equity – The Sense of Fairness blog

An extraordinary legal case was decided in the UK in April, and it has recently been determined that there can be no appeal from it. The court decision has led directly to the insolvency of a major property development group, and it illustrates the way in which fairness fills gaps in the law – indeed how fairness is a core element of how the law works.

The case is extraordinary because it deploys fairness effectively to overthrow a fundamental element of corporate law. The decision in effect enables the piercing of the corporate veil – the legal barrier that means the liabilities of a company stop at its doors and cannot be claimed from a parent, other group company, or shareholder. Limited liability, through this mechanism of the corporate veil, is generally regarded as a core element of capitalism, a protection of the shareholder providing capital, freeing them from the risk that they might lose more than their contribution to the company through their buying of shares. Because of this perceived centrality to the capitalist system, courts, and indeed legislators, are deeply wary of piercing the veil in the way this decision does.

However, there are certain policy aims that are so substantial that such effective veil piercing is seen as necessary. That is true of the policy underlying the law in the case in question, Crest Nicholson Regeneration v Ardmore Construction. It concerns Building Liability Orders, established under the Building Safety Act to ensure that appropriate contributions are made by those responsible for the remediation of buildings which since the terrible Grenfell Tower fire (see Power leads us astray: fairness lessons from Grenfell) are recognised as representing significant risks. Building Liability Orders (BLOs) allow the courts to extend the liability for remediation costs from the immediate company involved to associated companies where it is ‘just and equitable’ (what this blog would call fair) to do so.

Image from *KCTMO – Feeling the Heat!*, sadly prescient blog from Grenfell Action Group, March 14 2017

I deliberately say that this ‘in effect’ pierces the corporate veil, because it’s worth noting that there is some debate as to whether this is a full piercing, though to a non-specialist this may seem a debate on the head of a pin. As Christopher Veal of leading barristers’ chambers Pump Court explains:

“Whether this constitutes “piercing the corporate veil” in the traditional sense is contested: some courts and commentators treat BLOs as a distinct statutory remedy rather than classic veil-piercing, on the basis that the court is not disregarding the corporate structure but rather applying a legislative override. Others characterise the practical effect as functionally equivalent to piercing the veil. The distinction matters less in practice than the statutory test itself, which turns on whether it is just and equitable to extend liability.”

Even though there is this debate, the case makes clear that sometimes statute and policy considerations will take decisions to extend liability notwithstanding the perceived strong constraint of the corporate veil. This step was seen as particularly needed in the development sector, where there is a history of each individual development being built by a thinly capitalised subsidiary so as to protect the parent, and wider group, from exposures to any potential liability. The immediate subsidiary involved in the development, Ardmore Construction Ltd, had been put into administration on the day before the initial adjudication against it (the judge decided to accept the suggestion that this was coincidence), and the court also found that there had been a corporate restructuring with some intent to limit broader liability. The ruling means that this restructuring has failed: following the court’s decision to pierce the veil, the whole Ardmore Construction Group entered administration in mid-June, and other related companies have sought protection from creditors.

This application of fairness to close gaps in the law isn’t as infrequent as people might imagine. In many ways, it is a core element of the functioning of the common law, under which judges reach decisions that are not explicitly covered by legislation, applying broader judgement and higher principles to do so. Fairness is often one of those higher principles. Think about the famous 1930s case of the snail in the bottle of ginger beer, Donoghue v Stevenson. There would have been no need for the case to reach the House of Lords (then the UK’s highest court) if the drinker of the ginger beer in question had been its purchaser rather than her friend for whom she bought it. If the buyer had drunk it and suffered the consequences, contract law protections would have applied. In the absence of some form of contractual protection for the drinker, the House of Lords applied a more general duty of care to manufacturers and found that the Stevenson business could be seen to have negligently breached that duty of care. From this finding based in fairness has arisen the whole modern concept of the law of tort, whereby in certain constrained circumstances duties of care arise outside of contractual relationships.

In other situations, courts will imply fairness into contracts that on the face of it do not expect it. In her interesting book Fool Proof, law professor Tess Wilkinson-Ryan discusses the Massachusetts Supreme Court case Fortune v National Cash Register. Orville Fortune was employed at will and at a low salary, with his main pay opportunity through commission on sales – a portion paid at the point of sale and the rest on delivery and installation of the equipment. Fortune was sacked between landing a big sale and the point at which he would have received the second part of his commission from that sale. While on the face of the contract his employer could indeed do this, the courts implied a duty of good faith such that National Cash Regiester was not in fact permitted to exploit its worker in this way. Instead, it needed to treat Fortune fairly and allow him to take the fair benefit of the commission he had earned through his sale. The court stated bluntly:

“we are merely recognizing the general requirement in this Commonwealth that parties to contracts and commercial transactions must act in good faith toward one another. Good faith and fair dealing between parties are pervasive requirements in our law; it can be said fairly, that parties to contracts or commercial transactions are bound by this standard.”

Further, there is a whole section of the English legal system fully animated by fairness. It is not by chance that this is called ‘equity’, now formally combined with the rest of the legal system but with its origins in a mediaeval court system focused on delivering fairness. As Alastair Hudson states in the opening words of the seventh edition of his Understanding Equity & Trusts: “Equity is a means by which English law ensures fair outcomes in individual cases where the strict application of the common law or statute would otherwise generate injustice.” In practice, the concept of equity applies somewhat more narrowly than this assertion implies, but the intent is to identify the fair outcome when there is a lack of clarity in the common law or in statute. Equity lies at the heart of trust law, and so as I explore in my forthcoming book, the sense of fairness animates the fiduciary duties with which trustees are vested.

