HT-2024-000316 - [2025] EWHC 434 (TCC)

Fecha: 27-Feb-2025

Appropriateness and the scope of section 132

Appropriateness and the scope of section 132

38.

It follows that the condition in section 132(3)(b) does not strictly fall for consideration. However, I shall say something about it fairly briefly.

39.

Section 132 says two things about the permissible scope and purpose of an information order: first, that the information or documents must “relat[e] to persons who are, or have at any time in a specified period been, associated with the body corporate”; second, that it is appropriate to require the information or documents to be provided for the purpose of enabling the applicant to make, or consider whether to make, an application for a building liability order. Paragraph 1095 of the Explanatory Notes to the 2022 Act relates to section 132:

“1095.
This section has been created to prevent companies using more complex and opaque structures to prevent a building owner, landlord or leaseholder from being able to prove how companies are associated and therefore undermine the intended outcome of building liability orders as defined in section 130. Information orders provide a route for persons to obtain information in order to support them applying for a building liability order and to support them in receiving adequate recompense to correct building safety defects.”

40.

Section 132 does not stipulate the kinds or categories of information or documents that may be specified in an information order. These will clearly include information and documents that enable the applicant to identify associates of the respondent. In an appropriate case, they will, in my view, also include matters concerning the financial position of the associate; such matters may, in a given case, be highly material to the decision whether or not to apply for a building liability order. If the information and documents are publicly available (for example, from Companies House), or if an applicant does not need the provision of information or documents in order to make an application under section 130 or to decide whether to make such an application, it is hard to see why it should be appropriate to make an information order. However, it is probably not very fruitful to try to decide in the abstract what sort of information or documents might be the subject of an information order; it is better to look at the terms of the particular application and consider whether it is appropriate to require the information and documents to be provided for the specified purpose, as required by section 132(3)(b).

41.

The information and documents sought by BDW at the hearing were set out in the Schedule to its skeleton argument, though very little was said about them in oral argument. The text at the head of the Schedule explained the detailed requests:

“Information and documents regarding (a) all bodies corporate which since 2006 have or have arguably been associated with ACL for the purposes of s. 131 of the Building Safety Act 2022 (‘Associates’) and thus including, per s. 131(4), if any of the Associates have or have had (or arguably have or have had) the power, directly or indirectly, to secure that ACL’s affairs are conducted in accordance with the Associate’s wishes; and (b) the financial standing of ACL and Associates.”

42.

The specific requests and my brief comments on them are as follows.

43.

A.1 Details of the corporate structure in which ACL and the Associates sit, including the identities of all Associates. Includes information and documents related to all Associates (including, but not limited to, whether AGHL is associated with ACL)

I would not have ordered the provision of this information and documentation in respect of R2-4. The corporate structure is clear and simple and R2 and R3 acknowledge that they are associates of ACL. R4 has not made a similar admission, but its structural relationship with the other respondents is clear. BDW has contended that, as R4 is not admitting that it is an associate, BDW requires and is entitled to further documentation that is not within the public domain. I do not think that this is so. The test for whether R4 is an associate of ACL is in section 131(1): first, does R4 control ACL? second, does a third body corporate control both of them? The first part of the test turns on the application of subsections (2), (4) and (6) to the facts. The second part of the test requires knowledge of whether there is an even more ultimate corporate body. But Companies House shows that Mr Cormac James Byrne has 75% or more of the shares and of the voting rights in R4. The argument relating to R4 concerns not factual uncertainty but the application of section 131(1) to known facts. I understood Mr Choat to have acknowledged this in the course of argument. I would, however, have been willing to make a limited order to elicit information concerning two Irish companies that are said in ACL’s latest accounts to be “related” to ACL, and concerning two companies incorporated in the British Virgin Islands and in which ACL has subscribed for shares (see Ardmore Construction Ltd v Revenue and Customs Commissioners [2018] EWCA Civ 1438, [2018] 1 WLR 5571, at [4]).

44.

A.2 In relation to the incorporation of AGHL [i.e. R4]: (1) the intended purpose and/or primary function of AGHL; (2) board resolutions and/or minutes which relate to the incorporation of AGHL and the allocation of AGL shares in AGHL; (3) advice prepared for the ex-directors of AGL in relation to the transfer of assets to AGHL; (4) whether the directors of AGHL intend to make a financial provision in the next set of accounts to be filed by AGHL for the cost of remedial works to the seven BDW Developments built by ACL; and (5) if such a financial provision will be made (a) whether the provision for liabilities will include allowances for remedial works at the seven BDW Developments built by ACL; and (b) the amount of financial provision made in respect of each of those Developments.

