Since the tragedy at Grenfell in June 2017, claims surrounding fire safety of buildings have become commonplace. For this reason, the TCC’s judgment in Martlet Homes Ltd v Mulalley & Co Ltd – the first decision of its kind since Grenfell to address fire safety defects - was hotly anticipated.
The claimant Martlet Homes Ltd is the owner of five tower blocks in Gosport. It was seeking to recover £8 million in damages from the defendant building contractor, Mulalley & Co Ltd. The damages included the cost of investigating and remedying, by removal and replacement, combustible external wall insulation rendered cladding, in addition to the cost of associated interim measures.
The external wall system had originally been fitted by Mulalley between 2005 – 2008. It was not until after the Grenfell tragedy that investigations revealed fire barriers and insulation boards had been defectively installed, and concerns were raised about the use of combustible insulation.
Martlet’s claim against Mulalley comprised two broad categories of breach:
- There were the ‘installation breaches’, in relation to the workmanship failings in respect of the fire barriers, and separate issues surrounding the installation of the insulation panels.
- There was the ‘specification breach’, where it was alleged that the cladding system failed to comply with the Building Regulations at the time of the contract.
The history behind the two categories was that while Mulalley had previously admitted that some of its workmanship was defective, it maintained that its breaches had not caused Martlet any loss. Mulalley argued that the insulation, while compliant with the Building Regulations in force at the time of the project, was not now compliant with the current regulations. Therefore, it argued that the insulation would have needed to be replaced now in any event. Martlet denied this causation defence and, in its reply, argued in the alternative that Mulalley was in breach of contract for originally specifying combustible insulation.
The court found that while there were installation breaches, the damages that followed, had the claim succeeded only on that basis, would be confined to a repair scheme only. Damages for the full replacement scheme would not have been recoverable. Fortunately for Martlet, the court upheld the specification breach, and it was therefore able to recover the cost of the full replacement scheme.
There is naturally a lot of interest in this judgment. Part of the reason for this is that it provides much-wanted guidance for parties involved in similar disputes. This of course comes with the caveat that each case will turn on its particular circumstances.
Nonetheless three key issues that arose will have a significant influence on other fire safety claims.
- ‘Everyone else was doing it’
As the saying goes, ‘When the herd moves, it moves’. The court gave short shrift to any suggestion that the mere fact that an opinion or practice was widespread at the time will be a defence. The court made clear that, ‘A defendant is not exonerated simply by proving that others …[were] … just as negligent.’ A practice must have a logical and rational basis to be defensible.
- Burden of proof
In most civil claims the burden of proof is on the claimant. In this case, Mulalley argued that Martlet had not proven that the system would not have passed a BS 8414 test (and so complied with the Building Regulations), by undertaking such a test. Mulalley had also not done so. The court noted that either party could have done so and in effect treated this issue as a defence argument; a way in which Mulalley could have disproved the claim. Accordingly, in the absence of testing by either party, the court was unwilling to find that it was probable that the system would have passed. Accordingly, Mulalley could not escape liability simply by saying Martlet must prove the system would have failed.
Notwithstanding its findings on the specification breach, the court considered what would have happened if only the case in respect of installation breaches had succeeded and so Mulalley was only responsible for the cost of a repair scheme. This would have been significant because no such scheme was undertaken. The whole system was replaced. Mulalley argued that the court would have to be satisfied that, ‘but for’ the installation breaches, the cladding would not have been replaced. Mulalley stated that the test could not be satisfied here, because the cladding would have had to have been replaced due to the changed fire safety landscape.
The court confirmed that this was a case where the ‘effective cause’ test for causation could be applied in place of the ‘but for’ test. It recognised that adopting the latter would (hypothetically) result in Martlet not recovering any damages. The adoption of the effective cause test is significant and provides flexibility for building owners. It means, for example, that just because a particular defendant’s breaches could have been remedial by localised repairs, that they will not escape all liability if a wider remedial scheme is undertaken for other reasons. Their liability will however be capped by reference to the cost of rectifying the defects for which they are responsible.
Those bringing fire safety claims will take some comfort from this judgment. The court has arguably shown a receptiveness to such claims that could improve the prospects of success. It should also be borne in mind that claimants also benefit from the Building Safety Act 2022. This extends the limitation period for claims under the Defective Premises Act 1972, and introduces building liability orders which allow liability for construction work to be extended to associated entities such as parent or sibling companies. It may be fair to suggest that as things stand, in the context of fire safety claims, claiming parties currently have the rub of the green.