In a recent case (381 Southwark Park Road RTM Company Limited & Ors v Click St Andrews Ltd & Anr), the High Court has given valuable guidance on two relatively new provisions introduced by the Building Safety Act 2022 (the BSA).

The claim involved allegations about structural and fire safety defects on an existing block of flats caused by works to add modular accommodation units to the roof. The defects were identified through reports investigating water ingress to the flats caused by the works.

The court found on the evidence that building safety risks arose from structural and fire safety issues due to inadequate beams, the lack of structural protection from fire and inadequate fire compartmentation.

Building Liability Orders (BLOs)

These were introduced by Section 130 of the BSA. Their primary purpose is to allow claimants interested in a building with building safety risks (and/or under the Defective Premises Act 1972) to pursue companies that are associated with special purpose vehicle (SPV) companies involved with the works. Before this provision, it was common practice for developers to set up an SPV with the specific purpose of developing a particular building, but such an entity would then typically have no assets once the development was complete and any revenue/profits had been distributed to and absorbed by other companies in the same corporate chain.

The problem and injustice in such a situation is that the true defendant for defects will not have any money to pay damages even if it is found liable. A BLO is a tool that ‘pierces the corporate veil’ by allowing, where ‘just and equitable’, orders to be made against companies associated with the SPV, so that they become liable despite having no direct contractual or tortious relationship with the claimants.

This case is important because it is the first time that the High Court has made a finding on whether or not there was a building safety risk for the purposes of Section 130 of the BSA, and here such a risk was found based on the expert evidence. 

The decision about whether a BLO should be made in this case will require a further hearing.

Section 2A of the Defective Premises Act 1972 (DPA)

The DPA provides remedies to people interested in a dwelling unfit for habitation due to defects. However, until 28 June 2022, it was only of use to a prospective claimant where the defects were connected with work or services that led to a brand new dwelling. 

Section 2A is a powerful addition providing the same remedies where the work or services relate to work to an already existing dwelling.

Two interesting points on the DPA arose in this case. The first was an attempt to suggest that Section 2A had a slightly different meaning from Section 1 of the DPA, such that it was not necessary to prove that the dwelling was unfit for habitation and that it was sufficient to show that the work was not done in a workmanlike or professional manner or not carried out with proper materials. The court rejected this argument however and said it was well-established under Section 1 that the dwelling had to be unfit for habitation for the DPA to apply (even if the work was defective) and given that Section 2A was written in the same terms it should be applied in the same way.

The second point related to the importance of the cut-off date of 28 June 2022. On the evidence, it was found to be impossible to identify anything that was carried out after that date that could give rise to a liability under the DPA.  This will remain a possible issue where works were carried out both before and after this date, highlighting once again the need for clear and accurate construction records, but clearly, it will not be an issue for future contracts for work on existing dwellings, where all such work will be caught by the new Section 2A.

For more information

For more information or advice on the new provisions, please contact me.