Cladding claims: a vital result revisited

Stuart Pemble summarises the most recent judicial analysis of cladding claims following the Grenfell tragedy Key point The latest High Court judgment on cladding claims is an important read for everyone in the industry Back in March (“Cladding cases: a result of some significance”), Legal Notes considered the Court of Appeal’s judgment in Mulalley & Co Ltd v Martlet Homes Ltd [2022] EWCA Civ 32; [2022] PLSCS 16, which allowed Martlet to amend its pleaded case outside the normal limitation period. Judge Stephen Davies’ subsequent decision in Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC) saw the High Court consider the underlying merit of Martlet’s claim. Martlet is a housing association which owns five tower blocks in Gosport (designed and built between 2005 and 2008), and sought damages from Mulalley because the cladding used consisted of highly flammable expanded polystyrene (EPS) wall insulation and the mineral wool fire barriers used had been defectively installed. The judge decided the case in Martlet’s favour. He agreed the cladding system specified and installed did not comply with the fire safety standards at the time the towers were designed and built. As such, Martlet was entitled to the costs of removing and replacing the cladding, as well as compensation for the waking watch it had maintained at the site following the discovery of the EPS, and not just (as Mulalley had argued) the lesser costs associated with a proposed repair scheme for the cladding. He also rejected Mulalley’s argument that the decision to replace rather than repair arose not out of Mulalley’s breaches of contract, but the changed landscape following the Grenfell Tower tragedy. Key to this was the judge’s conclusion that Mulalley was responsible for specifying the cladding as well as its installation. Had the judge decided that it was only responsible for the installation, damages would have been limited to the cost of repairing the cladding rather than of replacing it. An important decision Judge Davies was keen to stress that his judgment turned on the specific contractual provisions and standards applicable at the time the towers were built, as well as the arguments advanced by both sides and the factual evidence before the court. Notwithstanding that caveat, I cannot help but feel that the case is of significant importance. It covers a wide range of critical issues. First, and with apologies if this is stating the obvious, it hints at a judicial approach (first suggested by the Court of Appeal’s earlier judgment) that will be supportive of cladding claims (where the facts permit such support). Indeed, in the context of whether or not the waking watch costs were recoverable, the judge had strong words for the industry, commenting on the “culture of endemic complacency in 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”. Second, the judge considered the well-established principle for professional negligence decided in Bolam v Friern Hospital Management Committee [1957] 2 All ER 118: a professional cannot be negligent if they act in accordance with a practice accepted at the time as proper by a responsible body of similarly-skilled professionals, even though other professionals might adopt a different practice. Judge Davies effectively dismissed the argument that Mulalley could not be negligent in relation to the design, specification and installation of the EPS cladding because “everyone else was doing it” at the same time. He agreed with Mr Justice Edwards-Stuart’s comment in 199 Knightsbridge Development Ltd v WSP UK Ltd [2014] EWHC 43 (TCC); [2014] PLSCS 74 that “a defendant is not exonerated simply by proving that others… [were]… just as negligent”. Third, and of particular relevance to parties drafting and negotiating amendments to JCT design and build contracts, the judge considered the meaning of a clause which seemed to establish two contradictory positions. First, it imposed a duty of skill and care (assessed by reference to an “architect or… other appropriate professional designer holding himself out as competent to take on work for such design”) on Mulalley. It then continued: “In addition to the foregoing, the contractor hereby accepts responsibility for the design of the works and every part thereof and for the selection and standards of all and any materials, goods and workmanship.” On one hand, there was a qualified obligation on Mulalley by reference to skill and care but, on the other, there was an absolute one. Following Lord Neuberger’s judgment in MT Højgaard v E.ON Climate and Renewables UK Robin Rigg East Ltd and another [2017] UKSC 59 (“Construction contracts: The €26.25m wind farm question”), the preferred approach was to treat the less demanding obligation as imposing a minimum requirement rather than qualifying the more demanding wording. Also, the use of the phrase “in addition to the foregoing” made it clear that the lesser obligation did not qualify or limit the absolute wording. There is also a detailed judicial analysis of key parts of the Building Regulations, British Standards and Building Research Establishment reports, with which the contract again required strict compliance. The analysis will be of interest to contractors and consultants and highlights one of the issues that has plagued the industry following Grenfell. The drafting of the regulations and standards is technical, detailed and complicated. If it takes a distinguished judge just under 100 paragraphs to summarise the key principles and obligations regarding fire safety, then I cannot help but think that those principles and obligations need to be made clearer and more concise. Stuart Pemble is a partner at Mills & Reeve Photo © Guy Bell/Shutterstock