Contractor ordered to pay £8m legal bill for cladding defects

A housing association has won an £8m legal claim for cladding defects against construction firm Mulalley.

The judge in the case condemned “endemic complacency” in the construction industry over cladding fitted prior to the Grenfell Tower fire in 2017.

Martlet Homes, part of Hyde Housing Group, brought the case over five tower blocks in Gosport, Hampshire.

The claim was for its costs in investigating and replacing combustible external-wall insulation fitted by Mulalley between 2005 and 2008, under a design-and-build contract, and for providing a ‘waking watch’ fire-safety service. The cladding was manufactured by Sto.

Judge Stephen Davies said in his judgement that Mulalley admitted to some defects in the cladding installation, but denied these justified their complete replacement or the need for the waking watch.

Mulalley argued that the real cause for the replacement works and waking watch was Martlet’s realisation, triggered by the Grenfell Tower fire, of the risk posed by the combustible external-wall insulation cladding, which did not meet the heightened fire-safety standards.

The rules came into place only weeks after the works were completed on the tower blocks.

In a lengthy judgement, Judge Davies said Martlet succeeded in its whole claim, and he ordered that the exact level of damages should be calculated “once the quantity surveyors have translated my findings into figures”.

He said: “I am prepared to accept that, prior to Grenfell, there was no widespread knowledge or understanding within the construction sector that the risk to fire safety, where combustible external cladding was found on a high-rise residential tower block, was so great that a waking watch would be required until it was removed.

“However, this seems to me to reflect more what was clearly a culture of endemic complacency within the construction sector about the true nature and extent of the fire-safety risk associated with the use of combustible external cladding on high-rise residential tower blocks.

“[Opposed to] any reasoned assessment that the risk could never be sufficiently high to justify the provision of temporary additional fire-safety precautions if serious fire safety-related defects were discovered in such a building.”

The judge said a “sensible company” in Mulalley’s position should have “applied its mind in 2005 to the probable consequences of there being a serious fire-safety risk in the Gosport towers as a result of the use, in breach of the Building Regulations and the contract, of combustible EPS insulation in the external-wall insulation cladding and/or widespread and serious installation defects”.

Law firm Norton Rose Fulbright, which acted for Martlet, said the case was the first High Court judgement on a claim concerning fire-safety defects in cladding on a high-rise building since the Grenfell Tower disaster.

It said the ruling had wider implications for the construction, property and insurance industries “as it offers much-needed guidance on the court’s approach to numerous significant issues affecting the hundreds of cladding disputes”.

Norton Rose Fulbright partner Simon Ramsden said: “We’re extremely proud of the role our team played in delivering this outcome on behalf of the Hyde Group, which we hope will promote the resolution of the many cladding-related disputes, thanks to the court’s guidance delivered today.”

Last month, ministers announced plans to ban cladding of the type used on Grenfell Tower from being used on any building in England.

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