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The Concept of Association in the Building Safety Act 2022 04 June 2025

Key Points

  • The concept of association is central to the BSA 2022’s mission of holding those responsible for the construction of unsafe buildings to account, but it has received relatively little commentary
  • Association is defined at section 120 for the purposes of sections 122 to 124 and Schedule 8, and at section 131 for the purposes of building liability orders
  • Both definitions contain the phrase “A body corporate (X) controls another body corporate (Y) if X has the power, directly or indirectly, to secure that the affairs of Y are conducted in accordance with X’s wishes
  • When, as seems inevitable, the question of association is fully explored by a court or Tribunal, property and construction lawyers may benefit from considering tax and sanctions authorities, albeit their different contexts means they should be approached with some caution

Introduction

Part 5 of and Schedule 8 to the Building Safety Act 2022 (“the BSA 2022”) pierce the corporate veil in order to achieve their aims of protecting leaseholders and ensuring that those responsible for building safety defects are held to account. This is done by elaborating a concept of “association” in sections 120 and 131. Perhaps surprisingly, these provisions have received relatively little commentary in service charge, remediation order, remediation contribution order, and building liability order cases so far. When the question of association arises in a contested setting, property and construction lawyers and judges are likely to have to consider somewhat removed areas of law, such as tax and sanctions, to see quite how far the concept extends.

The Association Provisions in Sections 121 and 131 of the BSA 2022

Section 121 defines when a partnership or body corporate is associated with another person for the purposes of sections 122 to 124 and Schedule 8 (i.e., service charges, remediation orders, and remediation contribution orders). In summary, a partnership or body corporate will be associated with another person where the partnership or body corporate is a co-beneficiary with the person under a trust of the relevant building (subsection (2)), where the person was a partner in the partnership (subsection (3)), where the person was a director of the company (subsection (4)), where they share a director (subsection (5)(a)), or one controlled the other, or a third body corporate controlled both of them (subsection (5)(b)). Subsection (5) then introduces three situations in which a body corporate X will be regarded as controlling another body corporate Y, which focuses on the possession or entitlement to share capital (subsection (6)), the holding of voting rights (subsection (7)), and, much more broadly (subsection (8)):

A body corporate (X) controls another body corporate (Y) if X has the power, directly or indirectly, to secure that the affairs of Y are conducted in accordance with X's wishes.

There are then further subsections which set out definitions and assumptions, including, most materially, that body corporate X is treated as possessing the rights and powers of its nominees and the bodies corporate which it controls.

Section 131 sets out when one body corporate will be associated with another in the particular context of building liability orders. There is a similar trust provision to section 121(2) at subsection (7), and subsections (1) to (6) largely mirror section 121(5)(b) to (10), but bodies corporate which share a director with body corporate X are notably absent. The First-Tier Tribunal in Vista Tower CAM/26UH/HYI/2023/0003 noted at §41 that “The relevant test for those who may be associated… for these purposes is narrower than the test for a RCO under section 124”. There does not appear to be an obvious reason why that is the case.

The Construction of the Association Provisions

The subsections of sections 121 and 131 which concern common directors, share capital, voting rights etc. are unlikely to be complicated in practice. The association provision which could cause the most difficulty is the ability of a body corporate to secure that the affairs of another body corporate are conducted in accordance with its wishes.

The provision was briefly considered in 381 Southwark Park Road RTM Co Ltd v Click St Andrews Ltd (In Liquidation) [2024] EWHC 3569 (TCC), in which Mrs Justice Jefford found that X could secure that the affairs of Y in accordance with X’s wishes because X owned all the shares in Z, Y was a wholly owned subsidiary of Z and, the directing mind of X and Y was the same person. However, X did not attend and was not represented, so the issue was not contested and the court did not benefit from argument.

The Explanatory Notes to the BSA 2022 state that the basis for the association provisions are the Petroleum Act 1998 (“the PA 1998”) and the Corporation Tax Act 2010 (“the CTA 2010”). While not listed in the Explanatory Notes, sections 121 and 131 of the BSA 2022 also have a basis in regulation 7 of the Russia (Sanctions) (EU Exit) Regulations 2019 (“the Sanctions Regulations”).

