1. Professional negligence of Independent Monitoring Surveyors, duties owed and assessment of damages
The recent case of Eiger Funding (PCC) Limited v Ridge and Partners LLP [2026] EWHC 609 (TCC) provides important guidance on the duties owed by Independent Monitoring Surveyors ("IMSs") to lenders in development finance transactions, and the consequences of providing negligent advice on construction costs and project risks.
Eiger Funding (PCC) Limited ("Eiger") provided a loan of £12.9 million to Signature Living Residential Limited ("Signature") funding the completion of a development at 60 Old Hall Street, Liverpool (the "Project"). The Project was being built by Signature's related company Signature Living Contractors Limited. The loan was arranged by North Wall Capital LLP ("NWC") acting as investment manager for Eiger. The Court found that, despite not formalizing their legal relations, Ridge and Partners LLP ("Ridge") had been engaged by Eiger as IMS to provide a report ("Report 16") advising on the adequacy of the construction costs and costs to complete. Report 16 was also to outline any risks which could result in a cost overrun or impact on completion of the Project. Ridge was initially engaged on the Project by Signature as quantity surveyor before performing the IMS role for the initial lender, Lendy Finance.
In November 2018, Ridge produced Report 16, which indicated that the revised total construction cost was £7,614,000, and that the cost to completion was approximately £3 million. Eiger entered into a loan agreement on 30 November 2018 ("Loan Agreement"), in reliance on Report 16 which formed a condition precedent to the release of funds. Signature then made negligible progress with the Project, and the relevant Signature companies were placed into administration in April 2020, leaving Eiger with an unrecovered loss in the region of £10.8 million. Eiger brought a claim against Ridge for these losses.
Despite initially denying they owed any legal duties to Eiger, just prior to closing submissions, Ridge conceded that they owed Eiger a duty to exercise reasonable skill and care in the provision of Report 16. The Court agreed that this duty was owed in both contract and tort.
Eiger's claim against Ridge was for professional negligence, and alleged breaches of the duty of care across four areas:
- Pricing in review of the adequacy of the original contract sum;
- Assessment of the cost to completion;
- Failing to advise that the relationship between Signature and its Contractor had inherent risk; and
- Conflict of interest in originally acting for Signature and then as IMS in breach of Royal Institution of Chartered Surveyors ("RICS") professional guidance.
On these grounds, the Court found:
- Pricing & Cost to Completion: Report 16 was a "confusing and unsatisfactory document." Ridge accepted figures from Signature without investigation and offered no independent analysis of costs to complete. To fulfil its duty of care, Ridge should have advised NWC that there was a significant risk of incurring substantial costs beyond those suggested by Signature.
- Relationship: Report 16 suggested the building contract had been converted by Signature and its contractor from a lump sum to a target cost contract without explanation of why or when. Ridge failed to advise this was a different contractual arrangement with the potential for risk of cost overruns and lack of transparency of pricing between related companies.
- Conflict: Having previously been engaged as quantity surveyor by Signature, when advising NWC as IMS, Ridge were essentially "marking their own homework." Ridge did not comply with RICS professional guidelines to obtain informed consent to the conflict, which required strict procedural and documentary requirements. Ridge also did not disclose that the original £10.2 million contract sum was Ridge's own figure, based on 2015 pricing and that build costs would be 20% higher at the time of Report 16.
The Court found Eiger had relied on Report 16, both through oral evidence, and the fact that Report 16 was a condition precedent to the funding which was advanced. The Court found Eiger suffered recoverable loss at the point of entering into the Loan Agreement and assessed damages by reference to BCIS benchmarking data, finding the realistic cost to complete was approximately 77% higher than the figure Signature had put forward, and awarded damages of £2.5 million.
This case highlights the need for parties providing professional advice on construction contracts to ensure that any costs or information are independently reviewed and verified and not just accepted without reasonable enquiry and professional verification. Inadequacy of cost information should also be flagged. Failure to do so will likely be a breach of professional duties of care. Any conflicts should be raised before work is commenced and any required consent recorded in accordance with professional and contractual requirements.
