Ben Quiney KC and Michele De Gregorio consider the groundbreaking Supreme Court judgment of URS Corporation Limited v BDW Trading Limited [2025] UKSC 21
23rd May 2025
On 21 May 2025 the Supreme Court handed down its much-anticipated judgment covering building safety issues, defective premises and contribution claims. We set out below our summary, plus a number of comments on the likely impact of the decision and unresolved issues.
The facts
The developer, BDW (the respondent), brought a claim against the consultant engineer, URS (the appellant), in relation to URS’s defective structural design for two sets of high-rise residential developments. The issues in the case stem from the fact that the defects in the structural design were discovered after BDW had sold the buildings to third parties for full value, and before they had caused any physical damage.
BDW initially brought a claim, in March 2020, against URS in negligence only, seeking to recover the cost of the remedial works it had carried out. At the time of which, BDW had no proprietary interest in the buildings and no claims had been made against it by the owners or occupiers.
First instance: preliminary issues
URS contended that BDW did not suffer any actionable damage, either because it sold the buildings for full value before the defects were discovered or because BDW was not liable to carry out any remedial work as it had a complete limitation defence to any claim against it by the owners and occupiers. Therefore, URS argued, any losses were outside the scope of its duty of care.
These points came before Fraser J as preliminary issues: [2021] EWHC 2796 (TCC). Fraser J decided in favour of BDW, finding that BDW’s cause of action in tort accrued no later than the date of practical completion, at which point BDW suffered actionable loss falling within URS’s scope of duty.
One of the assumed facts was that by the time the defects were discovered any cause of action by the owners or occupiers against BDW was time-barred.
First instance: amendment application
In June 2022 s.135 of the Building Safety Act 2022 (the “BSA”) came into force and retrospectively extended the limitation period for accrued claims under s.1 of the Defective Premises Act 1972 (the “DPA”) from six to 30 years (by inserting s.4B of the Limitation Act 1980).
In consequence, BDW sought to make various amendments to its claim, including the addition of new causes of action against URS for breach of s.1(1) of the DPA and for a contribution or indemnity under the Civil Liability (Contribution) Act 1978 (the “Contribution Act”) on the grounds that URS and BDW were both liable to the owners and occupiers of the buildings for the same damage.
Adrian Williamson KC (sitting as a Deputy High Court Judge) permitted BDW’s amendments: [2022] EWHC 2966 (TCC).
Court of Appeal
The Court of Appeal unanimously dismissed URS’s appeals against both the preliminary issue and amendment application decisions: [2024] KB 827.
The leading judgment was delivered by Coulson LJ (with whom Asplin and King LJJ agreed). In respect of the preliminary issue decision, it was held that:
- The losses were within the scope of URS’s duty of care. The risk of harm was that, in breach of URS’s duty, the design of the buildings would contain structural defects that would have to be remedied, and BDW would thereby suffer economic loss.
- In respect of a claim in tort against a designer of a defective building in circumstances where the defect caused no immediate physical damage, the cause of action arose, at the latest, when the building was practically completed.
As to the appeal against the amendment application decision, it was held that:
- The deputy judge did not apply the wrong test. He was not obliged to determine the points of law arising from the amendments.
- The wording of s.135(3) of the BSA means what it says: the longer limitation periods under the DPA are treated as always having been in force. There is no exception for proceedings that were ongoing at the time the BSA came into effect.
Having rejected the threshold objections, the Court made the following, obiter findings:
- The duty under s.1(1) of the DPA is not owed only to individual purchasers, it may be owed to commercial developers, such as BDW. This is not altered by the fact that a developer may, under s.1(4), itself owe a duty to individual purchasers.
- The fact that BDW had sold the buildings when the defects were discovered did not preclude a claim under the DPA. The recoverability of damages under the DPA is not limited by property ownership.
- It is not a condition precedent to a claim under s.1(1) of the Contribution Act that a third party has brought or intimated a claim against the party seeking the contribution.
Supreme Court
The Supreme Court unanimously dismissed URS’s appeal: [2025] UKSC 21.
