Supreme Court’s Ruling in Building Safety Case: URS Corporation Ltd v BDW Trading Ltd
The case of URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 has seen seven judges in the Supreme Court ultimately uphold the overriding intentions of the Building Safety Act 2022 (BSA) to allow those directly responsible for creating building safety defects to be held accountable through the Courts.
Background
The dispute concerned two residential developments of tower blocks completed in February 2005 and October 2012 in East London and Leicester.
BDW (whose trading names include Barratt and David Wilson Homes) was the developer and sold its interest in the developments before 2019. BDW employed URS as its structural engineer for both projects, later alleging negligence in the performance of the structural design services. Despite having no proprietary interest in the blocks at the relevant time, BDW procured investigations, arranged evacuations, and undertook remedial works.
BDW commenced a claim in tort against URS for compensation in respect to the costs of those remedial works (among other things), asserting that URS owed a tortious duty to exercise reasonable skill and care and had breached that duty. BDW had then sought to amend its pleaded case to add in a claim under the Defective Premises Act 1972 (DPA) once the limitation for the DPA had been retrospectively extended to 30 years by the BSA.
Following decisions in BDW’s favour in the TCC and Court of Appeal, four issues were put to the Supreme Court to determine.
Issues
1. Is loss that is otherwise recoverable in the tort of negligence irrecoverable if it is incurred (i) without an enforceable legal obligation to do so, and (ii) in respect of property in which the claimant has no proprietary interest, because such loss is voluntarily incurred, and that means it falls outside the scope of the defendant’s duty of care and/or is too remote?
At the centre of this issue was the question of whether BDW should be capable of recovering its losses in undertaking the remedial works which URS characterised as having been voluntarily incurred by BDW.
At the time of undertaking the remedial works, BDW:
- was not the landlord and had no proprietary interest in the developments;
- was not the subject of proceedings against it; and
- had a defence to any action under the DPA as a consequence of the expiry of the six-year limitation period applying to claims under the DPA at that time.
The Court concluded that the cases put forward by URS did not establish “a principle of voluntariness that operated as a bright line rule of law rendering loss too remote or outside the scope of the duty of care in the tort of negligence”.
The Court concluded that it was ultimately a question of causation (and/or mitigation) that would have to be considered following a full trial (as this appeal arose out of a preliminary issue trial). The Court noted that a judgment would need to be made about how a person in the position of BDW could reasonably be expected to act in the particular circumstances. It was a question which is “highly fact dependent”.
Notably, the Court cast doubt on URS’s characterisation of these being losses voluntarily incurred, noting that:
- BDW was still at risk of claims for personal injury if it had chosen not to undertake the remedial works and people has subsequently been injured.
- BDW had a legal liability to the homeowners under the DPA or in contract to incur the cost of repairs notwithstanding that the six-year limitation period applying at the time of undertaking the works meant that they had no remedy.
- There would be potential reputational damage to BDW if BDW did nothing once it knew of the danger to homeowners. It was therefore in BDW’s commercial interest to effect the repairs. The decision that BDW could not recover damages for “reputational damage” did not detract from this point. Closely linked to this point was that there was a general public interest, which included moral pressure on BDW, in BDW effecting the repairs so as to avoid danger to homeowners.
2. How do the retrospective extended limitation periods provided for by section 135 of the BSA apply to other claims (e.g. in the tort of negligence or claims for contribution) which could be impacted by the time-bar applicable to claims under section 1 of the DPA?
URS conceded in oral argument that the 30-year time limit for retrospective DPA claims also operates retrospectively for an action brought under the Contribution Act when a question arises about whether a claim under section 1 of the DPA is or was time-barred. Otherwise, there would be the absurdity that a homeowner could bring a claim against a developer or against a contractor (or both) for breach of the statutory duty, invoking the 30-year limitation period, yet neither the developer nor the contractor could recover contribution from the other. Therefore, the legislation must be interpreted as enabling BDW to recover contribution from URS in respect of remedial work done before as well as after section 135 of the BSA came into force.
In relation to claims in the tort of negligence, the key question is causation and whether BDW's decision to carry out remedial works should be regarded as a consequence of the assumed negligence of URS or of a choice freely made by BDW:
- As regards remedial work done after 28 June 2022, it would be very difficult for URS to argue that carrying out remedial work which discharged the liability of BDW (and URS) to the homeowners was not a step that BDW could reasonably be expected to take in mitigation.
- As regards remedial work done before 28 June 2022, any claim by the homeowners against BDW under the DPA would at that stage have been time-barred. So BDW could not argue that carrying out remedial work was a step that it could reasonably be expected to take to discharge its legal liability to the homeowners. BDW would have had to rely on other reasons to justify its conduct, such as avoiding or minimising damage to its commercial reputation. This position is not changed by the coming into force of section 135 of the BSA, as there is a distinction between altering the law and altering other facts which were affected by what the law was at a given time.
