Part 5: Other provisions about safety standards, etc. Construction products Section 149: Liability for past defaults relating to cladding products Background
This is a new provision.
	Current issues with historical fire safety defects in multi-occupied residential buildings are an unprecedented situation affecting large numbers of leaseholders.
	There are particular problems with the past use of unsafe cladding products on these buildings, and the resultant fire safety risks. Often, to mitigate against the fire safety risks, the cladding needs to be remediated. The costs associated with remediation are often significant.
	There is evidence that the past actions of manufacturers and sellers of cladding products have contributed to the creation of these defects and the resultant fire safety risks.
	Where the actions of cladding product manufacturers and sellers have caused or contributed to a building being unsafe, there are limited existing routes to secure redress from those at fault.
	The cause of action created by this section provides a new route for recourse against cladding product manufacturers, where their actions have caused or contributed to a dwelling becoming unfit for habitation.
	The cause of action has retrospective effect. This means that it is available in respect of defaults (to which see subsection (2)) which occurred before the commencement of this section (which is two months after Royal Assent of this Act; to which see section 170(3)). The limitation period commences on the date on which the right of action begins to accrue, which is the completion of the relevant works. In practice, this means that claims will be able to be brought in respect of works which were completed from mid-1992 onwards. The limitation period for work completed before commencement will be 30 years; the limitation period for work completed after commencement will be 15 years.
	The cause of action created by section 148 has prospective effect. It applies to a wider range of construction products and will apply in respect of defaults which occur after the commencement of sections 148 and 149.
Example
In 2001, the manufacturer of a cladding product misrepresented the properties of the product to the lead contractor for the construction of a high-rise residential building. The manufacturer stated in marketing materials that the cladding product was more resistant to the spread of fire than it was.
The cladding product was installed by the contractor on the high-rise residential building and the relevant works were completed in 2002.
Following fire safety checks it is determined that the cladding product installed on the building creates a serious fire safety risk and should not have been used in the construction of a high-rise building. The use of the product in the building has resulted in dwellings in the building being unfit for habitation at the time of completion of the works due to fire safety risks.
The cladding product now needs to be replaced with a safe alternative. The building owner will bear the costs of this remediation.
To replace the dangerous cladding, the building owner incurs significant costs. Under this section, (and before the limitation period expires) the building owner brings a claim for compensation against the cladding product manufacturer for the costs associated with remediating the unsafe cladding. The court finds that the reason the dwellings in the building were unfit for habitation on completion of the relevant works is the use of the unsuitable product. This was used as a result of the manufacturer’s misleading marketing material and the Court orders the manufacturer to pay damages to the building owner.