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

Fecha: 27-Feb-2025

Section 132(3) (a): general considerations

Section 132(3)(a): general considerations

20.

Section 132(3) stipulates two conditions that must be satisfied before the court has power to make an information order. The first is that “it appears to the court … that the body corporate [here, ACL] is subject to a relevant liability”. ACL disputes that this condition is satisfied. The first question that falls to be considered is the construction of section 132(3)(a) and what is required to satisfy the condition. On this question there appears to be no existing authority.

21.

For BDW, Mr Choat submitted that the condition was satisfied in circumstances where (as is established by the evidence in the present case): (i) the applicant (here, BDW) has received advice from competent and qualified experts that in respect of each of the developments there are serious fire safety and/or structural failures that give rise to serious risks to the safety of people in or about the buildings and that require remedial works; (ii) in respect of each development the applicant has been advised by lawyers that a claim can be made against the original body (here, ACL) under the Defective Premises Act 1972; and (iii) the applicant intends to seek damages from the original body. In support of this interpretation of section 132(3)(a), Mr Choat relied on the example of an information order given in the Explanatory Notes. Although he accepted that the example was inconsistent with section 132(2) in respect of the body corporate against whom an information order could be made, he submitted that it was consistent with a construction of section 132(3)(a) that was both possible and practically sensible.

22.

If that primary submission were wrong, Mr Choat submitted that the court could nevertheless be satisfied that ACL had a relevant liability, for either of two reasons.

The court ought to consider it implausible that ACL could defeat the case against it in respect of every single one of the five developments. Although a single building liability order can relate to liability only in respect of a single building, it only takes one such instance of liability to satisfy the condition in section 132(3)(a). ACL’s latest company accounts, those for the year ended September 2023, include substantial provision for liabilities for remedial works on previous projects (as, indeed, do those of R2 and R3). BDW’s requests for information as to the particular projects to which this provision relates have been refused.

If section 132(3)(a) requires that a relevant liability shall actually have been established before an information order can be made, the condition is satisfied in respect of the Crown Heights development. That dispute went to adjudication, in which BDW was awarded its entire claim of about £14.5m on two bases: (i) breach of the building contract, in respect of which a limitation defence was rejected on the grounds of deliberate concealment; (ii) the Defective Premises Act 1972. Joanna Smith J subsequently gave summary judgment enforcing that award: BDW Trading Ltd v Ardmore Construction Ltd [2024] EWHC 3235 (TCC). The liability has been discharged and is not disputed. ACL has obtained permission to appeal in respect of the second basis of the award (liability under the Defective Premises Act 1972) but as it does not dispute the alternative basis of the award (breach of contract) and does not seek repayment of the moneys paid, permission to appeal was granted on condition that ACL pay the costs of the appeal in any event. Mr Choat accordingly submitted that there were relevant liabilities in respect of the Crown Heights development, namely, first, the liability found by the adjudicator and, second, the liability in respect of the costs of the appeal, which were likely to be of the order of £120,000.

23.

For ACL, Mr Brannigan submitted that, for the condition to be satisfied, it must appear to the court that ACL is, not that it might be or has previously been, subject to a relevant liability: that is, that it actually is liable in respect of such a liability, not merely that it might be liable or that it has a potential liability. The main points in his argument may, I think, be summarised as follows.

The wording of section 132(3) is clear. The words “it appears to the court that” naturally indicate the requirement for a judicial determination or conclusion; that is how they are repeatedly used in the Civil Procedure Rules 1998 (among other examples, r. 3.4(2), r. 6.15(1), r. 44.11(1)). The words cannot properly be construed to mean “the applicant, on advice, considers that”, or any such thing.

What must appear to the court is that the body corporate against which the information order is to be made “is subject to a relevant liability”, not that it might be, nor that it has previously been. Further, there is no arguable distinction between having a liability and being subject to one.

Parliament could easily have framed the condition by reference to a possible or potential liability but did not do so. By way of contrast, Schedule 8 to the 2022 Act (which concerns remediation costs and section 122) refers, in paragraph 9, to service charges in respect of certain services “relating to the liability (or potential liability) of …”.

Section 132 is only ancillary to section 130. As a relevant liability is required for the making of a building liability order, it would be strange if one were not required for the making of an information order. (I should say that Mr Brannigan did not place much weight on this particular argument, partly because he accepted that an application for a building liability order could be made before any relevant liability was established—see above—and partly in the face of my scepticism of the suggested construction of section 130.)

