Mulalley & Co Limited v Sto Limited and Sto SE & Co KGaA
| Court | High Court of Justice, Business and Property Division, Technology and Construction Court |
| Judge | Mr Justice Constable |
| Judgment | 20 October 2026 |
| Hearing | 16 October 2026 |
| Jurisdiction | England and Wales |
| Claimant | Mulalley & Co Limited, design and build contractor and applicant for default judgment |
| Defendants | (1) Sto Limited, supplier of the external wall system, in administration since 17 January 2025; (2) Sto SE & Co KGaA, parent company and sole shareholder of the first defendant, against which the application was made |
| Case reference | HT-2024-000089 |
| Outcome | Default judgment entered against the second defendant, with the first defendant's contribution under the 1978 Act to be assessed at a hearing after 1 December 2026; any application to set aside to be made within 28 days of service of the order |
Summary
Mulalley & Co Limited paid £10,799,982.33 to Martlet Homes Limited after the TCC found that the overcladding system it installed on Martlet's Towers failed the Building Regulations. It then sued the supplier, Sto Limited, under the Civil Liability (Contribution) Act 1978, relying on the supplier's statutory liability for cladding products under the Building Safety Act 2022, section 149. When Sto Limited went into administration, Mulalley joined its German parent, Sto SE & Co KGaA, and asked the court to make a building liability order against it under section 130. The parent filed nothing.
Constable J refused judgment for the whole judgment sum. That sum was fixed, but the contribution was whatever the court found just and equitable, and whether the parent should bear the supplier's liability was a separate evaluative question under section 130. He entered default judgment with the contribution to be assessed. The ruling is procedural.
Background and facts
In 2005 Mulalley was the design and build contractor for refurbishment of the Towers, overcladding the concrete walls with external wall insulation and render. Sto Limited specified and supplied the StoTherm Classic System, with combustible expanded polystyrene insulation and an organic render. Defects emerged in investigations after the Grenfell Tower fire.
In Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC), HHJ Stephen Davies held after an eight day trial that the system failed functional requirement B4(1). Mulalley's pleading against the supplier claimed a contribution in the amount the court found just and equitable, in respect of the entire judgment sum.
The administration, from 17 January 2025, imposed a moratorium on the claim against Sto Limited. The parent was joined on 16 July 2025 and served in Germany on 20 January 2026. It filed no acknowledgment of service by 10 February 2026 and no defence. Mulalley applied on 13 August 2026.
The issue
Default judgment may be for a specified amount of money or for an amount to be decided by the court. Because the claim also sought a building liability order, Mulalley applied under Part 23, which the judge accepted was right. It argued that its pleading made the contribution the whole judgment sum, so judgment could be entered in that amount. In the alternative it sought judgment with the contribution to be assessed, directions and an interim payment. The application was unopposed.
The decision
The judge reviewed Merito Financial Services Limited v Yelloly [2016] EWHC 2067 (Ch), which read specified amount widely, and Edward v Okeke [2023] EWHC 2932 (KB), where the master below had declined to follow Merito. In the earlier claim between the same parties over a different development, Mulalley & Co Limited v Sto Limited and Sto SE & Co KGaA [2026] EWHC 1552 (TCC), Waksman J entered default judgment for damages to be assessed and Pepperall J later fixed the contribution at 87.5 per cent. Mulalley's attempt to distinguish the earlier pleading failed: both stated the sum with precision.
The judge looked at the substance of the claim, not only the figure. Merito itself had refused judgment for a specified amount on one head of loss for which a specific sum was pleaded.
In reality, it is necessary to separate the Judgment Sum from the contribution sought in respect of it.Mr Justice Constable, paragraph 29
The judgment sum was fixed and identifiable. The contribution, on Mulalley's own pleading and by section 2(1) of the 1978 Act, was the amount the court found just and equitable, and the size of the judgment sum did not answer that. Section 130 then asked whether it was just and equitable to make the supplier's liability the parent's liability too.
That is ordinarily an evaluative judgment for the Court and does not follow merely from Sto Germany's default.Mr Justice Constable, paragraph 29
The order sought fixed the money figure, and that could not yet be done. Even if the pleading did contain a specified amount, the judge would have followed Waksman J's course, because both statutory tests are for the court. The interim payment was not pursued given possible enforcement issues in Germany, but Mulalley obtained a time limit on any set aside application.
In light of the benefit of certainty in the context of enforcement in another jurisdiction, I consider there is justification for requiring Sto Germany to exercise any entitlement to seek to set aside the Order within 28 days of service.Mr Justice Constable, paragraph 32
He expressed no concluded view on whether the CPR wording departs from the old division between liquidated and unliquidated claims.
Practical implications
Where a cladding supplier is insolvent, section 130 lets the claimant ask the court to make its parent answer for the supplier's liability. A parent that ignores the claim does not thereby accept the pleaded figure. The contribution and the order both rest on the court's view of what is just and equitable, and in the earlier claim the assessment needed evidence of loss and produced 87.5 per cent, not a full indemnity.
This is a first instance ruling on an unopposed application. It leaves open the wider meaning of a specified amount of money, but a contribution claim will not ordinarily be one.
Practice points
- Plead a contribution claim for what it is, an amount the court must find just and equitable, and expect any default judgment to be entered with that amount to be assessed.
- Where the claim includes a building liability order or another remedy that is not money, apply for default judgment under Part 23; a request on the prescribed form is not available.
- Have disclosure and witness evidence on quantum and on each party's responsibility for the damage ready before applying; here the order gave Mulalley 28 days to provide it.
- Against a parent abroad, ask for a fixed period for any set aside application, so that enforcement in the other jurisdiction proceeds with certainty.
- Weigh whether an interim payment is worth pursuing where enforcement in another jurisdiction is uncertain.