Spec Finish

Legal www.thefis.org 17 Court can now order that the liability be met by another associated company or a subsidiary within the group. Increased liabilities Following Grenfell the Government has product manufacturers and suppliers in its line of fire. Defective construction products which create building safety risks, leading to a dwelling being unfit for human habitation, will put manufacturers and sellers in the dock. They can be sued by freeholders or leaseholders of buildings throughout the UK where; • the product is inherently defective; and/or • the product has been mis-sold; and/or • there has been a breach of any construction product regulations applying to the particular product. For cladding products there will be a 30-year limitation period to apply retrospectively. Otherwise there will be a 15 year limitation period applying to all products for the future. Claims can be brought in respect of personal harm, damage to property as well as any financial loss. For contractors there is one unsettling aspect of this new product liability; it could extend to contractors in the event that a product is used in a way that offends any requirement relating to the product, or possibly, to any misleading claims made about the product. This is a risk which could materialise as we see litigation being pursued in the courts. It should be noted that under existing law a contractor will be contractually liable for installing defective cladding – see page 24 of the July 2022 issue of SpecFinish. Implications for FIS members The extended limitation periods under the Defective Premises Act for historical defects are of significant concern. The Act provides two defences: 1. a claim will be dismissed if it breaches the defendant’s human rights: this could mean, for example, that the defendant hasn’t the means to defend itself because relevant records were not kept for 30 years (in most cases this would not be considered unreasonable); and 2. claims which have been settled or resolved cannot be revived. FIS members should pour over their files to assess the risks of possible claims for historical defects and make these known to their insurers. Speaking of insurers they will be re-appraising their increased exposure to risks as a result of the extended limitation periods. Some insurers may be considering excluding Defective Premises Act claims (and even Section 38 claims) from their cover. Some insurers have already limited or excluded altogether their cover for design impacting on fire safety. It doesn’t need explanation but the outlook for premiums could be dire. FIS members should be having a dialogue with their insurers and re-reading the contents of their policies. Furthermore, we are likely to see amendments to contracts to reflect the new limitation periods. Some clients/ tier 1 contractors may use this as an excuse to extend periods for retentions release. Finally, FIS members will need to consider their pricing structures. The greater exposure created by the new limitation periods and the consequent impact on insurance premiums will have to be priced into members’ work wherever possible. Following Grenfell the Government has put product manufacturers and suppliers in its line of fire