Fire safety: claims involving the original project team

Posted: 21/04/2020

Deficiencies in the fire safety aspects of a building’s design and construction may constitute a breach of obligations by the original project team and lead to a recovery of losses. This note briefly sets out some of the common considerations.

Has there then been a breach of a legal obligation?

Legal requirements and acceptable standards (including for design, construction and record keeping) have moved on significantly since the tragic fire at Grenfell Tower on 14 June 2017.  Non-compliance with current requirements and standards does not necessarily equate to non-compliance at the time of construction. However, it is evident that there have been industry- wide failings. Careful examination of:

• legal documents and contemporary standards;
• the division of responsibility during the project;
• designs and project records; and
• as built construction,

should reveal the potential for claims.

Who may be liable?

Responsibility for fire safety in the design of a building is invariably shared. In the professional team the architect, fire engineer, building inspector and any cladding consultant would commonly hold some responsibility for the fire safety of the external wall construction, for example. The extent to which the main contractor takes on responsibility for design will be highly relevant to assessing its liability. Design and build procurement may mean the contractor has wide ranging responsibilities, although this may not be comprehensive. Conversely, even where a design and build contract is not used, there may be express or de facto elements of design responsibility. Key subcontractors may also design and provide collateral warranties.

Experience of claims relating to cladding shows that defective workmanship is often an issue.  Intrusive investigations may reveal widespread workmanship defects, particularly in cavity barriers, fire stopping and fixings. Of themselves these could necessitate substantial remedial work.

It is common for claims to involve multiple defects and parties. This generates complexity, risk and cost, but opens up multiple avenues to recovery.

In claims involving design or other professional services, defendants will rely on their professional indemnity insurers. Many insurers have introduced cladding exclusions or limitations in their policies. Cover for building inspectors has also become more limited. Other more general limitations may be relevant, including whether the policy covers non-negligent liability and whether a main contractor’s policy covers sub-contractors’ design. Professional indemnity insurance is written on a ‘claims made’ basis so for parties who are insolvent before a claim is made, cover may not be available.

Consideration should also be given to claims under latent defects insurance policies while purchasers should assess rights under sale agreements.  

What may be recoverable?

In a claim for breach of contract, the costs of works to correct a defect are potentially recoverable. This may include works to bring the affected construction into compliance with modern building regulations where that is a legal requirement for undertaking the corrective work. 

Prior consultation with the defendant(s) is advisable in the hope of avoiding disputes about an appropriate remedial scheme.   

Related professional fees are generally recoverable.

Financial losses beyond the direct costs of work require careful analysis. Such claims are more straightforward where the employer's business is of a well understood type and the relationship between the effect of the defect and the financial loss is straightforward.

Consideration should be given to any exclusions or limitations of liability in relevant contracts.

When can a claim be made?

It the defect arises within the rectification period, usually 12 months after completion, the contractor may be obliged to rectify the defect itself.

In a claim for breach of contract, under a simple contract the time limit is six years from breach or 12 years under a deed. 

For a claim in tort, it is six years from when loss beyond the trivial was first suffered, although an additional three years may be available following the discovery of a latent defect, subject to a 15 year longstop.

For claims relating to residential properties, under the Defective Premises Act 1972 claims are permitted up to six years following completion or in respect of failed remedial works, from completion of those works.

Latent defects insurance policies tend to provide cover for a 10 year period, although cover after the second year is limited.

How should such a claim be pursued?

Reputable developers and contractors may agree to compromise claims without recourse to legal proceedings, potentially on terms that they undertake remedial works. If formal legal proceedings are necessary, in many cases litigation provides the most convenient forum, particularly for multi-party disputes.

Adjudication may also be an option for contractual disputes between two parties. Care should be taken when using adjudication for complicated disputes; a high standard of proof is still expected. However, effective strategic use of adjudication can be a very useful tool. For example, it may be possible to limit the adjudication to a discrete and fundamental issue ie compliance with contemporary building regulations or contractual interpretation.

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