Building Liability Orders: why this “quiet revolution” matters

Over the past year we’ve seen a quiet, but significant, shift in building safety law. Courts are making Building Liability Orders against parties linked to insolvent SPV developers. In plain terms: even if the original developer has gone bust, liability may still reach up the corporate chain where it’s just and equitable to do so.

We are witnessing what leading lawyers are calling a “quiet revolution” with the making of Building Liability Orders against parties that were linked to the original developer that went bust.

See the Decision Tree flow chart below for Building Liability Orders (BLO).

The flow chart was produced by a niche construction law firm, Adam Benedict, who acted in the leading case on the subject, 381 Southwark Park Road.

The developer in that case, and the defects it created in the name of profit, were beyond scandalous. Even with recoveries made, leaseholders have been left in a difficult position.

The case is worth a read.

But it’s not as big a revolution as it could have been. While associated companies of bust SPVs are now strong targets for compensation, this does nothing for individuals who contracted with “Mr and Mrs Building Company Limited” (of which there are many thousands), companies that take consumers’ money and then go bust, or who at mediation threaten to go bust unless the claimant accepts “three shillings and sixpence.” Making a director of “Mr and Mrs Building Company Limited” personally liable would have been a great move. So, draftsman: back to the BSA, please amend the definition of “associate”.

Due diligence and pre-contract enquiries will now need to establish if there is a possibility your purchaser might be able to benefit from a potential BLO.

381 Southwark Park Road involved a claimant freeholder and leaseholders who successfully pierced the corporate veil of an SPV and obtained judgment against its parent company, ultimately helping to bring down a corporate group with a track record of unsafe building practices. Huge credit is owed to Adam Benedict.