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Who pays for what with cladding claims?

High Court judgment in Martlet Homes Limited v Mulalley & Co Limited [2022]

Buying and selling property

A recent High Court judgment in Martlet Homes Limited v Mulalley & Co Limited [2022] EWHC 1813 TCC considered this very issue in the context of cladding claims.

After Grenfell, the construction industry has been keeping a watchful eye on the landscape of cladding claims and the approach courts are likely to take. Many developers, housing associations and other landlords of tower blocks are still assessing their position in relation to potentials claims they may have since the significant changes have come into place to enhance and ensure the safety of buildings to prevent such disasters occurring again.

Many building owners/landlords are considering what they can claim for in terms of their buildings defective cladding system.

“Gosport Towers” are owned by Martlet Homes Limited (“Martlet”) and between 2005 and 2008 they were refurbished under a design and build contract made in 2005. Mulalley & Co Limited (“Mulalley”) was responsible for the design and execution of the works which included the completion of the design and selection of materials for the external wall system. The external wall systems and the insulation materials used within them particularly came into the spotlight post Grenfell.

Martlet conducted inspections on Gosport Towers commencing in June 2017 which revealed the existence of combustible expanded polystyrene which created a fire risk and the spread of fire. Furthermore, defects relating to Mulalley’s workmanship were revealed on subsequent inspections relating to the fire barriers.

Given the issues found Martlet made the decision to replace the entire external wall system with a new non-combustible cladding system. Mulalley argued that the installation defects found did not justify the wholesale replacement of the external wall system and that less expensive repairs could have been undertaken.

Despite the defences raised Martlet succeeded in recovering the full replacement costs and the costs of the waking watch. The decision the court made shows that it can clearly find a creative path of awarding full replacement costs by referring to the relevant Building Regulations in place for external wall systems at the time of design and construction even if the wording is advisory rather than mandatory. The judge noted that such advice contained a clear recommendation, therefore amounting to a strong exhortation and that any reasonable contractor would comply with that advice. The failure by Mulalley to follow such advice meant that the judge was able to find that the full replacement costs of the external wall system were recoverable by Martlet.

Whilst this case can be construed as a landmark case it should be read with caution. Not all cladding cases will be the same and each case will be dependent upon its own facts. There will be many ways of designing and constructing external wall systems with compliant fire proofing barriers and lots of varied materials will have been used from different suppliers by different contractors. It does confirm, however, that the cheapest solution is not necessarily the best option. As is always the case in construction the need to keep an extensive paper trial of all decision-making processes will help in showing that the decision to follow a particular remedial solution was reasonable in all the circumstances in the case.

If you are a landlord, local authority or housing association and you would like to discuss a potential claim you are facing please use our site to find a solicitor who specialises in property law, as you will need professional advice based upon your particular circumstances.