Contractor Mulalley has been awarded £1.8m in a significant legal judgement related to the Building Safety Act (BSA).
Last week, a High Court judge ruled that the German parent company of a UK cladding manufacturer and supplier was liable for the contractor’s costs – through a building liability order (BLO) – to replace a defective cladding system.
Justice Pepperall’s judgment in the case Mulalley & Co. Ltd v Sto Ltd & Sto SE & Co awarded an 87.5% contribution to its costs, which is above the 67%-80% range typically granted for similar claims.
Law firm Charles Russell Speechlys, which represented Mulalley, said the high apportionment was due to the “inherently defective product supported by misleading marketing material”.
Mulalley was appointed by client Chelmer Housing Partnership to design and construct the refurbishment and extension of Parkside Court, Chelmsford, Essex. The work included the design and installation of external cladding on the 54-unit residential tower block.
Mulalley subcontracted the cladding works, including the supply and installation of the StoTherm Classic System, which was manufactured and supplied by Sto UK.
Cladding remedial works
Following the Grenfell tower fire, Chelmer investigated Parkside Court and identified that the cladding was defective. It subsequently made claims against Mulalley, which as a result, undertook remedial works in 2022, which included the removal and replacement of the defective cladding.
Mulalley then sought to recover its costs from Sto’s German owner under the Building Safety Act 2022. Sto went into voluntary administration and Sto Germany failed to defend the proceedings, so a judgment in default was sought late last year.
The contractor originally requested £3.7m for the remedial works, which the judge revised down to just over £2m because “the remedial works extended beyond the work necessary to remedy the defective render system”.
Rebecca Morjaria, Charles Russell Speechlys senior associate in the Construction, Engineering & Projects team, said the ruling sent a clear message to product manufacturers that the Building Safety Act has real reach, and “structuring around a subsidiary will not insulate a group from liability where a defective product has been placed on the market”.
She added: “This is one of the first substantive contribution claims under the Building Safety Act to result in a BLO, and the first to do so by way of default judgment against an overseas parent company.”
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