Last month we announced that we would be publishing a series of blogs and thought leadership pieces on the latest developments in building safety. This article is the first of those; it deals with the developing caselaw in respect of Building Liability Orders (“BLOs”) which were introduced by s.130 of the Building Safety Act 2022 (“BSA”). BLOs represent a significant change from the usual principle that a company is solely responsible for its liabilities – traditionally known as the “corporate veil” separating the legal entity from its shareholders, directors and employees.

The purpose of BLOs

BLOs were designed to address situations where the company directly responsible for a building safety failure is unable to cover remediation costs. They are part of the BSA’s toolkit for ensuring leaseholders do not have to bear the cost of building safety defects; rather, those considered to be responsible for building safety defects can be held to account (the “polluter pays” principle).

The concern for leaseholders stems, at least in part, from a practice commonly used by developers of setting up “special purpose vehicles” (“SPVs”) to carry out developments which are subsequently wound up following completion, or simply no longer have any (or at least any sufficient) assets, and therefore it is not worth making a claim against them. The principle that one cannot “pierce the corporate veil” has, until now, enabled the SPVs’ parent companies to avoid long-term liability for any defective works in the development.

Elements of a BLO claim

There are three elements to a BLO claim:

• there is a “relevant liability” within the meaning of s.130(3) of the BSA;
• the parties are associated within the meaning of s.131 of the BSA within the relevant period1; and
• it is just and equitable to make the BLO.

When can a BLO be sought? 

Last year, the Court considered BLOs for the first time in the case of Willmott Dixon Construction Limited v Prater & Ors.2 That case concerned whether a claim for a BLO should be stayed until the main claim was resolved - because (it was argued) it would otherwise be unfair to deal with the BLO, and to incur the costs of doing so, until the underlying liability was determined and the liability was unsatisfied by the “original” defendant. 

The Court held that a BLO does not need to be brought at the same time as the primary claim.  However, if a BLO was claimed before the main claim was decided, the correct approach would usually be to deal with the BLO at the same time as the main claim. However, the Court was not required at that stage to decide whether or not to make a BLO. We understand that the case is no longer proceeding through the Courts and therefore the Court will not be asked to consider whether or not a BLO should be made.

However more recently, in the case of BDW Trading Ltd v Ardmore Construction Ltd & Ors3 the Court noted that it saw nothing in s.130 that makes it a precondition to the making of a BLO that the relevant liability of the “original” defendant shall already have been established. Amongst the reasons the Court gave for that finding, was that there was no wording in s.130 requiring such a pre-condition, it was unnecessary to imply such a pre-condition and it “makes perfectly good sense to allow a BLO to function as what might be termed an indemnity ("If this original body has any relevant liability in respect of this specified building, this associate shall also have that liability").”4

The first BLO

The first BLO was awarded in December 2024 in the case of 381 Southwark Park Road RTM Company Limited & Ors v Click St Andres Limited & Ors.5 That case concerned defects in and damage to a block of flats known as St Andrews House, 381 Southwark Park Road, London SE16, arising from works to develop the property by removing the existing pitched roof and erecting an additional storey of three prefabricated modular units which would be lifted into place. The works were carried out on behalf of a developer known as Click St Andrews.

During the works, there was water ingress and damage to the flats below, which was said to be a consequence of the defendants' failure to provide adequate protection to keep the roof structure watertight. Further investigations led to the identification of other defects in workmanship in the modular units, including, significantly, structural and fire safety issues.

The claimants included a resident’s company and leasehold owners of the flats. The first defendant was an SPV which procured the works and, at the time of the relevant events and the trial owned the freehold and head lease of the property, but was itself a wholly owned subsidiary of the second defendant (“Click Group Holdings”). The SPV was in liquidation at the time of the hearing. 

“Relevant liability”

A Relevant Liability is defined under the BSA as a liability that is incurred:

• under the Defective Premises Act 1972;
• pursuant to s38 of the Building Act 1984; or
• as a result of a building safety risk - being “a risk to the safety of people in or about the building arising from the spread of fire or structural failure”.

The Court held that there was a relevant liability - the inadequate fire protection within the building and issues with the structural adequacy of certain beams which supported the upper storey of the property amounted to “building safety risks” and, therefore gave rise to a “relevant liability”.

This is an important reminder that whilst the BSA was introduced following the Grenfell fire, and therefore necessarily addresses concerns about fire safety, that is not its sole focus. Building safety risks encompass fire safety and structural issues, whilst a liability under the Defective Premises Act 1972 could be broader still – the benchmark for a claim is whether or not a building is fit for habitation.

