Natalie Pilagos
- Partner
- Construction
Building Liability Orders – the net widens
Think your group structure protects you from historic building safety claims? Think again. Building Liability Orders (BLOs) are rapidly emerging as one of the most potent remedies for building safety defects – and contractors and their supply chain are firmly in the firing line.
The first reported decision on BLOs appeared in 2025. In the last two months alone, two further significant decisions have underlined just how powerful – and far-reaching – these orders are.
Crest Nicholson v Ardmore was the first fully contested BLO decision. Mulalley v Sto was the first reported case in which a BLO was made against an overseas parent. Taken together, these decisions make it clear that corporate structuring is unlikely to shield historical building safety liabilities. BLOs can extend to parent, sister and associated companies, including overseas parents, where it is just and equitable to do so.
What is a Building Liability Order?
BLOs are a statutory mechanism under section 130 of the Building Safety Act 2022 (BSA), allowing the court to extend liability for building safety failures beyond the contracting entity to its associated companies. The relevant liability has to relate to liabilities arising under section 1 of the Defective Premises Act 1972, or as a result of a “building safety risk” which is a risk to the safety of people in or about a building arising from the spread of fire or structural failure. They are made by the court provided it is “just and equitable” to do so.
In Crest Nicholson v Ardmore, the court confirmed that it may grant:
- Anticipatory BLOs – imposed before final judgment, so that if the original project entity is found liable, associated companies will also be liable;
- “Adjudication” BLOs – enabling an adjudication award to be enforced against associated companies; and
- Partial BLOs – extending liability for only part of a claim where appropriate.
In Mulalley v Sto, the court demonstrated how BLOs can operate alongside section 149 BSA extending liability from a UK subsidiary to its overseas parent. Section 149 provides a new retrospective legal remedy against construction product manufacturers and suppliers for liability for past defaults relating to cladding products where those products are inherently defective or misrepresented.
Crest Nicholson & others v Ardmore Construction Limited (in administration) and others [2026] EWHC 789 (TCC)
The case concerned the Admiralty Quarter development in Portsmouth, completed by Ardmore Construction between 2007 and 2009 under a JCT design and build contract. Post-Grenfell investigations identified alleged fire safety defects.
An adjudicator awarded the developer, Crest Nicholson, approximately £14.9 million for Ardmore Construction’s breach of its contractual obligations and duties under section 1 of the Defective Premises Act 1972. Ardmore Construction entered administration the day before the decision.
Crest Nicolson then went on to seek relief in the form of BLOs, and successfully secured:
- An anticipatory BLO, making any future liability of Ardmore Construction under the Defective Premises Act or arising from a building safety risk the joint and several liability of its associated companies; and
- An adjudication BLO, making the associated companies jointly and severally liable for the monies awarded in the adjudication, effectively extending the £14.9 million adjudication award across the Ardmore group.
In effect Crest Nicholson secured group liability for a £14.9 million award, despite the contractor entity, Ardmore Construction, being in administration. Arguments that a BLO would not be “just and equitable” were rejected.
As a direct consequence, the wider Ardmore group – including multiple trading entities – entered administration, with the loss of several hundred jobs. The group cited the “profound impact” of the BLO decision on its financial position and ability to trade given the impact on client confidence across the group. The case is a stark illustration of how historic building safety liabilities can crystallise rapidly into group-level exposure making continued trading challenging.
Mulalley & Co Ltd v Sto Ltd & Sto SE & Co. KGaA [2026] EWHC 1552 (TCC)
This decision is one of the first contribution claims under the BSA to reach judgment and shows how BLOs can extend liability to overseas parents and cladding product suppliers.
Mulalley was engaged in 2006 to refurbish a residential tower in Chelmsford, including installing an external wall system. Defects later emerged. In 2022, Mulalley settled with the building owner and undertook remediation works.
Mulalley then pursued recovery from:
- Sto Ltd (UK) – under section 149 BSA for defective cladding products; and
- Sto Germany (parent) – via a BLO, after Sto Ltd entered administration in 2025.
Sto Germany did not participate in the proceedings so the case was not fully defended. Default judgment was entered on liability, leaving quantum to be assessed.
Mr Justice Pepperall found that the “principal cause” of the losses was the supply of an “inherently defective product”. Sto Ltd was held responsible for 87.5% of the remediation costs (£1.77 million), and a BLO was made against the German parent for that amount.
This is the first time that a building liability order has been made by default judgment and in respect of suppliers of cladding products. The decision highlights the significant exposure facing cladding product suppliers – and their parent companies, including overseas groups with UK subsidiaries – where products are implicated in building safety defects.
Why these decisions matter
Expect more “Ardmore” scenarios
The Ardmore decision is unlikely to be a one-off. Building safety risk is an enforceable and potentially group-wide issue. Developers and building owners can tactically combine adjudication with BLOs to reach well-resourced group companies particularly where the original project entity is insolvent or under-capitalised.
Building safety risk is an enforceable and potentially group‑wide issue.
These adjudication awards can therefore quickly become a large, enforceable group liability via a BLO which can crystallise at short notice – potentially years before a final trial. This means that the timing and scale of risk have altered for group boards and insurers alike.
Corporate diligence
These decisions emphasise the need for robust intra-group diligence. Liability can attach across the group irrespective of formal corporate structuring. Historic projects and legacy risks require renewed scrutiny.
Financial reporting
Companies will need to reassess how they identify, quantify and disclose potential building safety liabilities. If adjudication can trigger immediate group exposure, auditors may require provisions or disclosures at group level earlier than previously anticipated.
“Just and equitable” – a high bar to resist
The courts are taking a purposive approach, aligned with the BSA’s objective of ensuring those responsible for historical building safety defects bear the cost of remediation. While the “just and equitable” test is broad, the direction of travel suggests that will be difficult (though not impossible) to resist a BLO on just and equitable grounds. The court will consider all the circumstances, including group structure and the nature of the underlying liability.
Insurance and investor risk
Insurance coverage for BLO liabilities remains uncertain.
- Risk managers should review whether existing policies respond to BLO exposure; and
- Investors and parent companies should recognise that group association may bring them within scope for building safety claims.
This may necessitate enhanced indemnities, insurance protections and contractual risk allocation where there is potential to be treated as an “associate” under the BSA.
Key Takeaway
BLOs are a practical, high-impact tool capable of transforming project-level disputes into group-wide liabilities—quickly and, in some cases, decisively.
Permission to appeal in the Ardmore decision was granted and it is hoped that the Court of Appeal will have the opportunity to consider and provide further guidance in relation to the issues raised. Until then, the emerging case law sends a clear warning to contractors and those where there is a narrative of responsibility for building defects: group structures are becoming a less reliable means of containing building safety risk. Where it is just and equitable to do so, the courts are willing to extend liability beyond the original contracting entity to parent, sister and even overseas group companies.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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Sarah Elliott
- Partner
- Construction