The judgments address four grounds of appeal. The leading judgment on Grounds 1 to 3 was given by Lords Hamblen and Burrows (with whom Lords Lloyd-Jones, Briggs, Sales and Richards agreed). The leading judgment on Ground 4 was given by Lord Leggatt (with whom all other Justices agreed). Lord Leggatt also provided his own reasons for dismissing the appeal on Grounds 1 to 3.
Ground 1: Scope of duty / remoteness
The first issue under Ground 1 was whether, in relation to BDW’s claim in negligence, it had suffered actionable and recoverable damage or whether the damage was outside the scope of URS’s duty of care and/or too remote because it was voluntarily incurred.
The Court rejected URS’s argument that English law recognised a “voluntariness” principle, which rendered BDW’s loss outside the scope of URS’s duty and/or too remote. The fact that BDW carried out the repairs voluntarily in circumstances where it had no proprietary interest in the buildings and/or had no legal obligation to do so (because all claims against it were, at that point, time-barred) did not render BDW’s loss irrecoverable in law.
A claimant’s voluntariness may be relevant to legal causation and mitigation in the sense of being unreasonable conduct, but those are fact-specific issues for trial.
In any event, on the assumed facts, it was strongly arguable that BDW did not perform the repairs voluntarily, in particular because of the risks of personal injury or death to occupiers if it did not do so.
The second issue under Ground 1 concerned the date on which BDW’s cause of action in the tort of negligence accrued. That issue would have been relevant if URS’s argument on voluntariness had succeeded, because BDW argued it already had an accrued cause of action in negligence at the time it sold the buildings. However, given the Court’s finding on the first issue, this point fell away.
The Court therefore declined to decide whether to overturn the decision of the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 (HL). This had been the reason for convening a panel of seven Justices and might be regarded by some practitioners as a missed opportunity. Nonetheless, the Court made three observations on Pirelli, at [74]-[76], which provide a steer for any future consideration of the issue.
Ground 2: Application of s.135 of the BSA
It is obviously the case, and was not disputed, that s.135 of the BSA has retrospective application to claims under s.1 of the DPA. However, URS argued that BDW could not rely on s.135, for the purposes of its claims in negligence and under the Contribution Act, to the effect that claims by owners and occupiers of the buildings under s.1 of the DPA had not become time-barred.
The Court rejected URS’s argument, holding that s.135 of the BSA applies to claims which are dependent on the time limit under the DPA but are not actually claims brought under the DPA. This conclusion was supported by the wording of the statute, in particular s.135(3), which refers to “an action by virtue of” s.1 of the DPA and is not limited to actions “under” s.1. It was also consistent with the context and purpose of the statutory provision. A central purpose and policy of the BSA, to hold those responsible for historic building safety defects accountable, would be seriously undermined if s.135 were restricted to actions under the DPA.
This finding provides a further answer to URS’s argument on the voluntariness principle, which assumes that claims by owners against BDW under the DPA would have been unenforceable because time-barred.
The Court noted that this finding does not prevent factual arguments as to legal causation or mitigation, which would be determined by reference to the facts at the time and could therefore take account of BDW’s understanding that any liability to owners was unenforceable if it chose to rely on a limitation defence.
Ground 3: To whom is the duty under s.1(1)(a) of the DPA owed?
URS argued that the DPA distinguishes between those who owe DPA duties and those to whom they are owed, such that a developer – who owes a duty under the DPA – cannot simultaneously be owed a duty.
The Court rejected this argument, holding that URS owed a duty to the developer, BDW, under s.1(1)(a) of the DPA. The relevant work was carried out “to the order of” BDW and therefore a duty was owed under s.1(1)(a). There is no reason why a developer cannot both owe a duty and be owed a duty. The purpose of the s.1 duty was to protect the interests both of those who acquire an interest in the dwelling and of those who have an interest in the dwelling other than by purchase, most obviously the first owner (i.e. the developer).
The Court further held there was no question of the repair costs being of a type that are irrecoverable for breach of that duty.