The requirement for the court to be satisfied as to the existence of a relevant liability is entirely appropriate, because an information order is capable of requiring the provision of information and documentation that not only relates to non-parties to the application but also may be confidential or commercially sensitive; the provision of such information or documentation might even constitute an interference, requiring justification, with the non-parties’ rights under Article 8 of ECHR.

The primary case for BDW on the construction of section 132(3)(a) rests entirely on the example in the Explanatory Notes. However, the example is seriously flawed. First, as already mentioned, it misunderstands the way that section 132 operates, in that it supposes that an information order can be made against an associate, whereas in fact it can only be made against the original body with the relevant liability. Second, it entirely ignores the requirement in section 132(3)(a), moving without explanation from the assertion of the applicant’s case to the conclusion that an information order will be made. (Mr Brannigan made other critical observations on the example, but they seemed to me to be, arguably, indicative merely of rather loose drafting and not to go to the heart of this issue.)

Thus for the condition in section 132(3)(a) to be satisfied, the court had to be satisfied of the existence of a relevant liability. This could be achieved in either of two ways. First, the liability could already have been established, most obviously by judicial or arbitral determination or by admission. Second, the applicant could persuade the court by adducing evidence at the application and seeking to prove the existence of the specific relevant liability. This latter course would not be available at all in respect of any development pursuant to a contract containing an arbitration clause: section 9 of the Arbitration Act 1996. In other cases, it could conceivably be available but would require disclosure of documents and examination of factual and expert evidence in a manner akin to a trial (skeleton argument, paragraph 43(c)(iii)).

In the case of not a single one of the five developments could the court, on this application, be satisfied as to the existence of a relevant liability:

Crown Heights: The liability established in the adjudication has been discharged; therefore it is not an existing liability: ACL did have a relevant liability, but it does not now do so. As for the liability to pay BDW’s costs of the appeal: first, that is no more than a potential liability, because the appeal might not be pursued; second, in any event, such liability is neither a liability “incurred under the Defective Premises Act 1972” nor a liability “incurred as a result of a building safety risk”. It is therefore not a relevant liability.

Explorers Court, Pierhead Lock: These two developments are subject of ongoing and confidential arbitration proceedings, in respect of which no award has been issued. Therefore no relevant liability has been established. Further, in view of the existence of the arbitration agreement it would not be open to the court to make any determinations as to the existence of such a liability.

Galleria: BDW has commenced proceedings against ACL under claim no. HT-2023-000370. In December 2024 ACL served an Amended Defence disputing both liability and quantum. No relevant liability has yet been established.

Citiscape: BDW has issued proceedings against ACL, but these have been stayed pursuant to a consent order dated 3 November 2023 to enable compliance with the Pre-action Protocol, and there has been no exchange of statements of case. Again, therefore, no relevant liability has been established.

In these circumstances, with the exception of Crown Heights, where there was but is not now a relevant liability, each of the projects involves only contested and unresolved claims in which no relevant liability has been established. As BDW does not seek to establish the existence of such liability on this application—for example, by factual and expert evidence on the substantive issues of liability—the condition in section 132(3)(a) is not satisfied.

24.

Those are the competing submissions. I turn to my consideration of the matter.

25.

First, I do not consider that the primary interpretation of section 132(3)(a) contended for by BDW does sufficient justice to the wording of the statute. However one may precisely put the matter, it would come to saying that the condition is satisfied if the court considers that a relevant liability is asserted on reasonable, or plausible, or credible grounds; that (to put the matter colloquially) the party against whom the information order is sought is, or is potentially, in the frame for a relevant liability. I have not found such an interpretation of the provision to be without attraction: it would accord with the example in the Explanatory Notes; it would be consistent with the fact that the provision does not require there to have been any prior adjudication or admission of relevant liability and would address what I think is a very real practical problem where such liability has not previously been established; and it would fit well with the fact (as I think it to be) that a building liability order can be made when the original body’s relevant liability remains in dispute. These are not, however, sufficient reasons in my view to adopt this interpretation.

The example in the Explanatory Notes is of very limited assistance, both because it is clearly wrong in another respect—see above—and because it entirely fails to address this particular issue.

