Recovering costs of RAAC remediation works

Introduction

‘Reinforced Autoclaved Aerated Concrete’ (aka RAAC) is failing in many buildings and making headlines in the news. It has been named a crisis. Why? Because at the very least defective RAAC will be costly to remediate, but at the worst it could pose a threat to life. This has occurred at a time when building safety is being fiercely promoted.

The key legal question that we analyse in this article is who could be found liable to pay for RAAC remediation works, leaving aside the recent media and political outcry (which does not a legal liability make).

Background

RAAC was commonly used as a cheaper alternative to standard concrete throughout the late 1950s up to the late 1980s primarily in public buildings but also in commercial and residential buildings. During the 1990s, concerns arose that RAAC panels were not performing as originally anticipated because there were instances of ‘deflection’ (i.e. cracking) and corrosion of the RAAC’s internal reinforcement suggesting a lack of alloy protection. 

The Building Research Establishment (‘BRE’) and others investigated and concluded that RAAC had a usable life span of around 30 years, subject to appropriate maintenance works being undertaken. 

The current position

It is now evident that sufficient maintenance works were not undertaken and/or that RAAC was not replaced before the end of its life span. This means that RAAC is now failing in many buildings and must be replaced. Parties have little other choice but to undertake expensive remediation works, or run the risk of facing criminal prosecution, or worse.

What makes this crisis so noteworthy, is that many of the structures known to suffer from failing RAAC are schools, nurseries, hospitals, leisure centres, university facilities, hotels, law courts and other public essential buildings. Critics say this crisis follows a sustained period of reduced government funding.

The RAAC crisis has occurred in a climate where building safety is increasingly in focus (with no signs of abatement), following the tragic loss of life during the Grenfell Tower fires in 2017. This resulted in (1) private sector building developers and product manufacturers being criticised in the ‘Hackitt’ review for prioritising profits above all else, and (2) the behemoth and complex Building Safety Act in 2022 (‘the BSA’) obtaining assent on 28 April 2022 with the stated aim of ensuring the safety of people in buildings.

Any party facing the costs of remediation works will understandably be considering if there are third parties from whom they can recover remedial work costs.

These third parties could include the party that commissioned the building works, the design consultant or a contractor with design responsibility that specified RAAC for use, the contractor who put the RAAC into the building, landlords with repairing obligations, any parties involved in the management of the building and ‘associated’ companies of the above.

We consider below some the causes of action that could be raised against these third parties.

The legal position: A construction perspective

Breach of Contract

The works contractor would be under an obligation to ensure that the materials used were satisfactory. The party that specified the use of RAAC would be under an obligation to use ‘reasonable skill and care’ in specifying materials. Should a claim be brought against a works contractor for using RAAC which has now failed, the issue would be whether the use of RAAC was wrong at the time that it was specified and used.

To sustain that argument, there would need to be a body of expert evidence which supported the view that at the time that RAAC was used, it was not a satisfactory material. The law will not look at these issues with hindsight. The focus would be upon, at the time of the RAAC’s specification/use, whether RAAC was a satisfactory material. If not, the works contractor could be in breach of its express and/or implied contractual obligations and be liable for damages.  

It is being widely asserted that, one way or another, the problems with RAAC have been known about for some time, and that the current crisis has arisen because of delays in taking steps to resolve the problem by way of maintenance or replacement works (as discussed above). There is no suggestion that RAAC should never have been used and/or that it was known, when the buildings were originally built, that RAAC was not a satisfactory product. As the BRE put it, there ‘is no evidence so far to suggest that RAAC planks pose a safety hazard to building users’.

Negligence

The designing party which specified the use of RAAC would owe a duty of care that obliged them to use reasonable skill and care to ensure that materials it was specifying were reasonably fit for their intended purpose. 

Similar to breach of contract, the assessment of whether a party was negligent in specifying RAAC would be viewed through the lens of what was known about RAAC at the time it was specified; hindsight views will not be relevant.

Currently no information has been put forward to suggest that RAAC was the wrong material to specify and/or use, either at the time or now. In the early 1990s, the BRE advised that RAAC had a lifespan of 30 years; the current timeline suggests that that was correct.

Defective Premises Act 1972

One of the BSA’s effects was to extend the period in which claimants could bring claims under the Defective Premises Act 1972 (‘the DPA’) to 30 years retrospectively, thereby hypothetically permitting claims as far back as 1993. However, the DPA only relates to ‘dwellings’.

To succeed in a claim under the DPA, a claimant must establish that the dwelling was unfit for human habitation ‘at the time it was completed’. A claimant would fail in its claim under the DPA if the building in question is not a dwelling.

There are cases where DPA claims have succeeded where that breach was present but unknown at the time of completion, for example, a hidden breach of the then current Building Regulations. Currently there has been no suggestion that the use of RAAC was a breach of the Building Regulations previously in force. Rather, it appears that RAAC has performed as anticipated.

The legal position: A landlord and tenant perspective

Contractual obligations

A lease will allocate responsibility so that each party understands the parts of the building that it is to keep in repair. The allocation of responsibilities varies (particularly in complex title structures), but commonly a landlord is responsible for the repair of the structural and external elements of a building.

Similarly, the forms of repairing obligations are myriad, but it is settled law that the obligation to ‘keep’ a premises in repair will only be engaged if there is a physical deterioration in the element of the building which is subject to the repairing obligation. No deterioration = no repair obligation.

