Why Crest Nicholson v Ardmore Matters to the Construction Industry
The recent decision in Crest Nicholson v Ardmore is a significant judgment of the Technology and Construction Court (“TCC”) concerning the operation of Building Liability Orders (“BLOs”) under the Building Safety Act 2022 (“BSA”). It represents only the second reported High Court decision in which a BLO has been granted, and critically the first to provide detailed guidance on the application of the “just and equitable” test.
The judgment confirms that BLOs may be made at an early stage, including in reliance on an adjudicator’s decision, and emphasises the Court’s willingness to look beyond corporate structures where necessary to give effect to the purpose of the BSA.
Background to the Crest Nicholson v Ardmore Dispute
Crest Nicholson (“Crest”) is the long leaseholder of 19 residential flats in a development known as Admiralty Quarter in Portsmouth (“the Development”), constructed between 2007 and 2009 under a JCT Design and Build Contract (“the Contract”), whereby Ardmore Construction Group Limited (“ACL”) was the designer and main contractor. Following the Grenfell Tower fire in 2017, Crest identified fire safety defects in the external walls of the Development such as combustible materials and fire barriers missing or deemed inadequate.
In May 2025, Crest commenced an adjudication against ACL in respect of the external wall defects. ACL participated to some extent in the adjudication, however went into administration the day before the adjudicator’s decision was issued. The adjudicator decided that the external wall defects did amount to a breach by ACL of its duties under the Contract and under the Defective Premises Act 1972 (“DPA”), and that ACL should pay to Crest approximately £14.9m (“Adjudicators decision”).
The Court’s Approach to Adjudication and Building Liability Orders
The sum awarded by the adjudicator was not paid and Crest made an application to the TCC for a BLO.
Pursuant to section 130 of the BSA, a BLO allows the High Court to declare that any relevant liability of a body corporate in relation to a specified building is also the liability of one or more associated companies – if the court considers it just and equitable to do so. Once a BLO is made, associated companies become jointly and severally liable, so claimants may enforce the order against the assets of all companies named in the order, effectively piercing the corporate veil.
ACL was part of a corporate group of 10 companies, inclusive of ACL, who were at all material times ultimately controlled by Mr Cormac Byrne or the Byrne Family Trust, with Mr Cormac Byrne being a director of all 10 companies (“Ardmore Group”). Crest named all 10 companies in the Ardmore Group as Defendants to the BLO application, as each of the BLO Defendants were associates of ACL under section 131 of the BSA. ACL had been placed into administration to benefit the wider Ardmore Group, to avoid the liabilities targeted at it by the BSA.
The BLO sought by Crest was two-fold:
- “The Anticipatory BLO” – sought against the BLO Defendants to make them jointly and severally liable for any liability that ACL may ultimately be liable to Crest for under the DPA, or arising from a building safety risk under section 130 of the BSA. ACL argued it was not just and equitable to make an anticipatory BLO, as it should be made at the same time that ACL’s liability to Crest is decided.
- “The Adjudication BLO” – sought against the BLO Defendants making them jointly and severally liable for the sum of approximately £14.9m awarded against ACL to Crest in the Adjudicator’s decision. ACL argued that the enforcement of the Adjudicator’s decision was not before the Court; that the Adjudicator’s decision or the obligation to pay was not a relevant liability within s.130 BSA; that the adjudicator lacked jurisdiction in the adjudication that Crest was seeking to obtain the Adjudication BLO in respect of; and that it was not just and equitable to order a BLO as it was incompatible with the interim binding nature of an adjudicator’s decision.
Against that background, the Court was required to determine:
- Whether an adjudicator’s decision could give rise to a relevant liability under section 130 BSA.
- Whether the adjudicator lacked jurisdiction.
- Whether it was just and equitable to make the BLOs sought.
The Court’s Findings on Adjudication, Jurisdiction and Corporate Liability
Can an Adjudicator’s Decision Create a Relevant Liability?
It was not the case, as asserted by the BLO Defendants, that the Court must itself be satisfied that there is a relevant liability under s.130 BSA, before it can make a BLO. The decision of the adjudicator to that affect was enough as adjudicators’ decisions are binding unless successfully challenged, creating a substantive liability which is not negated by the fact that adjudicators’ decisions are interim in nature; and adjudication and BLOs can operate together. It was not necessary, or a defence to the BLO application, that Crest had not made an application for summary judgment in respect of the Adjudicator’s decision. In any event, the Judge said he would have granted permission for Crest to bring an application for summary judgment had it been necessary to do so. Subsequently, an adjudicator’s decision could give rise to a relevant liability under section 130 BSA. Anticipatory BLOs are therefore available and may be properly made before the finding before a Court of a relevant liability.
Can Defective Premises Act Claims Be Decided Through Adjudication?
