Legal Developments in construction law July 2026

1. Court delivers first judgment on defective cladding product claims under s149 of the Building Safety Act

In Mulalley & Co. Limited v Sto Limited & Sto SE & Co. KGaA [2026] EWHC 1552 (TCC), the High Court assessed for the first time the quantification of a contractor's contribution claim against the supplier of a defective external cladding system.

Mulalley & Co. Limited ("Mulalley") was engaged in 2006 to carry out refurbishment works at Parkside Court, a residential tower block in Chelmsford, Essex.  Mulalley subcontracted cladding installation specifying use of the StoTherm Classic System supplied by Sto Limited ("Sto").  Following the Grenfell fire in June 2017, the cladding was identified as defective. Mulalley entered into a settlement agreement with the building owner to remove and replace the cladding.  Mulalley then pursued a contribution claim against Sto pursuant to s.149 of the Building Safety Act 2022 (the "BSA").  As Sto entered administration in January 2025, Mulalley also pursued Sto's German parent company, Sto SE & Co. KGaA ("Sto Germany"), for a building liability order under s.130 of the BSA.  Sto Germany elected to take no part in the proceedings and default judgment was entered in December 2025. 

In assessing quantification of the claim, several key issues were considered by the Court:

• Assessment of Damages: The Court confirmed that the claimant must still prove its loss by evidence, notwithstanding default judgment. 
• Costs Incurred: The Court accepted Mulalley's expert evidence who assessed the total costs incurred at £3,431,633.53, after deductions for preliminaries, subcontractor costs, and consultancy and legal fees.  
• Causation: As the remedial works extended beyond the defective cladding, the Court applied a causation analysis, determining that the Sto render accounted for 85.83% of the works to the external walls and 69.03% of the overall development, reducing the recoverable sum to £2,025,499.62.   
• Reasonableness: Citing Martlet v Mulalley [2022] EWHC 1813 (TCC), the Court held that courts are "generally reluctant to criticise, with the benefit of hindsight, the reasonableness of the claimant's expenditure on remedial works".  The Court accepted the expert's evidence that he could find no evidence that costs were improperly or unreasonably incurred or that there was a cheaper alternative method of rectification. 
• Contribution: The contribution claim was pursued under s.149 of the BSA, read together with the Civil Liability (Contribution) Act 1978.  The Court assessed the "just and equitable" contribution by reference to both the seriousness of the respective parties' faults and their causative relevance. Adopting an analogy to architect/contractor contribution cases (typically 67%–80%) and recognising that the principal cause was Sto's marketing and supply of an inherently defective product, the Court fixed a higher contribution at 87.5%. 

The Court awarded Mulalley £1,772,312.17 (being 87.5% of £2,025,499.62), together with interest at 1% over base rate.  Costs were awarded on the standard basis, with £175,000 on account. 

Key points for the UK Construction Industry:

• s.149 BSA contribution claims are possible against product suppliers of defective building products although the viability of such claims is likely to be case specific and dependent on several factors including the supplier/manufacturer's conduct. 
• s.130 of the BSA enables Building Liability Orders to be pursued against a parent company, including foreign entities.  
• Robust evidence is essential — even where default judgment has been entered, the claimant must prove its loss through detailed factual and expert evidence.  
• Where remedial works extend beyond the specific defect, only those costs causally connected to the defendant's breach are usually recoverable.   
• Courts will not readily challenge reasonable expenditure.  
• High contribution levels are achievable against product suppliers — where the supplier was the designer and manufacturer of an inherently defective system.

Mulalley & Co Ltd v STO Ltd & Anor [2026] EWHC 1552 (TCC) (22 June 2026)

2. Adjudication enforcement in light of failure to consider a "binding" email agreement to alter completion dates

The decision in Clerkenwell Lifestyle (UK) Limited v HG Construction Ltd [2026] EWHC 1406 (TCC), considered the enforcement of an adjudicator's decision on liquidated damages and extensions of time under an amended JCT Design and Build Contract 2016 (the "Contract").

The dispute arose from the design and construction of a hotel and residential apartments in Clerkenwell, London (the "Works").  The employer, Clerkenwell Lifestyle (UK) Limited ("Clerkenwell"), issued Part 7 proceedings to enforce an adjudicator's decision awarding it £955,943.43 in liquidated damages.  The contractor, HG Construction Limited ("HG"), issued Part 8 proceedings seeking declarations that: (i) an exchange of emails on 8 February 2023 constituted a binding agreement to revise the contractual completion dates; and (ii) the adjudicator's decision was unenforceable for breach of natural justice and/or lack of jurisdiction.

