A Building Liability Order

Hot on the heels of the recent High Court judgment in BDW Trading Ltd v Ardmore Construction Ltd & Ors [2025] EWHC 434 (TCC) (27 February 2025) (bailii.org) which refused to grant an information order in relation to a potential building liability order (BLO), we have another High Court judgment, issuing a BLO.

For my short piece on the BDW judgement, please see: Information orders guidance under the Building Safety Act 2022 | Thackray Williams.

The BLO judgement is from Jefford J, in 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Anor [2024] EWHC 3569 (TCC) (19 December 2024) (bailii.org)

The court made a BLO under s130 Building Safety Act 2022 (BSA) against Click Group Holdings Limited (Holdings), the ultimate parent company of Click St Andrews Limited (Click St Andrews), in favour of the applicant dwelling leaseholders.

It followed a substantive trial where the same judge held that Click St Andrews was liable under a freehold purchase agreement to the purchaser, a right to manage company (RTM). The judge found breaches of that agreement relating to fire safety and structural inadequacy of beams supporting the new upper storey. Those were both “relevant liabilities” under s130 BSA.

Under s130(3) BSA, a “relevant liability” is “a liability (whether arising before or after commencement) that is incurred—

(a) under the Defective Premises Act 1972 or section 38 of the Building Act 1984, or

(b) as a result of a building safety risk.”

Those breaches also put Click St Andrew’s in breach of its covenant of quiet enjoyment in the leases to the leaseholders – even though, in the case of the beams, the risk had not yet manifested itself and may not do so.

The RTM has the benefit of a parent guarantee from Holdings in the freehold purchase agreement. The leaseholders were not party to that agreement and therefore did not benefit from it. Hence, they applied to the court for a BLO.

Section 130 BSA enables a BLO to be made against a body corporate “associated” with the body corporate that has the relevant liability. Jefford J had no difficulty finding that Holdings did have control over Click St Andrews, via ownership of all the shares in an intermediate subsidiary, which itself controlled Click St Andrews. It was therefore “associated” with Click St Andrews.

That then left the question of whether it was “just and equitable”, as s130 BSA requires, for the court to issue a BLO against Holdings. The judge referred to the decision of the First Tier Tribunal (FTT) in Triathlon Homes LLP v Stratford Village Development Partnership [2024] UKFTT 26 (PC). That case related to an application for a remediation contribution order or orders under s124 BSA. S124 also requires it to be “just and equitable” for the FTT to make a remediation contribution order.

Jefford J agreed with the FTT that “the power is discretionary and should therefore be exercised having regard to the purpose of the 2022 Act and all relevant factors….” The FTT had also said that: “The obvious purpose behind the association provisions is to ensure that where a development has been carried out by a thinly capitalized or insolvent development company, a wealthy parent company or other wealthy entity which is caught by the association provisions cannot evade responsibility for meeting the cost of remedying the relevant defects by hiding behind the separate personality of the development company.”

The difference in the Click St Andrews case was that Holdings was not wealthy. However, Jefford J held that, when deciding whether it is just and equitable to make a BLO, the emphasis should be on the ability or inability of the company primarily liable for the remediation costs to pay those costs, rather than on the financial position of the associated company.

Jefford J considered that it is preferable, but not necessary, for a body corporate that could be the subject of an application for a BLO, to be a party to the substantive proceedings as to whether there is a “relevant liability”, so as to ensure that all issues are dealt with. She held that it is not even necessary to identify them in the substantive proceedings, “because it may not be apparent that a particular company will be pursued, and which company may be pursued may turn on changeable financial arrangements, or the company against whom the order is sought may not even exist at the time of the original proceedings”.

Jefford J stated that it was not necessary to quantify the liability of the body the subject of a BLO at the stage of making the BLO. She also emphasised that a BLO can only apply to losses arising from the “relevant liability”, not also to any other losses that might have been incurred in relation to any other type of liability.

If you would like any advice on building liability orders or anything contained in this article, please contact Andrew Harbourne in our Construction team on 020 8290 0440.