Building Safety Act 2022: High Court makes Building Liability Orders against connected companies of insolvent contractor
The High Court considers an application for two Building Liability Orders under s.130 Building Safety Act 2022 (“BSA 2022”), discussing in its judgment the application of the “just and equitable” test and the extension of BLOs to associated companies.
The background
Crest Nicholson Regeneration Ltd v Ardmore Construction Ltd [2026] concerned a large development of 19 residential buildings in Portsmouth, of which 5 buildings rise to over 18m above ground level. The development was constructed by the main contractor Ardmore, under appointment from Crest.
Following the Grenfell Tower tragedy in 2017, investigations into the external cladding and walls of buildings at the development uncovered a number of fire safety risks and defects, such as the use of combustible materials and missing and defective cavity and fire barriers, requiring thorough remediation at a cost of multi-millions.
Crest and its group companies issued adjudication proceedings against Ardmore, alleging breaches of contract and Building Regulations, and breach of duty under the Defective Premises Act 1972 (“DPA 1972”). Ardmore was ordered by the adjudicator to pay an award of £14,928,320.40 to Crest. Ardmore entered into administration the day before the adjudication award decision was handed down, and the sum was not paid to Crest.
In addition, further proceedings were brought against Crest by Portsmouth Naval Base Property Company and Portsmouth Naval Base Property Trust, to which Ardmore was also a party.
Crest then brought Building Liability Order proceedings under s.130 BSA 2022 against companies connected to Ardmore, seeking two orders:
- An “Anticipatory BLO”, making those connected companies jointly and severally liable for any liability that Ardmore may be found by a court to owe as a result of breaches under the DPA 1972 or arising from building safety risks defined under the BSA 2022; and
- An “Adjudication BLO”, making those connected companies jointly and severally liable for the sum awarded by the adjudicator of £14,928,320.40.
It was agreed that the connected companies were each an “associate” of Ardmore for the purposes of s.131 BSA 2022.
The decision
The High Court considered three key questions:
- Could the adjudicator’s decision give rise to a “relevant liability” for the purposes of s.130(3) BSA 2022;
- Did the adjudicator have jurisdiction; and
- Was it just and equitable to make the BLOs sought by Crest.
The Court found that the adjudicator’s decision was binding, could give rise to a “relevant liability” under s.130(3) BSA 2022, and did not need to be enforced by way of an application for summary judgment. The Court did not need to undertake its own assessment to determine relevant liability, and was able to transfer liability to connected parties where just and equitable to do so.
On the second question, and considering BDW Trading v Ardmore Construction Limited [2024], the Court found that the adjudicator did have jurisdiction to determine claims made under the DPA 1972 and to make an award to Crest and its undisclosed principal group company.
Finally, the Court found that it was just and equitable to grant both the Anticipatory BLO and the Adjudication BLO against companies connected with Ardmore. Considering the facts, the Court decided that Ardmore was unable to satisfy its liabilities as a result of its administration, which arose as a result of defects claims brought against it, or which may potentially be brought against it in the future, following the large-scale review of residential buildings after Grenfell. The Ardmore group of companies includes the connected companies against which the BLOs were sought, all of which are controlled by the same individual.
The Court was satisfied that building safety risks existed in the subject buildings for which Ardmore was liable, that Ardmore had been fully aware of its exposure to risk in relation to claims by Crest for some time, had limited engagement with proceedings, and had not paid the award made by the adjudicator.
The Court concluded that, considering the facts of the case, it was just and equitable to grant both the Anticipatory BLO and the Adjudication BLO.
It is understood that the Ardmore group of companies intends to appeal this decision.
Advice and action for landlords
This is an important decision in the context of Building Safety Orders and the BSA 2022, and is the first to award an “Anticipatory BLO” in respect of liabilities yet to be determined separately, operating in a similar way to an indemnity. Whether it is just and equitable to make the BLO is a decision that turns largely on the individual facts of a case, and the Court may use its wide discretion in making that decision.
Landlords and freeholders will no doubt welcome the judgment, which creates avenues of recovery of major remedial works costs from companies associated with insolvent lead contractors, exposing group companies to risk regardless of their corporate structures or insolvency.
Adjudication awards can give rise to a relevant liability, making adjudication a viable alternative to engaging in expensive litigation to establish liability, including liability under the DPA 1972.
We will continue to monitor proceedings in this case, particularly if the matter proceeds to appeal.