The PA 1998

Section 30(8D) of the PA 1998 states:

In any case, A controls B if A has the power, directly or indirectly, to secure that the affairs of B are conducted in accordance with A’s wishes

This is virtually identical to sections 121(8) and 131(4) of the BSA 2022. Unfortunately, there appears to be virtually no reported case law on the section.

The CTA 2010

Section 1124(2) of the CTA 2010 states:

In relation to a body corporate (“company A”), “control”  means the power of a person (“P”) to secure—

(a) by means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or

(b) as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of company A are conducted in accordance with P’s wishes

Section 1124(2) of the CTA 2010 has generated more litigation. Perhaps the most illuminating is Farnborough Airport Properties Co v Revenue and Customs Commissioners [2019] 1 W.L.R. 4077, in which the Court of Appeal considered whether the appointment of receivers over the property of a group company pursuant to a debenture meant that other companies within the same group could no longer secure that the affairs of the former were conducted in accordance with their wishes. The Court of Appeal, in deciding that the other group companies could not so secure such affairs, was assisted by Inland Revenue Commissioners v Lithgows Ltd 1960 S.C. 405, a Scottish case on section 333(1) of the Income Tax Act 1952, which had materially identical provisions. Lord Guthrie construed that provision at 278:

In my opinion, it is not sufficient, to satisfy the requirements of the definition that a person is in a position to carry a particular resolution at a meeting of the company. In order that a person may have ‘control’ he must be in a position to secure that ‘the affairs of the company’ are conducted according to his wishes. That phrase means that ability to achieve an isolated result, the power to carry a particular resolution, is insufficient to establish control in the statutory sense, and that what is required is power to secure the continuing conduct of the company's affairs in accordance with the will of the person. Secondly, the definition does not state that control is the power of a person to secure that the affairs of the company are conducted according to his votes. The use of the word ‘wishes’ suggests that the statute requires that he shall be able to achieve his personal aims

The Court of Appeal adopted this explanation, while noting that the situation would be different where the allegedly associated person was a company rather than a collection of shareholders.

The Sanctions Regulations

Regulation 7 gives the meaning of “owned or controlled directly or indirectly” for the purposes of the sanctions regime and sets out two conditions, the satisfaction of either of which means that one person is associated with another. The second condition is:

that it is reasonable, having regard to all the circumstances, to expect that P would (if P chose to) be able, in most cases or in significant respects, by whatever means and whether directly or indirectly, to achieve the result that affairs of C are conducted in accordance with P's wishes

There are more cases still on the Sanctions Regulations in the short time they have been law. The width of the test in regulation 7(4) and the peculiar circumstances of Russian politics, however, means that they are practically likely to be difficult to apply. For example, in Hellard v OJSC Rossiysky Kredit Bank [2025] 1 W.L.R. 297, the High Court noted at §53 that the second condition was “more difficult to apply” and involved making value judgments about what it was “reasonable” to expect and what “in significant respects” meant. Those aspects are absent from sections 121(8) and 131(4) of the BSA 2022. Much of the judgment was an attempt to reconcile two ostensibly inconsistent authorities, Mints v PJSC National Bank Trust [2024] K.B. 559 and Litasco SA v Der Mond Oil and Gas Africa SA [2023] EWHC 2866 (Comm), which stemmed from the naming of the Russian president as a designated person. Nevertheless, the High Court’s elaboration of different sorts of control at §§76 and 77, namely de jure control, actual present de facto control, potential future de jure control, and potential future de facto control, may provide a useful analysis when the question of association under sections 121(8) and 131(4) of the BSA 2022 arises.

Conclusion

Some caution must necessarily be applied when attempting to construe sections 121(8) and 131(4) of the BSA 2022 using these provisions. The legislative context is, of course, very different for all three, and the CTA 2010 and the Sanctions Regulations have additional material, in the former concerning the holding of shares and powers conferred by articles of association and in the latter a wider regard to “all the circumstances” and securing a person’s affairs by “whatever means”, in the context of which the wishes criterion must be construed. Association under the BSA 2022 is also tacked to a “relevant period” (unfortunately defined differently in sections 121 and 131), which means the focus is often on historic relationships between bodies corporate. Nevertheless, in the absence of authorities on the BSA 2022, case law on the CTA 2010 and the Sanctions Regulations is likely to be of assistance.


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