English High Court refuses stay and appeal in landmark building liability order ruling

Once a building liability order (BLO) is made, defendants will find it difficult to escape enforcement. That was the clear message from Mr Justice Constable's latest judgment handed down on 8 May in the Crest Nicholson Regeneration Ltd v Ardmore Construction Ltd litigation that has already reshaped the BLO landscape under the Building Safety Act 2022 (BSA).

The English Technology and Construction Court in an earlier principal judgment confirmed for the first time that anticipatory BLOs are available before trial and that an adjudicator's decision constitutes a "relevant liability" capable of grounding such an order. The May judgment makes clear that, once a BLO is obtained, defendants face a substantial challenge to unwind it. Ardmore has, however, been granted permission to appeal to the Court of Appeal. 

Permission refused 

The BLO defendants, companies within the Ardmore group, sought permission to appeal on five grounds. All were refused. The high bar for appealing discretionary decisions was the first ground to fall. BLOs are made where the court considers it "just and equitable", which is an inherently fact-sensitive judgment. Appellate courts will not simply substitute their own view; they will only intervene where the first-instance decision was "plainly wrong", meaning outside the range of decisions reasonably open to the court. That is a high bar, and one the defendants did not clear.

The second ground concerned anticipatory jurisdiction. An anticipatory BLO is made before the underlying liability has been finally determined at trial, allowing claimants to protect against the risk that associated companies are restructured or stripped of assets during litigation. The defendants argued that a two-stage anticipatory BLO was impermissible. The court rejected this, noting it would mean anticipatory BLOs could never satisfy the "just and equitable" test, defeating the purpose Parliament intended when including them in the BSA.

Third, the defendants argued that an adjudicator's decision, given its interim quality, meant that an adjudicator's decision could not ground a BLO. Adjudication is a form of statutory dispute resolution common in construction: decisions are temporarily binding but can be revisited in later proceedings. The court disagreed, holding that while the temporary nature of the decision may inform the exercise of discretion, it does not remove jurisdiction altogether.

The question around jurisdiction and whether claims under the Defective Premises Act 1972 can support a BLO remains live and consequential – and unresolved. The court noted that Lord Justice Coulson had already granted permission to appeal on this point in a related case, and considered it more appropriate to let that appeal resolve the question.

A leapfrog appeal to the Supreme Court was also refused. The defendants had asked the court to certify the case for direct appeal to the Supreme Court, bypassing the Court of Appeal. The court declined, noting in particular the Supreme Court's approach in Triathlon Homes v Stratford Development Partnership and others where it refused permission to appeal in relation to the "just and equitable" test (in the context of remediation contribution orders).

Stay refused

The BLO defendants applied for a stay of execution of the adjudication BLO. The court applied well-established principles noting there is a strong presumption against a stay once summary judgment has been granted, strengthened further where the judgment enforces an adjudicator's decision and the parties are commercial entities.

The critical question was whether the BLO defendants had established an inability to pay, assessed not just by reference to their own funds, but those available from their ultimate owner or any closely associated person. The court was unpersuaded on both counts and critical of inconsistencies across witness statements which ultimately failed to provide the court with a coherent financial picture. The complete absence of any evidence from the ultimate beneficial owner of the Ardmore Group was independently sufficient to defeat the application.

Interest and costs

The court rejected the argument that interest only ran from the date the BLO was made. It held that the BLO attaches to Ardmore's liability including accrued interest, and any of the BLO defendants could have paid Crest at any time following the adjudicator's decision. 

Crest was awarded 100% of its costs. The BLO defendants sought a 10% reduction to reflect their success on whether the court could transmit only a proportion of a liability. The court found this overstated their success and it did not displace the general rule that costs follow the event.

BLO clarity

These latest decisions paint a clear picture: once a BLO is made, defendants will face substantial difficulty in appealing it or avoiding immediate enforcement. Several points stand out.

• Permission to appeal is a high bar. Simply repeating first-instance arguments will not suffice. BLO defendants must demonstrate that the court's exercise of discretion was plainly wrong, not merely that a different balance of factors was open to it.
• Financial evidence must be robust, consistent and fully documented. Material inconsistencies between witness statements on cashflow, valuations or available facilities will be treated with considerable scepticism. Courts will expect a coherent picture, not one that shifts across successive statements.
• Evidence from the ultimate beneficial owner is essential. Where the personal wealth of the individual behind a group is sufficient to meet the judgment sum, defendants must address that position directly. The absence of such evidence was independently fatal here.
• Interest runs from the adjudicator's decision, not the BLO. In other words, interest is not lost in the period between the adjudicator's decision and the making of the BLO itself.
• The DPA jurisdiction point remains live in the Court of Appeal. It is worth watching for those advising on adjudication strategy in building safety disputes.

Osborne Clarke comment

The story here however is not yet over. Following the decision and mounting legacy liabilities being faced by the group, many companies within the Ardmore Construction Group went into administration. Notably, this did not include the property business which has applied for a moratorium as well as applying for, and being granted on 9 June, permission to appeal to the Court of Appeal. 

The administration of the Ardmore Group illustrates a tension in the BLO regime: orders intended to protect claimants may themselves contribute to financial distress in the industry. If BLOs and other building safety claim routes are driving major developers into administration, future claimants against those entities, including homeowners with latent defects yet to materialise, may find themselves proving as unsecured creditors in an insolvency with limited prospects of meaningful recovery. 

The wider question for the sector is whether the regime, designed to ensure accountability for building safety failures, risks hollowing out the very entities from which recovery is sought.