A further argument URS had taken in the Court of Appeal – that s.1(1) of the DPA only applied to “lay” purchasers – was abandoned.
Ground 4: Can a claim be brought under the Contribution Act where no third party has ever asserted a claim against the party seeking a contribution?
URS argued that BDW’s claim was premature because the right to contribution does not arise unless and until the existence and amount of D1’s (here BDW’s) liability to C (the owners) has been established by judgment, admission or settlement. On the facts, no claims had even been asserted by the owners against BDW.
BDW contended that the right to compensation arises as soon as C suffers damage for which D1 and D2 (here URS) are liable.
The Court rejected both arguments, finding that the answer lay somewhere between these two extremes. It held that the right to contribution arises when: (i) damage has been suffered by C for which D1 and D2 are each liable; and (ii) D1 has paid or been ordered or agreed to pay compensation in respect of the damage to C.
Here BDW had paid compensation in kind for the damage suffered by the owners by carrying out the repairs. The fact there had been no judgment, admission of liability or settlement between BDW and the owners, nor even any claim against BDW, did not prevent BDW claiming contribution from URS.
Comment
Voluntariness
The Court’s rejection of a “voluntariness” principle will be welcomed by developers who have acted responsibly by carrying out remedial works in the wake of the Grenfell tragedy. However, developers may still face arguments as to legal causation and mitigation on the facts and the decision to carry out remedial works, prior to the BSA coming into force, may have to be justified, for instance, on grounds such as preventing the risk of personal injury or reputational damage.
Given the observations of the Supreme Court as to how the issue of voluntariness might arise when a Court considers both causation and mitigation questions, it is likely that these boundaries will need to be tested. The analysis in the judgment suggests that “voluntariness” is quite an elastic concept that captures incurring additional losses for commercial, reputational and even moral reasons (see paras. 65, 174, 184 and 188ff). This seems a surprisingly wide approach.
Pirelli
Further, the observations on Pirelli create some difficulties when advising on the present state of the law. Whilst they may be well made, the missed opportunity of resolving these issues is unfortunate, whilst understandable. The judgment is virtually inviting an enterprising party in a dispute to seek permission to “leapfrog” to the Supreme Court in the appropriate case.
Section 135 of the BSA
The decision on the application of s.135 of the BSA accords with pragmatic policy and common sense. The intervention of the Secretary of State for Housing, Communities and Local Government on the appeal highlighted the purpose of the BSA to ensure that those responsible for historical building safety defects are held to account. That purpose can only sensibly be served if developers are able to bring or pass on claims to other responsible parties, including contractors, sub-contractors and construction professionals. The Contribution Act is an important tool in this regard, and its utility would have been seriously undermined had a narrow view been taken of the retrospective effect of s.135.
The general approach to interpretation of the DPA and the BSA is informative. The Supreme Court showed a real willingness to consider extrinsic material, such as Law Commission Reports, the Hackitt Report, and the Explanatory Notes to the BSA. This is to be contrasted with the approach of the Court of Appeal below. This is supplemented by the explicit policy driven reasoning, which was no doubt supported by the intervener’s submissions. It is likely that in future cases where the meaning of the DPA and BSA is in issue these extrinsic materials will be the first port of call for lawyers.
Developers
The decision that developers may be owed duties under s.1(1)(a) of the DPA confirms a further avenue for recovery of remedial costs in respect of historic building safety defects.
One acute issue that is likely to be of immediate importance to those performing design functions is the need to consider their PI cover, if they had not already done so after the decision in the Court of Appeal. One of the arguments made, and rejected, by URS was the impact of BDW’s arguments on existing limitations and exclusions that had been agreed many years ago by, for example, architects and engineers in their contracts. Pursuant to s.6(3) of the DPA such clauses do not apply to DPA claims. This objection seems to have been given light consideration by both the Court of Appeal and the Supreme Court, but is likely to have a significant effect on professionals, the availability of cover, the cost of premiums, and the ability of parties to allocate the risks of complex constructions projects.
Conclusion
Overall, the Supreme Court decision will be welcome news to developers but less so to insurers of contractors and construction professionals.