“Associated Companies”

Under the BSA, a company is considered to be associated with another company if one of them controls the other (parent/child companies), or if both are controlled by a third company (sister companies). S.131 of the BSA sets out the specific cases in which one company controls another company - two examples are (i) where Company A possesses, or is entitled to acquire, at least half of the issued share capital of Company B; and (ii) where Company A has the power, directly or indirectly, to secure that the affairs of Company B are conducted in accordance with Company A’s wishes.

The BLO was sought from Click Group Holdings – a parent company (one step removed) from the original defendant. The Court found that it was an associated company because Click Group Holdings held all the shares of Click Above Limited which, in turn, owned all the shares of Click St Andrews (the defendant in respect of the underlying claim). The Court therefore found that Click Group Holdings controlled Click St Andrews indirectly in the sense that it was able, through that corporate structure, to secure that the affairs of Click St Andrews were conducted in accordance with its wishes.

On the facts of this case, the association was even clearer because the “controlling or directing mind” of both companies was the same person.

“Just and equitable”

The Court referred to an earlier decision of the First-tier Tribunal (“FTT”) in Triathlon Homes LLP and Stratford Village Development Partnership6 that concerned a Remediation Contribution Order – an order requiring that a specified party (not just the current landlord, but also past landlord, developer, or associated person) contributes towards the cost of works to remedy building safety defects.

Although a different remedy to BLOs, such orders can also be made only if it is “just and equitable” to do so. In that case, the FTT observed that with regard to Remediation Contribution Orders7:

“Beyond stating the obvious, that the power is discretionary and should therefore be exercised having regard to the purpose of the 2022 Act and all relevant factors, it is not possible to identify a particular approach which should be taken.”

Whilst appreciating the difference between a Remediation Contribution Order and BLOs, the Court took a steer from the Triathlon Homes decision - to have regard to the purposes of the BSA and to all relevant factors when deciding whether it was “just and equitable” to make a BLO.  The Court also took note of the FTT’s finding 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 remedy in the relevant defects by hiding behind the separate personality of the development company…”8. 

In this case, the TCC held that it was “just and equitable” to make the order because the development company was: 

• an SPV;
• set up for the sole purpose of purchasing, developing, and then divesting itself of the property; and
• dependent upon inter-group and inter-company loans for survival. 

Commentary

Of note for anyone considering applying for a BLO, and any associated company defending such an action, will be Court’s view in the Click St Andrews case that, when considering what is “just and equitable”, the emphasis should be on the financial position of the defendant (i.e. Click St Andrews in this case), rather than the associated company from whom a BLO is sought (i.e. Click Group Holdings in this case). Therefore, before applying for a BLO, potential applicants should properly investigate whether or not the company with the “relevant liability” will be able to satisfy any judgment – if it can, one might query whether pursuing a BLO is necessary and a good use of funds. In any event, it will likely be a factor that a Court will take into account when considering whether it is “just and equitable” to make a BLO.

Additionally, one reason that might militate against it being “just and equitable” to make a BLO would be if the associated company had not had the opportunity to have a fair trial. The Court said that did not apply in this case – the parties had received a fair trial. 

More broadly, across the cases to date, the Court has given some guidance for parties who might wish to pursue a BLO in the future on the basis of what the BSA says and, more importantly, does not say: 

• There is nothing to prevent a BLO being made prior to the establishment of a liability on the part of the original body.
• The BSA does not require a party to be identified in pleadings or joined into proceedings before a BLO is made – it might not be clear at the time proceedings are issued who should be named, or it might be that the group of companies is subject to change. These matters might only become clear during proceedings, or even afterwards.
• In the future it might be that applications for a BLO would be for a specified amount. However, the absence of a figure was not a reason against making a BLO – in the Click St Andrews case a BLO was sought, and obtained, in respect of unquantified relevant liability.

Conclusion 

The body of caselaw in respect of BLOs is limited, but the Court has already set out some clear guidance, both on issues of procedure and the substantive question of when it is appropriate to make a BLO, which parties considering applying for a BLO should carefully consider.

There will, no doubt, be further cases providing further guidance to shape this developing area of the building safety law. We will report on these as and when they are published.

• 1. The “relevant period” is defined as the period beginning with carrying out of the works in relation to which the relevant liability was incurred ending with the making of the BLO per s.130(6) of the BSA.
• 2. [2024] EWHC 1190 (TCC)
• 3. [2025] EWHC 434 (TCC)
• 4. [2025] EWHC 434 (TCC) at paragraph 14.
• 5. [2024] EWHC 3569 (TCC)
• 6. [2024] UKFTT 26 (PC)
• 7. [2024] EWHC 3569 (TCC) at paragraph 10, referring to [2024] UKFTT 26 (PC) at paragraph 237
• 8. [2024] EWHC 3569 (TCC) at paragraph 11, referring to [2024] UKFTT 26 (PC) at paragraph 266