Marlet Homes Limited v Mulalley & Co. Limited

A design-and-build contractor may be liable for both defective installation and an unsafe specification of combustible external wall insulation. Building guidance must be read in its statutory and contractual context. Although BRE 135 (2003) did not impose a mandatory requirement that every system pass the Annex A performance standard, it gave clear recommendation and advice that combustible EPS and organic render should not be specified for high-rise residential buildings without evidence of compliance, or a satisfactory reason why testing was unnecessary.

Where installation defects and a later fire-safety development each contribute to the need for remedial action, the effective-cause test may apply instead of the but-for test. Recovery remains subject to reasonableness, mitigation, betterment and remoteness principles.

Martlet Homes owned five high-rise residential tower blocks fitted with combustible EPS external wall insulation and organic render by Mulalley under a 2005 design-and-build contract. Following the Grenfell Tower fire in 2017, investigations identified serious defects in the installation of fire barriers and insulation boards. Martlet removed and replaced the cladding and operated a waking watch pending removal.

Martlet claimed approximately £8 million for replacement works and waking-watch costs. Mulalley contended that only limited repairs were required and that the post-Grenfell regulatory environment, rather than any breach, caused the replacement decision. The principal issues were breach of contractual and statutory fire-safety obligations, causation, remoteness, mitigation and quantification.

1. Contractual obligations. The design-and-build contract imposed responsibility for design, specification, materials and workmanship. Clause 2.5.1a imposed an unqualified design and specification obligation, not merely the lower professional-negligence standard in clause 2.5.1.
2. Installation breaches. The fire barriers were installed with dot-and-dab adhesive, leaving voids; there were gaps between barriers; and the dowels were inadequate. The EPS boards were also installed without a continuous perimeter adhesive band and with inadequate mechanical fixings. These defects breached the contract, the Building Regulations 2000, applicable guidance and the BBA certificate.
3. Specification breach. ADB 2002 did not expressly prohibit combustible insulation in non-ventilated overcladding, but required consideration of BRE 135 (1988). BRE 135 (2003) created the Annex A performance standard assessed by BS 8414-1. Its reference to adoption for high-rise residential buildings was a strong recommendation and advice. The StoTherm Classic system had not been shown to meet that standard and the defendant had not established that testing would have shown compliance. The defendant therefore breached the contractual requirement to conform to BRE 135 (2003), and the specified system failed Requirement B4(1).
4. Professional skill and care. A reasonably competent designer could not simply rely on the 1995 BBA certificate. The relevant guidance, the combustible materials, the inadequate fixing details and the availability of safer alternatives required further assessment. The defendant also breached the reasonable skill and care obligation.
5. Causation. The installation defects were an effective cause of the replacement works and waking watch. The but-for test was not determinative because the defects and the changed fire-safety landscape were concurrent effective causes. However, had only the installation breaches been established, recovery would have been capped at the reasonable cost of the repair scheme.
6. Remoteness and mitigation. Temporary fire-safety measures were the type of loss reasonably contemplated from serious fire-safety breaches in high-rise residential buildings. Martlet acted reasonably in investigating, obtaining expert advice, procuring replacement works and maintaining the waking watch. The claim was reduced for betterment and for the unsupported provision of two fire marshals instead of one.
7. Disposition. Martlet succeeded on the specification-breach case and recovered replacement-work and waking-watch costs, subject to final quantification, agreed interest, deductions and the reductions identified in the judgment.