Mulalley & Co Limited v Sto Limited & Anor

On an assessment of damages following default judgment, the claimant must prove the loss by evidence. The assessment proceeds on the basis of the liability pleaded and established by the judgment; the defendant cannot advance a case inconsistent with that liability.

For a contribution under section 2(1) of the Civil Liability (Contribution) Act 1978, the court must reach a just and equitable figure having regard to both the seriousness of the parties’ faults and their causative relevance. In assessing remedial costs, actual expenditure is an appropriate starting point, subject to evidence of reasonableness and causation. A contractor’s contribution for an inherently defective cladding product was assessed at 87.5%.

Mulalley had undertaken refurbishment works, including external cladding, at Parkside Court. Following the Grenfell Tower fire, the cladding system was found to be defective. Mulalley settled its liability to the building owner by agreeing to remove and replace the cladding and pay associated sums.

Mulalley pursued a contribution claim against Sto Limited under the Building Safety Act 2022. After Sto Limited entered administration, Mulalley also pursued Sto SE & Co. KGaA for a building liability order under section 130. Waksman J entered default judgment against Sto Germany on 8 December 2025, leaving the assessment of damages for determination.

The central issues were the costs actually incurred, causation, reasonableness, and the just and equitable proportion of the loss payable by Sto Germany.

1. Judgment was entered for Mulalley against Sto Germany in the sum of £1,772,312.17, representing 87.5% of the recoverable remedial costs.

2. Default judgment established the right to damages, but the assessment was not made by default. Mulalley had to prove its loss by evidence. The assessment had to proceed consistently with the liability pleaded and established by the judgment. The court therefore assessed only costs caused by the pleaded defects.

3. The evidence established total incurred costs of £3,431,633.53. After removing costs unrelated to the defective Sto render and legal costs incurred in achieving the settlement, the reasonable remedial costs were £2,025,499.62. Actual costs were the appropriate starting point, but the court considered expert evidence on reasonableness. There was no evidence of gold plating or of a cheaper alternative technical solution.

4. Under section 2(1) of the Civil Liability (Contribution) Act 1978, the contribution had to be just and equitable having regard to the seriousness of the respective faults and their causative relevance. The principal cause was Sto’s marketing and supply of an inherently defective cladding product. The product failed to comply with functional requirement B4(1) and regulation 7 of the Building Regulations, and the defects required replacement of the fire barriers.

5. Taking the matter in the round, the appropriate contribution was 87.5%. Interest was awarded at 1% over base on the relevant sums, with interest at the Judgments Act rate on the unpaid interim payment. Costs were payable on the standard basis, with £175,000 awarded on account under rule 44.2(8) of the Civil Procedure Rules 1998.

This was a first-instance assessment following default judgment against Sto SE & Co. KGaA entered by Waksman J on 8 December 2025. The present court assessed damages and made consequential orders for interest and costs.