Eiger Funding (PCC) Limited v Ridge and Partners LLP [2026] EWHC 609 (TCC) (16 March 2026)
2. Building Liability Orders: Use in advance of established liability and the applicability of adjudicator's decisions
The High Court has provided welcome guidance on how it may approach the grant of Building Liability Orders ("BLOs") under section 130 of the Building Safety Act 2022 (the "BSA"), both in advance of a final determination of liability and on the use of adjudication decisions to establish a relevant liability.
Crest Nicholson Regeneration Limited as employer, and related group companies (together "Crest"), is pursuing claims relating to alleged fire safety defects at its Admiralty Quarter development in Portsmouth ("Development") against its contractor Ardmore Construction Limited ("ACL"), now in administration. Crest had conducted an adjudication against ACL in respect of these defective works and was awarded £14.9 million (the "Adjudicator's Decision"). In the recent TCC case of Crest Nicholson Regeneration Limited & Ors v Ardmore Construction Limited (in administration) & Ors [2026] EWHC 789 (TCC), Crest sought BLOs under section 130 of the BSA against several of ACL's associated companies (the "BLO Defendants"), which were accepted to be "associates" for the purposes of that section. Crest sought two separate BLOs:
- An "Anticipatory BLO" providing that any eventual relevant liability of ACL (under the Defective Premises Act 1972 ("DPA") and/or arising from a building safety risk) would also be the joint and several liability of the BLO Defendants; and
- An "Adjudication BLO" making the BLO Defendants jointly and severally liable for the sums awarded under the Adjudicator's Decision.
Mr Justice Constable found that at the heart of the case there were two questions:
- Where a principal contractor has entered administration against the backdrop of allegedly extensive fire safety defects, and where both factual and legal responsibility for any such defects is in dispute, is it just and equitable for the Court to determine in advance of trial that associated companies should stand behind any relevant liability ultimately established; and
- How, if at all, are the provisions for BLOs applicable to liabilities arising out of the decision of an adjudicator, pursuant to statutory or contractual regimes required by the Housing Grants, Construction and Regeneration Act 1996?
The Court assessed s130 of the BSA and the case law considering both s130 and s124 of the BSA dealing with Remediation Contribution Orders (also an order the Court may make where just and equitable to do so) and distilled the following points:
- The assessment of whether or not it is just and equitable to grant a BLO is a broad and fact specific test;
- The power to grant a BLO, including to grant anticipatory BLOs, is discretionary and must be exercised having regard to the purpose of the BSA and relevant factors;
- The purpose of s130 is to allow the Court to hold those directly responsible for relevant defective works to be pursued through their associated companies and is not limited just to special purpose vehicles; and
- The Court should not seek to limit the grant of BLOs by setting out an exhaustive list of factors.
The Court's Ruling on the Anticipatory BLO
Considering its summary of the legal position outlined above the Court held that it had jurisdiction to grant the Anticipatory BLO. Also following the consideration of several factors, including the Court's confidence that the relevant liability would be established at trial, the corporate and commercial reality of the Ardmore group structure and the fact of ACL's administration, it held that it was just and equitable for the Court to grant the Anticipatory BLO. In reaching that conclusion, the Court rejected that it would be premature to grant the BLO in advance of final establishment of the liability and was confident that the Development contained building safety risks for which ACL would be liable. The Court also found that arguments about the effect of the BLO on the Ardmore group, Crest's status as a commercial developer with higher profit margins on the Development and uncertainty as to final quantum did not weigh against it being just and equitable to grant the Anticipatory BLO.
The Court's Ruling on the Adjudication BLO
The Court also granted the Adjudication BLO finding, in summary, that:
- Even though Crest had not brought a summary judgment enforcement application in respect of the Adjudicator's Decision, this did not prevent the Court from considering the Adjudicator's Decision in assessing the s130 relevant liability for the purposes of the BLO application;
- The temporarily binding nature of adjudication did not prevent the Adjudicator's Decision from creating a "liability" capable of being a "relevant liability" under BSA s130 as the decision is binding unless and until finally determined by the Court, and (if unchallenged) may be binding for all time; and
- Arguments that adjudication is "rough justice" and fundamentally incompatible with the "extraordinary" nature of a BLO were rejected. The Court treated the statutory "just and equitable" discretion as the safeguard, to be applied case-by-case, rather than carving adjudication liabilities out of section 130 as a category.