Following these two examples, a landlord subject to an obligation to keep in repair the parts of a building in which RAAC is located, is not automatically obliged to remediate those parts of the building merely because RAAC is in situ. However, if the condition of the RAAC deteriorates (which presumably is the case given RAAC has a limited life span), then the position would immediately change. 

If a landlord failed to keep in repair RAAC such that its tenant was prevented from using its demised premises in whole or part, then the landlord may void its own insurance policy. This breach would also likely trigger breaches of the landlord’s wider contractual obligations resulting in it being vulnerable to claims by the tenant for damages. The tenant could also bring a claim against the landlord for ‘performance’ which, if obtained, would compel the landlord to undertake the repair works.

The BSA

Amongst other things, the BSA’s provisions enable tenants to issue court claims against their landlords, the original developers/contractors and their ‘associated’ companies, compelling them to contribute towards the costs of remediation works. Alternatively, a tenant may issue a claim seeking to compel their current landlord to undertake remediation works.

A tenant may bring either one of these claims in respect of ‘building safety risks’, the definition of which includes the ‘collapse of the building or any part of it’. The collapse of buildings caused by failing RAAC seems to fit this criteria exactly.

A landlord may either be liable to contribute towards the costs of RAAC remediation works, or to undertake remediation works itself, regardless of whether that landlord was actually responsible for the installation of the failing RAAC.

However, a tenant may only bring a claim seeking either a contribution towards remediation work costs or an order compelling a landlord to undertake works, in respect of ‘relevant buildings’ which requires that the building in question must contained at least ‘two dwellings’. This clearly would put some buildings (e.g. law courts) out of scope.

Even if a landlord is not vulnerable to claims under the BSA, it may still none the less be required to undertake repair works under the contractual mechanics of the leases. If that is the case, the BSA may prevent a landlord from recovering the costs of its remediation works from ‘qualifying tenants’, under the service charge provisions of the lease. Again, not all buildings/tenants will be in scope.

Limitation Issues

Even if there were a route for a prospective claimant to establish a ‘cause of action’, any potential claim would have to overcome arguments that any claim is now ‘statute barred’. The law prescribes limitation periods for causes of action, requiring any legal proceedings to be commenced within the relevant limitation period.

For claims for breach of contract, a claimant has either six years (for a simple contract) or 12 years (for a deed such as a lease) from when the breach of first occurred to commence formal legal proceedings. Given the age of the works undertaken when the RAAC was first installed, any claim for a breach of contract in respect of the original construction of the building would very likely be statute barred and incapable of being pursued. Occasionally there may be helpful contractual provisions that could assist a claimant to pursue a claim long after the works have been completed, for instance, contractual terms granting an indemnity that the works were going to have a specific lifespan. 

In respect of a party under a lease failing to comply with its contractual obligations, the position could be very different. For example, if a party was obliged to keep in repair that part of the building which included RAAC, and it did not, then that party would likely be vulnerable to legal claims which were not statute barred, given the breach of contract would likely have occurred within the 12 year limitation period. Further, the BSA is primarily concerned with the status of the building as at today’s date, and it extends the limitation period under the DPA, so limitation there is unlikely to be an issue.

For claims in negligence the limitation period is either six years from the date of damage caused by the negligence, or three years from the date the damage was or should reasonably have been discovered, subject to a longstop period of fifteen years from when the works were originally done. Again, any potential claim in negligence relating to the original construction of the building will also be statute barred. Albeit, query whether there will be scope for claims in negligence for more recently undertaken remediation works and/or professional services.

Whilst there are provisions under the relevant Limitation Acts giving courts the discretion to extend limitation period, that discretionary power is rarely exercised and will be seen against the backdrop of the problems with RAAC being known about for some time.

Our comment

Legally speaking, it appears the current legal issues are not that RAAC is or was always inherently safe (which does not appear to be the case).

Instead, risks have arisen because the buildings suffering from failing RAAC were not properly maintained and/or that the RAAC in those buildings has reached the end of its life span.

Unless the situation changes such that it is proved that RAAC was never at any time a satisfactory product, our view is that claimants will struggle to prove that the original design party and works contractor are liable to pay damages under breach of contract or that they negligently breached their duty of care. Even if this could be proved, claimants would still need to get around the issue of limitation.

As such, our view is that the burden of paying to remediate failing RAAC, or actually remediating RAAC, will fall mainly (1) to parties under leases by way of their contractual obligations, or (2) under the BSA, albeit not all buildings/tenants will be in scope.

So, unless the law changes, the mere presence of RAAC does not automatically impute a legal obligation to undertake remedial works.

Pragmatically speaking, given the potential threat to life, parties must not delay in reviewing whether to take action if they know or suspect that RAAC is installed in their building. This is the starting point of our advice when dealing with building safety concerns.

Legally speaking, to determine a party’s liability, a forensic process must be undertaken to determine the condition of the RAAC and, if it is found to be failing, to then devise a scheme of remediation works.

Only once that has occurred, will a party be in a position to (1) accurately calculate its loss, and (2) consider which third parties may be liable to pay compensation (or undertake works), which would require an examination of the contractual and statutory web of provisions applying to those with an interest in or association with the building. Clearly, as with much of building safety, this exercise will require a team of professionals, including legal advisors from potentially several different disciplines, together with building surveying experts.

Of course, some landlords may understandably also be concerned with the risk of adverse public relations.

Hill Dickinson’s team of experts is actively advising its clients on numerous building safety issues, including those relating to RAAC. Please do not hesitate to contact us should you want to discuss how we can help you.