The Court of Appeal has dismissed Knot Builders’ appeal against a High Court decision that ruled it was liable to pay the Construction Industry Training Board levy.
In the latest development in the legal battle between Knot Builders Ltd (KBL), formerly known as Hudson Contract Services Ltd, and the CITB, the Court of Appeal also upheld CITB’s cross-appeal, effectively ruling that KBL was liable to pay the levy imposed by the CITB without being entitled to the corresponding grants.
Both KBL and the CITB had appealed a High Court ruling from January 2024 in which Mrs Justice Ellenbogen dismissed two of the three grounds raised by KBL for judicial review.
In her judgment, Ellenbogen had referred to KBL’s submissions as “fanciful and opportunistic” and characterised one of its arguments as cynical.
Although CITB claimed victory in the High Court ruling, both it and KBL appealed the decision.
CITB contested the decision that KBL might be eligible for certain grants for the 2015/16 period, specifically related to inductions for new starters and site audits where operatives received workplace training. The CITB argued that KBL did not meet the necessary criteria to qualify for these grants.
Court of Appeal ruling
In the Court of Appeal judgement, handed down on Friday (17 January), Lady Justice Elisabeth Laing, Lord Justice Coulson and Sir Andrew McFarlane unanimously dismissed KBL’s appeal and allowed CITB’s cross-appeal.
Laing endorsed Ellenbogen’s comments that KBL’s arguments were both “opportunistic” and “cynical”. Coulson added that KBL’s challenge against the CITB decision regarding grant entitlements or levy liabilities was “an artificial construct”.
KBL/Hudson had been fighting in court for over a decade that it was not liable to pay the CITB levy. It launched an application for judicial review and brought a separate appeal which the company pursued from the employment tribunal all the way to the Court of Appeal.
When Hudson eventually applied for a training grant, it did not disclose to the CITB that it had restructured the business over two years earlier “with the express intention of avoiding any liability to the levy”, the ruling noted (paragraph 88).
In its latest financial statement, KBL notes as a going concern that “the company is liable for the 2015/16 CITB levy of £7,964,584 […] the company has also brought in a corresponding grant claim for the same period for £8,464,230”.
A spokesperson for Knot Builders said: “Knot Builders Ltd, who have not traded for the past six years and are not builders, are considering their position. Whether to continue this argument, or roll it into the next one.”
CITB was approached for comment.
