There has been a significant decision from the Technology and Construction Court in Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC) (14 July 2022) which will be highly relevant to parties involved in cladding claims.
The Facts
Martlet Homes Ltd (“Martlet”) is the owner of high rise concrete tower blocks in Gosport, originally built in the 60s and which were acquired by Martlet from Kelsey Housing Association in 2017.
In 2006-2008, the towers where subject to a cladding installation by Mulalley & Co Ltd (“Mulalley”) which added a StoTherm Classic render system (“the StoTherm System”) to its elevations.
Following the Grenfell tragedy, investigations revealed various defects. Faced with an unacceptable fire safety risk, Martlet removed the combustible StoTherm System and replaced it with a non-combustible cladding system.
This was a claim for the significant cost incurred by Martlet for the cladding replacement scheme and a waking watch in the interim whilst such works were completed.
The Contract
The relevant contract (which appears to have been assigned by Kelsey to Martlet) included amendments so that Mulalley was responsible for the design as well as the execution of the works, including the completion of the design and the selection of the specifications.
The contract also required compliance with the Building Regulations and included additional provisions in relation to Statutory Requirements, Codes of Practice, British Standards, and critically, the latest “requirements, directions, recommendations and advice”.
The parties’ positions
Martlet’s position was presented in terms of:
a) Installation Breaches” – failure to fit insulation boards with a continuous adhesive and using dowels of insufficient length” ; and
b) an alternative “Specification Breach” – that even if there had been no Installation Breaches, the StoTherm System should not have been specified as it did not comply with the contract.
Mulalley accepted there were defects in the installation of the cladding but denied that they were such as to justify the actual replacement works carried out or the need for a waking watch. Its position was that the real cause of the replacement works was the increased fire safety standards following Grenfell and argued that a more limited “repair scheme” was the extent of its liability.
Technical requirements/standards
HHJ Steven Davies considered various technical standards which will be relevant to many in the construction industry dealing with similar cases, including the Building Regulations 2000 and the related Approved Documents, which provide practical guidance with respect to the requirements of any provision of building regulations.
Of relevance in this case, Approved Document B contained a paragraph 13.7 in connection with external wall construction which provided that “advice on the use of thermal insulation material is given in the BRE Report Fire performance of external thermal insulation for walls of multi-storey buildings (BR 135, 1988) (which had been updated to BR 135 2003 and which was accepted by the parties as being the applicable version).
Mulalley argued that there was no Specification Breach as BR 135 (2003) was not mandatory and it was reasonable for Mulalley to rely on a “British Board of Agrement Certificate” that was available for the StoTherm System.
The Decision
It was held that the Installation Breaches claim had been fully made out.
The position in relation to the Specification Breaches was more complex. The Specification Breach was important for Martlet as if this was not established, the full cost of replacement would not in principle be recoverable.
Of critical significance was interpretation of BRE 135 (2003). It was held by HHJ Steven Davies that BRE 135 (2003) created a performance standard which was to be found in its Annex A and which was to be assessed through the tests to be undertaken in accordance with BS 8414-1.
The BS 8414-1 test is often referred to as a “large scale test” whereby the cladding system is built in mock up form and set fire to, mimicking a fire breaking out of a window and exposing a cladding system to a severe fire.
A reasonably competent designer specifier should have been aware that BRE 135 (2003) contained advice to avoid specifying a product such as the StoTherm System (which contained combustible insulation and combustible render) for a high-rise residential building unless there was evidence that it met the Annex A performance criteria via a BS 8414-1 test. They would not have been satisfied that the StoTherm System conformed with all of the general and system specific design principles contained within BRE 135 (2003).
Although the wording of BRE 135 (2003) is advisory and not mandatory, the judge noted that the advice contained a “clear recommendation” and a “strong exhortation” and that any reasonable contractor would comply with that advice.
The Court concluded that Mulalley had failed to follow the advice, and that failure to comply with BRE 135 recommendations/advice also amounted to a failure to comply with functional requirement B4(1) of Schedule 1 of the Building Regulations. This meant that Mulalley was also in breach of its contractual requirement to comply with statutory requirements.
Everyone else is at it
There was consideration of evidence from Mulalley that at the time the “typical designer specifier” would regularly specify the StoTherm System even for high-rise residential buildings (on the basis that it had a valid “BBA Certificate“). The court made short shrift of this. This was not a get out of jail free card – “A defendant is not exonerated simply by proving that others … [were] … just as negligent” .
Causation
In order for loss to be recoverable, causation must be established between the breach and the loss, that is that the loss would not have been incurred were it not “but for” the breach. Mulalley’s position was that the but for test could not be satisfied because the cladding would have been replaced anyway due to the changed fire-safety landscape.
However, Martlet’s position was that the correct legal test was the “effective” cause test (rather than the but for test). The court agreed with Martlet that the effective cause test was correct here. Whilst the breach had to be an effective cause of the loss, it did not have to be the only cause.
Conclusion
This is no doubt the first of many cases which will examine the relevant technical standards/guidance in detail.
As with most cases, the decision is relevant to its specific facts but it is useful in providing some clear guidance at to how the Building Regulations will be interpreted and particularly the standard by which “reasonably competent designers” will be judged. There are often arguments as to the application of Approved Document B, given that it is not mandatory, but this case shows how it (and BR 135) are likely to be interpreted when considering the actions of designers.