Welsh Cladiators leading the way to justice for building safety victims

Mark Thomas

As a long-suffering Welsh building safety victim of seven years, I have significant experience of how the current political, regulatory and legal systems are addressing the shocking and nationwide fallout of the 2017 Grenfell Tragedy.

I am now approaching 67 years of age and have devoted the last seven years of my life trying to get a substantial Welsh apartment block, built in the early 2000s with serious latent fire and build defects, remediated.

I now know there are two possible routes to assist Welsh building safety victims. One requires the responsible developer to perform its obligations under the Welsh Government’s Deed of Bilateral Contract (DBC). The second involves suing the developer under the Defective Premises Act 1972.

High-quality

At the time of my purchase, I believed I was buying a high-quality apartment that would form a substantial part of my retirement planning and pension provision. This was important to me as I did not have the security or benefit of a corporate or public sector pension plan.

Like so many other building safety victims, I was reluctant to invest in other sectors. We are all aware of the many financial investment and pension scandals of the 2000s, some of which I had already been caught up in.

My apartment was also a place to possibly retire to. Little did I know that, from day one, the development was beset with latent, life critical fire and construction defects.

Eight years on from the horrors of Grenfell many hundreds of thousands of building safety victims are now suffering well-being, mental health and severe financial difficulties.

Some have already been declared bankrupt. Shockingly, one high profile victim who was deeply troubled by the crisis is known to have tragically taken their own life.

Given the enormous complexities involved in the crisis, many building safety victims have tried to ignore the issue by burying their heads in the sand. They live in hope that someone in authority will eventually sort out the huge mess.

However, a small and brave minority have decided to fight back against the extreme injustice despite the personal risks to their own health, finances and lives.

Those ultimately responsible for the crisis have sought to use every aspect of the current regulatory and legal system to deflect and evade accountability. It is an epic injustice that has many parallels to the horrific Post Office scandal: another example of the massive imbalance of power between corporate giants and the little people.

Complex

Yet despite the highly complex and adversarial legal game being played I believe our courts do try to ultimately deliver justice. So, despite already learning some tough lessons in the differences between the law and justice I, and a small group of leaseholders, continue to fight and live in hope that our faith and courage will be rewarded.

My family and friends think I’m crazy to continue to battle a large and powerful corporate entity, but I am steadfast. I have worked too hard in life to allow a cluster of anonymous corporate executives to savage my retirement plans and the lives of so many other decent, ordinary Welsh people.

Young and old have had their lives turned upside down by a shocking and, in my view, utterly toxic industry.

Grenfell and the House Building Industry

Home fire safety victims fall under the same broad arc of corporate malpractice that beset the innocent 72 victims of Grenfell. Of course, nothing equates to the indescribable pain that Grenfell families and friends have experienced. But the similarities in terms of regulatory failures, corporate denials, obfuscation and sheer buck passing, are plain to see for all Welsh and English building safety victims.

The housing development industry operates in a self-congratulatory echo chamber that marks its own homework. Senior executives flip effortlessly from one company to another. Their boards of non-executive directors are littered with members drawn from the doyens of Britain plc. Since the cladding crisis has been exposed, developers have demonstrated no such equivalent affability towards building safety victims.

I have spent my entire life working around the world in many large and diverse corporations and I am disgusted by the way the leadership teams of these developers have dealt with their former customers and now victims. In terms of other industries such as medical devices, pharmaceuticals, automotive and aircraft manufacturing, developers are decades behind in terms of product quality, reliability, safety and customer focus.

I have met so many decent people who have been run ragged by developers while fighting to get their fire and/or build-defective homes remediated. Social media is littered with hundreds of seriously stressed and distraught victims. Meanwhile the industry sugar coats its woeful performance by glossy adverts and paid for insider social media campaigns. The crisis has revealed an industry that is in denial. Like many other building fire safety victims, I pray that Grenfell victims and families will see justice sooner rather than later.

Michael Gove and the Cowboy Industry.

