Assistant Editor, Informa

August 5, 2022


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Court ruling finds contractor liable for £8 million cost of removing unsafe cladding

The High Court in London has handed down a landmark judgment that establishes legal liability for remedial safety work on buildings.

In a ruling on Thursday 14 July , Mulalley & Co, an Essex-based contractor, was ordered to pay damages towards the cost of removing cladding it had fitted to four residential tower blocks in Gosport on the south coast of England deemed to be unsafe after the Grenfell tower fire.

The contractor had reportedly refurbished EWI cladding by using StoTherm Classic render, however this consisted of an inner layer of expanded polystyrene (EPS) insultation boards, and an adhesive. Both the EPS and acrylic render which was applied over it were combustible substances, which consequently created a fire risk that had not previously existed with the concrete construction. StoTherm Classic had incorporated horizontal mineral wool fire barriers at each floor above the third storey to mitigate this risk however, Martlet Homes (who had acquired Gosport towers in 2017), established a fire safety team to respond to concerns following Grenfell.

Martlet Homes’ investigations is said to have also revealed the existence of serious installation defects, including defects in the installation of fire barriers, which created a risk that they would not operate as intended to prevent the spread of fire.

Martlet Homes took action to remove the entire EWI cladding system and replaced it with a non-combustible system using stone wool insulation panels instead of EPS.

Martlet was awarded approximately £8m in damages by the court, seeking to cover the costs of investigation, removal and replacement of the EWI cladding system, along with a waking watch fire safety precaution until the EWI was removed.

HHJ Stephen Davies determined that the  system was defectively installed with insufficient and/or incorrect provision of firestopping by cavity barriers and, as a result, did not comply with the Building Regulations.

“Massive implications for the market”

Andy Hulme, Chief Executive of housing association Hyde Group which brought the claim via its subsidiary Martlet Homes against Mulalley, said the case had “massive implications for the market”. He added that it should help unblock disputes between leaseholders living in blocks fitted with flammable cladding and the buildings’ owners over who should pay to have it removed.

“It’s the first time a contractor has been held accountable for the quality of work and the materials they have used… Based on this case we now know where the lines of accountability lie,” he said.

Mary-Anne Bowring, a fire safety expert and Group Managing Director at property consultant Ringley Group, described the ruling as “a landmark that gives hope to millions of residents living in unsafe buildings by opening the potential for legal action against other construction contractors who installed unsafe cladding”.

She added: “However, it is not enough to simply expect developers and housing associations to launch further legal action off the back of today’s judgment in order to recover the money spent on fixing unsafe buildings.”

Instead, she argued, the government should pay upfront to fix defective buildings and recoup costs from construction companies later.

For contractors, which typically operate with small cash reserves, the judgment could have serious implications. Hulme said Hyde had spent a total of £80m across its property portfolio on fire safety and remediation, and was pursuing “a number of other cases with other contractors” to recoup some of that.

Legal firm Clyde & Co has commented on the case with insight, noting that “the significance of this decision cannot be overstated and has the potential to set a longstanding precedent in future combustible cladding claims, adding that these disputes will undoubtedly be assessed on a case-by-case basis, particularly in relation to the suitability of the remedial schemes that are undertaken.

Lawyers from the firm stated: “Developers and building owners will be encouraged by the TCC’s stance on the recovery of waking watch costs as this type of precaution has been widely used.

“The TCC have shown in this decision that they will take a strict view on an external wall system’s compliance with Building Regulations in force at the time of construction.

“Notwithstanding the Claimant’s success in this matter, the decision does highlight the importance of completing and passing BS-8414 testing for a contractor as the Court has indicated buildings which have not been tested in accordance with BS-8414 or BR135 are unlikely to be determined as being compliant with Building Regulations.

“This statement does offer some hope for contractors that BS-8414 and BR135 test passes may be accepted by the courts as demonstrating a route to compliance with Building Regulations and therefore any contractors facing claims of this nature should ensure that they have evidence of the relevant test passes. This decision also serves as an important reminder to contractors to identify and engage with the relevant members of the supply chain whom a contractor may be able to pass all or part of any liability to as early as possible.”

The 2017 Grenfell fire, in which 72 people died, has triggered a widespread building safety crisis. The long-running inquiry into the blaze has exposed sharp practice and abuse in the construction and regulation of tower blocks in England. The total cost of fixing unsafe buildings across England is expected to exceed £10bn and at present is being largely met by taxpayers and developers via a levy.


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