In the next in our series of articles considering the new and extended causes of action under the Building Safety Act 2022 (BSA), we consider the provisions of the BSA which implement stronger sanctions for building safety breaches, as well as the potential personal liability of officers of a body corporate, including its directors, for such breaches.
In her foreword to the 2018 Independent Review of Building Regulations and Fire Safety, Dame Judith Hackitt observed that one of the key issues underpinning the system failures that came to light following the Grenfell tragedy was "[i]nadequate regulatory oversight and enforcement". She noted further that "[w]here enforcement is necessary, it is often not pursued. Where it is pursued, the penalties are so small as to be an ineffective deterrent".
Accordingly, one of the stated aims of the BSA is to remedy this by providing for stronger sanctions against those who breach building regulations or the new building control regime established by the BSA, which is due to come into force later in 2023 (which we explored in an earlier article).
In addition, as the Explanatory Notes to the BSA explain, the majority of those carrying out duties under the Building Act 1984 and the new BSA building control regime will be corporate bodies rather than individuals. However, since corporate bodies operate only by and through the actions of individuals, an offence by a body corporate must be attributable, by some measure, to the personal failure of those individuals with decision-making powers.
Accordingly, the BSA will extend liability for such breaches to individual directors, managers, secretaries or other similar officers of a body corporate, or partners within a partnership, where the breach is committed with their "consent or connivance", or is attributable to any neglect on their part – although as noted below, the relevant provisions of the BSA are not yet in force at the time of writing.
The rationale for extending liability to such individuals is to "bring home" the importance of building safety responsibilities to those individuals who are responsible for directing companies.
Stronger sanctions for breach of building regulations
Prior to the passing of the BSA, any person who contravened a provision of the building regulations committed an offence, albeit that maximum conviction was fairly lenient (s. 35 BA 1984). It is also worth noting that this was a personal liability of a person (which may include an individual or a body corporate), but not a liability that could be passed to a director/partner etc. of a body corporate.
Section 39 of the BSA (which as of the date of writing, is also not yet in force) will significantly increase the penalty for breaching building regulations under section 35 of the Building Act 1984. Section 35 was previously a summary-only, fine-only offence limited to a fine of £5,000, and a maximum daily fine of £50 for each day on which the default continues after the date of conviction.
The amended section 35 provides for an unlimited fine, and also provides for imprisonment of up to two years as a possible sentencing option.
The time during which notices may be given requiring removal or rectification of work which is non-compliant with building regulations is also significantly extended, from 12 months to 10 years.
Potential personal liability of Officers of a Body Corporate etc.
Alongside the individual personal liability under section 35 of the Building Act 1984, section 40 of the BSA inserts a new provision into the Building Act 1984, which provides that where a body corporate commits a criminal offence under that Act, certain individuals will also be deemed to have committed that offence, in certain circumstances (which we outline further below).
Section 161 makes the same provision where an offence under Part 2 or Part 4 of the BSA is committed by a body corporate. If there is sufficient evidence and the relevant test is met (see further below), then "that person as well as the body corporate commits the offence and is liable to be proceeded against and punished accordingly."
At the time of writing, neither section 40 nor section 161 have yet been brought into force.
In terms of potential offences under the Building Act 1984 which may lead to personal liability under section 40 of the BSA, the amended section 35 casts this in very wide terms since it states that any contravention of a provision of building regulations, or a requirement imposed by virtue of any such provision, is an offence. It is worth keeping in mind that building regulations apply to all "building work" and are not limited to residential or high-rise residential buildings.
Offences under Part 2 of the BSA may include, for example:
- Intentionally obstructing / impersonating an authorised officer (i.e. a person authorised by the Building Safety Regulator to carry out a function under Part 4 of the BSA, or under the Building Act 1984) – under section 23 of the BSA; and
- providing false or misleading information to the Regulator, under section 24.
Potential offences under Part 4 of the BSA include, for example:
- breaches of sections 76-82, which contain numerous requirements in respect of registration and certificates including the requirement to obtain the relevant completion certificate before allowing occupation of HRBs;
- failure to conduct regular assessments of the building safety risks in respect of occupied higher-risk buildings, under section 83, or to manage those risks as required by section 84;
- failure to prepare or revise a safety case report for HRBs "as soon as reasonably practicable" after the buildings become occupied, as required by section 85; and
- failure to comply with the mandatory reporting duties set out in section 87.
Who could be found liable?
In respect of the individuals who potentially could be found liable, both sections refer:
- to any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity;
- in the case of a partnership, to a partner; and
- in the case of an unincorporated body other than a partnership, to members who manage the body's affairs, or members of the governing body.
"Director" is defined in the BSA (s 161(2)) – in relation to a body corporate whose affairs are managed by its members, director will mean a member of the body corporate.
The terms "manager" or indeed "other similar officer" are however not defined, and are potentially open to wide interpretation. It therefore remains to be seen which individuals could be encompassed by these terms once the provisions come into force and are applied and tested in practice.
