Directors’ Liability under the Building Safety Act 2022

The Building Safety Act 2022 (“BSA”) introduces a raft of new responsibilities for building owners.

Central to those new responsibilities is the overarching objective that higher risk buildings are safe for residents and others from the risk of fire and structural collapse. In addition to the responsibilities placed on duty holders, such as the principal accountable person, section 161 extends responsibility to individuals at director and management level who consent or connive in, or whose neglect causes, a breach of certain obligations within the BSA.  Similarly, section 40 introduces provisions that create similar personal liability for certain breaches of the Building Act 1984.  Although the relevant sections of the Act are not yet in force, they have potentially far-reaching consequences for individuals at director and management level within an organisation, who may face fines or even imprisonment if found guilty.

In this article we explore who could be found liable, the responsibilities to which such liability may attach, and the steps organisations should take to ensure their directors and officers are protected.

Who is Liable?

Section 161 of the BSA provides for personal liability if an officer (a director, manager, or company secretary) consents or connives in the commission of an offence by that organisation under Parts 2 and 4 of the BSA. Section 40 of the BSA provides the same liability for failing to meet selected sections of the Building Act 1984.  For the purposes of this article, we will focus on the offences within the BSA itself.

The range of individuals potentially exposed to liability remains somewhat unclear. The relevant provisions are not yet in force, and regulations or guidance may inform the position, however, the word “manager” is potentially broad and may well include anyone who has a responsibility for discharging the organisation’s obligations under the BSA, e.g. a business unit manager or a head of department.

What BSA Responsibilities are “Offences”

The BSA makes clear that only certain obligations set out in the Act will be “offences” which will trigger the liability set out at section 161.

Those offences include behaviour which constitutes intentional obstruction of someone who is “exercising a relevant building function” (section 23) or where false or misleading information is provided to the Building Safety Regulator (section 24).

There is also a host of responsibilities in respect of Higher Risk Buildings (“HRBs”), set out in Part 4 of the Act, that could lead to personal liability under section 161, including:

  • allowing occupation of a HRB without the relevant completion certificate (section 76);
  • allowing occupation of a HRB without registration (section 77);
  • failure to action or comply with a Compliance Notice (section 99);
  • failure to apply for a Building Assessment Certificate when directed to do so (section 79);
  • failure to display various notices and certificates in the building (Section 82);
  • failure to operate a mandatory reporting system (where required) related to the safety of an occupied building (section 87);
  • where there is a change in accountable persons and the previous accountable person fails to provide prescribed information and documents to the new accountable person (section 90); and
  • where an accountable person breaches a relevant requirement that places people in or around the building at critical risk (section 101).

When will there be a Liability?

The scope of section 161 is drafted widely. Should one of the offences listed above be committed by the relevant corporate duty holder, a director, manager or company secretary could have personal liability if the offence committed by the body corporate was either:

(1) committed with the “consent or connivance” of that individual (these thresholds focus on knowledge); or

(2) attributable to (i.e. caused by) any neglect on the part of that individual – neglect can take the form of an act or omission (a focus on acts, as opposed to knowledge).

Broadly speaking, consent covers those situations where an individual or individuals act when permission is given to do something constituting a criminal offence.

Connivance covers those situations where an individual or individuals are allowed, tacitly or secretly, to do something constituting an offence, never having been given direct agreement. This is sometimes known as “blind eye knowledge”. In Huckerby v Elliott [1970] 1 All ER 189, the court held that a person has connived in an offence where “he is equally well aware of what is going on but his agreement is tacit, not actively encouraging what happens but letting it continue and saying nothing about it”. On this definition, connivance includes an individual who “shuts his eyes to the obvious”.

In terms of neglect, R v P [2007] EWCA Crim 1937, the CA ruled that the correct question to determine neglect in cases where there was no actual knowledge of a permanent fact was: should the officer in question, by reason of the surrounding circumstances, be put on enquiry to require him to check that relevant procedures were in place?

Protective Measures

The clear aim of potential personal liability of officers for these offences is to seek to ensure that the new key responsibilities within the BSA are addressed diligently and effectively by all building owners who are body corporates. Therefore, it is of paramount importance that organisations introduce processes which secure compliance with the BSA (and the Building Act) and actively manage those processes and timelines for achieving such compliance.

It should be noted that Parts 2 and 4 are not yet in force, but organisations should take this time to implement strategic measures to protect the organisation and its officers from this potential liability.

Given the extent of the liability, and the wide range of persons which are caught, it will be imperative for organisations to consider what they can do now to best prepare – identifying the obligations that arise under the BSA (and the Building Act 1984), who is meant to carry them out and how, and monitoring the completion and adequacy of those steps. Documenting these steps, to ensure they can be evidenced, is a vital and ongoing process.

In terms of taking protective measures, an important action for organisations will be to investigate and procure insurance cover available for such liabilities. It remains unclear how the insurance market will react to providing cover for such risks, which is likely to be influenced by market conditions and insurers’ risk appetite at any given time. As a starting point, organisations should discuss their risk needs in this respect and obtain advice from their insurance brokers as to the cover (and the associated premium cost) that is, or is expected, to be available, that may mitigate some of this potential risk exposure.

For more information, please contact Mark London, Michael Wharfe, Rachel Jones, or Sivan Raza.

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