One deal, two jurisdictions – interpreting competing jurisdiction clauses
The Court of Appeal has provided comfort to the derivatives market by giving a wide, commercial interpretation to an exclusive English jurisdiction clause.
In the wake of the recent catastrophic fire at Grenfell Tower (Grenfell) and subsequent cladding tests on high rise blocks, questions have been raised about the state of fire safety regulation in England and Wales, particularly for high rise buildings.
The current fire regulatory framework, as described in the full briefing, takes a dual approach, imposing requirements on new buildings (or those which undergo material alterations) and a separate set of requirements for existing buildings. In the case of existing multiple-occupancy buildings, obligations to ensure fire safety are imposed on both the 'responsible persons' for a building, which can encompass owners, landlords and managing agents; and also social housing landlords such as local authorities, housing associations, and any managing agents or tenants' association with delegated responsibilities.
The Buildings Regulations 2010 (the Building Regulations) set out minimum standards in respect of health and safety which must be met when constructing new buildings.
The minimum standards relating to fire safety can be found in Part B of Schedule 1 of the Building Regulations. These include, for example, the requirement that a building be “designed and constructed so that there are appropriate provisions for the early warning of fire” and “appropriate means of escape from fire”. It is important to note that the Building Regulations do not themselves specify how these standards should be met. The Government has, however, approved detailed technical guidance documents on how compliance may be achieved. There is no legal requirement to implement the guidance, provided that the minimum standards are met. In the case of fire safety, the relevant guidance document is Approved Document B, which has separate volumes for dwelling houses (Volume 1) and for other buildings (Volume 2). For example, in relation to the requirement to provide an appropriate means of escape, Section 2 of Approved Document B (Volume 1) makes different recommendations corresponding to the height of the building: a window might be an appropriate means of escape from a flat located on an upper level of a building (no higher than 4.5 metres from ground level), but flats at a higher elevation would require alternative forms of emergency exits.
Part B also requires that buildings be constructed in a manner to limit both internal and external fire spread. Approved Document B provides prescriptive examples of how this can be achieved, but as noted above, compliance with Approved Document B is not mandatory. Following allegations that the cladding used on Grenfell Tower may have contributed to the rapid spread of the fire, there were calls for a re-haul of the fire safety framework set out in the Building Regulations. The Government has since announced that an independent review of the Building Regulations will now take place.
Currently, the penalty for contravention of the Building Regulations is an unlimited fine, together with a fine of £50 per day that the contravention continues after conviction.
Fire safety in existing buildings is governed by both the Regulatory Reform (Fire Safety) Order 2005 (FSO), which imposes duties on individuals in control of the building, and the Housing Act 2004 (the Act), which imposes monitoring duties on local authorities to take enforcement action against those in control of a building. Alterations (but not generally repairs) and extensions to existing buildings will be subject to the Building Regulations unless the building falls under an exemption (for example, the construction of a greenhouse). The requirements of the Building Regulations are discussed above.
The FSO imposes a duty on the 'responsible person' (who, in the case of a block of flats will be a person in control of the premises) to implement fire safety measures. These include (but are not limited to) undertaking a risk assessment; making fire safety arrangements; where necessary, ensuring that a premises is equipped with fire-fighting equipment, fire-detection equipment and emergency routes; and establishing procedures such as fire safety drills. Typically the 'responsible person' will be a freehold owner or landlord, but may also include a 'residential management company' or a 'right to manage company'. Since the FSO takes a non-prescriptive approach, fire risk assessments should be conducted on a periodic basis to evaluate the risk and determine the appropriate fire safety measures to be implemented and maintained.
In respect of blocks of flats, the FSO only applies to the common parts. Responsible persons must ensure that tenant activities do not compromise the safety of the common parts (e.g. by placing obstructions/flammable objects in corridors or blocking fire escape routes). Landlords should take appropriate action to minimise such risks, for example, by placing signs in prominent places instructing tenants to keep the common parts free from any obstruction and/or flammable objects. Landlords need to be mindful of these risks when drafting tenancy repair and maintenance obligations and should also ensure regular checks are carried out/safety audits conducted on a routine basis. Certain repair works, including the replacement of fire doors may constitute 'material alterations' and must also comply with the Building Regulations.
Failure to provide adequate fire safety measures is a criminal offence. If the failure places one or more people at risk of death or serious injury, it can be punishable by an unlimited fine and/or up to two years' imprisonment. The Fire and Rescue Authorities have responsibility for enforcement of the FSO and will work in conjunction with responsible persons to monitor the safety of common parts of relevant buildings.
The Local Government Group has published guidance titled Fire safety in purpose-built blocks of flats to assist local authorities in understanding their responsibilities. In light of the Grenfell incident this guidance is likely to be reviewed as it promoted the “stay-put policy” (i.e. it is safer for residents not directly affected by a fire to stay-put in their flat), which presumes that a building has been constructed to prevent the spread of fire from its origin.
The Act imposes a duty on local authorities to keep the housing conditions in their area under review. Local authorities may inspect the common parts of residential buildings in private as well as public ownership, where they consider it appropriate to do so. In reviewing the state of the building, they must consider the twenty-nine hazards prescribed by the Act, which include fire, noise and structural collapse.
If a significant hazard is identified it may be recorded as a Category 1 or a Category 2 hazard (Category 1 being more serious). The local authority is required to take enforcement action where a Category 1 hazard is identified, and may do so at its discretion in respect of a Category 2 hazard. Such enforcement action can include improvement notices, emergency prohibition orders (preventing specified uses of the property) or demolition orders.
In addition to the fire safety-specific requirements, the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) may apply to lapses of fire safety management. Under the CMCHA an organisation will be guilty of 'corporate manslaughter' if the way in which its activities are managed causes a person's death and amounts of a 'gross breach' of its duty of care. In this context, the relevant duty of care will be that owed to occupiers of the premises and a breach of that duty would be considered 'gross' if the relevant conduct falls far below what can be expected of the organisation in the circumstances. In order to be convicted, a substantial element of the breach must be the way in which senior management organised its activities and there must be a direct causal link between the breach and the fatalities caused.
An organisation which commits this offence will be subject to a criminal trial with a jury and the maximum penalty is an unlimited fine. While this offence applies to organisations (including corporate entities, local authorities and government bodies) only, it is still possible for individuals (e.g. directors and officers) to be prosecuted for the common law offence of gross negligence manslaughter.
In the aftermath of the Grenfell fire and subsequent tests on high risk blocks, it is clear that fire safety will be a significant area of concern for government, social landlords, private landlords, construction companies, managing agents and most particularly, residents of high rise blocks for many years to come. There will be a particular emphasis on building materials and the enforcement of fire safety regulations.
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