A fire safety court case brought against Galliford Try could establish how far construction firms’ sister and parent companies can be held liable for defect costs.
Taylor Wimpey is suing Galliford Try Infrastructure over alleged fire safety issues at a development built by Morrison Construction, which Galliford Try acquired in March 2006 and which is now called Galliford Try Infrastructure.
It is also using powers in the Building Safety Act that it says would also allow it to pursue “associated companies” for damages through a Building Liability Order (BLO).
However, Galliford Try says that this application for extended liability should be rejected because the legislation only applies on very narrow grounds.
In court documents, it said: “The stated intention of Parliament in introducing the Building Safety Act 2022 and the Building Liability Order regime was that it should be used in relation to large developers that have used special purpose vehicles, which are typically thinly-capitalised and have relatively few assets and/or limited revenue streams, in an attempt to avoid or limit their liability.”
Galliford Try also denies liability in the main claim.
The case relates to the Rope Quays development in Gosport, which Taylor Wimpey described as a development of three blocks taller than 11 metres, completed between 2006 and 2008.
According to the developer, checks uncovered fire-safety issues, including missing and improperly installed cavity barriers and is claiming damages from Galliford Try Infrastructure.
In addition, it is seeking a BLO against Galliford Try Construction & Investments Holdings, Galliford Try Ltd, and Galliford Try Holdings.
BLOs, introduced in the Building Safety Act 2022, allow liability to extend to associated companies.
But a legal submission by Galliford Try said that granting a BLO in the case would effectively remove the principle of separate legal personalities among corporate entities and undermine statutory protections for shareholders.
It warned: “The implications for the construction sector would be significant: it would expose groups such as the Galliford Try Group to the potential for very large liabilities in respect of projects in relation to which they had no involvement, from which they derived no material benefit and for which they are unlikely to be insured […] which liabilities in many cases may be business-threatening.”
It added: “The implication would be that an order would be made against the parent and sister companies of any construction company, simply and solely by reason of the fact that a relevant liability has been incurred by a company which is part of the same group.”
Galliford Try described this as “wrong, unjust and inequitable”, asserting that it contradicts Parliament’s intended purpose of BLOs, which it said was only intended to cover projects carried out by special purpose vehicles.
It added that granting a BLO would breach its rights under the European Convention on Human Rights.
Galliford Try is arguing that Taylor Wimpey did not specify its rationale for seeking a BLO in its claim document, claiming this would make the BLO application “liable to be struck out”.
It also argues that given that Morrison Construction was only acquired by Galliford Try in March 2006 when the project was nearing completion, any such orders should be made against previous owner Anglian Water.
Taylor Wimpey’s claim against Galliford Try Infrastructure argued that “serious fire safety defects that pose a real and imminent danger to the occupiers” at Rope Quays.
These included missing and incorrectly installed cavity barriers, non-compliant expanded polystyrene insulation in a StoTherm Classic render system, and aluminium panels with potentially non-compliant combustible cement particle board, it said.
Further claims include the use of non-compliant Kingspan Kooltherm insulation in the brick cladding, which Taylor Wimpey argued increases fire risk and contravenes Building Regulations.
The developer also pointed to inadequate cavity barrier provision due to the design of the aluminium panels, as well as improper installation where the barriers do not fully fit the cavities.
In response, Galliford Try said the existence of defects had not been demonstrated properly by Taylor Wimpey.
The contractor stated it was not responsible for warning about design defects or ensuring fitness for purpose. It also denied proposing or specifying the StoTherm render system.
Addressing the Kingspan Kooltherm claim, Galliford Try argued: “Kooltherm refers to a range of products that have been manufactured and sold, with markedly different characteristics and performance in relation to fire.
“Even specific Kooltherm products have in fact had different chemical compositions and levels of performance over the years. Accordingly, an allegation that ‘Kooltherm insulation’ was specified or used is, essentially, meaningless in this context.”
Taylor Wimpey estimated remediation costs at around £4.8m plus VAT but has not yet finalised a remedial works plan.
The claimant is also seeking interest, damages and legal costs. As a signatory of the government’s remediation contract, Taylor Wimpey acknowledged its obligation to undertake necessary works promptly and at its own expense.
Galliford Try, in a defence filed on 14 January, countered that Taylor Wimpey should have obtained detailed assessments to determine necessary remedial work.
It criticised the developer for inaction, stating: “The claimants have known of the issues in the development since the Grenfell fire prompted investigations. It is now late 2024 and the claimants have not at any time during the intervening seven-year period carried out any remedial works.”
The contractor added: “The claimants are able to fund any remedial works that are necessary but have failed to do so. These are not the actions of a responsible developer and/or a responsible landlord.
“It appears that the claimants have only voluntarily undertaken obligations pursuant to the [government] agreement by reason of political pressure.”
The case also involves two companies linked to BUJ Architects, which designed the development.
English