Jeffrey Brown considers building owners’ potential liability claims against architects and contractors for replacing high-rise cladding
The exposure to fire risks continues to attract media attention. It is now more than six months since the Grenfell Tower fire of 14 June 2017. This has led to reassessment of the fire risk of cladding to high-rise buildings, many of which are residential. There are reports of tenants facing payment liabilities for fire wardens patrolling buildings, pending the completion of any safety reviews or the performance of any necessary remedial work. Owners of buildings will have justifiable concerns for their own responsibilities under the Occupiers Liability Act of 1957 following the tragedy now that the fire risks of specific cladding are being reviewed.
The revised guidance issued by the Department for Communities and Local Government and the various fire authorities will lead to a need to replace cladding in many buildings, with safer solutions being adopted. Reports in the media reveal this cost will extend to many hundreds of millions of pounds. Many of the owners of the buildings are local authorities and housing associations, which will struggle to meet these liabilities without funding from central government. They will also face the costs of rehousing the tenants during the remedial works.
These building owners will naturally consider whether they may seek recompense from a third party which specified or supplied the cladding in the first instance, now thought to be dangerous. These may typically include the architects and designers of the building who may have named and specified the cladding, contractors who supplied the product, or the suppliers themselves. These parties should have insurance covering their potential liability. Typically designers will have the benefit of professional indemnity or design liability risks. Contractors will have public liability cover insuring against damage, or personal injuries. Suppliers will have product liability insurance cover which again will insure the risk of damage or personal injury.
Building owners will naturally consider whether they may seek recompense from a third party which specified or supplied the cladding in the first instance
Any claimant will need to establish primary liability. Any culpability will also be judged at the time that the cladding, now considered to be dangerous, was specified or supplied. If the cladding complied with all the relevant fire regulations and safety requirements at the time, this may be a sufficient defence.
A number of potential causes of action may be relevant. Firstly, a claim may arise against the contractor under section 1(1) of the Defective Premises Act 1972 if by use of improper materials, a dwelling was not fit for habitation. The individual flats, albeit not the common areas to a block of apartments, would constitute dwellings and thus would fall within the scope of the act. Designers may be liable if they failed to make proper enquiry and investigation of the suitability of specific materials. It will not be a sufficient defence to state that they relied on the advice and recommendation of the manufacturer or supplier. The fire risk within the building may also rest with not only the choice of the cladding, but also the manner in which, when incorporated within the overall design of the building, the increased risk of fire arises. Contractors will also have a duty to warn should they become aware of any design defects, and this would include the choice of the cladding materials.
If the cladding complied with all the relevant fire regulations and safety requirements at the time, this may be a sufficient defence
Finally, a relevant consideration will be to consider whether any cause of action is statute barred. Any claim for an alleged breach of contract will be subject to either a six- or 12-year limitation period. These periods will commence from the date of the breach of contract. A claim in the tort of negligence has the potential to arise at a later date, which is when the damage occurs.
If a primary liability is established, the existence of insurance offering an indemnity against these liabilities should provide claimants some comfort. Claimants will have to demonstrate they have taken all steps to mitigate their loss and may well be met by an allegation of betterment. To claim the costs of new cladding to replace the old may well confer a better solution. It will not be for insurers to subsidise a claimant who may have paid for a cheaper product but who now seeks a more expensive replacement.
Given the anticipated bill for replacing cladding to high-rise residential blocks, the courts may indeed have to resolve these dilemmas in years to come.
Jeffrey Brown is a partner in the London office of Veale Wasbrough Vizards