UK Building Safety Act: No time limit on cladding claims

In Almacantar Centre Point Nominee No. 1 and No. 2 Limited v Penelope de Valk and others, the Upper Tribunal had to consider the various protections for certain leaseholders under Schedule 8 of the BSA.

The building at the centre of the dispute, Centre Point House, was built in the 1960s. The landlord discovered that water was getting into the timber frame of the building and compromising its structure, so proposed a scheme to fix it. They applied to the FTT for a determination of whether the cost of those works could be recovered from leaseholders in the building as service charge.

The FTT found that the works fell within the landlord's repairing obligations, and tenants were liable under the service charge for those works, but as the works amounted to “cladding remediation”, qualifying leaseholders weren't required to pay the service charge by virtue of the leaseholder protections in the BSA.

Leaseholder Protections under the BSA

Schedule 8 of the BSA contains various protections for leaseholders, which prevent landlords recovering service charge from them for the costs of remedying “relevant defects” in certain circumstances.

“Relevant Defects” means anything done or not done during the construction or conversion of the building, or subsequent works to it in the period from 1992 to 2022, which cause a risk of the spread of fire or structural collapse. These protections only apply to relevant buildings (over 11 metres/5 storeys high).

The provision in issue in this case was paragraph 8 of Schedule 8, which provides that “no service charge is payable under a qualifying lease in respect of cladding remediation”, which is defined as “the removal or replacement of any part of a cladding system that (a) forms the outer wall of an external wall system, and (b) is unsafe.” Importantly, the wording of this provision did not expressly refer to “Relevant Defects”.

The landlord appealed to the Upper Tribunal, arguing that, like the other provisions in Schedule 8, the leaseholder protections for cladding remediation should only apply to relevant defects; as this was an inherent part of the design of the fabric of the building dating back to the 1960s, it was not within the 30 year window of 1992 – 2022 which applies to relevant defects, so the landlord should be able to recover its repair costs from leaseholders.

Despite all the references to “Relevant Defects” within the leaseholder protection scheme within schedule 8 and elsewhere in the BSA, the Upper Tribunal agreed with the leaseholders and the FTT that the cladding remediation provisions in paragraph 8 stood alone; As there was no reference in paragraph 8 to “Relevant Defects”, it was intended to apply more widely, and beyond the 30 year limit for other claims related to “Relevant Defects”.

The Upper Tribunal said that the explanatory notes to the BSA, which suggested the 30 year period should apply to all the provisions of schedule 8 including cladding remediation, could not be taken into account because they were published after the BSA was enacted.

They also decided that Parliament must have intended for cladding remediation works to fall outside the 30 year limitation period which applies to the rest of the schedule 8 protections, and to the Defective Premises Act 1972 as extended by the BSA.  This also means that cladding remediation is not capable of forming part of a Remediation Order, or a Remediation Contribution Order, which also only apply to relevant defects, though the Upper Tribunal did note that leaseholders could seek specific performance of lease repair clauses against their landlords, instead of using a remediation order.

While the wording of paragraph 8 does not refer to “Relevant Defects”, it does seem unusual for Parliament to have created a new time-unlimited provision without express wording to make that clear. The Upper Tribunal's view that this did not open the “floodgates” for historic claims relating to cladding, as only “unsafe” cladding fell within paragraph 8.

Cladding System

The next question for the Upper Tribunal was whether the works proposed by the landlord were cladding remediation. This turned in part on whether the exterior parts of the building being replaced amounted to a “cladding system”. Surprisingly for a provision with such wide reaching effect, there is no definition of cladding in the BSA.

The landlord argued that “cladding” implies a two layer system, with an external wall and a cladding system affixed on top as an outer skin. The façade at Centre Point House was not an outer skin, it formed part of the exterior of the building itself so was not a “cladding system”.

The Upper Tribunal said that the FTT's decision that the façade of Centre Point House was a finding at fact, which could not be challenged. They nonetheless decided that a “cladding system” was not necessarily limited to two separate systems (a wall, and cladding on the top), and that one composite wall could meet the definition.

Unsafe

The final point to be determined was whether the requirement in paragraph 8 for a cladding system to be “unsafe” was limited to fire safety to the occupants of the building, or applied to “safety” more broadly.

The landlord argued that unless paragraph 8 was limited to fire safety to the occupants of the building, it could extend to something which could become unsafe through gradual deterioration.

However, the Upper Tribunal took a wide view, and decided that “unsafe” was not limited to fire risks, or risks to the residents of the building. As there was a risk that the issues with the exterior of the building could detach, with risks to members of the public, the “cladding system” was unsafe.

What does this mean for older properties?

The scope of the BSA is already broad; “Relevant Defects”, which can be the basis of remediation orders requiring certain defects to be fixed, and protect certain leaseholders from paying for the associated costs through service charge, don't just relate to the risk of the spread of fire, but also to more general structural collapse and can reach back to works carried out as early as 1992.

However, this judgment suggests that, when it comes to cladding defects, the BSA can reach back for more than 30 years. Combined with the FTT and Upper Tribunal's very wide approach to what constitutes a cladding system, extending to an original structural wall from the 1960s, this seems to give the BSA a very broad reach. It does seem seriously questionable as to whether this genuinely was Parliament's intention, as opposed to somewhat imprecise drafting – which would not be the first time where the BSA is concerned. Did Parliament in enacting the BSA really intend to insulate leaseholders from service charge relating to the repair of non-fire safety related structural issues in a building over 60 years old?

This decision will be of concern to all landlords contemplating external works to older buildings, even where those works are not fire-safety related. 

Authored by Paul Tonkin and Lucy Redman.