It is very difficult to see how “it appears to the court” can indicate anything other than a view arrived at by the court. That is what it naturally suggests. That is how it is used in the CPR. I have not been referred to any uses of the expression in primary legislation, but it is how it is used in the only such instance of which, without proper research, I am aware. (Footnote: ³) If what was required was only that the court was satisfied of the possibility of the existence of a state of affairs, rather than of the actual existence of the state of affairs, this would easily be achieved; for example, by providing “if it appears to the court that there are grounds for believing that …”, or some such wording.

Similarly, I find it hard to see how “is subject to a relevant liability” can be construed to mean anything like “might have a relevant liability” or “is a person against whom a relevant liability might be established”.

The fact that one can apply for a building liability order before the relevant liability of the original entity has been established neither entails nor, in my view, suggests any particular construction of the requirement in section 132(3)(a), because one can certainly apply for a building liability order after the relevant liability has been established.

26.

Second, however, section 132(3)(a) does not require that a relevant liability shall already have been established against the corporate entity. Again, it would have been easy to stipulate some such condition.

27.

Third, in a measure of disagreement with Mr Brannigan’s submissions, I do not think that section 132(3)(a) requires the court to make any determination of liability as such in a case where liability has not already been established. In my view, the actual wording—“it appears to the court (a) that the body corporate is subject to a relevant liability”—deliberately reflects two things, each of which is important: first, that it is not necessary that the existence of a relevant liability should already have been established; second, that the court, upon an application under section 132, is not determining the question of liability but is simply forming a view on the question for the purpose of considering the application for an information order. I do not regard this latter point as a distinction without a difference.

28.

Fourth, for this reason, I should not consider that section 9 of the Arbitration Act 1996 had any bearing on the matter. Section 9(1) provides:

“(1)
A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.”

Legal proceedings to determine matters of liability that are covered by an arbitration agreement would fall within section 9(1). But an application for an information order would not, in my view, fall within section 9(1), because it would not be an application “in respect of a matter which under the [arbitration] agreement is to be referred to arbitration”. And I do not think that it would fall within section 9(1) just because of the condition in section 132(3)(a) of the 2022 Act, as the court dealing with such an application would not be determining questions of liability at all but would simply be forming its own view for the purpose of deciding whether to make an information order.

29.

Fifth, there is no difficulty if the relevant liability has been established by judgment, arbitration award, adjudication decision or admission. But both the applicant and the respondents are agreed—rightly, in my view—that the power to make an information order exists even where there has been no such prior determination of liability. This does, I think, give rise to a practical question. What is to be expected on the hearing of an application in such circumstances? In this regard, I think it important to have firmly in mind that section 132 is merely ancillary to section 130. It is not a vehicle for trying or resolving building disputes and it is not a method of early neutral evaluation; its only purpose is to provide a means of enabling persons to apply for building liability orders or consider whether to apply for them. In my view there should be no question at all of having anything like trial procedures; the suggestion in the written arguments that there might be examination of lay and expert witnesses appears to me (with respect) one that ought not to be entertained. But I am little more enamoured of the idea that, when there is an active building dispute (as there is in four of the cases relied on by BDW), the applicant should be putting its evidence before the court and inviting an assessment (albeit non-binding) on the merits. Applications under section 132 ought (in my view) to be short and uncomplicated, and I do not consider that they impose on the court any obligation to become embroiled in assessments of the merits of disputed matters. If this means that applications for information orders will be made sparingly in cases where liability is in issue, I cannot see why that is a bad thing. Further, as a judge dealing with such an application is not making any determination of liability but merely saying how things appear to him, he ought not to be required to do more than say how things appear to him; detailed reasons for why one view is to be preferred to another do not seem to me to be appropriately required.

30.

Sixth, I do not regard objections concerning privacy, confidentiality or commercial sensitivity as being of great importance as regards the question of statutory construction. The effect of section 132(2) is that the body corporate can only be required to provide information or documents relating to associates, as these are defined in section 130 in terms of “control”. More importantly, perhaps, section 132(3) imports a condition of appropriateness, which gives the court ample power to control inappropriate disclosures. There is also, of course, the court’s power to impose restrictions and conditions on the use that can be made of information and documents. The whole matter needs also to be considered in the context that Parliament has decided that extensive impositions of liability upon companies that otherwise could have no relevant liability are justified in the public interest.