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Potentially—but not automatically. The UK Technology and Construction Court has been reported as making a default building liability order in Mulalley & Co Ltd v Sto Ltd and Sto SE & Co KGaA, with Sto SE, the German parent, ordered to make an 87.5% contribution. The decision concerns the Building Safety Act 2022 and defective cladding products; it does not abolish corporate separateness or make every parent company liable for every subsidiary debt.
What the Mulalley v Sto decision actually concerns
The case reported by Building on 3 August 2026 is a UK Building Safety Act dispute in the Technology and Construction Court (TCC). The named defendants were Sto Ltd and Sto SE & Co KGaA. Sto SE is described as the German parent company of the UK business.
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The reported procedural and financial outcome is significant: Building says this was the first building liability order obtained by default judgment and that Sto SE was ordered to make an 87.5% contribution. The accessible report does not state the monetary amount, the arithmetic behind that percentage, or the detailed evidence relied on by the court.
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The parties and forum
- Claimant: Mulalley & Co Ltd, a construction contractor.
- Defendants: Sto Ltd and Sto SE & Co KGaA.
- Court: the Technology and Construction Court in the UK.
- Legal setting: Building Safety Act 2022 claims involving defective products and allocation of responsibility.
What “default building liability order” means here
A building liability order (BLO) is a statutory mechanism created by the Building Safety Act 2022. In this report, the order was obtained by default judgment rather than after a fully contested trial described in the available material. In ordinary civil procedure, default judgment is generally available where a defendant has not taken the procedural step required to defend a claim. That procedural label should not be treated as a finding that every legal issue was tested through a full trial.
The report calls this the first BLO obtained by default judgment. That is a description of the reported procedural route, not proof that it is the first BLO of any kind or that later cases must reach the same result.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchCan a parent company be liable if its UK subsidiary has gone bust?
The case indicates that a parent may face an order through the Building Safety Act route even where the relevant UK subsidiary is insolvent or otherwise unable to satisfy the claim. It does not establish that a parent automatically inherits a subsidiary’s liabilities. The question remains whether the statutory mechanism applies to the facts and whether the required procedural and evidential steps have been met.
Corporate separateness still matters
English company law ordinarily treats a company and its shareholders or parent as separate legal persons. A subsidiary’s contract, negligence exposure or judgment debt is not normally the parent’s debt merely because the parent owns the shares. The Mulalley v Sto report should therefore be read as a case about a specific statutory route, not as a general rule that corporate structure no longer works.
The headline “Corporate structure no longer a shield for manufacturers” is a useful warning about enforcement risk, but it is broader than the verified detail. A parent company cannot assume that incorporation alone will prevent a Building Safety Act claim; equally, a claimant cannot assume that naming a parent guarantees recovery.
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Why insolvency changes the practical question
If a UK subsidiary has no funds, a claimant may look for a route to pursue a related company with resources. Section 149 is relevant because the Building Safety Act contains a statutory framework for claims involving associated companies and building safety liabilities. The reported result shows why manufacturers and their groups must consider potential exposure beyond the balance sheet of the operating subsidiary.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesThat does not answer every insolvency question. The available report does not disclose the subsidiary’s formal insolvency status, the precise wording of the claim, whether an administrator or liquidator was involved, or how any existing insurance, guarantees or contribution rights were treated.
What section 149 contributes to the analysis
The report identifies section 149 of the Building Safety Act 2022 as the statutory issue relevant to claims against product suppliers. It also identifies apportionment between contractors and product manufacturers as an issue addressed by the court.
What can safely be taken from the report
- Section 149 was part of the legal framework relied on in the dispute.
- The claim was connected with defective cladding products supplied for a building project.
- The court’s reported outcome reached beyond the UK operating company to Sto SE.
- The decision addressed how responsibility was divided between the contractor side and the manufacturer side.
What the available material does not establish
The full judgment was not available for checking. The report therefore does not establish the precise statutory conditions, the court’s interpretation of each element, the judgment date or neutral citation, the complete procedural history, or the evidence that persuaded the TCC. It also does not establish whether the order depended on facts that would be unusual in another project.
Anyone preparing pleadings, advising on a live defect claim or assessing a limitation position should obtain the judgment and current statutory text rather than rely on a headline or standfirst. The reported article’s phrase that manufacturers and suppliers remain liable even when a UK subsidiary has failed or the group is overseas is the authors’ summary, not a quoted judicial formulation of the legal test.
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How responsibility was divided between contractor and manufacturer
The useful comparison in this case is not simply “subsidiary versus parent”. It is the division of responsibility across the construction chain. A contractor may have duties connected with design coordination, installation, inspection or workmanship. A product manufacturer or supplier may face allegations concerning the product’s performance, information supplied with it, warnings or compliance with the specification. The legal basis and evidence for each allegation can differ.
| Party or role | Questions a claim usually has to answer | What is established about Mulalley v Sto |
|---|---|---|
| Contractor | What work was undertaken, what specification applied, and whether installation or project decisions contributed to the defect? | Mulalley was the contractor claimant; the report says responsibility between contractors and manufacturers was addressed. |
| Product manufacturer or supplier | What product was supplied, what representations or technical information accompanied it, and whether the product was defective or unsuitable? | The dispute concerned defective cladding products and claims against product suppliers under section 149. |
| Parent company | Does the statutory route permit an order against the associated company, and are the procedural requirements satisfied? | Sto SE, the German parent, was reported to have been ordered to contribute. |
| Other contributors | Were designers, subcontractors, consultants, insurers or other suppliers involved, and what legal basis connects them to the loss? | The accessible report gives no complete list or quantified allocation for additional parties. |
Understanding the 87.5% contribution
The reported 87.5% figure is a contribution ordered from Sto SE. It should not be casually described as the percentage of all building defects, the parent’s ownership percentage, or a universal manufacturer share. The accessible source does not give the monetary amount or explain the calculation. Without the reasons, it is not possible to say whether the figure reflects comparative responsibility, an agreed basis, a particular head of loss or another procedural measure.
