Part 4 of the Building Safety Act 2022 introduced a mechanism that did not exist in English law in this form before 28 June 2022. Under sections 130 to 134, the High Court may make a building-liability order declaring that a company associated with a body corporate that has incurred a "relevant liability" is jointly and severally liable for that same liability. This is a statutory route to pursue a solvent group company for a defect-related liability of a related entity, without needing to prove fraud, sham or common-law grounds for lifting the veil.
The relevant liability has two triggers: a liability under section 1 of the Defective Premises Act 1972 — the duty to see that work is done in a workmanlike or professional manner so the dwelling is fit for habitation — or a liability under section 38 of the Building Act 1984, or a building-safety risk associated with a higher-risk building. The limitation window for section 1 DPA 1972 claims was extended to 30 years for retrospective claims and 15 years prospectively by section 135 of the BSA 2022, which is why historic residential work built decades ago now sits within scope.
Section 130(3) of the Building Safety Act 2022 sets the associated-company test. Two companies are associated where, at either the time the liability was incurred or the time the application is made, one controls the other, or the same person controls both. "Control" is read across from section 1159 of the Companies Act 2006 — broadly, the power to secure that the affairs of the company are conducted in accordance with the controller's wishes, through shareholding, voting rights, or the composition of the board.
The test is deliberately broad. It captures sister companies under common directorship, holding companies, subsidiaries and successor entities where control has passed through the same natural person. A dormant shell and a trading firm sharing a sole director can be associated for section 130 purposes even if they never traded together.
The court will only make a building-liability order where it considers it just and equitable to do so (s.130(1)). Reported authority is still developing, but factors likely to weigh include the degree of common control, whether corporate structures were used to shield assets from foreseeable defect claims, and whether the associated company benefited from the work.
PI insurers have responded in three visible ways since 2022. First, disclosure at renewal routinely requires a full list of associated companies, historic and current. Second, some markets have introduced specific wording addressing liabilities imposed under Part 4 BSA 2022 — occasionally as an extension where the group is underwritten as a whole, more often as a carve-out where only the named insured's own acts and omissions are covered. Third, aggregation and limit structures are under review: an order can pull an unrelated policy into a sister entity's claim.
Worked example (illustrative only). DesignCo Ltd, a small architectural design practice, is found liable under section 1 DPA 1972 for defective cladding-related design on a 2015 residential block. DesignCo has minimal assets and lapsed its PI cover in 2020. The same natural person controls a second architectural firm, BigCo Ltd, unrelated commercially but with substantial reserves and a current PI policy. On application under section 130, the court finds it just and equitable to make a building-liability order joining BigCo to the DPA liability. BigCo's PI policy, which insures BigCo for its own professional acts and omissions, may not respond to a liability imposed by statutory order in respect of another company's design work. The exposure then falls on BigCo's balance sheet directly.
Related reading: Building Safety Act 2022 — architect PI implications, Principal designer under the BSA — PI cover for higher-risk buildings, Architects' PI insurance — UK guide 2026, and Design-and-build contractors' PI insurance — UK guide 2026.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.