The High Court has ruled in the case of Crest Nicholson v Ardmore Construction Ltd on the widened scope of the Building Safety Act 2022 (BSA) and the circumstances in which BLOs will be made against associated companies
Case Background
Ardmore Construction Ltd (ACL) was the principal contractor for a development in Portsmouth called the Admiralty Quarter, a significant development of nineteen residential apartment buildings constructed between 2007-2009.
As a result of investigations carried out after the Grenfell Tower tragedy, widespread fire safety defects were discovered in both the external wall system and internal fire safety measures. The claimants in the case referred the dispute with ACL regarding the external wall defects to adjudication. The adjudicator awarded Crest Nicholson approximately £14.9 million for the defects. ACL subsequently went into administration and therefore the sums awarded by the adjudicator were not paid.
Crest Nicholson pursued two types of BLOs against associated companies within the Ardmore group:
- An anticipatory BLO, making associated companies jointly liable for any potential future liability that ACL may be found to owe to Crest Nicholson under section 1 of the Defective Premises Act 1972 (DPA) or arising from a building safety risk within the meaning of section 130(6) of the Building Safety Act 2022 (BSA) – the anticipatory BLO.
- A BLO enforcing the adjudicator’s £14.9 million award onto the same group companies making them jointly and severally liable for the unpaid amount – the adjudication BLO.
Key Takeaways
The Court granted both orders pursued by Crest Nicholson as set out above. The Judge concluded that it was just and equitable to grant both BLOs against the associated companies. The decision confirmed that the assessment of whether it is just and equitable to grant a BLO is a broad, fact-specific test, and the power is discretionary and should be exercised having regard to the purpose of the BSA and all relevant factors.
Concerning the anticipatory BLO, the court ruled it had jurisdiction to make a BLO before ACL’s liability was established, either under section 1 of the DPA or arising from a building safety risk. The court dismissed arguments that it was premature to decide whether to grant a BLO before trial, concluding with a high degree of confidence, the development contained building safety risks and ACL would be liable for those risks.
Concerning the adjudication BLO, the court ruled that an adjudicator’s decision could constitute a relevant liability under section 130 of the BSA. The court dismissed the argument that the temporarily binding nature of adjudicators’ decisions rendered them incompatible with BLOs.
Implications for Corporate Structures in Construction
This case is now the leading authority on BLOs – the decision confirms that section 130 of the BSA provides the court with powers to ensure that where there is relevant liability, associated companies of the party responsible for defective work can be pursued.
The judgement reinforces the ethos behind the BSA, that those who caused historical building safety defects should pay for their remediation, and that those liabilities cannot be ring-fenced and avoided through corporate restructuring. For construction contractors, this means that liabilities incurred by one company in a group can be extended to associated companies within that group, making them jointly and severally liable. The financial position of the associated company is irrelevant when determining whether to grant a BLO and it does not matter if the original body corporate has been dissolved; a BLO can still be made in respect of its associates.
Summary and Wider Impact on the Construction Sector
Crest Nicholson v Ardmore marks a significant turning point in the evolution of BLOs under the BSA. The decision highlights the courts’ readiness to give robust effect to judicial intention: ensuring that those responsible for building safety defects are held accountable, even where the original contracting party is insolvent and liability has yet to be fully determined by the court.
The judgment sends a clear signal that the corporate veil – and the wider protections afforded by group structures – will not shield associated companies from responsibility. Where building safety defects arise, associated companies may be required to answer for the liabilities of insolvent group members. Moreover, the Court’s confirmation of the relationship between adjudication and the BSA underscores that adjudication awards can serve as a powerful mechanism for pursuing recovery against associated companies.
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