Short answer

A supplier’s failure to defend a cladding claim does not automatically mean that its parent company must pay the entire amount sought. In Mulalley & Co Limited v STO Limited & Anor [2026] EWHC 2681 (TCC), the court entered default judgment but required a later assessment of the supplier’s contribution before determining the monetary extent of associated-company liability under a Building Liability Order (BLO).

What happened?

Mulalley was the design-and-build contractor for refurbishment of residential towers owned by Martlet Homes. The works included a StoTherm Classic external wall insulation and render system. Sto Limited (Sto UK) provided the specification and materials.

Following investigation of cladding defects, Martlet sued Mulalley. In 2022 the Technology and Construction Court held that the installed system did not satisfy the relevant Building Regulations requirement. Mulalley was ordered to pay Martlet £10,799,982.33, including damages, interest and costs.

Mulalley then pursued Sto UK for a contribution to the same damage under the Civil Liability (Contribution) Act 1978, relying on alleged statutory liability relating to cladding products under section 149 of the Building Safety Act 2022. Sto UK entered administration in January 2025.

Mulalley also sought a Building Liability Order against Sto UK’s parent company, Sto SE & Co KGaA (Sto Germany), under section 130 of the 2022 Act. Sto Germany did not file an acknowledgment of service or defence. Mulalley applied for default judgment, asking principally for a specified sum based on the earlier Martlet judgment, or alternatively judgment with the contribution to be assessed.

What did the court decide?

Mr Justice Constable distinguished a known judgment debt owed by Mulalley from the proportion of that loss recoverable from another party as a statutory contribution.

Under section 2 of the Civil Liability (Contribution) Act 1978, the recoverable contribution must be what the court finds just and equitable having regard to that party’s responsibility for the damage. The amount of the earlier judgment does not, without more, establish that a supplier should pay all of it.

Likewise, section 130 of the Building Safety Act 2022 requires a just-and-equitable decision about extending relevant liabilities to an associated body corporate. The parent's failure to defend did not remove that statutory assessment.

The court therefore entered default judgment while directing a later assessment of the amount of Sto UK’s contribution, before fixing the monetary extent of Sto Germany’s exposure under a BLO. The assessment was to be listed after 1 December 2026, with disclosure and supporting evidence. No interim payment was pursued at the hearing.

Why does this differ from collecting an unpaid invoice?

An ordinary debt claim may concern a fixed amount payable under agreed terms. A contribution claim is different: the claimant may have paid a judgment or funded remediation, but a court must still consider the extent to which the proposed contributor was responsible for the relevant damage.

That can require analysis of the design, product selection, installation, causation, the scope and cost of necessary remedial works, and the conduct of other participants. There is an additional statutory test before an associated company can be made answerable through a BLO.

The absence of a defence may establish procedural consequences, but it does not necessarily eliminate the need for technical and financial evidence or a subsequent hearing.

Why the earlier Mulalley decision is different

In a separate 2026 claim concerning a different development, the TCC assessed Sto’s contribution at 87.5% following consideration of technical and cost evidence. That was a fact-specific assessment; 87.5% is not a standard percentage for other cladding cases.

The October judgment deals with a different project and the appropriate form of default judgment where both contribution and a BLO are sought.

What should contractors and developers do now?

  1. Identify the legal route. Contract damages, contribution under the 1978 Act, statutory construction-product liability and a BLO have different requirements and should not be conflated.
  2. Document the loss carefully. Record the remedial works, related costs, interest and costs claims. Distinguish necessary safety-related repairs from other upgrades or wider refurbishment.
  3. Preserve product and design records. Retain specifications, certifications, test evidence, approvals, site inspection records and communications about substitutions.
  4. Use proportionate technical evidence. Causation, appropriate remediation methods and reasonable costs may depend on expert evidence.
  5. Assess responsibility between parties. Payment by a contractor to a building owner does not automatically make another participant responsible for 100% of that payment.
  6. Investigate the corporate structure. Insolvency of the original supplier may prompt consideration of associated entities, but a BLO requires satisfaction of the statutory conditions, not merely proof of common ownership.
  7. Budget for additional procedure. Even an undefended claim can require disclosure, a quantum assessment and a distinct court determination about extending liability.

What remains unresolved?

The judgment did not finally determine the amount Sto UK must contribute in this project. It did not make an immediate monetary BLO against Sto Germany for the full amount of the earlier Martlet judgment. Nor does it establish that every default judgment requires an assessment hearing; the procedure depends on the nature of the claim and relief sought.

Verifiable sources

Need advice on a live matter?

HQ Law advises on construction defects, remediation contracts, building-safety-related disputes, contractual recovery and technical evidence. The appropriate route depends on the building, contractual relationships, statutory framework and available evidence.

This article provides general information only and is not legal advice on any particular building, contract or dispute. Limitation and procedural deadlines need specific attention.