Out-Law News 8 min. read

Fire safety duties for insolvency practitioners

When a business goes into insolvency, insolvency practitioners may become responsible for fire safety. Those responsibilities will change if the Hackitt Review's post-Grenfell recommendations are implemented, particularly if the insolvency involves buildings where people sleep.

Fire safety duties: the basics

Fire safety in England and Wales is governed by the Regulatory Reform (Fire Safety) Order 2005 (RRO), which sets out fire safety duties applying to almost all buildings, places and structures that are not individual private homes. They apply to the shared areas of blocks of flats and to houses in multiple occupation.

Those responsible for premises must:

  • take general fire precautions;
  • undertake a suitable and sufficient fire risk assessment and review it regularly;
  • have appropriate arrangements in place to manage fire safety;
  • install appropriate fire fighting equipment, fire detectors and alarms, and maintain these systems;
  • appoint at least one competent person to provide fire safety advice and assistance; and
  • provide fire safety information and training to employees.

Failure to comply with these duties is a criminal offence if that failure puts people at risk of death or serious injury in case of fire. The maximum penalty is an unlimited fine or a custodial sentence of up to two years for individuals. Failures could also give rise to the fire and rescue authority serving an enforcement notice requiring fire safety improvements, or a prohibition notice restricting the use of premises until serious fire safety issues have been resolved.

The responsible person

Fire safety duties fall primarily on the “responsible person”, but they can also apply to people in control of premises.

The identity of the responsible person is determined by article 3 of the RRO and depends on how the premises are used.

In a workplace the responsible person is the employer. Where a place is not a workplace but is controlled by someone in connection with a trade, business or undertaking, it is the person in control. For any other use the responsible person is the owner.

The RRO specifies that a person is deemed to be in control where any contract or tenancy imposes maintenance, repair or safety obligations for the premises upon them.

In complex buildings which contain premises occupied by multiple organisations, or where there is potentially more than one person or organisation in control, determining the identity of the responsible person can be complex and challenging for the fire and rescue authority.

What happens in an insolvency situation?

Where the responsible person or a person in control becomes insolvent, a key risk for insolvency practitioners (IPs) is that they may be deemed by the fire and rescue authority to become the responsible person upon appointment. Where an LPA (Law of Property Act) receiver is acting as agent in respect of property, especially in the case of vacant premises, the same risks and broad considerations apply.

After a number of fires at premises where the businesses were in administration the London Fire Brigade wrote to professional bodies in 2009 setting out its interpretation of the legislation. It said that the IP becomes the responsible person in this situation. This has not been tested in court but the same approach has been widely adopted by other fire and rescue authorities.

This approach gives fire authorities simplicity and certainty but it is not the law and in an insolvency setting the situation can be very fact-specific and open to interpretation.

The issues likely to determine responsibility include:

  • whether the business continues to trade from the premises;
  • who employs any people working in the premises;
  • whether a management company has been engaged to trade the business, and the terms of its engagement;
  • the extent to which the IP can be said to be in control of the premises, particularly if the keys have been returned to the landlord; and
  • who is responsible for repair and maintenance.

It may be possible to assert that the insolvent company, if it remains trading and is an employer, is the responsible person. Or it might be a third party who is in control of the premises. However, it must be borne in mind that the fire and rescue authority’s main priority is ensuring that buildings are safe. They either may not fully appreciate the detail of the insolvency regime or may choose to disregard any legal arguments about who is the responsible person based on the insolvent status of the business. It is unlikely that a fire authority would find enforcement action against the shell of a company attractive.

A concern for fire authorities is the management of fire safety in vacant buildings. In those circumstances where there is no trading entity as an employer and the building is no longer a 'workplace' then the RRO responsibilities placed on those with some degree of) control over the premises have even greater relevance for IPs.

In our experience IPs generally understand that personal criminal liability arising from fire safety exists for individuals. Although we have yet to see a successful prosecution of an IP on this basis, the heightened emphasis on fire safety in the aftermath of the Grenfell fire cannot be ignored. The nature of individual criminal liability and the role of the IP throws up a number of legal issues and potential defences. However, even if no prosecution actually comes about, the potential effect on an IP receiving correspondence that suggests that they are under personal investigation cannot be overstated.

We have recently had some success in persuading a fire and rescue authority to depart from the London Fire Brigade position and serve an enforcement notice on a company in administration, rather than the appointed administrators. However, it was crucial in that instance that there was a clear commitment from the administrators to address the fire and rescue authority’s concerns.