Therefore, section 135 of the BSA makes it possible for BDW to bring claims against URS under the DPA and for contribution in the extended limitation periods. But in relation to BDW’s claim for damages in the tort of negligence and the DPA claim, section 135 does not retrospectively affect the answer to the questions of causation, mitigation and remoteness which determine whether BDW can recover compensation from URS for the cost of remedial work carried out before section 135 of the BSA came into force. These are questions of fact to be determined by reference to the circumstances as they actually were when BDW decided to carry out the work.
3. Does section 1(1)(a) of the DPA apply only to purchasers of properties, or does it also give property developers a right to bring a claim under the DPA?
The Supreme Court agreed with the Court of Appeal. URS carried work out “to the order” of BDW and therefore owed them a duty under s1(1) of the DPA.
It was acknowledged that the purpose of the DPA is better served if the DPA duty is widely, rather than narrowly, owed. Using the facts of the present case as an example, it would better serve the policy of ensuring the safety of dwellings if BDW itself had rights under the DPA against a party primarily liable for the defects.
As a consequence of the BSA enabling claims for breaches of the DPA as far back as 30 years for claims which arose prior to 28 June 2022 and 15 years for those accruing after that date, the confirmation that developers may in turn rely upon those extended limitation periods in DPA claims against its construction team will be greatly welcomed by developers.
It is also worth remembering that the DPA provides that:
“any term of an agreement which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of any of the provisions of this Act, or any liability arising by virtue of any such provision, shall be void”.
Consequently, for claims under the DPA, those appointed by a developer should not take false comfort from limitations or exclusions of liability agreed in their terms of appointment which would be disregarded in DPA claims.
4. Is BDW entitled to bring a contribution claim against URS under section 1 of the Civil Liability (Contribution) Act 1978 when there has been no judgment or settlement between BDW and any third party and no third party has ever asserted any claim against BDW?
The Supreme Court found that BDW was not prevented from seeking a contribution. It was sufficient that BDW had made a payment in kind in performing the remedial works in compensation for the damage suffered by the homeowners.
In considering the two-year period in which any claim for contribution must be bought, the Supreme Court determined that this begins when:
- Damage has been suffered by one party (C) for which two other parties (D1 and D2) are each liable, and
- D1 has paid or been ordered or agreed to pay compensation in respect of the damage to C (and that for these purposes carrying out remedial works was a payment in kind).
There was no further requirement that, before an action can be brought, D1’s liability to pay compensation to C (or the amount of that compensation) must have been established by a judgment against D1, an admission by D1 or a settlement agreement between D1 and C.
However, the Supreme Court did note that without a settlement agreement, D1 would not get the benefit in contribution proceedings against D2 of the statutory assumption provided by section 1(4) of the Contribution Act that the factual basis of the claim against it by C would have been established at trial. Therefore, where there is no settlement agreement ascertaining the existence and amount of D1's liability, D1 is entitled to recover contribution provided it can prove the relevant facts as well as its liability in law to C on the basis of those facts. If a settlement agreement was in place, D1 would only have to prove it liability in law.
Conclusion
At the heart of this decision would seem to be a desire to best serve the policy of ensuring the safety of dwellings and their occupants. Developers have been in the front line of the Government’s push to affect the remediation of buildings suffering from building safety defects.
This decision should comfort developers (and main contractors) who may have undertaken remedial works “voluntarily” that they will not necessarily lose a right to claim in the tort of negligence or the right to bring a contribution claim against other members of the construction team directly responsible for the building safety defect.
This decision should also comfort developers that they could have DPA claims against their supply chain in circumstances where they are facing DPA claims from leaseholders due to the extended limitation periods in the DPA brought into force by the BSA.
However, for remedial works undertaken before section 135 of the BSA came into force (28 June 2022), developers bringing claims in the tort of negligence or under the DPA will still have to overcome questions of causation and mitigation that are to be determined by reference to the circumstances as they actually were when the developer decided to carry out the work. In essence, were they justified in carrying out such work by the wider circumstances when not being under a strict legal liability to do so? The comments made by the Supreme Court indicate that there are a number of other factors that could justify such a decision.
For developers and main contractors considering carrying out remedial works, it is still preferable to agree a settlement agreement with the leaseholders before doing so (if possible) to assist with future contribution claims against their supply chain, as otherwise they will not get the benefit in contribution proceedings of the statutory assumption (following a settlement agreement) that the factual basis of the claim against them would have been established at trial.
