Key takeaways
New powers target evasive corporate arrangements
Building Liability Orders (BLOs) allow courts to hold associated companies accountable for building safety defects even years after construction.
Association test: a low bar to meet
The Act’s broad definition of “association” means companies with minimal or historic ties could be drawn into legal responsibility.
Courts still shaping how discretion is applied
With few precedents, the meaning of fairness under BLOs remains fluid—making early legal advice essential for risk management.
Although the power to make a Building Liability Order (“BLO”) has been available since the enactment of the Building Safety Act (the “Act”) in 2022, it is only recently that we have started to see cases concerning BLOs coming before the courts, with the first BLO made in December 2024 in the case of 381 Southwark Park Road RTM Company Ltd & Ors -v- Click St Andrews Ltd [2024], which we anticipate will be the first of many.
Given their impending prevalence, in this article we have sought to provide an overview of BLOs, including who may be subject to a BLO and in what circumstances a BLO will be made.
What is a BLO?
In brief terms:
A BLO is a creature of the Act which extends a building safety related liability from one body corporate to another, making it jointly and/or severally liable.
BLOs are designed to ensure that a body corporate is unable to escape long-term liability for building safety defects through the use of associates, e.g., subsidiaries or special purpose vehicles (SPVs), which may be wound up or left dormant following the completion of a development.
BLOs are distinct from, but share characteristics with Remediation Contribution Orders (“RCOs”), a separate order available to the courts under the Act, which have been the subject of a series of key judgments in recent months, including Triathlon Homes LLP -v- Stratford Village Development Partnership and others [2024] and more recently, Grey GR Limited Partnership -v- Edgewater (Stevenage) Limited and others [2025], which we have commented on in a separate article.
When will a BLO be made?
As per the Act, for a BLO to be made, the following must be established:
A “relevant liability” (i.e., a liability that is incurred under the Defective Premises Act 1972 or s38 of the Building Act 19841 or as a result of a building safety risk) of the original body corporate; and
An “association” between the original body corporate and one or more specified bodies corporate; and
That it is “just and equitable” for the BLO to be made.
When will companies be associated?
Association as between companies will be established if the original body corporate (i.e., the one incurring the relevant liability) controls the other (i.e., the associated company), or vice-versa, or, alternatively, a third body corporate controls both of them.
The Act prescribes the circumstances in which this control will be made out based on share capital and voting rights. However, it also provides what is in effect a catch all provision, with such control demonstrated where one body corporate has a direct or indirect power to secure that the affairs of the other are conducted in accordance with its wishes. As such, companies who may consider themselves to be sufficiently distanced from others who have incurred relevant liabilities may in fact be caught by this provision.
In this respect it is important to note as follows:
The Act does not define what is meant by power, direct, or indirect, or provide any guidance in this respect, leaving it open to interpretation as to what is required to satisfy this requirement.
It is arguable, given how this is drafted, that all that is required is merely some evidence that an undefined direct or indirect power existed, not that control was in fact exercised, albeit this may be relevant to whether it is just and equitable to make the order.
The fact the companies were not associated at the time of the works is irrelevant, it is sufficient to simply demonstrate association at any time during the relevant period, which runs from the date the works commenced until the order is made, which could be years, if not decades, after the works were undertaken.
Given the extensivity and wide-application of these provisions, establishing an association is likely to be a relatively low-hurdle, even in circumstances where the relationship with the original company incurring the liability is tenuous and/or was short-lived.
When will a BLO be just and equitable?
The Act does not set out what is meant by “just and equitable” which allows for judicial discretion.
Although this is a common legal standard, what this means in a BLO context remains unclear. The Act is still in its infancy, meaning we are without any leading authority or clear judicial guidance, and arguments as to what should be appropriate considerations largely remain unaired and/or untested. Notwithstanding, the cases already mentioned provide some insight as to how this is currently being interpreted by the courts:
In Triathlon, the First Tier Tribunal (“FTT”) found that this discretion should be exercised having regard to the purpose of the Act and all relevant factors. However, the FCC considered that it was not possible to identify a “particular approach” that should be taken to determine whether an RCO was just and equitable.
In deciding that it was just and equitable to make a BLO in Southwark Park, the Technology and Construction Court (“TCC”) gave considerable weight to the proximity of the relationship between the companies (i.e., the strength of the association), whilst finding that the true financial standing of the alleged associate was of no great significance.
In Grey GR Limited, the FTT found that the just and equitable test for an RCO is wide, and deliberately wide, “so that the money can be found”. The FTT did not give weight to the fact that Grey GR Limited was a substantial corporate body itself and had acquired the property after the Grenfell Tower tragedy.
The case of Triathlon was recently heard by the Court of Appeal, with the judgment eagerly anticipated in the coming months.
Conclusion
The scope of BLOs are wide-ranging. It is not simply the wealthy parents of developer subsidiaries that will be caught by the provisions, rather, corporate entities related to those who had an involvement in the construction and maintenance of a defective building could all fall within the potential reach of a BLO.
The battle ground in many cases will be whether a BLO is just and equitable in the circumstances. In this respect, although each case will turn on its facts, the law is still evolving, meaning there will be a period of uncertainty as to the true meaning and effect of this test for the purposes of BLOs until more of these cases have filtered through the court system.
As matters stand, at least in the FTT, the overarching message from the authorities is that justice and equity is not a friend of respondents. However, it remains to be seen whether a similar message will be conveyed by the TCC in the context of BLOs.