First Building Liability Order issued – Principal Contractors Invited to Share Views
NFRC members operating through group structures, including those with associated manufacturing, supply or contracting entities, should be aware of the potential implications.
What a BLO does
BLOs were introduced by the Building Safety Act. They allow liability for building safety defects to be extended to companies 'associated' with the one that carried out the defective work, even where that original company has since been dissolved or placed into administration. The mechanism closes a route that some groups had previously used to ring-fence liability within a single entity and walk away from claims once that entity ceased trading.
The rulings so far
In Mulalley v Sto, the High Court found that Sto Limited was the manufacturer and supplier of a defective cladding system and ordered it to contribute towards the cost of remedial work. Sto Limited was placed into administration in 2025. Under the BLO, that liability now passes to its German parent company, Sto SE & Co. KGaA.
Earlier this year, a BLO was also issued in Crest Nicholson v Ardmore. Ardmore Construction Group has since gone into administration, unable to meet a £14.9 million fine and further potential liabilities that arose when its associated entity, Ardmore Construction Limited, was dissolved.
Who might this impact
Both cases centre on defective building envelope work. The rulings confirm that dissolving or restructuring the contracting entity no longer draws a line under liability. Parent companies, sister companies and other 'associated' entities within a group can now be pursued directly for defects, regardless of which entity in the group carried out the work.
For NFRC members operating through multiple companies, this is a good reminder to review how liability, insurance and financial exposure sit across your group, not just within the entity holding the contract.
Share views
Build UK is convening businesses who have acted as Principal Contractor for a roundtable on the potential impact of BLOs, on Tuesday 28 July. If you'd like to take part, contact NFRC's policy team at [email protected].
