A High Court ruling in a substantial building safety dispute has examined when a claimant can obtain default judgment for a specified sum and when the court must instead assess the amount recoverable. The decision arose from Mulalley & Co Limited’s claim against the German parent company of a cladding system supplier.
What did the High Court decide?
In Mulalley & Co Limited v STO Limited & Anor [2026] EWHC 2681 (TCC), Mr Justice Constable considered Mulalley’s application for default judgment against the second defendant, Sto SE & Co KGaA, referred to in the judgment as Sto Germany.
The application arose after Sto Germany failed to file an acknowledgment of service or a defence within the relevant period. Mulalley sought judgment for a specified amount, relying on a previously established judgment sum of £10,799,982.33, or alternatively an order requiring damages to be assessed.
The court concluded that the amount of Sto UK’s contribution under the Civil Liability (Contribution) Act 1978 needed to be assessed before the monetary extent of the liability to attach to Sto Germany could be determined. Default judgment was to be entered, with further directions for the assessment.
Background to the cladding dispute
Mulalley had been engaged in 2005 as the design and build contractor for refurbishment works to residential towers. The work included external wall insulation and a render finish using the StoTherm Classic System, supplied by Sto UK. The system included combustible expanded polystyrene insulation and an organic render.
Following investigations after the Grenfell Tower fire, defects were identified in the cladding works. In Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC), the court found that the system did not comply with the relevant functional requirement of the Building Regulations. Mulalley was ordered to pay Martlet Homes Limited £10,799,982.33, including damages, interest and costs.
Mulalley subsequently pursued a contribution claim against Sto UK, relying on its alleged liability in respect of the same damage under section 149 of the Building Safety Act 2022 and the Civil Liability (Contribution) Act 1978.
The central issue was whether the previously identified judgment sum could automatically be treated as the amount of the contribution recoverable from Sto UK and then attached to Sto Germany through a building liability order.
Why was default judgment sought?
Sto UK entered administration on 17 January 2025, and the claim against it became subject to a statutory moratorium. Mulalley obtained permission to join Sto Germany to the proceedings in July 2025. Sto Germany was identified in the judgment as Sto UK’s parent company and sole shareholder.
Service on Sto Germany was completed on 20 January 2026. The deadline for filing an acknowledgment of service was 10 February 2026. The company did not file one and had not served a defence when Mulalley applied for default judgment on 13 August 2026.
Under the Civil Procedure Rules, the court must be satisfied that the relevant claim documents have been served, the applicable response period has expired, and the other conditions for default judgment are met. Mr Justice Constable accepted that the necessary procedural conditions had been established on the evidence before him.
Why was the contribution not fixed immediately?
The court considered the meaning of a “specified amount of money” under CPR Part 12, including the distinction between a claim pleaded for a fixed sum and a claim where the amount must be determined through a further assessment.
Mulalley argued that because its particulars of claim identified the entire judgment sum, default judgment could be entered for that figure. The judge rejected the argument that identifying a fixed underlying loss necessarily fixed the contribution payable by Sto UK.
Section 2(1) of the Civil Liability (Contribution) Act 1978 requires the contribution to be the amount the court considers just and equitable, having regard to the extent of the relevant party’s responsibility for the damage. That assessment is distinct from identifying the total sum previously paid to the building owner.
The court also considered earlier decisions concerning specified amounts and damages to be assessed, including Merito Financial Services Limited v Yelloly, Edward v Okeke and an earlier Mulalley and Sto judgment. The judge did not consider it necessary to resolve the broader disagreement over whether the CPR’s wording was intended to depart substantively from the older distinction between liquidated claims and unliquidated damages.
What does the building liability order involve?
Section 130 of the Building Safety Act 2022 empowers the court to make a building liability order where the statutory conditions are met and it considers such an order just and equitable. The application sought to make Sto Germany liable in respect of Sto UK’s relevant liability.
Mr Justice Constable explained that Sto Germany’s failure to defend the proceedings did not, by itself, settle every evaluative question required for the order. The court had to distinguish the underlying contribution liability from the separate question of whether that liability should attach to Sto Germany under section 130.
Because the contribution amount had not yet been assessed, the court could not determine the monetary extent of the liability to attach to Sto Germany at this stage.
Implications for construction disputes
The decision highlights the importance of distinguishing between the total amount of a loss and the contribution legally recoverable from another party. Even where a claimant identifies a precise figure in its pleadings, the applicable statutory test may require the court to undertake a further assessment.
For parties involved in building safety litigation, the ruling also demonstrates that default judgment does not necessarily determine every element of the relief sought. Where legislation requires the court to assess responsibility or decide whether a further order is just and equitable, those issues may still require judicial consideration.
The court directed that the assessment hearing should be listed on the first available date convenient to those concerned after 1 December 2026. Mulalley was to provide disclosure under Model B and/or witness evidence in support of its claim within 28 days, in accordance with the order. Any application by Sto Germany to set aside the default judgment was to be made within 28 days of service of the order.
Frequently asked questions
What is the case Mulalley v STO about?
It concerns a claim for a contribution arising from a defective cladding system and an application to attach the relevant liability to Sto Germany through a building liability order.
How much was the underlying judgment sum?
The judgment sum in the earlier claim by Martlet Homes Limited against Mulalley was £10,799,982.33, including damages, interest and costs.
Why did the court order an assessment?
The contribution under the Civil Liability (Contribution) Act 1978 must be determined by reference to what is just and equitable, considering the party’s responsibility for the damage. The underlying judgment sum did not automatically establish that contribution.
Did the court decide the final amount Sto Germany must pay?
No. Default judgment was to be entered, but the amount of Sto UK’s contribution had to be assessed before the monetary extent of any liability attaching to Sto Germany could be determined.
Which legislation was central to the decision?
The judgment considered the Civil Liability (Contribution) Act 1978, the Building Safety Act 2022 and the Civil Procedure Rules governing default judgment.