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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →The High Court’s 22 June 2026 judgment in Mulalley & Co. Ltd v Sto Ltd & Sto SE & Co. KGaA (2026 EWHC 1552 (TCC)) awarded Mulalley £1,772,312.17 before the stated interest consequences. The sum represented 87.5% of £2,025,499.62 in remediation costs that the court found reasonably incurred and caused by defective cladding. The decision is a practical lesson in proving causation, apportioning wider works and documenting expenditure, not a general rule that cladding suppliers must pay 87.5% of every building claim.
What did the High Court award?
Mr Justice Pepperall assessed damages after liability had already been established by default judgment against Sto SE & Co. KGaA (“Sto Germany”). The court accepted £2,025,499.62 as reasonable remediation costs caused by the defective cladding works. Applying section 2(1) of the Civil Liability (Contribution) Act 1978, it decided that Sto and Sto Germany should bear 87.5% of that sum. Judgment was therefore entered for £1,772,312.17.
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The order also dealt with interest and costs. Interest was awarded at 1% above base rate from 1 October 2023 to 8 December 2025 on the relevant sum. The judgment noted 8% Judgments Act interest on an unpaid £1,200,000 interim payment and awarded further interest at 1% above base on the remaining judgment balance from 8 December 2025 to the date of judgment. Mulalley received £175,000 on account of costs, with any balance to be assessed on the standard basis if the parties could not agree.
| Item | Figure | What it represents |
|---|---|---|
| Pleaded claim | £2,403,846 | Amount pleaded in the claim |
| Gross costs claimed | £3,733,837.96 | Mulalley’s initial gross costs claim |
| Costs found incurred after expert analysis | £3,431,633.53 | Quantity-surveyor assessment after reductions |
| Costs accepted as reasonable and caused by the defective cladding | £2,025,499.62 | Recoverable cost base accepted by the court |
| Contribution percentage | 87.5% | Just and equitable share allocated to Sto and Sto Germany |
| Judgment sum | £1,772,312.17 | 87.5% of £2,025,499.62, before the stated interest consequences |
Every figure is a finding or order in this particular case. None is an industry average or a tariff for future cladding disputes.
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What project and procedural history led to the assessment?
Chelmer Housing Partnership engaged Mulalley under a 30 December 2006 refurbishment contract for Parkside Court, a residential tower block in Chelmsford, Essex. The scheme included a new podium containing 27 flats and refurbishment of a 54-flat tower. External cladding formed part of the works, and Mulalley subcontracted that package using the StoTherm Classic System specified for the project.
After the Grenfell Tower fire, Chelmer identified the system as defective. Under a settlement agreement dated 22 December 2022, Mulalley agreed to remove and replace the cladding and to pay specified sums to Chelmer. Mulalley then sought a contribution from UK supplier Sto Limited and pursued a Building Liability Order against its German parent, Sto SE & Co. KGaA.
Sto Limited entered administration on 17 January 2025, so the claim against that company was subject to a statutory moratorium. Sto Germany did not defend the proceedings. On 8 December 2025 the court entered default judgment establishing liability, while leaving the amount of damages for a later assessment. The June 2026 hearing was therefore about proof and valuation of loss, rather than whether the pleaded liability case was made out.
How did the court reduce the claimed costs to £2,025,499.62?
A default judgment did not make the claimed amount payable automatically. Mulalley still had to demonstrate what it had spent, which work addressed the pleaded defects, and whether the expenditure was reasonable. The evidence consisted principally of witness statements and an expert quantity-surveyor report. Sto Germany filed no evidence and took no part in the assessment, but the evidential burden remained with Mulalley.
1. Establishing costs actually incurred
The gross claim was £3,733,837.96. The quantity surveyor reviewed the underlying material and assessed total costs incurred at £3,431,633.53. Reductions included amounts relating to preliminaries, subcontractor costs, and consultancy and legal fees. This demonstrates why invoices, payment records, contracts, variations, completion records and a clear cost ledger matter: a pleaded total is not proof of expenditure.
