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Building Safety Act: Introduction of Section 38 Building Act 1984

Posted on 9 June 2022

The Building Safety Act was introduced to Parliament with the intention of, amongst other things, placing additional (and ongoing) responsibilities for buildings on the original stakeholders in the development. This includes the original developer, main contractor and other associated parties.

One of the changes made by the Act is the introduction of a new cause of action for damage suffered as a result of a breach of the Building Regulations, by virtue of section 38 of the Building Act 1984. Section 38, which has long been in the statute books but was never previously brought into force, provides a statutory cause of action for breaches of the Building Regulations and the ability for a Claimant to claim damages where they suffer harm because works have not complied with the prevailing Building Regulations. Unlike many of the changes brought about by the Act, section 38 applies to all buildings and not just dwellings.

What was the position before Section 38 was brought into force?

In the absence of a statutory cause of action under Section 38, parties have needed to rely on other avenues to mount claims against consultants, main contractors, and subcontractors including:

  • An express term commonly inserted into contracts and appointment documents that the contractor/consultant will carry out the works in accordance with the prevailing statutory requirements (to include the Building Regulations);
  • An implied term that the works will be carried out and completed in accordance with Building Regulations; and
  • An implied term as to the quality of materials and workmanship (including the proscription of deleterious materials)

What will the position be after Section 38 is brought into force?

This change will be welcomed by property owners, whose contract and appointment documents do not have express terms regarding compliance with the prevailing statutory requirements, as well as those who do not have a contractual nexus with the original contractor/consultant, such as leaseholders.

The Building Safety Act allows the High Court to make a Building Liability Order if it considers it just and equitable to do so. In certain circumstances, such an order may extend the liability of a body corporate to an associated body corporates such as a parent company or sister company even if the original body corporate no longer exists. These provisions apply to claims under section 38 and will broaden the list of potential defendants to a claim under this section. This will also benefit claimants where the original body corporate is insolvent or does not have the financial capability to rectify defects.

The limitation period for claims under section 38 will be extended to 15 years and apply prospectively. Therefore, the extended limitation period will only apply to work undertaken after section 38 comes into force.

Damages under Section 38

Based on the wording of section 38, damage will potentially be restricted to physical (or mental) damage to persons or property caused by the breach of Building Regulations, to the possible exclusion of pure economic loss (which may potentially be covered within the scope of a claim under the Defective Premises Act 1972).

However, it remains be seen how the Courts interpret these provisions.

Defences to claims for non-compliance with Building Regulations

Importantly, unlike other causes of action created by virtue of the Building Safety Act, the extended limitation defence will only apply prospectively.

As to claims against building control and Approved Inspectors, it is common for a contractor to point the finger at the local authority or private building control who certified works in breach of the Building Regulations. However, such claims are notoriously difficult and have regularly been struck out or dismissed by the Courts. The general consensus amongst the judiciary was that claims for breaches of the Building Regulations applied to those whose work positively contributes to the creation of the dwelling. This would include architects, main contractors and the like but exclude building control, whose function is to ensure the dwelling is legal and properly certified but provides no positive contribution to the creation of that dwelling. It remains to be seen whether the introduction of section 38 will change this dynamic.

When does Section 38 come into force?

Section 38 will come into force two months from the Building Safety Act receiving Royal Assent. Accordingly, it is expected that section 38 will come into force on 28 June 2022 (alongside the extended limitation periods for claims under the Defective Premises Act 1972).

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