As a reminder, a BLO is a statutory remedy introduced by the Building Safety Act 2022. It allows the Courts to extend liability incurred under:

• the Defective Premises Act 1972 or section 38 of the Building Act 1984 (not yet in force), or
• as a result of a building safety risk (being a risk to the safety of people in or about the building arising from the spread of fire or structural failure).

The Court found that it was sufficient that the adjudicator had found that the extent of the fire safety defects in the external walls rendered certain dwellings unfit for habitation and consequently breached the Defective Premises Act 1972. Interestingly, the Court also agreed with Crest that the failure to comply with an adjudicator's decision was also itself capable of being a 'relevant liability'. The temporarily binding nature of an adjudication decision did not prevent the Court from finding that it was a 'relevant liability'. If it later transpired that an overpayment had been made, the associates could claim in restitution for the return of the moneys ordered to have been paid. Notably, Crest was also willing to give an undertaking in respect of any such overpayment, insofar as necessary. That doesn’t mean to say that the Courts will always determine that it is just and equitable to find that an adjudicator’s decision constitutes a relevant liability. The Court noted that it should be considered on a case-by-case basis.

Anticipatory BLOs

Interestingly, the Court characterised the award of an anticipatory BLO as stage one of a two stage process. The second stage would be the conversion of the anticipatory BLO into one which is ultimately enforceable, giving the Court an opportunity to:

• consider the relative factual blameworthiness of the parties at that point, and
• decide whether to reduce the proportion of liability at the point of transmission to the associates.

Just and Equitable Test

The associates of ACL raised various arguments to oppose the application, notably including:

• As Crest was a commercial developer and was not an individual leaseholder, an impecunious management company, a charity or a social housing provider etc., it was not the sort of entity in whose favour it is just and equitable to grant a BLO.
• ACL overall made a net loss of £1.94m on the development such that no profits would have gone to the associates from the development. In comparison, it was alleged that Crest had made a substantial profit on the development.
• That, by making an anticipatory BLO in this case, it would create a queue of other parties seeking anticipatory BLOs against the associates, with the likely knock-on effect of making borrowing or raising money for performance bonds more difficult.
• The substantial extent of the Ardmore Group's overall contribution to fire safety remedial works across 49 projects.