I would have disallowed this request, on the basis that, having regard to the information that is publicly available and that BDW already has, the information was not required to enable BDW to identify R4 as an associate of ACL or to assess whether it was worthwhile applying for a building liability order against it. In that context, I regard the request as commercially intrusive without sufficient justification. I also accept that ACL itself is unlikely to have much of this information; it is not enough to say that other parties in the group can provide it.

45.

A.3 Details of the group security structure in which ACL and the Associates sit, including any cross-guarantees/cross guarantor structures - with details and copies of any current letters of credit, parent company letters of support, performance bonds

I would have refused this request. This, again, is commercially sensitive information to the extent that it goes beyond information at Companies House. It does not seem to me to be required either for the purpose of identifying associates of ACL or to enable BDW to form a view as to the financial viability of associates. I bear in mind that the information is being sought before liability has been established and before it is even known whether ACL will discharge any liability. That does not preclude an order being made, but it does seem to me to be relevant when considering whether an intrusive order ought to be made now. I would not, however, have refused the request simply on the ground that the information related to ACL rather than, as is required, to the associates, as it seems to me to relate to both.

46.

B.1 Management accounts and reports for ACL and each of the Associates for: the year ending 30 September 2023; the year ending 30 September 2024; the quarter ending 31 December 2024. To include profit and loss; balance sheet and cash flow statements (standalone and consolidated where applicable); total assets less current liabilities; claims received (with the total liabilities faced and reasonably anticipated sums falling due); cash in hand; and historical performance on a monthly basis.

I would have refused this request. Insofar as it relates to ACL’s management and accounts and reports, it does not fall within the permitted scope of an information order: section 132(2). Insofar as it relates to the associates’ management accounts and reports, there is no good reason for supposing that ACL is entitled to those documents. More generally, I am not satisfied that the documents are required for BDW to decide whether to apply for a building liability order.

47.

C.1 In relation to the provision for liabilities for remedial works on previous projects made in the accounts of ACL, ACGL and AGL for the years ending 2022 and 2023: (1) whether the provision for liabilities in the filed accounts record that ACGL and AGL have made financial provision for the cost of remedial works to seven BDW Developments built by ACL; (2) whether the provision for liabilities in the filed accounts include allowances for remedial works at those seven Developments; (3) the amount of financial provision made in respect of each of the seven Developments; (4) management reports and management accounts prepared for the directors of ACL, ACGL and AGL in relation to the provisions; (5) board resolutions and/or minutes which relate to these provisions and the payment of dividends from ACL, ACGL and AGL; and (6) board communication with shareholders and investors regarding these provisions.

I would have refused this request. First, insofar as it relates to ACL, it is not within the proper scope of an information order. Second, I have not been persuaded that the information in respect of the associates is actually required for the purpose of assessing their ability to meet any liability under a building liability order; it seems to me to have more to do with assessing the group’s (confidential) view as to the likely extent of liabilities to BDW. This is the sort of information that, if I were to order it at all, I should be reluctant to order before liability had been established. Third, the information relating to the associates appears to be within the control of the associates, not of ACL.

48.

C.7 Detail for ACL and each Associate of all existing banking and lending arrangements (including overdraft facilities), associated covenant details, and the most recent schedules of covenant compliance

I would have refused this, for largely similar reasons. Even if ACL has the right and power to provide this information in respect of its associates, I am not persuaded that BDW reasonably needs it for the purpose of considering an application for a building liability order, and I should see no good reason for ordering such information relating to associates when ACL’s liability had not been established.

49.

C.8 Details for ACL and each Associate of all ongoing contracts, including value, delivery status, completion timing and payment terms of each contract as well as any intentions to novate any contracts

I would have refused this for similar reasons.

50.

D.2 Medium-term forecasts (on a monthly basis) to 31 December 2025 including projected profit and loss, cash flow and balance sheet for ACL and each Associate. Include associated workings and assumptions as well as forecast contract schedule cashflows per project and any cost saving plans.

Again, insofar as it relates to ACL the information is not within the scope of section 132(2), and insofar it relates to the associates the information is not ACL’s to give. Further, although it is said that this information is relevant to BDW’s consideration of whether to make an application for a building liability order, I am not persuaded that it is likely to play a sufficiently significant role in making any such decision to justify the requirement to provide such highly intrusive and commercially sensitive material.