Information orders under the Building Safety Act

A Building Liability Order (BLO) under the Building Safety Act 2022 (Act) allows claims concerning certain defects affecting residential properties created or caused by a body corporate (which can include companies and LLPs) to be passed on to ‘associated’ body corporate.  The relevant claims are those under the Defective Premises Act 1972 (defects rendering a residential property unfit for human habitation) and those relating to defects that present a risk of fire spread or structural failure.  An entity is associated with another if it is (or has been) a parent or subsidiary or if there is (or has been) common ownership or control.  Establishing whether entities are associated is not always straightforward and the Act contains a court-based mechanism to compel information to be provided.  The first reported decision on the use of this process highlights the limitations of its use and application in the short term.

BDW Trading Limited v Ardmore Construction Limited and others concerned building defects at a number of properties.  Following the filing of accounts BDW was concerned that Ardmore Construction may not have the means to meet its liabilities in respect of the prospective claims and so applied for orders for information about a number of Ardmore entities and indeed joined those entities into the application.  The relevant issues for determination were:

Could an information order be made against the related entities BDW had joined?

The answer here was no.  The Act refers to the court’s jurisdiction to order that the liable entity disclose information about the associated entities.  It does not create an ability to seek information from those associated entities themselves.

Do you need to have established the relevant liability for defects before you can seek information about associated companies?

The answer here was also no.  There was nothing in the Act that went this far.  The Act requires that it must appear to the Court that there was a relevant liability and that necessarily denoted something short of a determination could suffice.

How do you demonstrate the appearance of a relevant liability?

It being accepted that something short of a determination could be sufficient for it to appear that that there was a relevant liability, the critical question for someone seeking an information order is how far do you have to go? It was stated in the judgment that applications for an information order should be short an uncomplicated and it is also said that an Applicant should be putting forward evidence and inviting a non-binding determination.  This however begs three important questions which are unanswered by the Ardmore decision:

1. Do you need to have obtained all of your expert evidence and lay witness evidence before being able to mount an application?
2. Does the information and evidence need to have been sent to the company against whom an application is to be made?
3. Can an application be short and uncomplicated if the respondent to an application submits evidence to challenge liability?

Concluding thoughts

It is important to stress that there is nothing in this decision that makes it more difficult to seek a BLO and indeed the decision confirms that a BLO can be obtained against an associated company without having first established the existence of a liability under the Defective Premises Act 1972 or for defects presenting a risk of fire spread / structural failure.  If you have managed to establish association of bodies corporate then the need for an information order falls away.

In those cases where there is a lack of transparency and where information orders might be required however, this decision does appear to create problems.  Notwithstanding the suggestion that applications will be short and uncomplicated, that is unlikely to be the case in practice.  The costs associated with collating evidence to support an application will be significant.  A Respondent, looking to insulate associated entities from becoming exposed will have the ability to submit rebuttal evidence which could, in circumstances where the Court is not determining liability itself, create enough doubt so that the threshold is not met.  Prosecuting claims against the principal entity to establish a relevant liability will then be the only option, but that will take time and cost money which may not ultimately be recoverable if that entity is a company of straw.

It may be that future cases on information orders will provide greater clarity and comfort to those who might avail themselves of the process.  As it stands however the practical implications of the Ardmore decision suggest the use of information orders as a route through to building liability orders may be a challenging one to navigate.

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