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2. Separating defective-system work from wider works
The remediation extended beyond work strictly necessary to remedy the defective render system. Rather than treating the whole development cost as recoverable, the expert apportioned the work. The accepted allocation attributed 85.83% of the external-wall work and 69.03% of the overall development to the Sto render. That analysis produced £2,086,826.65 in remedial costs attributable to the defective system.
3. Removing a further non-recoverable element
The court made a further deduction for Mulalley’s legal costs in achieving its settlement with Chelmer. After that deduction, it accepted £2,025,499.62 as costs reasonably incurred and caused by the defective cladding works. The path from £3,733,837.96 to the accepted sum is therefore central to the judgment: broad project expenditure was tested against contemporaneous evidence, technical attribution and legal recoverability.
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Why was the contribution set at 87.5%?
Section 2(1) of the Civil Liability (Contribution) Act 1978 requires a contribution that is “just and equitable” having regard to the extent of each person’s responsibility for the damage. The court considered both the seriousness of the parties’ fault and the causal significance of their conduct.
The judge accepted that a contribution against an architect for a design breach might commonly fall in a range of 67% to 80%. This case went further on its pleaded and established facts. The default judgment included findings that Sto failed to supply a product complying with the applicable functional fire-safety requirement and regulation 7 of the Building Regulations, made misleading statements about its system, and supplied an inherently defective system.
Those findings placed the product’s marketing and supply at the centre of the loss. Mr Justice Pepperall stated: “In my judgment, the principal cause of the remedial works was plainly the fact that Sto marketed and supplied an inherently defective product.” Because the supplier’s conduct was treated as the principal cause, the court fixed its just and equitable share at 87.5%.
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The percentage cannot be lifted out of this procedural and factual setting. It depended on the liability findings, the role attributed to the supplier, the evidence linking the system to the remedial work and the absence of a defended damages case. It does not establish that a manufacturer, designer, contractor or landlord will ordinarily receive or pay the same percentage.
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What does a default judgment establish—and what does it not establish?
Liability can be established without a defended trial
When a defendant fails to defend, the court may enter judgment in default on liability. In this case, that occurred on 8 December 2025. The liability findings included breach of the applicable fire-safety requirement, breach of regulation 7, misleading statements and an inherently defective system.
Damages still require proof
The default judgment left damages to be assessed. Mulalley therefore had to prove the amount and character of its loss through witness and expert evidence. The court scrutinised incurred costs, causation, reasonableness and the boundary between defective-system remediation and other improvements or works. A claimant should not assume that silence from the defendant converts an estimate or settlement figure into an award.
Absence of opposition affects the context
Sto Germany’s failure to participate meant there was no opposing evidence at the assessment. That is relevant context when using the judgment as an example. It does not remove the need for a claimant’s evidence, and it makes the result a poor basis for predicting the outcome of a fully contested dispute.
What should building owners do when cladding remediation is disputed?
Build a cost trail from the defect to payment
- Keep the original contract, specifications, drawings, product literature, approvals and inspection records.
- Preserve fire-risk assessments, intrusive investigation reports, surveys and correspondence identifying the affected system.
- Separate design, access, temporary works, removal, replacement, testing, professional fees and financing or legal costs in the ledger.
- Retain invoices, applications for payment, payment certificates, bank evidence, variations and completion documentation.
The Mulalley evidence shows why a quantity-surveyor review should be carried out against primary records rather than prepared as a single retrospective percentage.
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Define the remedial scope precisely
If a project includes work beyond the defective cladding, identify the additional work and explain why it was necessary. A programme that replaces a whole façade may be reasonable operationally, yet the recoverable claim may concern only the proportion caused by the pleaded defect. Record elevations, areas, access arrangements and work packages so an expert can test the allocation.
Deal with settlement evidence carefully
A settlement with an owner or leaseholders may resolve immediate obligations, but a contribution claim still requires proof of the underlying loss. Keep the settlement agreement dated 22 December 2022 model as a reminder that sums paid and sums legally attributable to a specific defect are not automatically identical.
Check solvency and procedural routes early
Mulalley pursued both a contribution claim against the UK supplier and a Building Liability Order against the German parent. The supplier’s administration on 17 January 2025 triggered a statutory moratorium. Owners and contractors should identify which entity designed, marketed, supplied, installed or approved the system, then obtain advice on limitation, insolvency stays, contribution claims and any available parent-company remedy.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What should contractors, manufacturers and designers take from the judgment?
