Fire safety claims: What we know and what’s next?

Claims relating to fire safety continue to take up a significant amount of time and budget, as they have done ever since the Grenfell tragedy in 2017. Given the complexity of the issues, a detailed review is beyond the scope of this article, and we have instead sought to highlight both what we know and what is yet to be resolved.

What we know

Policy

There is a distinct element of policy in the way that the courts approach fire safety claims, with the Supreme Court confirming in URS v BDW that:

Given that the Supreme Court also confirmed in the same matter that the courts can ascertain the meaning of the words used in a statute in the light of their context and the purpose of the Act (allowing courts to refer back to, e.g. the Hackitt Report and the Explanatory Notes to the BSA, both of which were of course hugely critical of the construction industry), the result that it is generally very difficult for contractors and consultants to defend such claims (which of course also has major implications for their insurers).

Negligence of others is no defence

Parties are not able to defend a claim by saying they were not negligent because every other designer had made the same or similar mistakes at the relevant point in time – defendants will not be exonerated simply by proving that others were just as negligent.

Third party certificates no guarantee

A designer is not entitled to rely on third party certificates such as a BBA Certificate as a form of “guarantee” or “passport” to compliance with the Building Regulations – a design needs to comply with the Regulations and the contract, regardless of what the certificate essays.

No “voluntariness principle”

If fire safety issues exist, and a party voluntarily undertakes remedial works to resolve those issues without any claim against it, that will not prevent it from recovering the costs from third parties later.

Can owe and be owed a duty

There is no reason why a developer cannot both owe a duty and be owed a duty under the BSA, most obviously where the developer who orders relevant work is the first towner.

Burden of proof

If a claimant has proved that a defendant’s design is, on the face of it, in breach of contract, the claimant does not also have to prove the system as specified would have failed to pass the relevant performance criteria. Instead, the defendant must demonstrate the system would pass the relevant tests.

Quantum / limitations of liability

Any limitation of liability clause (whether that is an exclusion or cap on liability, or a net contribution clause) will not be effective to the extent that the works in question are caught by the Defective Premises Act 1972 (DPA). This will apply when a person takes on work for or in connection with the provision of a dwelling (see our further comment below). Further, the costs of any “waking watch” are in theory claimable and are not too remote to be recovered in damages.

BLOs and RCOs

Prior to the Court of Appeal decision in Triathlon Homes LLP v Stratford Village Development Partnership there were some questions regarding the extent to which parties would be able to resist applications for Remediation Contribution Orders (RCOs) (introduced by the BSA to make sure funding to fix building safety defects is made available or obtained to reimburse costs previously incurred in fixing building safety defects).

However, and in keeping with the policy driven approach described above, this decision demonstrated that the courts will make it very difficult to resist such applications, with the Court unanimously, and with some force, upholding the First Tier Tribunal’s decision to grant RCOs. Whilst this decision dealt with RCOs only, we anticipate that the Courts in England and Wales will take a similar approach to Building Liability Orders (BLOs).

What we don’t know

Whilst we know that limitation of liability clauses will not be effective to the extent that the works in question are caught by the DPA, some questions exist as to when the DPA applies, which will be resolved by reference to the extent to which the works in question were for or in connection with a dwelling and whether the defects left that dwelling unfit for habitation.

There is already helpful guidance regarding the extent to which any dwelling is “fit for habitation when completed”, with pre-Grenfell decisions showing that the Courts take a relatively wide approach view in that regard. More interesting is likely to be what types of buildings are “dwellings”: for example, whilst we know that a block of flats is a dwelling, and a typical office building is not, questions may arise with regard to whether student accommodation and care homes are caught by the DPA, and we anticipate satellite litigation in this regard. It is also likely there will be issues regarding what losses can be recovered under the DPA (most obviously loss of profit).

Further, although we know that a developer can both owe a duty and be owed a duty under the DPA (most obviously where the developer who orders relevant work is the first towner), we anticipate that this question of dual duties will be tested in other scenarios, most likely with regard to main contractors – they owe a duty to their employers, but will they also be owed a duty by their subcontractors under the DPA?

This may lead to satellite litigation regarding the precise extent to which the subcontractor’s work for a dwelling is “provided to the order” of the main contractor.

Whilst we expect Courts in England and Wales to take a similar approach to BLOs as they have done for RCOs, it’s less clear how foreign courts will view such orders, which may well be important given that the headquarters of some companies who might be targeted in this regard are in foreign jurisdictions.

Finally, we anticipate that insurers may need to consider the extent to which their policies respond to BLOs, with the wording of the insuring clause and the definition of 'insured' likely to be key to resolving the issue.