This judgement confirms that (i) BLOs can be sought and obtained before trial where the Court is sufficiently satisfied that it is just and equitable to fix contingent group exposure now, and (ii) liabilities arising out of adjudication decisions (at least where the adjudicator has determined DPA liability/building safety risk in substance) can, depending on the facts, be transmitted to associated entities via a BLO. It also underlines that the Court's focus is likely to be on the purpose and policy of the BSA and the overall justice of the position, rather than technical objections based on quantum uncertainty or the applicant's commercial status, or a generic characterisation of adjudication as merely an interim cashflow mechanism.
3. Court of Appeal ruling on residential occupier exemption and payless notices in Adjudication
In January, we reported on a rare judicial interpretation of the residential occupier exemption to the Housing Grants, Construction and Regeneration Act 1996 ("Act").
In a recap of background, Mr. & Mrs. James (the "Respondents") were building a large luxury house in Devon and engaged RBH Building Contractors Limited ("RBH") to provide project advisory services. No written contract was executed for RBH's services, and the contract was agreed orally. Relationships between the parties soured and RBH ceased work in April 2024, and, in November 2024, submitted a payment application for £663,016 ("Application"). The Respondents replied by letter on 27 November 2024 (the "Letter") that they considered that nothing was payable and outlining why. RBH commenced a 'smash and grab' adjudication for the unpaid amounts in the Application and the adjudicator found in its favour. RBH then sought an application for summary judgment to enforce the adjudicator's decision.
At first instance, the judge considered what constituted a "residential occupier" for the purposes of s106 of the Act and whether the Letter constituted a valid payless notice ("PLN") under s111 of the Act. The trial judge found that the Respondents were residential occupiers and so the adjudicator did not have jurisdiction and the summary judgment application was dismissed. The judge also found that the Letter constituted a valid PLN. RBH appealed on both points.
The Court of Appeal ("CA") recently handed down its judgment, unanimously agreeing with the trial judge and dismissing the appeal.
Ground 1: The Residential Occupier exception
RBH argued that the trial judge was wrong in concluding that the Respondents were residential occupiers: (i) citing specific terms of their development agreement, pursuant to which it was claimed that occupation would be illegal; and (ii) claiming that the Respondents intended to rent the property for part of the year.
The CA considered the relevant section of the Act and distilled several points to be considered in assessing an "intention to occupy" for section 106, namely:
- The burden of proof lies on the party seeking to trigger the exception.
- The determination of the necessary intention is a matter of fact, to be assessed at the time the contract was made.
- There are two elements to the test: (i) whether there is a bona fide intention to occupy (largely subjective), and (ii) whether there is a realistic rather than fanciful prospect of bringing that occupation about (objective).
- There must be an intention to occupy within a reasonable time after the completion of the works.
Considering the above points the CA found that there was evidence of the Respondents' intent to occupy at the time of the contract and that the development agreement, while commercial in nature, was not a "trump card" and various undertakings therein had been explained by the Respondents in evidence. The Court quickly dispensed with the suggestions that breach of a third-party commercial agreement made occupation illegal and that partial annual renting of the property was incompatible with general occupation. Ground 1 of the appeal was dismissed.
Ground 2: Was the Letter a PLN?
While dismissal of the appeal under Ground 1 made the consideration of the PLN issue "academic," Coulson LJ, delivering the CA's unanimous verdict, addressed Ground 2 noting it may be of "wider importance."
RBH argued that the Letter was not a valid PLN because it did not specify the sum the Respondents considered to be due, and/or the basis on which that sum was calculated, as required by section 111(4) of the Act.
Coulson LJ, after reviewing the Act and authorities, summarised the applicable principles of a PLN as:
- The content of payment notices and PLNs should be considered in a common-sense way and should not become tick box exercises or traps for the unwary.
- Does the payment notice explain in a tolerably clear way what is due and why?
- Does the PLN explain, also in a tolerably clear way, what (if any) part of the payment is said to be due, and why less is being paid than is sought?
