Author
URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21
Background – BDW’s claim
BDW Trading Ltd (BDW) is a property developer that trades under names such as Barratt Homes and David Wilson Homes. BDW engaged URS Corporation Ltd (URS) as a structural design consultant in connection with the building of 12 tower blocks. In March 2020, BDW brought a claim in negligence against URS in relation to certain structural design defects. Despite BDW discovering the defects after having sold the developments to third parties, it performed remedial works to rectify those defects. BDW has sought to claim those remedial costs against URS.
While there had been no obvious physical damage observed to the buildings, and no claims against them, BDW considered there had been an increased risk to residents’ health and safety and remediated the defects.
No determination of whether URS were negligent was made but the parties proceeded on the basis of assumed facts. Certain preliminary issues were considered and at the first hearing in the TCC it was determined, with some exceptions, that URS owed a duty of care to BDW that extended to the alleged losses. Those losses were in principle recoverable.
URS’s appeal to the Court of Appeal
URS appealed the decision to the Court of Appeal ([2023] EWCA Civ 189) on the following the grounds:
- Ground 1 – That BDW’s losses (i.e. the costs of repairing the development) did not fall within the scope of URS’s duty of care in tort;
- Ground 2 – That the losses claimed by BDW were not recoverable as at the time BDW discovered the design defects in 2019 the claim was time barred (as the claim pre-dated the Building Safety Act 2022 which extended the limitation period), and that it had sold its proprietary interest in the developments; and
- Ground 3 – That the High Court judge had erred in not striking out the claim.
The Court of Appeal held that:
- Ground 1 – The losses claimed by BDW fell within the scope of URS’s duty of care in tort (notably being the loss that would be caused by the construction of a structure using a negligent design such that it was built containing structural deficiencies or defects).
- Ground 2 – That in cases involving a design defect that does not cause physical damage, the cause of action in tort accrued at the completion of the developments (not on discovery of the defects as asserted by URS). It was irrelevant that BDW had any obligation towards the current owners or occupiers, or that it had sold its proprietary interest in the developments, noting that BDW had a proprietary interest at the time the duty and cause of action arose.
- Ground 3 – As a result of the findings above, ground 3 was also dismissed. The Court of Appeal also considered that BDW had a claim against URS under the Defective Premises Act 1972 even though it was not a resident occupier.
URS’s appeal was accordingly dismissed.
Further appeal to the Supreme Court
URS subsequently appealed to the Supreme Court. The dispute was heard between 2 and 5 December 2024. This further appeal considered whether:
- BDW suffered actionable and recoverable damage that fell within the duty of care owed to it by URS;
- The retrospective extended limitation periods provided for by section 135 of the Building Safety Act 2022 apply (i) in the circumstances of this case, and (ii) to claims brought before section 135 came into force and which are the subject of pending proceedings;
- Section 1(1)(a) of the Defective Premises Act 1972 applied only to purchasers of properties, or whether it also applied to commercial developers; and
- BDW is entitled to bring a contribution claim against URS under section 1 of the Civil Liability (Contribution) Act 1978 notwithstanding that (i) there has been no judgment or settlement between BDW and any third party, and (ii) no third party has asserted any claim against BDW.
The Supreme Court’s Decision
The Supreme Court yesterday delivered its judgment. The Appeal was dismissed on all four grounds:
- The fact BDW voluntarily assumed responsibility to repair the defects did not affect the fact that URS owed a duty to BDW in tort. It may be relevant on questions of mitigation, but not on the question of whether a duty is owed;
- The 30-year limitation period imposed by the Building Safety Act 2022 was not relevant to questions of whether it was reasonable for BDW to repair the defects;
- The duty under S. 1 of the Defective Premises Act 1972 applies to developers such as BDW as they were the first owner, and the works were carried out by URS to the order of BDW; and
- BDW is not prevented from bringing a claim for contribution against URS by the fact there has been no judgment against BDW or settlement between BDW and any third party. It is sufficient that BDW has paid compensation for damage suffered by the homeowners.
Michelmores’ comments
Michelmores will be providing further comments on the issues covered by the judgment shortly. However, it is clear the Supreme Court Decision will be welcomed by developers and those having to pay for remedial works relating to building safety defects. The judgment is consistent with the plethora of case law that is being created in this area post Grenfell.
Should you wish to discuss any of the issues raised in this article, please contact Andrew Pratten.
Author
Michelmores Property Development Club
The Michelmores Property Development Club (PDC) is a forum for developers and property professionals to connect and share knowledge. The Club is celebrating its 22nd...
Michelmores Property Awards
Celebrating the best of property, development and construction in the South West The Michelmores Property Awards celebrate the best property, development and construction projects in...