Building Liability Orders (BLOs) are a critical tool introduced under the Building Safety Act 2022 (BSA). They empower the High Court to assign liability for remediation costs to associated corporate entities when building safety issues arise. This article provides an overview of BLOs, their application, and their significance within the UK legal landscape.
What are Building Liability Orders?
Building Liability Orders allow the court to hold related entities accountable for building safety failures by piercing the corporate veil. This is particularly relevant when the directly responsible entity, such as a developer or contractor, has become insolvent or lacks sufficient funds to address remediation costs. By linking liability to associated entities within the same corporate structure, BLOs seek to ensure that victims of unsafe building practices are not left without recourse.
Legal basis and criteria
The BSA established Building Liability Orders to address historic fire safety and cladding defects brought to light by the Grenfell Tower tragedy. To issue a Building Liability Order, the court must satisfy specific criteria:
Relevant Liability
A “relevant liability” must exist. A “relevant liability” for the purposes of a BLO under the BSA refers to an obligation to remedy building safety risks, such as fire or structural defects, that pose a danger to people in or around the building.
Corporate Relationship
There must be a corporate relationship, for example a parent company, sister company or subsidiary.
Just and Equitable
It must be “just and equitable” to grant a Building Liability Order. How the courts will apply this test remains to be seen, but developments are expected as BLO applications make their way through the courts.
Recent developments on Building Liability Orders
Being new legislation, case law on the application of Building Liability Orders is limited but we expect further clarity as cases make their way through the courts.
In 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Anor [2024], the Court identified a “relevant liability” due to fire and structural safety breaches, which constituted a “building safety risk” under section 130(3)(b) of the Building Safety Act 2022.
This determination allows the claimants to pursue a BLO against the parent company of the rooftop developer’s corporate group. The application for the BLO is scheduled to be heard in a subsequent hearing. This case is significant as it represents one of the first instances where the High Court has recognized grounds for a BLO application, aiming to hold associated companies accountable for building safety defects, especially when the directly responsible entity is insolvent or has been dissolved.
It’s important to note that while the court has acknowledged the basis for a BLO in this instance, the final order has not yet been granted. The upcoming hearing will determine whether the BLO will be issued, setting a precedent for future applications under the BSA.
Wilmott Dixon -v- Prater and others confirmed that BLOs can be sought by not only those bringing building-safety claims, but those defending them too.
How Moore Barlow can help
Building Liability Orders are a groundbreaking mechanism for addressing the legacy of unsafe building practices. By holding associated entities accountable, they strengthen the framework for building safety in the UK. For businesses, understanding and mitigating the risks associated with BLOs is vital. Legal advice is essential to navigate this evolving area of law effectively.
While BLOs might sound daunting, they’re here to ensure fairness and accountability. If you need help navigating issues relating to Building Liability Order or the Building Safety Act, our experienced Property disputes lawyers would be pleased to assist you.