HG's case centered on four arguments:

• that the email exchange of 8 February 2023 between the Employer's Agent and HG created a binding agreement fixing revised completion dates, separate from the contractual extension of time mechanism;
• that the adjudicator breached natural justice by failing to consider this alleged binding agreement as a material defence;
• that the adjudicator lacked jurisdiction to "go behind" the allegedly agreed dates;
• that it would be unconscionable to enforce the decision on this basis.

Mrs Justice Jefford rejected HG's case on all grounds:

• No binding agreement by email: The Court held that the word "agree" in the emails was used in the sense of being willing to grant an extension, not to create a free-standing legal agreement outside the Contract.  The proposals in the 8 February email were part of a more complex set of arrangements (including matters relating to a separate office contract), several of which were expressed only as agreements "in principle".  The parties were operating the contractual extension of time mechanism, not entering into a separate binding contract.  The Court also noted that if such an agreement existed, it would be too uncertain to enforce and that the Employer's Agent lacked authority under Article 3 of the Contract to enter into an agreement varying the completion dates.
• No breach of natural justice: The defence of a binding agreement was not raised in HG's Response in the adjudication.  At most, paragraph 28 of the Response quoted the email without asserting it constituted a binding agreement. HG's own expert proceeded on the basis of the original contractual completion dates as the baseline.  The Adjudicator was not required to identify and consider a defence that had not been advanced.
• No lack of jurisdiction: HG admitted the scope of the dispute referred and engaged fully with the adjudication on that basis.  The jurisdictional argument was not pursued at the hearing.

As a result of the Court's findings above, Clerkenwell's Part 7 application for summary judgment enforcing the Adjudicator's decision was granted and both HG's Part 8 declarations were refused.

Key points for the UK Construction Industry:

• An informal email exchange, even one using the language of "agreement", will not readily be construed as a binding contract to vary completion dates where a building contract has a contractual extension of time mechanism such as in the JCT or similar standard form.
• An Employer's Agent's authority under a building contract is limited to the functions expressly conferred which does not usually extend to entering into binding agreements varying the contract terms.
• A defence that is not clearly raised in an adjudication response cannot subsequently ground a challenge on natural justice or jurisdictional grounds.  As a result, parties must articulate their defences with clarity.
• Subsequent conduct (including how parties present their cases and instruct experts) may be relevant evidence as to whether a binding contract was formed, even if generally inadmissible as an aid to construction of contract terms.

Clerkenwell Lifestyle (UK) Ltd v HG Construction Ltd [2026] EWHC 1406 (TCC) (12 June 2026)

3. Remediation Contribution Orders: "Just and Equitable", "over-engineered" remediation and recoverable costs

The First-tier Tribunal ("FTT") has granted a Remediation Contribution Order ("RCO") following application by the Secretary of State for Housing, Communities and Local Government ("SoS").  SoS had provided funding to the head leaseholder ("RTM") for fire safety remediation works at Hallings Wharf Studios, London E15. The initial developer of the property entered liquidation in 2018 and the SoS sought an RCO under section 124 of the Building Safety Act 2022 ("BSA") for recovery of £3,682,997.78 from the developer's associated company Hollybrook (UK) Limited ("Hollybrook").  Hollybrook resisted the application, arguing that the remedial works had been over-engineered and that it would not be just and equitable to make an RCO, or at least not for the full amount claimed.  The FTT made the RCO for the full remediation sum claimed but refused to include SoS's litigation costs, which exceeded £1 million.

On consideration of relevant defects, the FTT found the correct question under section 120 of the BSA is whether a building safety risk has arisen from relevant works. It is not necessary first to identify some separate "defect" and then apply a further threshold of intolerable or unacceptable risk.  The FTT held that the statutory test is a single-stage assessment: if the relevant works give rise to a risk to the safety of people in or about the building from the spread of fire or structural collapse, that is sufficient.  There is no requirement to show a particular level or gradation of risk or to assess the claimed defect by reference to the Building Regulations in existence at construction.