The adjudicator did not lack jurisdiction. An adjudicator has jurisdiction to decide claims under the DPA. It would be wrong to restrict adjudication to being solely about short-term cash flow issues. The Judge referred to the principle that, when construing arbitration clauses, one should start from the assumption that parties intended for the same tribunal to determine their disputes, and this principle applied to adjudication clauses also.
When Is a Building Liability Order “Just and Equitable”?
Given the following facts before the Court in evidence, or as were uncontroversial, it was just and equitable to grant both the Anticipatory BLO and the Adjudication BLO:
- ACL was in administration and did not have the means to satisfy any judgment against it.
- ACL entered into administration because of its exposure to claims in relation to defects on projects following the Grenfell Tower fire.
- ACL is part of the Ardmore Group, as are all of the BLO Defendants.
- The Ardmore Group has been restructured specifically to ringfence ACL’s liabilities from those of others in the group.
- All fingers point to Cormac Byrne as the entity with ultimate control of ACL and the other BLO Defendants, or the Byrne Family Trust.
- There is no real dispute that the Development contains building safety risks and that ACL will be liable for those building safety risks.
- ACL has been aware of both Crest’s claim and third party claims for a long time.
- There is no real doubt that Cormac Byrne and subsequently the BLO Defendants knew about Crest’s claim and have done so for a long time.
- The BLO Defendants were sent pre-action protocol letters of claim almost a year prior, and showed little interest in engaging.
- Cormac Byrne did not submit any evidence on the application, but did sign the statement of truth on the Defence.
- There is an Adjudicator’s decision for approximately £14.9m relating to fire safety defects that is unpaid.
Factors the Court Considered Under the “Just and Equitable” Test
The Judge also provided further helpful commentary in respect of the just and equitable test in response to arguments made by the BLO Defendants:
- Here, the BLOs applied for met the purpose of the BSA in requiring the BLO Defendants to stand behind ACL to create a route of redress for those responsible for historic building safety defects in developments to pay for remediation.
- There is nothing inherently unjust or inequitable about making an anticipatory BLO when quantum remains to be determined.
- The fact that Crest is a large developer who is making substantial profits, and indeed more than the Ardmore Group, carried little weight as justice lies in meeting the purpose of the BSA which is ensuring those responsible for building safety defects pay for their remediation, it is not aimed at those with the deepest pockets.
- The fact that ACL argued that Crest bore some responsibility for the defects through approval of designs did not preclude the making of a BLO. The Court can determine just and equitable on the worst case assumption and the trial Judge can later narrow the relevant liability.
- It wasn’t unjust or inequitable that, as is standard procedure, ACL had a shorter time to respond to the adjudication than Crest had to produce the referral as both parties had known about the claim for a long time.
- The BLO Defendants claimed that payment of the approximately £14.9m would present profound problems for the Ardmore Group. However, based on the evidence, the Judge was sceptical of this and, in any event, it would be unusual for this to carry significant weight when considering what is just and equitable.
- The fact that Crest might benefit from the Building Safety Fund was not a reason to refuse the BLOs.
As a result, Crest were granted both the Anticipatory BLO and the Adjudication BLO.
Key Takeaways for the Construction Industry
Crest Nicholson v Ardmore Is a Landmark BLO Decision
This is a landmark decision where the BSA is concerned, as one of the first to order a BLO and the first to discuss the just and equitable test in depth.
Building Liability Orders Can Be Determined at an Early Stage
The Court favours early determination when assessing the just and equitable test at the time of application. Respondents will likely struggle to argue that BLO applications should wait to be heard until after ultimate liability is tried.
Adjudication and Building Liability Orders Can Work Together
The construction industry can continue to rely on adjudication as a primary dispute resolution mechanism, as the Court has confirmed that BLOs and adjudications are compatible. This means that, in appropriate cases, instead of an enforcing party having to wait for the outcome of Court proceedings, they can adjudicate against the original body and if successful, obtain a BLO against the original body’s associates and then enforce the adjudicator’s award against the associates, in advance of any trial. This effectively means that corporate restructuring and administration, whether the purpose of that is to isolate historic liabilities or not, will not provide protections against BSA liabilities.
The “Just and Equitable” Test Will Depend on the Facts
The Court is reluctant to define any situation where it will not be just and equitable to impose a BLO as each case will turn on its own facts. It is not willing to set out any hard and fast rules for the just and equitable test and therefore we will have to wait and see how the case law develops further. What this case does however give us is various examples of factors that are not likely to prevent the Court from determining that it is just and equitable to impose a BLO.
The Purpose of the Building Safety Act Is Central
It is important, when considering the just and equitable test and the making of a BLO, to have regard to the purpose of the BSA, and if an application meets that purpose then it will be an uphill battle to try to argue that the making of such order is not just and equitable. Early engagement with the merits of the just and equitable test is therefore essential.
Please note that, whilst correct at the time of writing, the decision could be appealed.
If you would like further information or require advice in relation to the Building Safety Act 2022, please contact a member of our Building Safety team.
Please note that the above does not constitute legal advice.
