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Cladding dispute comes to Court: “Everyone else was doing it”

News / / London

Martlet Homes v. Mullaley and Co Ltd [2022] EWHC 1813
The Court has awarded a property owner damages for the defective design and installation of cladding. This is the first time the High Court has dealt with a dispute concerning cladding on a high rise building since the Grenfell Tower disaster.

The background facts

Between 2005 and 2008, Mulalley completed refurbishment works on five social housing blocks, known as the Gosport Towers (then owned by Kelsey Housing Association Limited), under a design and build contract (the Contract). The Contract included the application of external wall insulation (EWI) cladding to most elevations to improve their resistance to cold and damp penetration. 

The EWI cladding applied to the existing walls of Gosport Towers was a system known as the StoTherm Classic render system. No specific issues were experienced with StoTherm following practical completion.

After the conclusion of the refurbishment works, Martlet acquired the Gosport Towers from Kelsey.

In response to the Grenfell Tower fire, Martlet conducted investigations into the Gosport Towers that revealed combustible insulation boards in the cladding system and fire barriers that did not prevent the spread of fire. As a precaution, Martlet implemented a regular fire patrol system known as a “waking watch”.

After further investigations, Martlet decided to remove the entire EWI cladding system and replace it with a new, non-combustible cladding system.

The claim

Martlet subsequently commenced proceedings, seeking damages for:
(a)    Installation breaches: Martlet alleged that the EWI cladding system was defectively installed because the fire barriers at each floor level and insulation boards were inadequately fixed; and 

(b)    Specification breaches: Martlet alleged that the StoTherm system failed to meet the applicable building regulation standards in breach of the Contract.

The claim was brought in respect of four blocks, the claim in respect of the fifth block being time-barred.

Mulalley admitted some of the installation defects, but denied that they caused the need for complete replacement works or the need for the “waking watch”.

The Technology and Construction Court decision

The Court found in favour of Martlet on both of its claims, awarding approximately £8 million in damages, despite the court acknowledging that the design, supply and installation works were largely sub-contracted by Mulalley.

(a)    Installation breaches

The Court relied heavily on the evidence of the experts to satisfy itself that Martlet had fully made out its case with regard to the fire barriers and the insulation boards. In particular, the defective installation was found to breach various building regulations and guidance, with the adhesive technique used (known as ‘dot and dab’), said to create a void between the barrier/insulation and the wall.

(b)    Specification breaches

The Court considered these breaches on a “counter-factual” basis, namely that the StoTherm system was installed without any defects. In doing so, the Court examined the applicable Building Regulations, and found that the installation of the StoTherm system breached the Regulations thus breaching the Contract.

Mulalley attempted to rely on British Board of Agrément (BBA) Certificates to support StoTherm’s compliance with Building Regulations. The Court, however, decided that the Certificates did not sufficiently show compliance and, in any event, they were not a passport to compliance.

(c)    Causation 

The Court undertook a detailed examination of the case law on causation. It noted that Martlet had to show that the breaches were the dominant cause of the repairs and replacement.

Whilst the Court acknowledged that the action necessary to remedy the defective installation (i.e. to repair it) was different from the remedial action necessary to address the presence of combustible cladding (i.e. remove and replace it), Martlet’s decision to remove and replace the cladding was the only sensible way to address both of the problems it faced at that time. The Court concluded that Martlet was entitled to recover the costs of the removal and replacement with a non-combustible alternative.

With respect to the costs incurred for the “waking watch”, the Court emphasised that temporary measures were needed to mitigate the fire safety risk until a permanent solution could be identified and implemented. These costs were not, therefore, too remote to be recoverable.

Comment

This decision comes in the wake of the Grenfell tragedy and following on from the enactment of the Building Safety Act 2022, which came into force in April 2022. While the outcome of the case depended very much on the specific contractual provisions in question, and the applicable Regulations in this instance, the decision does give general guidance on how the courts are likely to approach cladding fire safety issues going forward.

The case serves as a warning to construction companies, designers and architects that it will not be enough in such disputes to rely on the BBA Certificate, nor on the fact that others in the industry were doing the same thing. Instead, a BBA Certificate and industry practice can only be seen as an indication of the potential suitability of materials.

The housing sector should also take note that the costs of “waking watch” patrols were not deemed too remote to be recovered as damages. This is an important finding, given their widespread use.
 

 

Stefanie Johnston

Stefanie Johnston Dual qualified commercial disputes Partner

Tim Foley

Tim Foley Partner & Head of Property

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