Keep records that explain technical decisions
Contractors should retain subcontract orders, product selections, technical submissions, installation instructions, inspection and test plans, non-conformance reports, responses to design queries and handover records. Manufacturers and suppliers should preserve technical data, marketing claims, certification, compliance assessments and communications about fire performance. These records may become the evidence that connects—or separates—a product defect from later remediation.
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A contractor that settles with an employer may still need to establish contribution from a supplier or designer. Conversely, a supplier cannot assume that every amount paid in a settlement is caused by its product. The court will examine the pleaded defect, the work actually undertaken and each party’s causal role.
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Understand the risk of unchallenged allegations
Failure to defend can result in liability findings being entered without a contested trial. It does not make the later damages assessment irrelevant, but it leaves the absent party unable to test the claimant’s factual and expert case. Promptly preserving documents and obtaining legal advice is therefore critical when proceedings are served.
How is a Building Liability Order different from the contribution assessment?
The contribution assessment determined how much of Mulalley’s established loss should be borne by Sto and Sto Germany. The Building Liability Order was the route by which the parent company was pursued alongside the relevant corporate entity. These are distinct questions: a parent company is not automatically liable for every subsidiary obligation, and the statutory conditions for a Building Liability Order must be met in the particular case.
Similarly, the 87.5% allocation was not a finding that all contractors, owners or parent companies in cladding projects share responsibility in that proportion. It followed the judgment’s specific liability findings and its application of the 1978 Act to the evidence before it.
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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 matchWhat do the interest and costs orders mean in practice?
Interest can materially increase the amount payable after the principal sum is calculated. The court selected 1% above base rate from 1 October 2023 to 8 December 2025 on the relevant sum, recorded 8% Judgments Act interest on an unpaid £1,200,000 interim payment, and applied 1% above base to the remaining judgment balance from 8 December 2025 to judgment. Parties assessing exposure should model each period separately rather than apply one rate to the entire claim.
The £175,000 costs payment was on account only. Unless agreed, the final amount remained subject to assessment on the standard basis. A damages estimate that ignores expert fees, legal costs, interest and the possibility of costs assessment may understate the financial exposure.
How should this judgment be used when comparing other cladding cases?
Use five comparison points rather than the headline percentage:
- Procedural posture: Was liability contested, admitted or entered by default?
- Legal and pleaded basis: What statutory duties, contractual terms or product representations were established?
- Causation evidence: How were defective-system costs separated from wider refurbishment or improvement works?
- Relative responsibility: What did each party do, and how serious and causally important was that conduct?
- Remedy: What contribution, interest and costs orders were actually made?
That framework prevents a single unopposed assessment from being treated as a universal precedent for every façade or fire-safety dispute.
Practical checklist for a potential claim
- Identify the exact cladding, render or insulation system and the parties involved in its design, specification, supply and installation.
- Secure contracts, drawings, certificates, product literature, inspection records and relevant correspondence.
- Commission an investigation that maps the defect to affected elevations and building areas.
- Maintain a live cost schedule supported by invoices, payment evidence and work-package descriptions.
- Ask a quantity surveyor to test attribution where remediation extends beyond the defective system.
- Record why the chosen scope was necessary, including any whole-building or phased approach.
- Separate principal remediation costs from consultancy, legal, financing and settlement-related sums.
- Review limitation, contribution rights, insolvency moratoria and any potential Building Liability Order with specialist advice.
- Prepare for damages proof even if the opposing party has not defended the liability claim.
The central lesson for owners and contractors
Mulalley v Sto demonstrates that a successful cladding recovery is built on a chain of proof: the pleaded defect, the work required to remedy it, the money actually spent, the proportion attributable to that defect and the relative fault of each party. The court awarded 87.5% because the established findings treated Sto’s marketing and supply of an inherently defective product as the principal cause of the remedial works. That reasoning is powerful on these facts, but the percentage and the £1,772,312.17 judgment are not automatic outcomes for other buildings.
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