Crest Nicholson Regeneration Limited & Ors v Ardmore Construction Limited (in Administration) & Ors

The High Court may make a building liability order before the original company’s relevant liability has been finally established. The order is available where, on the evidence then available, it is just and equitable to transmit a contingent liability to an associated company. The statutory discretion is broad and fact-specific; the court should not impose an exhaustive checklist. An adjudicator’s decision may establish a relevant liability under the Building Safety Act 2022, notwithstanding its temporarily binding character. The court must assess the justice and equity of transmitting that liability on the facts of the particular case.

The claimants applied under sections 130 and 131 of the Building Safety Act 2022 for building liability orders against associated companies of an insolvent principal contractor. They sought an anticipatory order covering any liability ultimately established under section 1 of the Defective Premises Act 1972 or arising from a building safety risk, and a further order covering approximately £14.9 million awarded by an adjudicator.

The defendants argued that the anticipatory order was premature and that an adjudicator’s decision could not constitute a relevant liability. They also challenged the adjudicator’s jurisdiction and relied on financial, evidential and remedial uncertainties. The central issues were whether the court could make the orders at that stage and whether doing so was just and equitable.

1. Anticipatory order. The court had jurisdiction to make a building liability order before the original body’s relevant liability had been established. The timing of the application was a matter of case management, but the order could be made only if it was just and equitable at the time of decision.
2. The just and equitable test was broad and necessarily fact-specific. The court should consider the purpose of the Building Safety Act 2022 and all relevant circumstances, without formulating an exhaustive list of factors. The greater the confidence that the same order would be made after trial, the more inclined the court would be to grant an anticipatory order.
3. The evidence established with a high degree of confidence that the development contained building safety risks and that the contractor was likely to incur relevant liability. The contractor’s administration, the restructuring of the group to ring-fence historic liabilities, the associations between the companies, and their knowledge of the defects strongly supported transmission of liability. Unresolved issues concerning quantum, third-party responsibility, insurance, funding, profits and relative factual blameworthiness did not prevent the order.
4. Section 130 permitted liability of a specified description to be transmitted. That wording was broad enough, consistently with the statutory purpose, to permit the court in an appropriate case to transmit a proportion of a relevant liability. The anticipatory order could operate through a two-stage process, with the final liability and any reduction determined later.
5. Adjudication order. An adjudicator’s decision was binding until finally determined by the court and created a liability for the purposes of section 130. The liability determined under section 1 of the Defective Premises Act 1972 fell within section 130(3), because the fire safety defects rendered dwellings unfit for habitation. Alternatively, the liability arising from non-payment of the adjudicator’s decision had a sufficient causal connection with the building safety risk.
6. The phrase “under the contract” in section 108 of the Housing Grants, Construction and Regeneration Act 1996 included a claim under the Defective Premises Act 1972 concerning works undertaken pursuant to the construction contract. The adjudicator therefore had jurisdiction. Any jurisdictional difficulty concerning one referring party did not necessarily infect the whole decision, and the decision could in principle be severed where a safe core remained.
7. There was no inherent incompatibility between adjudication and building liability orders. Whether it was just and equitable to transmit a temporarily binding adjudication liability remained a fact-sensitive question. On the evidence, it was just and equitable to make both orders. Each BLO defendant was made jointly and severally liable for the relevant liabilities, including the sums owed under the adjudicator’s decision.