Building Liability Orders: The Legal Change That Is Quietly Reshaping How Every UK Contractor Prices Risk

The Corporate Veil: How Construction Firms Used It and Why It No Longer Works

Construction companies — particularly those involved in major residential development — have long used complex corporate structures to manage liability. The typical model involves a group holding company at the top, with project-specific subsidiaries or joint venture entities below it. The subsidiary holds the contract, performs the work, and takes the contractual risk. If a defect claim emerges five years later, the claimant goes after the subsidiary. If the subsidiary has been wound up, or never had significant assets, the claimant gets nothing. The group survives intact.

This was not illegality. It was standard commercial practice, widely understood and accepted. The legal doctrine of separate legal personality — the principle that a company is distinct from its shareholders and associated companies — is foundational to UK company law. Courts pierced the corporate veil only in exceptional circumstances.

The Grenfell Tower fire in 2017 killed 72 people and exposed exactly how this structure could frustrate recovery for those harmed by defective buildings. The Building Safety Act 2022 was Parliament's response. Sections 130 and 131 introduced Building Liability Orders — a statutory mechanism allowing the High Court to extend a company's relevant liability to its associated companies, where it is just and equitable to do so.

What Crest Nicholson v Ardmore Actually Decided

The April 2026 judgment was significant for three reasons that go beyond the Ardmore facts.

First, the court confirmed that an adjudication award can constitute a 'relevant liability' for BLO purposes. This matters enormously because adjudication is the fast-track dispute resolution mechanism that runs through UK construction contracts. It means that a claimant does not need to go through a full High Court trial before applying for a BLO. Win an adjudication, your opponent enters administration rather than paying — you now have a route to chase the wider group immediately.

Second, the court confirmed that BLOs can be made on an 'anticipatory' basis — before underlying liability is finally determined at trial. An anticipatory BLO attaches a contingent, as-yet-unquantified liability to associated companies before anyone knows exactly how much is owed. For claimants, this means they can secure BLO protection early, before the group shuffles its assets.

Third, and most significantly for the wider industry, the court confirmed that BLOs are not limited to situations involving deliberate use of SPVs or shell companies to evade liability. The policy objective is simply to allow those directly responsible for defective work to be pursued. The group structure does not need to have been set up with evasion in mind. If the court thinks it is just and equitable to extend liability, it will do so.

Who Is Exposed and How Much

Any contractor group that undertook residential development work between 1992 and 2022 carries potential BLO exposure. The Defective Premises Act 1972 has a limitation period that was extended under the Building Safety Act — historic claims going back decades can now be brought. That is a very large number of contractors, covering an enormous volume of completed residential development.

The practical consequence is that holding companies and sister entities in contractor groups are now being assessed as part of the risk picture for new contract awards. Clients and funders want to know whether the group carries unresolved legacy claims that could generate a BLO against the proposed contracting entity. Insurers are pricing group-wide exposure where they previously priced entity-level exposure. The market is recalibrating.

For subbies, the consequence is less direct but equally real. If a main contractor group is under BLO pressure on historic projects, the financial stability of every entity in that group is more uncertain than it appears on the surface. Payment terms that look commercially acceptable on paper may not survive a group-level liquidity event.

What This Means for Procurement

The smart money in UK construction procurement in 2026 is asking not just 'can this contractor deliver this project' but 'what does this contractor's legacy exposure look like, and does the group have the financial depth to absorb a BLO claim while continuing to perform on live projects.'

That is a sophisticated question. Most procurement processes are not set up to answer it. Most subcontractor selection processes certainly are not. The information is available — Companies House filings, TCC case lists, adjudication enforcement records — but synthesising it requires time and commercial expertise that most procurement teams do not have.

This is where supply chain technology has a genuine role to play. Not replacing procurement judgement, but providing the financial signals and compliance visibility that allow procurement teams to ask the right questions before they commit to a supply chain relationship. The Ardmore case is not the last BLO action. It is the first major one. There will be more.