The post-Grenfell building safety landscape continues to test the boundaries on construction liability

A recent decision made by the Technology and Construction Court (TCC) in HB Limited & Ors v Sto Limited & Ors provided new guidance on the developing law under sections 130 and 149 of the Building Safety Act 2022 (BSA), and contribution claims under the Civil Liability (Contribution) Act 1978 (the 1978 Act). The judgment also indicates that the BSA can apply to foreign companies.

Background

This case arose against the backdrop of building safety concerns following the 2017 Grenfell tower fire. The claimants, UK property developers Redrow, Lendlease and Barratt, uncovered alleged defective cladding in 18 high-rise residential buildings which were fitted with the ‘StoTherm Classic’ Insulation system. The cladding included expanded polystyrene insulation and was alleged to present a severe risk of fire spread.

The developers began remediation efforts, which were expedited through the government Building Safety Fund, but the developers remained liable to reimburse the remediation costs. The developers were therefore left with £90 million in collective liability between the government fund and self-funded remedial costs. The UK manufacturer, Sto Ltd, became insolvent and the developers decided to bring a claim against the German-based parent companies, Sto SE & Co. KGaA, a manufacturer and supplier of cladding components (Sto Germany), and Stotmeister Beteiligungs GmbH, the holding company (SBG).

The TCC gave permission for the claimants to serve the proceedings on Sto Germany and SBG ‘out of the jurisdiction’, in Germany. These Sto entities applied to the TCC to set aside service on the basis that the claims did not have a reasonable prospect of success and the provisions for Building Liability Orders (BLO) under the BSA do not apply to an entity domiciled in Germany.

Section 149

The TCC’s consideration of section 149 is particularly notable as it is the first reported judicial treatment of the provision. S149 of the BSA creates a statutory cause of action specifically for defective cladding products that make a building unfit for habitation, and it provides a retrospective 30-year limitation period for claims.

S149(2) applies when:

There is a failure to comply with cladding product requirements
Misleading representations about defective cladding products are made
The cladding product is inherently defective

The claimants in these proceedings argued that the StoTherm Classic system satisfied all of the above requirements.

The defendants argued that permission to serve the proceedings out of the jurisdiction should not extend to the s149 claim against Sto Germany, because it did not manufacture and supply a cladding system directly to the UK. The court rejected this argument, finding that the claimants’ s149 claim had a real prospect of success because Sto Germany likely manufactured or supplied a cladding component for the StoTherm Classic system.

Section 130

Another important issue considered in this case was the proposed Building Liability Order (BLO) against SBG.

S130 of the BSA allows a court to impose a BLO on a company associated with the relevant company, such as a parent company, provided it is ‘just and equitable’ to do so. SBG argued that the provision could not properly extend to it based on the presumption that Parliament does not design its laws to apply beyond the UK. However, the TCC held that the foreign status of the companies did not prevent the claims from proceeding because, if the applicable law is English law, then the English statute governing liability will apply and the concept of ‘extra-territoriality’ therefore did not apply. Moreover, SBG did not argue that German law applied.

In any event, the court noted that Parliament’s likely intention was that s130 would apply to foreign dependants, regardless of whether they had a UK presence, because “the construction industry is international”.

Contribution claims

The developers also brought contribution claims under the 1978 Act.

Contribution claims allow a party facing liability for a loss to pass on part of that liability to another party who is legally responsible for the same loss. Here, the developers argued that, although they had undertaken the remediation works, the Sto companies could also be liable for the costs because of their alleged responsibility for the defective cladding.

The defendants disputed this, arguing that the developers and defendants were not liable to the same people for the same damage, and that the contribution claims were premature. The TCC did not resolve these fact-sensitive issues at this stage, but considered the claims had a realistic prospect of success. The decision is particularly notable alongside URS Corporation Ltd v BDW Trading Ltd 2025, where the Supreme Court held that remedial works could amount to ‘payment in kind’ for contribution purposes.

Significance

While the judgment approached matters on an interim basis, it nonetheless provides useful and unprecedented guidance on the developing application of the BSA for foreign companies.

For developers and building owners, it confirms that claims under sections 149 and 130, together with contribution claims, may provide routes to recovery where the statutory requirements are satisfied.

Of particular significance is the court’s approach to the German defendants: their foreign status did not, at this stage, prevent the progression of BSA claims. For manufacturers and corporate groups, the decision underlines the importance of identifying the responsibilities of different entities within the supply chain and corporate structure when investigating historic defects. The judgment therefore adds to the developing body of authority on the reach of the BSA, while leaving questions of substantive liability for determination at a later stage.

This article was co-authored by trainee Cristina Antonacci.

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