘building safety risk’.

For the purposes of the Act, a body is associated with another body if one of them controls the other or if both are controlled by a third company.   The meaning of ‘control’ is provided for in the Act. 

The impact on the construction industry

The Act significantly increases the extent of liability in the construction industry for existing and new claims, as well as the time frames within which claims can be brought under sections 1 and 2A of the DPA 1972 and section 38 of the BA 1984. Further, the introduction of Building Liability Orders puts into question the existence of the corporate veil. The effect of these provisions of the Act are yet to be tested in the Courts, however the industry can expect to see the following as a consequence:

1. An increase in the number of claims being brought within the construction industry.
2. Withdrawal from the building market by smaller and medium sized enterprises due to the increased risk in terms of liability.
3. Greater reliance on the Civil Liability (Contribution) Act 1978 in an effort to reduce liability under the provisions of the Act.
4. Defendants of claims brought retrospectively under section 1 of the DPA 1972 providing weak defences, as relevant documents have been destroyed on the basis of the previous limitation period having expired after six years.
5. Withdrawal by professional indemnity insurers from the construction market given the increased risk to the insured and ultimately, the insurer.

For more information on this article, please contact our Construction & Infrastructure team.