Building Safety Act: Potential Personal Liability Of Directors

• Published date: 27 January 2023
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Directors and Officers
• Law Firm: Gowling WLG
• Author: Ms Sue Ryan, Gemma Whittaker, Sean Garbutt and Emma Knight

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.

Background

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...