German parent of defunct UK cladding firm to pay out £1.8m following first overseas BLO ruling

Mulalley then sought a contribution under the Civil Liability (Contribution) Act 1978 against Sto UK, arising from its liability under Section 149 of the Building Safety Act 2022, and Sto Germany, its parent company and sole shareholder. 

This is because Sto UK went into voluntary administration and therefore the statutory moratorium on proceedings was triggered. 

Sto Germany failed to defend the proceedings, and on 8 December 2025 Mr Justice Waksman entered default judgment against Sto Germany, granting the BLO with damages to be assessed.

Law firm Charles Russell Speechlys, which advised Mulalley, described the case as “notable” under the BLO due to it being the default judgment, and due to the level of contribution awarded – materially above the 67-80% range typically seen in claims against architects for design breaches.

The judge considered that Sto’s culpability extended beyond a mere design role. According to him, Sto was not simply specifying or certifying a system; it designed, manufactured, marketed and supplied a proprietary product that was inherently defective.

Furthermore, it made affirmative misleading statements about the product’s fire performance, the judge claimed.

The supply of a defective product coupled with misleading marketing, he said, elevated the seriousness of Sto’s fault and its causative contribution beyond the level typically seen in architect cases.

The judge added: “In my judgment, the principal cause of the remedial works was plainly the fact that Sto marketed and supplied an inherently defective product. 

“In its letter of claim, Chelmer also alleged workmanship issues in respect of the fire barriers, although I accept that the primary issue with the barriers was that Sto’s standard detail included a layer of combustible insulation over the face of the fire barriers.”

The Charles Russell Speechlys team consisted of Steven Carey, partner, and Rebecca Morjaria, senior associate, alongside associate Ashley Williams. The firm also instructed James Frampton of Keating Chambers, who acted as counsel.

Ms Morjaria said: “We are delighted to have secured this result for Mulalley.

“They stepped up to remediate Parkside Court for the benefit of residents and the building owner, and it is only right that the manufacturer of the defective cladding system bears the majority of those costs.

“This is one of the first substantive contribution claims under the Building Safety Act to result in a BLO, and the first to do so by way of default judgment against an overseas parent company.

“The decision sends a clear message to product manufacturers and their parent companies: the [act] has real reach, and structuring around a subsidiary will not insulate a group from liability where a defective product has been placed on the market.”

Sto Germany has been contacted for a response.

This latest judgment comes after a similar ruling in April, described as “landmark” by lawyers at the time, that ordered Ardmore Group, the parent company of the lead contractor on Portsmouth’s Admiralty Quarter development, to pay a £14.9m BLO.