It takes something significant for a major political figure like Michael Gove to describe an industry as functioning like the Wild West and operating as a cartel. But after years of developers’ denials and UK Government political impotence, that is exactly what Gove did when he called the developers’ bluff after years of denying accountability for their self-made crisis. His ultimatum was simple – you either take responsibility for the building safety crisis or I’ll put you out of business!

Gove followed up his threats by retrospectively changing the law and extended the time for legal claims under the Defective Premises Act (DPA) from six to 30 years. Seldom do governments retrospectively back date laws. It was a powerful act of political will and commitment and significantly shifted the narrative to a more positive stance.

Gove then strong-armed developers to sign his Developers Contract (or Deed of Bilateral Contract, DBC). This meant that developers were committed to undertake works to remediate “life critical fire defects” in their developments. Our Welsh Government – housing is a devolved responsibility in Wales – effectively copied the Gove contract some 12 months later. Bizarrely, however, the Welsh Government subsequently voted against key protective laws that our fellow English victims enjoy involving the issuing of Remediation and Contribution Orders (RCOs).

Remediation and Compensation – the key options

Today, and thanks to Michael Gove, victims of the Welsh and English crisis have two possible routes to resolve their fire and building quality defects with developers: require the developer to perform its obligations under the Deed of Bilateral Contract or sue the developer under the Defective Premises Act 1972.

Incredibly, the right to legitimately claim compensation or damages between the two is immensely different.

The Welsh Government contract with developers (“DBC”)

Under the Welsh or English governments’ contracts or Deed of Bilateral Contract (DBC) as they are known, developers are contractually bound to remediate only “life-critical fire defects” and nothing else.

Most importantly, the DBC does not cover any additional leaseholder damages claims such as the costs of waking watches, alarm upgrades, increased building insurance premiums, and leaseholder compensation for distress and inconvenience.

For many developments, these costs run into hundreds of thousands of pounds and it is the innocent leaseholders that have to pay, via increased service charges.

Up until now, the Welsh Government has “encouraged” developers to do the right thing and compensate victims for such costs. A few developers have responded positively but many have not and continue to refuse to do so.

After years of legally fighting developers, many leaseholders will know developers do not respond to moral or ethical appeals. They only respond to the force of law. Shockingly, some leading Welsh politicians don’t understand this brutal reality.

Despite damages and compensation being a well-known legal concept, it’s clear that in some parts of the legal profession, when it comes to the building safety crisis, there is a belief that “remediation is your remedy.” Many legal professionals have advised that leaseholders who have been subjected to significant additional financial costs are not entitled to any compensation or damages.

The term “make good” is often cited. You are entitled to be put in a position that you were in before the defects were discovered but you are not allowed to claim for any economic loss that might have resulted.

I know this mindset to be prevalent from speaking to many legal advisers over the last five years. As one eminent King’s Counsel (KC) advised – “You will win and have a great day in court, but you won’t get damages for loss of value in your property.” The same KC went on to advise that leasehold law was one of the most unsatisfactory aspects of Welsh and English law and that it treats the leaseholder very harshly.

Despite this strong legal group-think, thankfully, not all lawyers agree. After all, compensation is a well-recognised legal concept and practice. The fact is that the longer this crisis drags on then the more innocent leaseholders suffer financial and personal hardship. With each passing day of additional financial strain and mental worry, the weaker, the “remediation is your remedy” argument surely becomes. This is a key question that the courts will ultimately need to address.

Of course, our homes must be remediated of all serious fire and build defects, but at the same time why should innocent people be expected to foot the bill for vast expenditures on addressing the impact of the defects? Huge building insurance increases and losses in property values were not of their making. It is for that reason that some fearless Welsh and English leaseholders have decided to navigate a different course to justice.

The Defective Premises Act 1972 (“DPA”)

The second route for leaseholders to resolve their disputes with developers or builders, is the Defective Premises Act (DPA): a piece of legislation that has been around for over 50 years. Michael Gove’s retrospective extension of the timeline for claims under the DPA from six to 30 years effectively provided a lifeline for many leaseholders who would otherwise have been out of time for making a legal claim. Indeed, the six-year limitation prior to Gove was the developers’ get out of jail card in avoiding any liability.

