Sue Ryan and Gemma Whittaker are construction partners, and Emma Knight is a principal associate, at Gowling WLG
Almost all building work carried out in England must comply with building regulations. Historically, however, the sanctions for breaching the rules were minimal. Dame Judith Hackitt notably described the penalties as “so small as to be an ineffective deterrent”.
“It will be vital for individuals in senior positions to document the steps taken to ensure and monitor compliance”
The Building Safety Act 2022 (BSA) seeks to remedy this by providing for stronger sanctions. Section 39, which implements these, comes into force on 1 October 2023.
In certain circumstances, the BSA also extends liability for such breaches to individual directors, managers, secretaries or other similar officers of a body corporate, or partners within a partnership.
What is covered?
“Building work” carried out in England must comply with regulations made under the Building Act 1984 and the Building Regulations 2010. This includes (but is not limited to) construction of new buildings, extension of existing buildings, alterations or material changes of use, installation of controlled services (such as a boiler) or controlled fittings (such as replacement of windows), and renovation of thermal elements including roofs or external walls, etc.
Before the BSA and, in particular, section 39, any person who contravened building regulations committed an offence, albeit that the maximum penalty was fairly lenient. Section 35 of the Building Act set out the sanctions: it was a summary-only, fine-only offence limited to £5,000 and a maximum daily fine of £50.
Section 39 of the BSA significantly increases the penalty for breaching building regulations. This amends section 35 to provide for an unlimited fine and imprisonment of up to two years as possible sentencing options.
The time during which notices may be given requiring removal or rectification of work that is non-compliant with building regulations is also significantly extended, from 12 months to 10 years.
Potential personal liability
Sections 40 and 161 of the BSA also come into force on 1 October 2023. These provide that where a body corporate commits a criminal offence under the Building Act 1984 or parts two or four of the BSA, individual directors, managers, secretaries or other similar officers of a body corporate, or any person who was purporting to act in any such capacity, will also be deemed to have committed that offence, if the breach is committed with their “consent or connivance” or “attributable to any neglect” on their part.
If there is sufficient evidence and the relevant test is met, then “that person as well as the body corporate commits the offence and is liable to be proceeded against and punished accordingly”.
“Director” is defined in the BSA, but “manager” or “other similar officer” are not. It therefore remains to be seen which individuals could be included once the provisions are practically applied and tested.
Potential offences under the Building Act that may lead to personal liability are cast widely: any contravention of a provision of building regulations, or a requirement imposed by virtue of any such provision, is an offence. Of course, building regulations apply to all “building work” and are not limited to residential or high-rise residential buildings.
Offences under part two or four of the BSA are also wide-ranging: part four includes the obligation to register higher-risk buildings (HRBs) and obtain a relevant completion certification before occupation, as well as a host of other new duties.
Sections 40 and 161 are modelled on section 37 of the Health and Safety at Work Act 1974 (HSWA). However, neither the HSWA nor the BSA define “consent”, “connivance” or “neglect” and there is only limited guidance from the courts in the health and safety context.
What can directors/managers do to mitigate the risks?
Since the first step in establishing personal liability is to show that an offence has been committed by a body corporate, then the first step in avoiding such liability will of course be for directors or officers in decision-making positions to ensure compliance with the Building Regulations and parts two and four of the BSA.
Companies that manage buildings falling within the new regime will need to obtain appropriate advice as to their relevant obligations/duties – many of which come into force on 1 October.
It will be vital for individuals in senior positions to document the steps taken to ensure and monitor compliance with Building Regulations and the BSA. Documenting the decision-making process and sharing this with all those in decision-making positions will also help to evidence that the relevant individual took reasonable practical steps to avoid any breach.
Companies should speak to their insurance brokers to check what cover they have or may be able to procure in relation to their liabilities under the BSA – although it is impossible to insure against fines and insurance is of no use in the event of a prison sentence. However, a directors and officers’ liability policy should provide directors and employees in supervisory positions with cover for regulatory expenses and defence costs and in respect of any subsequent civil claims.