Hudson develops the thought further in his Great Debates in Equity and Trusts, recognising the need for the equity approach to soften the edge cases of common law and statute, so as to ensure that the legal system overall is “rounded”. He argues: “Clearly, there need to be rules … However, there will also be situations in which the ‘letter of the law’ will not necessarily produce an ideal response, or worse, a positively unfair response. There will be situations in which people need some flexibility in which to create new models which will work better for them personally or better in unanticipated situations. One future for the UK economy is likely to be in the creative field and in the new frontiers of technology. By definition, an innovative economy may need innovative legal models … to maximise its success. Therefore, non-rigid ways of thinking will be important.”

He concludes: “a legal system needs a synthesis of strict rules (of the sort typified by statute and by common law) and mechanisms for achieving fair outcomes when the strict rules will not achieve that”.

The extent to which fairness will require further substantive upendings of traditional legal understandings such as the Crest Nicholson Regeneration v Ardmore Construction piercing of the corporate veil remains to be seen. But it seems clear that fairness will continue to be needed to fill gaps in, and round off the edges of, the common law and legislation.

I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour.

Crest Nicholson Regeneration v Ardmore Construction [2026] EWHC 789

Crest Nicholson v Ardmore [2026] EWHC 789 (TCC): A Landmark Decision on Building Liability Orders, Christopher Veal. Pump Court Chambers, 22 May 2026

Donoghue v Stevenson [1932] AC 562

Fool Proof: How Fear of Playing the Sucker Shapes our Selves and the Social Order – and what we can do about it, Tess Wilkinson-Ryan. Harper Collins, 2023

Fortune v National Cash Register Co, 373 Mass 96 (1977)

Understanding Equity & Trusts, Alastair Hudson. Routledge, Seventh Edition 2022

Great Debates in Equity and Trusts, Alastair Hudson. Macmillan, 2014

Perceived unfair treatment is a driver not just of resentment but of outright conflict. Unfairness destabilises our world.

That’s the clear conclusion of some recent research by an IMF economist and a professor at Rice University in Houston in the US. Their focus is sub-Saharan Africa, a region with disproportionate levels of conflict and human suffering, whose violence fuels emigration and so more instability elsewhere. But it seems sure that while there unfairness fuels outright military conflict, the logic must be that in other parts of the world unfairness will drive unrest and discontent in different forms. The researchers refer to “conflict-inducing alienation”. That alienation can be seen in many countries of the world, not just sub-Saharan Africa.

But sticking first with their area of focus, the blog that accompanies the launch of the paper summarises the researchers’ findings:

“While various factors can fuel conflict, our research shows that discontent with state institutions among marginalized groups is a key driver of unrest in the region. Such distrust reflects perceptions that governments fail to address equity issues and inclusive growth—including the fair allocation of natural resources and human capital development… Poverty and underdevelopment alone may not fuel conflict. But those underlying factors are exacerbated by the experience or perception of social and economic exclusion, thus providing a fertile breeding ground for armed groups, necessitating urgent intervention.”

These countries in sub-Saharan Africa are of course among the first to experience the most brutal impacts of climate change, and this exacerbates the experiences of those at the edges of society. “Climatic fluctuations and food insecurity have been particularly acute in this subregion,” the paper reads. “Forecasts for 2023 indicate that nearly 142 million individuals in the region will confront acute food insecurity.” It should not be a surprise that “Food insecurity contributes negatively to trust in government.” Also unsurprisingly, the desperation that arises from this hunger drives individual actions, especially among those who have lost trust in governments. It must of course be noted that much of the poverty in the region is a legacy of colonialism.

The consequences of this are stark. Essentially, there is a close correlation between the sense of exclusion and unfairness and the fragility of nation states and their susceptibility to conflicts of various forms. This chart from the paper illustrates the finding well:

The researchers conclude:

“Our findings show that the crisis of confidence experienced by marginalized groups towards state institutions is the primary driver of conflict. This crisis of confidence originates from the perceived failure of state institutions to safeguard interests, ensure justice, promote human capital development equitably, oversee fair allocation of natural resources, and encourage inclusive economic growth. Such institutional failures, contributing to perceptions of social and economic exclusion, invite conflict as they undermine the principles of fairness and inclusivity vital for sustainable development.”

These findings emphasise the importance of the Rule of Law in fostering trust in government and so in building the foundations for economic growth and investment. And there is a clear need to foster the basic expectations of a cohesive society in order to lean against these perceived unfairnesses: “These results suggest strongly that governments in the Sahel G5 as well as sub-Saharan Africa more broadly should focus their efforts on improving the quality of their institutions (reduce corruption and improve law and order) and provision of public goods (healthcare, education, air and water quality, food and shelter sufficiency) rather than focus primarily on macroeconomic variables such as the levels of economic growth and unemployment.”

The sense of being forgotten and left behind by government and wider society is greater for those at the geographic edges: “conflict is often concentrated near national borders where there tend to be more limited or insufficient public services, fostering feelings of exclusion”. Many of those national borders were drawn with the arbitrary straight lines of empire.

That sense of living at the periphery, having been forgotten by government and wider society, is of course not unique to people in the countries of sub-Saharan Africa. Many in all the countries of the world now feel left behind and peripheral. In sub-Saharan Africa these frustrations appear to be reflected in outright conflict but in other parts of the world the same sense of abandonment has inevitable, if different, consequences. The consequential violence can fuel crime, it can drive social division and anger in and with politics, but these are just other forms of the violence and dislocation that comes from people feeling that society no longer operates fairly to protect their interests.

Perceptions of fairness seem to be vital to hold states and their people together in peaceful coexistence.

Tag: equity

Fairness piercing the veil, and filling gaps in the law

Unfairness fuels conflict: fraying threads