During the time the Act has been operating, the cases taken to court have clearly established that a “defect” under the DPA covers a much wider range of defects than the Welsh or English governments’ DBCs. Under the DPA, defects do not need to be fire related and they do not need to be life-threatening. However, life threatening fire defects will almost certainly be covered by the DPA.

Can it be conceivable that a defect that is admitted under the Welsh or English DBC is not a defect under the DPA? This will be a key question that the courts will need to rule on.

The enormous significance of establishing a defect under the DPA is that leaseholders can then claim all the additional damages that flow from any defects. This includes the waking watch costs, alarm upgrades, increased building insurance premiums etc.

It is also clear that leaseholders can claim the loss in value of their flats, including any loss in value remaining even after repairs have been completed. This is sometimes referred to as diminution in value or “blight”. Despite the previously highlighted legal group-think, there is clear judicial authority that supports this concept. Given the enormous scale and impact of the crisis in Wales and England, it is clear that very significant sums could be involved. It is for this reason that developers are currently showing Post Office-style resistance in fighting to derail and defeat any such claims.

Indeed, it is the enormous imbalance of power that befell the innocent Post Office sub-masters that awaits many leaseholders brave enough to take on any developer in the courts. Just as the Post Office sought to “legally outspend” and “crush” their former employees, the default position of developers is to deter leaseholders who dare to challenge them. The classic strategy being to simply “outspend” leaseholders if litigation is started.

Risks

Lawyers regularly advise of the huge cost and risks involved in litigating with developers. There is no such thing as a 100% winnable case in law. The legal fees involved, combined with the need for highly expensive technical expert reports to examine every minute detail of any fire or building defect, make for eye-watering reading. It is not for the faint hearted and probably explains why so few groups of leaseholders have been willing to go to court. For the brave leaseholders in Wales, it is a monumental Dafydd v Goliath battle that has, so far, gone under the Welsh mainstream media radar.

Given the legal and technical complexity involved, there have been calls for such disputes to be settled under a simpler and more transparent code of consumer law, rather than the complex processes of the Technology & Construction Courts (TCC) which rely on an extremely complex legal process and an almost microscopic level of detail. Cases involving the TCC are decided by judges not juries.

The courts also involve some of the most highly paid legal counsel in the UK. Indeed, the whole crisis has generated a financial feeding bonanza for lawyers and construction industry experts and professionals.

It has often been said that you get more consumer protection from buying a kettle than you do buying a new home, such is the weakness of the current law from a purchaser’s perspective. But any progress in this area is likely to take many years due to the complexities involved and the vested interests that must be overcome.

Remediation progress

As concerns increasingly grow over the slow rate of remediation progress in Wales and England, more leaseholders are realising the brutal reality of their situation. You either rely on a rather ineffectual government and developer’s contract that might potentially drag on what is a life destroying crisis for another decade or more.

Or, you look for other means by which you can force the hands of developers. Maybe the new Westminster government will step up to calls from building safety victims for new laws and sanctions. Sadly, in Wales, where the crisis hardly registers in the Senedd or media, there is little sign that the Welsh Government has the political will or appetite to take such action.

In contrast to Michael Gove’s aggressive stance, our Welsh administration has adopted a light touch and collaborative approach towards developers. It has even gone as far as providing a £20m interest free loan to help developers with any cash flow problems involving their remediation plans!

So, for now, we wait and hope that many more brave and courageous leaseholders will force the hand of the developers and use the DPA to move beyond remediation to remediation and compensation. As ever it will only take one to break the dam. As we say in Wales, Mae ffortiwn yn ffafrio’r dewr – Fortune favours the brave.

Mark Thomas is lead campaigner for the Welsh Cladiators, seeking justice for leaseholders who were sold defective homes.