Open Season: Can developers now sue suppliers of defective construction products under the Building Safety Act?

This legal update was co-authored by Michael Levenstein of Gatehouse Chambers.

Introduction

Amid the new provisions in the Building Safety Act 2022 (“BSA”) regarding higher-risk buildings, including remediation orders and the Building Safety Regulator, the changes to the law surrounding construction products have flown under the radar to some extent. However, these changes raise the question of whether developers can use the new provisions to sue manufacturers and suppliers of construction products directly.

What is a “Construction Product”?

The definition of “construction products” in the context of liability for the same comes from Regulation (EU) No. 305/2011, which defines them as “any product or kit which is produced and placed on the market for incorporation in a permanent manner in construction works or parts thereof and the performance of which has an effect on the performance of the construction works…” (That definition under the regulation remains in effect post-Brexit.) In practice this covers nearly all products used on construction sites that are incorporated into the finished building, but is unlikely to include items only used during the building’s construction.

Previous Position

In the past, a common issue faced by developers intending to bring claims against manufacturers or suppliers of defective construction products was the lack of a direct contractual link. A developer facing claims for building defects would therefore usually have to claim “down the contractual chain” against its sub-contractors or sub-consultants.

New Provisions

The BSA provides new rules for establishing the liability of suppliers and manufacturers of construction and cladding products (see, eg, sections 147 to 150; Schedule 11 also permits the Secretary of State to make more detailed provisions by way of secondary legislation).

For construction products, a person or company may be liable if, at any time after 28 June 2022:

• it fails to comply with a “construction product requirement” in relation to a construction product;
• it markets or supplies a construction product and makes a misleading statement about it; or
• it manufactures a construction product which is inherently defective.

Additionally, in order to establish liability, the construction product must be installed in a building containing one or more dwellings, so that upon completion of the works the construction product caused at least one of the dwellings to be “unfit for habitation”. The limitation period for defective construction products is 15 years from the date on which the cause of action arises.

There are standalone requirements and timeframes for establishing liability regarding cladding products. Perhaps the most notable difference is that liability relating to cladding products can be established for historic defaults, meaning the BSA can apply retrospectively. Where a cause of action arose before 28 June 2022, a claimant has 30 years from the date on which the right accrued to bring its claim.

If a person or company is liable under the provisions above, it can be liable to pay a party with a “relevant interest” (ie, a legal or equitable interest in the dwelling or building) damages for personal injury, damage to property, or economic loss.

Where Does That Leave Us?

It remains to be seen whether developers will be able to use the new provisions regarding construction and cladding products to sue manufacturers, suppliers, or even those parties which marketed such products. There are also questions as to whether developers can claim damages by virtue of having a legal or equitable interest in a building once the dwellings in a development have been sold, although not allowing them to do so would arguably appear at odds with the judgment in URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772 (which considered the absence of a proprietary interest was no bar to recovering the cost of remedying building defects). Given the political pressure to hold manufacturers and suppliers of construction products accountable for the performance of those products, this is an area of law which everyone involved in the construction industry should be watching with interest.

Edwin Coe’s Construction team and Michael Levenstein of Gatehouse Chambers (left) collaborate on Building Safety Act issues.

For more information on the BSA, please contact Edwin Coe’s Construction team.

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