Section 161(4) provides that in cases where a "relevant company" (which is defined as meaning resident management companies or right-to-manage (RTM) companies, or companies that are "commonhold associations") is an "accountable person" for a higher-risk building within the meaning of Part 4 of the BSA, then provided the company has appointed one or more remunerated directors "for a building safety purpose", then any unpaid directors will be exempt from potential liability.
This will be an incentive for resident management and RTM companies – and particularly the unpaid directors of such companies – to push for the appointment of paid directors "for a building safety purpose". This is defined as meaning the purpose of supporting the relevant company in complying with its duties under Part 4 of the BSA, or under regulations made under that Part.
In what circumstances will such personal liability arise?
The offence committed by the body corporate must either be:
- committed with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity; or
- attributable to any neglect on the part of any such person.
Both sections 40 and 161 are modelled on section 37 of the Health and Safety at Work Act 1974 (HSWA 1974). However, neither the HSWA nor the BSA define the meaning of "consent", "connivance" or "neglect".
In R v Chargot Limited (t/a Contract Services) and others (Appellants)  UKHL 73, the House of Lords observed that "no fixed rule can be laid down as to what the prosecution must identify and prove in order to establish that the officer's state of mind was such as to amount to consent, connivance or neglect." In some cases, such as where the relevant individual's place of activity was remote from the workplace or the activity there was not "under his immediate direction or control", then detailed evidence may be required. Where, on the other hand, the individual was in "day to day contact" with what was done at the workplace, the evidence required will not be as substantial.
Where "consent" is alleged, the House of Lords confirmed that a defendant would have to be "proved to know the material facts" constituting the offence and to have "agreed to its conduct of the business on the basis of those facts". It noted however that consent – as well as connivance and neglect – may be established by inference as well as by proof of an express agreement.
"Connivance" is generally considered to refer to passive allowance, or 'blind eye knowledge" (i.e. shutting one's eyes to the obvious). Huckerby v Elliott confirms that a person may be said to have connived in an offence where "he is equally well aware of what is going on but his agreement is tacit, not actively encouraging what happens but letting it continue and saying nothing about it."
In Chargot the House of Lords confirmed that if the circumstances under which the risk arose were under the "direction or control" of the individual, then it will be a "relatively short step for the inference to be drawn" that there was connivance or neglect on their part.
Finally, in R v P  EWCA Crim 1937 the Court of Appeal considered the meaning which should be given to the concept of "neglect" under section 37 HSWA and confirmed that correct question to determine neglect in cases where there was no actual knowledge of a permanent fact was: should the officer in question, by reason of the surrounding circumstances, be put on enquiry to require him to check that relevant procedures were in place? The Court further clarified that where neglect is relied upon, the following elements have to be proved:
- that the company committed a breach – in this case of sections 2 and/or 3 of the HSWA;
- that the defendant had a duty to inform themselves of the facts giving rise to the breach(es) – although the Court confirmed that there was no requirement, as the trial judge had found, that the defendant "did know of the material facts";
- that the defendant had a duty to act in relation to those facts;
- that the defendant was neglectful of their duty in the sense that they either knew or ought to have known but shut their eyes to the fact that there were reasonable practical steps they could have taken but which they did not; and
- that their neglect of duty caused or contributed to the company breaching its duty.
What can individuals in director/manager positions do to mitigate the risks?
Since the first step in establishing personal liability of individual directors/officers is to establish that an offence has been committed by a body corporate, then the first step in avoiding such liability will of course be for directors / officers in decision-making positions to ensure that the body corporate complies with (a) building regulations; and (b) Parts 2 and 4 of the Building Safety Act.
As noted above, however, not all of Parts 2 and 4 of the BSA are yet in force, and detailed secondary legislation implementing these Parts is expected to be published in draft form within the first few months of 2023. On 24 January 2023, the first set of draft regulations in respect of Part 4 of the BSA were published, the draft Higher-Risk Buildings (Key Building Information etc.) (England) Regulations 2023, which are expected to come into force in April 2023.
Companies which own/manage/develop buildings falling within the new regime will need to obtain appropriate advice as to what strategic measures they can implement now to prepare, as well as being made familiar with their relevant obligations/duties as soon as the details are published.
It will be vital for individuals in director, manager or other similar positions to document the steps they take to ensure compliance with the BSA as well as measures to ensure and monitor compliance with the Building Regulations. Documenting the decision-making process and ensuring that this is shared with all those in decision-making positions within a company will also help to evidence, e.g. that the relevant individual took "reasonable practical steps" to avoid any breach.
Companies should speak to their insurance brokers to check what insurance cover they have or may be able to put in place in relation to their liabilities under the BSA. It is impossible to insure against fines under the BSA and insurance is of no use in the event of a prison sentence. However, a Directors and Officers (D&O) Liability policy should provide directors and employees in a managerial or supervisory position with cover for regulatory expenses and defence costs and in respect of any subsequent civil claims. Companies should check whether there are any other employees with defined roles under the BSA that may need to be expressly added to the policy as well as how D&O cover interacts with any cover provided by their public liability or property owner's liability policy.
Building Safety Act: Potential Personal Liability Of Directors
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