Mulalley & Co. Ltd v Sto Ltd & Sto SE & Co. KGaA [2026] EWHC 1552 (TCC) navigates the intersection of the Civil Liability (Contribution) Act 1978 and the statutory recovery mechanisms of the Building Safety Act 2022 (‘BSA’), deciding that where a manufacturer “marketed and supplied an inherently defective product,” they will likely bear the preponderance of liability. In a first, the court granted a Building Liability Order (‘BLO’) against a parent company by default judgment, reinforcing the Building Safety Act’s objective of ensuring that those responsible for building safety risks cannot avoid liability.

Procedural Context

The dispute arose from a project to refurbish a residential tower in Chelmsford. Mulalley, the main contractor, specified the “StoTherm Classic System” for the external cladding. Post-Grenfell, the system was identified as fundamentally deficient, leading to a 2022 settlement wherein Mulalley agreed to undertake comprehensive remedial works and compensate Chelmer Housing Partnership.

The procedural landscape was complicated by the January 2025 administration of the British supplier, Sto Ltd, which triggered a statutory moratorium. To preserve the claim, Mulalley pursued the parent company, Sto Germany. Despite proper service, Sto Germany adopted a strategy of total non-engagement. Waksman J entered default judgment against Sto Germany in December 2025 and the subsequent quantification hearing before Pepperall J illustrates that securing a default judgment still requires rigorous forensic assessment of quantum when dealing with an absent defendant.

Evidentiary Standards in Default Judgments

A default judgment does not absolve a claimant of their evidentiary burden; the court maintains its gatekeeping role regarding proof of loss, particularly where a defendant has failed to participate. The claimant must undergo strict forensic verification to establish that the quantum claimed is both causally linked and reasonable. In assessing the damages, the Court set out four guiding principles:

Proving Causation & the Reasonableness Threshold

In high-value cladding claims, recovery relies on the claimant’s ability to strictly delineate expenditure. Claimants must isolate and exclude any costs not directly attributable to the defendant’s specific breach. Mulalley’s quantum expert applied this methodology, determining that the Sto render system accounted for £2,025,499.62 of the overall £3,733,837.96 in remedial costs. The court accepted this assessment.

Regarding reasonableness, ironically the court applied the precedent from Martlet v Mulalley [2022] EWHC 1813 (TCC), which affirmed that courts are “generally reluctant to criticise, with the benefit of hindsight, the reasonableness of the claimant’s expenditure on remedial works.” Furthermore, the court recognized that as a contractor rectifying defects under a settlement agreement, Mulalley possessed a direct financial incentive to avoid unnecessary enhancements or “gold plating” the works. Consequently, the court found the costs to have been reasonably incurred in carrying out the defective cladding works.

The ‘Just & Equitable’ Contribution

Section 2(1) of the Civil Liability (Contribution) Act 1978 provides that the amount of the recoverable contribution shall be such sum as may be found by the court to be “just and equitable having regard to the extent of that person’s responsibility for the damage in question.” The judge stated that this assessment requires consideration of both the seriousness of the respective parties’ faults and their causative relevance (Downs v Chappell [1997] 1 W.L.R. 426).

With Mulalley claiming that 90% was a ‘just and equitable’ contribution, the court acknowledged that claims against architects for design breaches typically result in a contribution of between 67% and 80%. The court determined that this case warranted an exception to that level of contribution and found that the principal cause of the remedial works was plainly that Sto marketed and supplied an inherently defective product, concluding that an 87.5% contribution was ‘just and equitable’ (Note. the judgment does not reveal what the remaining 12.5% of liability was attributed to). Mulalley was accordingly awarded damages of £1,772,312.17 (representing 87.5% of the £2,025,499.62 assessment).