Considering the evidence, the CA found that while the Letter was not titled a PLN it met the criteria for one. It clearly specified that the Respondents were withholding all payment and they considered £0 was due. The Letter clearly addressed each of the 11 claimed items in the Application and why it was considered nothing was due. By contrast, the CA considered the Application to be an "unsatisfactory document" largely containing a list of invoices with some "so vague to be useless … They do not explain why the sums are due and owing." The CA found that a reasonable recipient of the Letter would have realised "immediately" that the Letter set out in respect of each of the 11 challenged items that the Respondents considered they did not owe any part of the sums claimed in the Application. Ground 2 of the Appeal was also dismissed.
Parties to construction contracts concerning residential accommodation should note the CA's analysis of the residential occupier exemption and, if adjudication is a preferred method of dispute resolution for residential works, then it should be expressly included in a written executed contract. Parties should also note the CA's points regarding the requirements and content of both payment applications and PLNs and ensure they are met to avoid such notices being invalid. That is a wider point that extends beyond residential occupier cases.
RBH Building Contractors Limited v James & Anor [2026] EWCA Civ 511 (29 April 2026)
4. Construction Products Association forecasts sharp decline in Construction Output for 2026
The Construction Products Association ("CPA") has released its Spring 2026 Forecast on UK Construction Output. While it had previously predicted growth of 1.7% in 2026, the CPA has revised this downward substantially to forecast a decline in activity of 2.5%. Geopolitical tensions in the Middle East and their impact on the UK economy are expected to hit UK construction activity for the next 12-18 months with a drop in demand and sharp cost increases. The private housing sector is expected to see a decline in activity of 7% again with increased costs and decreased demand due to likely rising mortgage rates. Growth may still be expected in infrastructure sectors although these too may be affected by uncertain cost environments.
5. Construction Industry Scheme: Measures to simplify and improve administration now in force
New amendments to the Construction Industry Scheme (“CIS") are now in force from the start of the current tax year on 6 April 2026. The amending regulations:
- Reintroduce a requirement for contractors to file nil returns where they have not made any contract payments in each tax month (unless they have notified HMRC in advance that they will not make any such payments).
- Exempt payments made to local authorities or public bodies from the scope of the CIS.
Simplification and administrative improvements to the Construction Industry Scheme – GOV.UK
The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2026
6. Government consulting on reforming categorisation of building work to existing Higher Risk Buildings
The Ministry of Housing, Communities & Local Government ("MHCLG") is undertaking a consultation on improving the proportionality of the building control process for Category A and Category B building work to existing buildings under the Higher Risk Building (“HRB") regime (the "Consultation").
All building work to a HRB must receive approval from the Building Safety Regulator ("BSR") before work can start, save for only limited exceptions. Works to HRBs are currently designated either as Category A Works (which are more likely to result in greater risks to fire safety and standards) and Category B Works (being all works not Category A Works). Category A Works require additional documentation and consultation in the approval process. As of February 2026, the BSR has received five times the number of Category A Works applications than it had expected.
The Consultation seeks views on the following two options for amending the definition of Category A Works. Either:
- Excluding most building work within individual residential units in residential HRBs, reclassifying this work as Category B. Work affecting active fire safety measures and work to communal and external areas would remain Category A Works (Option 1); or
- Excluding work within individual residential units as in Option 1 but going further and excluding small-scale work in HRB communal areas, including hospitals and care homes (Option 2).
The Consultation closes on 28 May 2026.
7. MHCLG confirms Building Regulations amendments reflecting the Future Homes and Building Standards
The MHCLG has issued a Building Circular announcing new regulations amending the Building Regulations 2010 ("BR2010") to implement the Future Homes and Building Standards ("FHBS"). The Building Regulations etc. (Amendment) (England) Regulations 2026 ("Amendment Regulations") were laid down at the end of March 2026 and will come into force on 24 March 2027, save for specific regulations relating to higher-risk building works which will commence on 24 September 2027.
The FHBS aim to ensure that new homes and non-domestic buildings are built with low carbon heating and high levels of energy efficiency. The Amendment Regulations amend Part L of BR2010 to minimize greenhouse gas emissions and include a mandatory requirement to include on-site renewable energy generation for new dwellings.
The Future Homes and Buildings Standards: Building Circular 01/2026 – letter – GOV.UK
The Building Regulations etc. (Amendment) (England) Regulations 2026