Meeting the risk

Initial contact from a fire authority whether by telephone, email or letter has the potential to confuse a conscientious IP firm. Any contact of this sort should be treated seriously and consideration given to obtaining legal advice before responding. At the same time IPs should also recognise that considering the legal position carefully has to be balanced against practical matters and in particular that positive engagement with the fire and rescue authority can significantly reduce the risk of formal enforcement action.

Expansion of fire safety duties

The UK government is currently considering how to implement recommendations which would make fire safety duties more onerous.

Dame Judith Hackitt was commissioned by the UK government to review the system of building regulation and fire safety in England and Wales. Her final report recommends a wide-ranging and ambitious package of building and fire safety reforms, which practitioners will need to be alive to in any appointment, particularly where the insolvency involves buildings where people sleep.

Hackitt’s final report sets out the principles for a new regulatory framework which she considers will drive cultural change and the right behaviours in relation to fire safety. Emphasis is placed on a clear model of risk ownership, and the new regulatory framework she proposes is to be “outcomes-based” rather than following a prescriptive regulatory approach.

The recommendations apply to multi-occupancy, higher risk residential buildings, which the report defines as buildings of more than 10 storeys. The report recommends that the government considers extending the new system to other buildings used as living accommodation where people sleep, including care homes, hospitals, hotels, prisons, halls of residence and boarding schools. Such an extension has the support of the National Fire Chiefs Council. Some of the recommendations would apply to an even wider range of buildings.

On 19 July the government launched a consultation to gather views on revisions to the statutory guidance on building regulations for fire safety, in line with recommendations made in the Hackitt review. The revisions propose to clarify the regulations, leaving less room for misinterpretation by the individuals undertaking and inspecting building work. The consultation closes on 11 October.

A new model of risk ownership

This new regulatory system will be overseen by a Joint Competent Authority (JCA); a formal mechanism through which Local Authority Building Standards and the Fire and Rescue Authorities would work with the Health and Safety Executive in a much more integrated way. The new JCA would act as a 'gatekeeper', whose approval would be required at certain 'gateway points' in order to obtain planning permission, start building work and start occupation.

The JCAs work as gatekeeper and reviewer of the safety case would be done on a full cost recovery basis, underpinned by a fee-charging regime.

The JCA would have new enforcement powers, including the power to serve formal improvement and prohibition notices, and ultimately to pursue prosecution of those who fail to comply with their duties.

New information and 'safety case' requirements

The report envisages retrospectively creating safety cases for existing buildings, which would require an information-gathering exercise to build the data record and reconstruct the design intent for building safety. Hackitt recognises that this will be an enormous task, and proposes a phased programme of work on a prioritised basis.

More rigorous oversight of duty holders

Where the new regime applies the JCA must be notified of the identity of the “'duty holder' before a building is occupied. This must be the owner or superior landlord. This duty holder role applies to the whole building, and would overlap with responsible person duties for any individual premises within the building.

The duty holder would have to nominate a competent building safety manager to be responsible for the day to day management of the building, and to act as a point of contact for residents.

A central plank of this new system is the creation, maintenance and handover of key information, the so-called 'golden thread'. Those involved in the construction of buildings must prepare and hand over a digital record, a fire and emergency file, full plans, and a construction control plan. The building duty holder would also have to complete a pre-occupation fire risk assessment and a resident engagement strategy before the building could be occupied. Together, this information will form a 'safety case' for the building, which would have to be reviewed at least every five years, and more often if modifications are proposed to the building.

The duty holder would have an overarching responsibility to take such safety precautions as may reasonably be required to ensure that building safety risk is reduced so far as is reasonably practicable. This duty would operate in a similar way to the duties under health and safety legislation to ensure the health, safety and welfare of employees. It would be a criminal offence to fail to comply.

Residents would be given a voice under this new system, as promised by Hackitt in her interim review. The duty holder would have an obligation to ensure that there is a resident engagement strategy, and that residents receive information on fire safety in an accessible manner. However, with that voice will come responsibility. Clearer obligations would also be imposed on residents to cooperate with the duty holder and to ensure that they take any action required within their own flats, for example ensuring that fire compartmentation is maintained to a suitable standard.

Key issues for IPs

It will be important to understand in an insolvency situation whether the business is the named duty holder for any buildings to which the new regulations will apply because of the compliance cost and the potential liabilities associated with that role.

It is not currently clear what would happen in the event of insolvency of the duty holder. But it is again likely that the fire and rescue authorities will look to IPs to assume the duty holder role to ensure safety on an ongoing basis.

A further statement to the UK parliament setting out how the government intends to implement the new system of regulation is expected in the autumn.

Sean Elson and Katherine Metcalfe are health and safety experts at Pinsent Masons, the law firm behind Out-Law.com

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