On claims that the remedial works had been over-engineered, the FTT accepted Hollybrook's assertions that cheaper alternative schemes were possible.  However, the relevant test was not whether the chosen scheme was the cheapest possible solution.  The FTT held that, where more than one reasonable remediation route is available, the decision-maker carrying out or commissioning the works is entitled to choose between them.  Unless the works can properly be branded unreasonable, the fact that another approach might have remediated the risk at lower cost is not, in itself, a reason to reduce the RCO.  On the facts, RTM had acted on professional advice, the project was already well advanced when PAS 9980 came into force, pausing for a fresh PAS assessment would have caused delay, and the adopted remedial scheme fell within the range of reasonable responses. 

The decision also considered whether legal costs of an RCO application can form part of recoverable costs under an RCO.  The FTT was doubtful that section 124 of the BSA allows ordinary litigation costs to be recovered through an RCO at all, given that the FTT is generally a no-costs jurisdiction and Parliament did not expressly include litigation costs in the statutory examples of recoverable costs in section 124 (2A). In any event, even if such jurisdiction existed in an appropriate case, the FTT held that litigation costs were not recoverable here.  The remedial works had already been completed before the application was made, so the proceedings were not necessary to procure remediation, and the SoS had introduced the claim for litigation costs very late after the parties had conducted the case on the basis that adverse costs were not in issue.

On the "just and equitable" point, the FTT emphasised that section 124 of the BSA confers a broad discretion in the granting of an RCO.  The test is not limited to allocating liability between available respondents, nor can the relevant factors be exhaustively catalogued.  Here, it was just and equitable to make the RCO because Hollybrook was associated with the developer, relevant defects had been established, the remediation scheme and costs were reasonable, and Hollybrook had not produced evidence sufficient to displace the case based on its close connection with the developer. Arguments based on PAS 9980, alleged over-engineering and betterment, did not defeat the application.  The FTT also declined to make any deduction for betterment because there was insufficient evidence of the extent or value of any benefit.

Key points for the UK Construction Industry:

• The FTT's discretion to decide whether it would be just and equitable to grant an RCO remains broad. 
• Developers and associated companies should not assume that liability will be avoided because they did not carry out the remedial works, because a cheaper scheme can be identified with hindsight, or because the risk would be tolerable under a different assessment methodology. 
• Remediation decisions made in real time, on professional advice and within a range of reasonable responses, are likely to be respected by the courts. 
• Applicants may be unlikely to receive legal costs of the application through an RCO, particularly where the work has already been completed and the costs claim is introduced late.

Secretary of State for Housing Communities & Local Government v (1) EDR Builders Limited and (2) Hollybrook (UK) Limited.pdf

4. CLC publishes new Building Safety Guidance

The Construction Leadership Council ("CLC") has published new guidance on Higher Risk Buildings ("HRBs").  The CLC has published two new notes on the Fire and Emergency File ("FEF") and the Building Regulations Compliance Statement ("BRCS") for Building Control approval applications for new HRBs. The guidance notes provide information on the preparation, content and management of the key accompanying documents for Gateway 2 and Gateway 3 applications. The guidance reflects feedback from the Building Safety Regulator that while there has been some improvement in the quality of FEFs and BRCSs they remain a cause of rejection in some applications.

New and updated CLC HRB Building Safety guidance – Construction Leadership Council

5. Technology and Construction Court publishes Fourth edition of the TCC Guide 

On 1 July 2026 the Technology and Construction Court ("TCC") published the first revision of the TCC Guide in four years. The Guide is intended to provide straightforward practical guidance on the conduct of litigation and effective case management of proceedings in the TCC. The latest version of the Guide follows consultation with judges and court users.  The 2026 Guide includes new sections on proceedings involving the Building Safety Act 2022 and existing guidance on procurement cases was rewritten to take account of the Procurement Act 2023.  The use of Artificial Intelligence in the TCC is also addressed in the Guide for the first time.

Technology and Construction Court (TCC) Guide 2026 - Courts and Tribunals Judiciary

6. Building Safety Regulator data highlights average Gateway 3 approvals are taking twice as long as statutory target 

The Building Safety Regulator ("BSR") has released its latest Building Control approval application data covering the three months from April to June 2026.   The latest data shows early performance indicators for Gateway 3 applications relating to internal refurbishment works as no new builds via Gateway 2 are currently in scope. Of the refurbishment works, the median decision time is 16 weeks, double the statutory required target.  The BSR notes this is an important area of focus, particularly for new builds, and expects determination times to reduce as processes and resourcing improve. 

Building_control_approval_application_data_April_to_June_2026_-_Building_Safety_Regulator.pdf