Building Safety Act 2022: Quantification of contractor’s contribution claim

The TCC considers a claim for a contribution order brought by a contractor under s.149 Building Safety Act 2022 (“BSA 2022”) against the supplier of an external cladding system which was found to be defective.

The background

In Mulalley & Co Ltd v (1) STO Limited and (2) STO SE & Co. KGaA [2026], Chelmer Housing Partnership appointed Mulalley to undertake refurbishment works at Parkside Court, a residential block in Chelmsford, in 2006. The scope of works included the demolition of an existing structure, construction of a new podium containing 27 new flats, and refurbishment of the tower block containing 54 flats, together with design and installation of external cladding.

Cladding works were subcontracted and specified the use of the “StoTherm Classic System”. Assessment following the Grenfell Tower tragedy identified the cladding system to be defective. In 2022, Mulalley agreed to remove and replace the defective cladding, and to pay a sum to Chelmer. Mulalley then brought its claim to seek recovery of the costs of the remedial works and the sum paid to Chelmer from Sto Limited, the supplier of the cladding system.

Sto Limited entered into administration in January 2025. Mulalley therefore further pursued Sto’s parent company, Sto SE & Co KGaA (referred to as “Sto Germany”), for a building liability order under s.130 BSA 2022. Sto Germany did not defend the claim, and judgment in default was entered against it with damages to be assessed. Sto Germany did not participate in the hearing for assessment of damages.

Mulalley was entitled to damages as a result of the default judgment, leaving the remaining issue that of quantification of damages. The court considered:

1. The costs that had been incurred;
2. Whether these costs were incurred in relation to the pleaded defects;
3. Whether the costs incurred were reasonable; and
4. What is a just and equitable contribution for Sto Germany to be ordered to pay.

The decision

Total gross costs of the remedial works were assessed and accepted by the court at £3,431,633.53. Deductions were made to account for costs for works which extended beyond the external cladding system and to deduct legal costs, finding that a figure of £2,025,499.62 had been reasonably incurred.

In its judgment, the court drew comparison with a claim made by a contractor against an architect on the basis that, in this case, the supplier of the cladding system was responsible for any design defect. It was accepted that an award may be made against an architect in such circumstances of between 67% and 80%, and the court set out that liability as a result of the default judgment included findings that:

1. Sto would have produced or provided a version of its standard specification for the StoTherm Classic System (although the document has been lost);
2. The specification issued was for the StoTherm Classic K;
3. Sto failed to supply a cladding product that complied with Building Regulations;
4. Sto made misleading statements about the StoTherm Classic system;
5. The system was inherently defective; and
6. The misleading statements and the inherently defective nature of the StoTherm Classic system were the causes of the apartments being unfit for habitation.

The court found that the principal cause of the remedial works was the fact that Sto marketed and supplied an inherently defective product. The just and equitable contribution payable by St Germany under the Building Liability Order was 87.5%, and a sum of £1,772,312.17 was awarded to Mulalley against Sto Germany, together with interest.

Advice and action for landlords

This is the first decision from the TCC division of the High Court that considers whether a contribution claim brought against a cladding supplier could be “just and equitable”, although the claim was not defended. The matter is also the first whereby a court has made a Building Liability Order by default judgment.

The courts continue to approach BSA 2022 cases on a case-by-case basis that prioritises building safety and the recovery of costs incurred, and this decision further demonstrates that liability may be extended to other organisations within a group structure or associated companies, including companies registered overseas, in order to give effect to the provisions of the BSA 2022.