That distinction matters in negotiations. A percentage in one judgment is not a tariff for cladding disputes. Parties still need project-specific evidence about causation, product selection, installation, warnings, remediation and any other legally responsible actors.
Sto was not the Grenfell cladding supplier
The report expressly distinguishes Sto from the supplier of cladding at Grenfell. Grenfell is relevant background because the tragedy increased scrutiny of cladding products, supply chains and building-safety accountability. It would be inaccurate, however, to imply that Sto supplied the Grenfell cladding or that this case determines the legal responsibility for that event.
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Keeping that distinction clear avoids two common errors: treating every cladding manufacturer as connected with Grenfell, and treating a high-profile building-safety case as if it resolved all product, design and installation disputes.
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Practical implications for construction stakeholders
Building owners and leaseholder groups
- Preserve product data, delivery records, specifications, test reports, installation records and correspondence before remediation work destroys evidence.
- Map every company in the supply chain, including parent, subsidiary and trading names, rather than stopping at the contractor shown on an invoice.
- Ask advisers to assess whether a Building Safety Act route is available, while checking limitation, contract terms and other causes of action separately.
- Do not treat the reported 87.5% contribution as a forecast for your own recovery.
Contractors and subcontractors
- Separate installation evidence from product evidence. A defective product allegation does not by itself prove defective workmanship, and good workmanship does not by itself establish that a product was suitable.
- Review indemnities, collateral warranties, design responsibility clauses and notice provisions early.
- Keep records showing what the manufacturer stated, what the project team knew, and whether substitutions or deviations occurred.
- Consider contribution claims promptly where another participant may share responsibility.
Manufacturers and corporate groups
- Identify UK projects that used relevant products and maintain traceable technical and sales records.
- Review how product warnings, installation instructions and compliance information were approved and distributed.
- Assess group-wide litigation, insurance and document-retention procedures; an overseas parent should not assume distance prevents service or enforcement risk.
- Obtain advice on section 149 and related Building Safety Act provisions before restructuring, dissolving or transferring a UK trading subsidiary.
Insurers, lenders and insolvency professionals
The reported outcome supports treating building-safety exposure as a group-risk issue rather than examining only the insolvent company’s standalone accounts. That is a risk-management implication, not a finding that every parent is liable. Policies, aggregation language, exclusions, guarantees, asset transfers and contribution claims require separate review against the actual project and policy wording.
A disciplined way to assess a similar claim
- Identify the building and product. Record the project, construction dates, cladding system, manufacturer, supplier, installer and any replacement product.
- Build the corporate map. Check which entity contracted, which entity manufactured or sold the product, and which companies owned or controlled those entities at the relevant time.
- Preserve contemporaneous evidence. Collect specifications, approvals, test certificates, installation photographs, inspection reports, complaints, warnings, technical updates and remediation records.
- Separate legal routes. Analyse contractual claims, negligence or other causes of action alongside any Building Safety Act route. Do not assume section 149 displaces every other requirement.
- Check procedure and limitation. Confirm the correct defendants, service steps, deadlines and any insolvency stay or claims process before issuing or defending proceedings.
- Analyse contribution. Identify each actor’s alleged contribution to the loss and the evidence supporting causation. A parent-company claim and an allocation dispute are related but distinct questions.
- Verify current authority. Obtain the full Mulalley v Sto judgment, check for an appeal or later treatment, and compare the statutory text in force for the relevant proceedings.
Questions that remain open until the judgment is checked
- What is the judgment date and neutral citation?
- What exact procedural steps led to default judgment?
- What statutory conditions did the court apply under section 149?
- What evidence established a relevant defect or loss?
- How was the 87.5% contribution calculated, and what amount did it represent?
- Were any other parties allocated responsibility?
- Has Sto appealed, or has a later decision altered the reported position?
These are not minor details. They determine whether the decision is a narrow procedural outcome or a broader guide to contested Building Safety Act litigation.
What the decision does not change
The reported case does not make parent companies guarantors of subsidiaries, remove the need to prove a legally recognised claim, or create a fixed percentage for manufacturers in cladding disputes. It does not establish that an overseas company can always be sued in the UK, nor that a contractor escapes responsibility whenever a product is alleged to be defective.
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Source and date
The reported facts come from Building magazine’s article by Rebecca Morjaria and Steven Carey, dated 3 August 2026. The article’s standfirst summarises the result in broad terms, while the full judgment and detailed reasons were not available for verification in the material reviewed here. The safest current description is therefore a reported TCC default building liability order under the Building Safety Act framework, with a contribution by Sto SE, subject to confirmation from the judgment and any subsequent appeal or decision.
Bottom line
Mulalley v Sto is a warning that a parent company’s overseas location or a failed UK subsidiary may not end a building-safety claim. It is not a universal rule against corporate separateness. The decisive work in any new case remains identifying the statutory route, preserving product and installation evidence, joining the correct entities and proving how responsibility for the loss should be apportioned.
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