Summary and implications
When undertaking due diligence exercises in property purchases a standard construction enquiry is usually raised of the seller to ask if there is a health and safety file. Typically the response is that there is one and it will either be handed over on completion or left at the property. But what are the consequences if there isn't a health and safety file and there should be?
When should a health and safety file exist?
A health and safety file should be prepared, where none exists, and otherwise revised and updated by a CDM co-ordinator on all projects which are 'notifiable' i.e. the construction phase is likely to involve more than 30 days or 500 person days.
Responsibility for the production and maintenance of the health and safety file
The CDM Regulations provide that the CDM co-ordinator prepares the health and safety file, and on completion of construction work the CDM co-ordinator should pass the health and safety file to the "client". Although the health and safety file is prepared by the CDM co-ordinator it is ultimately the responsibility of the client.
The client is then under an obligation "to ensure that after the construction phase the information in the health and safety file – (a) is kept available for inspection by any person who may need it to comply with the relevant statutory provisions; and (b) is revised as often as may be appropriate to incorporate any relevant new information" (Regulation 17(3)).
These obligations are acquired by any new owner of the client's interest. Therefore, if a tenant has procured works and acted as the client for the purpose of such works, at the end of the lease the responsibility for the health and safety file would pass back to the landlord. Similarly, it would pass to any purchaser of the client's interest.
Failure to comply with the CDM Regulations is serious and incurs criminal liability.
Except in two circumstances the CDM Regulations are enforced by the Health and Safety Executive (HSE) under the Health and Safety at Work etc. Act 1974. The exceptions are enforcement action following a fire which would be under the Regulatory Reform (Fire Safety) Order 2005 and enforcement on the railways which is carried out by the Office of Rail Regulation.
The HSE has wide-ranging powers including:
- requiring the production of documents and inspecting and taking copies of them;
- the service of improvement notices requiring a contravention to be remedied within a certain time period;
- the service of prohibition notices requiring that the activity in question be stopped until the contravention is remedied; and
- the issue of simple cautions (different to police cautions).
Despite the powers of enforcement criminal law is the principal instrument for securing compliance.
Companies and other organisations can be prosecuted but in addition directors, managers and other officers of corporate organisations can be prosecuted personally where it is shown they have consented to the commission of any offence or where an offence has been committed by neglect on their part.
Any prosecution could result in a lower court maximum penalty of £20,000 and/or 12 months' imprisonment and a higher court maximum penalty of an unlimited fine and/or two years' imprisonment.
No civil liability
Since 1 October 2013 there has been no right of civil action under the CDM Regulations. Article 4 of the Enterprise and Regulatory Reform Act 2013 (Health and Safety) (Consequential Amendments) Order 2013 has omitted Regulation 45 (civil liability) this means that the CDM Regulations will not be construed as conferring rights of civil action.
If it comes to light during a property transaction (for example, a due diligence exercise on a purchase) that a health and safety file does not exist when it should or that one exists but it is not up to date, a health and safety file should be prepared by a suitably qualified surveyor as soon as possible. This could be done prior to completion of the transaction by the seller or immediately after completion of the transaction by the buyer, in which case it could be used as bargaining power to chip the price.
Appropriate warranties and indemnities may be requested from a seller with respect to the completeness and accuracy of the health and safety file and the courts have shown some willingness to allow a person to recover under an indemnity against criminal liability if they are satisfied that such person is wholly innocent e.g. indemnities given by a seller to a wholly innocent buyer. However, if the buyer is aware that a breach of the CDM Regulations has occurred but he has not done anything to rectify such breach then any indemnity from the seller is unlikely to be upheld.
A failure to comply with the CDM Regulations has serious and far-reaching consequences. A client's obligations under the CDM Regulations are acquired by any new owner of the client's interest and as such the new client may be prosecuted for a failure on the part of the previous client.
It is imperative that a new client checks, updates and maintains the health and safety file in respect of any property for which it is the client for the purpose of the CDM Regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.