The price of safety

Posted on 08 May 2018

The price of safety

After Grenfell: who should pay to remove unsafe, combustible cladding on apartment blocks?

In the immediate aftermath of the Grenfell Tower disaster, surveys and tests were carried out at private apartment complexes across the UK to determine whether the cladding covering those buildings posed a fire risk to residents. Of those inspected, it is believed that at least 130 failed the relevant tests. Now, almost a year on, the question remains: who pays for the essential but costly work of repair and replacement? 

A recent case in the First Tier Tribunal involved the Citiscape block in Croydon.  The tribunal ruled that where a lease contains typical service charge provisions allowing recovery of costs relating to essential repairs and maintenance, then leaseholders will be liable to pay in the absence of any contrary provisions or exclusions. This has understandably come as a blow to leaseholders who are left facing substantial and unanticipated costs. 

Many leaseholders will therefore looking to recover these costs elsewhere. Those who might potentially be liable include: landlords, developers, building contractors and engineers, local authorities and even the government.  Another potential target could be home construction warranty and insurance providers, such as the National House-Building Council or NHBC.  In each case, circumstances are unlikely to be clear-cut and leaseholders will need to establish a claim in either negligence or for breach of contract. 

The difficulty in bringing a negligence claim in these circumstances is that such claims cannot be founded on economic loss alone. However, economic losses can be recovered if there is an entitlement to make a contractual claim, but leaseholders will have to establish that they have a contractual relationship with the person against whom they are claiming. This may be tricky, particularly where buildings (like Citiscape which was built in 2001) were constructed many years ago and they may not have the benefit of collateral warranties, or those warranties may have expired or claims may be time-barred. 

Notwithstanding the practical difficulties in attributing liability to someone other than the leaseholders, there are obvious potential PR issues for commercial entities that refuse to cover costs for defective cladding and leave leaseholders to pick up the bill. In a recent development on the Citiscape case, the developer of the block, Barratt Developments, confirmed that they will cover the costs (estimated to be millions of pounds) of implementing retrospective and future safety measures to make the building safe. 

The government has welcomed the move, however, Barratt commented that the building was "built in line with all building regulations in place at the time of construction" and it remains to be seen whether developers will seek to take further action against local or central government in due course.