Construction firms that built blocks with flammable cladding are likely to face a slew of litigation from leaseholders and building managers after a key case went against a contractor, legal experts have said.
Housing association Martlet Homes last week won an £8m case against contractor Mulalley in which the judge condemned “endemic complacency” in the construction industry over cladding fitted prior to the Grenfell Tower fire in 2017.
Judge Stephen Davies said builder Mulalley had to pay both to replace the cladding and for the waking watch that Martlet had employed as a fire safety measure.
This came despite the external wall insulation having been fitted between 2005 and 2008, long before the Grenfell fire.
Anna Comerford, associate solicitor at law firm Mansfield, said the ruling meant “the potential costs for the construction industry and building management companies alike are not going to be insignificant as forensic architects and solicitors are instructed to assist”.
The decision on recovery of waking watch costs meant developers could be pursued by the building management companies that organise these, rather than by leaseholders.
She said: “Developers are required to fix buildings they had a role in developing or refurbishing even if they no longer own the building and management companies continue in their efforts to pursue developers, warranty providers and other third parties for costs.
“This is likely to affect the speed at which the works are going to be undertaken and create a shift in legal instructions from leaseholders to the management companies who are trying to attribute liability to historic claims, to establish if construction companies, architects and other third parties are still trading, [who] their insurance companies [are] and whether cover extends to this.”
David Savage, partner and co-lead of the construction and infrastructure sector at law firm Charles Russell Speechlys, said: “Although clearly fact-specific as any case is, this is an interesting and important case, for fairly obvious reasons given the number of similar points being taken in relation to Grenfell-related fire safety remediation cases currently.
“In particular, I would anticipate many will note the awarding of the ‘waking watch’ costs and the failure of the ‘it was an upgrade’ argument.”
Savage said the construction industry had suffered an “unflattering outcome arising from the evidence heard at the Grenfell public inquiry, [so] there will be many who will be pleased to see this first decision go the way that it did”.
“But that does not mean other decisions will necessarily go the same way. Judges will always seek to apply the law to the facts as they determine them,” he added.
Colin Jones, partner for construction and engineering at HCR Solicitors, said: “The company said it was working at a time when the regulations were different so it should not be responsible, but the court said it should have looked forward.
“This is going to have an impact, because it means people can’t hide behind what the rules were pre-Grenfell.”
Alex Delin, a senior associate at solicitor Fieldfisher, said: “Any individual or corporate entity with a legal interest in property which has been affected by fire safety concerns will be encouraged by the decision… not least because the budget of a replacement scheme as well as waking watch costs were deemed recoverable.”
He said it was also significant that Martlet had been allowed to dispute the specification of the cladding system, not just installation defects.
The judgement may, though, lead to a large increase in legal actions but not to actual court cases, Jones thought.
“Most [disputes] are settled by mediation or by agreements and the courts tend to get angry if a case comes to them where those routes have not been tried,” he said.