Sue Ryan and Gemma Whittaker are construction partners, and Emma Knight is senior associate, at Gowling WLG
Almost all building work carried out in England must comply with building regulations. Historically, however, penalties for non-compliance were minimal. Judith Hackitt described the penalties as “so small as to be an ineffective deterrent”.
“It will be vital that people in senior positions document the steps taken to ensure and monitor compliance”
The Building Safety Act 2022 (BSA) aims to address this through tougher penalties. Article 39, which implements them, enters 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 members of a partnership.
What is covered?
“Building work” carried out in England must comply with the regulations set out in the Building Act 1984 and the Building Regulations 2010. This includes (but is not limited to) the construction of new buildings, extensions of existing buildings, alterations or material changes of use, installation of controlled services (such as a boiler) or controlled equipment (such as the replacement of windows), and renovation of thermal elements such as roofs or external walls, etc. .
Stronger penalties
Before the BSA and in particular section 39, anyone who contravened the building regulations committed an offence, although the maximum penalty was quite lenient. Section 35 of the Building Act set out the penalties: this was a summary offense only with a fine 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 Article 35 to provide for an unlimited fine and imprisonment of up to two years as possible sentencing options.
The time during which notifications requiring the withdrawal or rectification of works that do not comply with building regulations can be issued 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 an offense under the Construction Act 1984 or parts two or four of the BSA, directors individuals, managers, secretaries or others similar. It will also be considered that the officials of a legal entity or any person who intended to act in this capacity, will be considered to have committed this crime, if the breach is committed with their “consent or connivance” or “attributable to any negligence” in his part.
If there is sufficient evidence and the relevant test is met, then “that person, as well as the legal person, commits the crime and is liable to be prosecuted and punished accordingly.”
“Director” is defined in the BSA, but “manager” or “other similar officer” is not. It will therefore be necessary to see which people could be included once the provisions are practically applied and tested.
The possible offenses under the Building Act that may give rise to personal liability are widely pronounced: any breach of a provision of the Building Regulations, or a requirement imposed under that provision, is an offence. Of course, building regulations apply to all “construction works” and are not limited to residential or high-rise residential buildings.
The offenses under Part Two or Part Four of the BSA are also wide-ranging: Part Four includes the obligation to register High Risk Buildings (HRBs) and obtain relevant completion certification prior to occupation, as well as a range of other new duties.
Sections 40 and 161 are based on section 37 of the Health and Safety at Work Act 1974 (HSWA). However, neither the HSWA nor the BSA define ‘consent’, ‘connivance’ or ‘negligence’ and there is only limited guidance from the courts in the health and safety context.
What can directors/managers do to mitigate risks?
Since the first step in establishing personal liability is to prove that a crime has been committed by a legal person, then the first step in avoiding such liability will, of course, be for directors or officials in decision-making positions to ensure compliance of the Building Regulations. and parts two and four of the BSA.
Companies managing buildings that fall under the new regime will need to obtain appropriate advice on their relevant obligations/duties, many of which come into force on 1 October.
It will be vital that those in senior positions 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 prove that the relevant person took reasonable practical steps to avoid any breach.
Businesses should speak to their insurance brokers to check what cover they have or can obtain in relation to their liabilities under the BSA, although it is impossible to insure against fines and insurance is of no use in of prison sentence. However, a directors’ and officers’ liability policy should provide directors and employees in supervisory positions with coverage for regulatory expenses and defense costs and in respect of any subsequent civil claims.
