Rebecca Morjaria and Steven Carey write in Building about liability for defective construction products

Liability for building safety defects is increasingly extending beyond contractors and developers to reach product manufacturers and suppliers. As more claims progress through the courts under the Building Safety Act 2022, companies involved in the manufacture and supply of construction products face growing scrutiny over their role in building safety failures.

Our team advised major family-owned construction and refurbishment company Mulalley on a c.£1.8m claim relating to defective cladding under the Building Safety Act (BSA 2022). The Technology and Construction Court decision in Mulalley & Co Ltd v Sto Ltd and Sto SE & Co KGaA highlights the court's willingness to hold manufacturers financially accountable where defective products have contributed to remediation costs. 

The case resulted in the first building liability order obtained by default judgment and an award requiring the German parent company of a cladding manufacturer to contribute 87.5% of the reasonable costs of replacing a defective system.

The judgment provides important guidance on the court's approach to claims against product suppliers and the apportionment of responsibility across the supply chain. It also demonstrates that manufacturers may face significant liability where the supply of a defective product is accompanied by misleading marketing or conduct extending beyond a purely design-related role.

The decision reinforces the Building Safety Act's objective of preventing manufacturers from avoiding liability through overseas structures or insolvent UK subsidiaries, while offering contractors and developers greater scope to recover remediation costs from others involved in the supply chain.

Rebecca Morjaria, Senior Associate, and Steven Carey, Partner, in our Construction, Engineering & Projects team, write in Building:

For product manufacturers and suppliers, the message is unambiguous: if you place a defective product on the market, the BSA gives the court the tools to hold you financially accountable - even if your UK subsidiary has entered administration or you are based overseas. Corporate structure will no longer provide a shield where a defective product has been placed on the UK market.

Read the full article in Building here.