The Fire Safety Act – a cause for rising M&E engineering claims?

Nearly four years have passed since the Grenfell tragedy and the impact continues to reverberate around the construction industry. Claims relating to defective cladding, insulation and cavity barriers have become depressingly commonplace. But one area where we are seeing an increasing focus is claims relating to mechanical and engineering services.

The ongoing enquiry chaired by Sir Martin Moore-Bick, now focuses on the production, testing and sale of materials. There is also movement by the government in the form of revisions to Approved Document B, the extension of the Building Safety Fund, which remains considerably underutilised, updated guidance regarding EWS1 forms, and the recent Fire Safety Act, which will be complemented by the forthcoming Building Safety Act.

In the English courts, there remains no binding case law as to liability or to apportionment between parties alleged to be responsible for the use of cladding and insulation products. In the absence of a ‘test case’ ongoing claims are stalling. Large numbers of claims and circumstances have already been notified. Whilst there is potential for new surges, exclusions are now widespread across the industry, so insurers will not be accepting many new claims relating to cladding and insulation.

That has resulted in a shift away from potentially pyrrhic claims into areas where insurance may still exist, including M&E (mechanical and electrical). Where there is a substantial remedial scheme which encompasses internal and external works, a change in focus may offer the prospect of some degree of recovery.

Various other factors are also contributing to the rise in such claims.

  • The new Building Safety Bill is built around a risk based approach; this means that ‘duty owners’ and ‘accountable persons’ are looking at fire safety from every potential angle, both during construction and afterwards. That includes both active and passive fire protection measures.
  • The impact of regeneration of existing buildings is also a factor. Where a building is upgraded to meet modern standards, it is perhaps inevitable that there will be some degree of compromise, which is unlikely to pass muster in the current regulatory environment.
  • Councils are now more actively using their powers to issue fire safety notices. Whilst minor penalties can be up to £5,000, major penalties include unlimited fines and up to two years in prison.

So what type of claims are we seeing?

  • Lifts. Lifts can be used both for evacuation and for firefighting, but they need to be designated and designed for a particular use. At Grenfell, the firefighters were unable to call the lift as intended, forcing the team to ascend the smoke filled stairwells. Potential issues include not only the construction of the lifts, but also their power supplies, programming and accessibility.
  • Extraction systems. The failure of a smoke extraction system was a contributory factor in the Grenfell disaster. The bespoke system designed for Grenfell was not ADB compliant, and did not work. Evidence was heard from the fire-fighters about the difficulty of firefighting and evacuation in thick black smoke, whilst Dr Barbara Lane’s report evidenced how a working system might have made a considerable difference to their efforts.
  • Fire doors. Whilst not strictly an engineering issue, services are generally required to be protected by suitably protective fire doors, so that they are not damaged whilst fires are still being fought. They are something, therefore, that M&E designers need to be fully cognisant of.
  • Sprinkler systems. There was no sprinkler system installed at Grenfell; there was no legal requirement. But in many buildings they are one of the primary means of fighting fires. Claims can arise if these systems are not properly designed or installed, have insufficient coverage or resourcing, or do not integrate with other building systems.
  • Dry and wet risers. Wet risers, properly situated, are much more effective in assisting firefighting.
  • Fire protective paintwork. If paintwork is not properly specified or installed, prolonged exposure can result in potentially catastrophic building failure.
  • Smoke and fire detection systems. Issues include the type of systems designed, issues with installation, including suitable wiring, placement and protection of sensors, and even software failings.
  • Fire compartmentation. This is something which can fall between the cracks in terms of responsibility, but M&E consultants will be expected to be aware of the issues that arise where services are routed through compartments.

And what factors are there to be aware of? These claims on the whole follow a similar path to other construction disputes. But it is always sensible to consider the following:

  • Limitation. Consultants’ appointments are not always signed as deeds. But the new Building Safety Act will extend limitation periods for claims under the Defective Premises Act, from six to 15 years.
  • Novations and assignments. Always check that the claimant actually has a right to sue the consultant, and that the proper procedures have been followed.
  • The state of the art. Be cautious when applying 2021 standards to earlier developments; both the letter of the law and its understanding have moved on substantially. Consultants may have reasonable defences of peer professional opinion, if they have properly considered the particular issues.
  • Contribution claims. Consider the roles of architects (particularly as lead consultant), fire engineers and approved inspectors, as well as contributory negligence against contractors.
  • Re-remediation. Where further work is being proposed to existing remedial schemes, what is the root cause of the problems? Should issues have been picked up earlier?
  • Coverage. It is always sensible to be aware of:
    • Fire exclusions. Whilst many were drafted post-Grenfell and focussed on cladding, many are now more widely drafted, covering fire safety generally.
    • Strict obligations. Particularly in relation to Building Regulations compliance, or unduly onerous contractual obligations or warranties which may take an insured outside the scope of policy cover.
    • Which is often excluded under consultant’s policies.
    • Should consultants reasonably have been aware of these issues in earlier years? Have there been any earlier notifications which might encompass new claims, or remedial works triggering a need to notify?

Comment

M&E claims are the latest front opening up in the post-Grenfell construction industry. They are unlikely to be the last such pivot, but for now they are of considerable interest to claimants looking at substantial shortfalls in remedial projects. There are lessons to be learned for both insurers and insureds in this latest wave of claims, and a reminder that fire safety is complex and multifaceted, and constantly developing.

Read other items in Professions and Financial Lines Brief - September 2021

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