Part 5: Other provisions about safety standards, etc. Building liability orders Section 130: Building liability orders Background
This is a new provision.
	A practice used in property development is where a subsidiary company (which may be thinly capitalised) is set up to own and manage a development on the behalf of the corporate group it is a part of. The subsidiary company is often wound up once the development has been completed. A consequence of this practice is that the corporate group has no long-term liability for its developments.
	Building liability orders have been designed to address the consequence described above, given the context of the wider building safety issues which have been discovered within medium and high-rise buildings.
	The assessment is that relying upon English common law to address this consequence would be insufficient.
Example
A 14 storey residential building is developed by a body corporate A. A few years after it is completed later, it is discovered that there are serious fire compartmentation issues within the building and the local fire and rescue authority order the building to be evacuated until the risk from fire is reduced. To seek recompense for the remediation costs, the freeholder speaks to lawyers about whether they can make a civil claim. The lawyers advise the freeholder that they can make a claim under the Defective Premises Act as the building is unfit for habitation.
The freeholder discovers the development company was dissolved once the building was completed and the freehold sold off. The freeholder’s lawyers advise that they can establish that the development company’s parent company is associated, as the parent company directly controlled the actions of the development company.
The freeholder applies to the High Court for a building liability order to be applied to the parent company. The freeholder must show that the parent company is associated with the development company. The High Court must consider whether it is just and equitable to grant the building liability order, for example whether the parent company can receive a fair trial.
In this example, the request for a building liability order is granted. The freeholder can now make a claim under the Defective Premises Act against the parent company. The court proceedings would then proceed as normal.