In what is likely to be one of the most significant cases in construction law in recent times, on 21 May 2025, the Supreme Court handed down judgment on the appeal brought in URS Corporation Limited v BDW Trading Limited and rejected all four grounds of appeal.
In this article, we review the background to the case and the court's decision on each of the four grounds of appeal.
BDW Trading Limited (BDW) was the owner and developer of tower block buildings with residential units constructed between 2005 and 2012 in London and Leicester. URS Corporation Limited (URS) is a consultant engineer and was one of the companies responsible for the structural designs for those buildings. In 2019, BDW discovered cracking in the structural slab of one of the buildings. The structural integrity of the slab was so deficient that the building was at risk of structural failure. The building was evacuated and BDW carried out remedial works to stabilise it. BDW then investigated the other buildings, and although there was no cracking found, the survey indicated the structural designs were dangerously inadequate. These discoveries led to an emergency evacuation, temporary propping and permanent remedial work, all undertaken at BDW’s own cost.
BDW no longer owned the buildings when it discovered the structural defects. Although no claim had been made against it in respect of those defects, BDW said it carried out the remedial works ‘as a responsible developer’, and that it could not ‘simply ignore the problem once it came to light’. URS disputed BDW’s claim against it, saying BDW had sold the buildings, so it had no legal obligation to carry out remedial work. URS also said any potential liabilities to the residents of the buildings were now time-barred. URS argued that meant the costs claimed by BDW as damages were voluntarily incurred, and expended only to protect its reputation. URS said there was no actionable damage of the type required to bring a claim in the tort of negligence, so BDW’s claim must fail.
In March 2020, BDW issued a claim in the tort of negligence against URS (and others) claiming damages in relation to the costs incurred as a consequence of the discovery of structural defects. There was no claim made in contract. In June 2021, BDW and URS agreed to a trial of three preliminary issues, based on assumed facts. Fraser J, as he then was, gave judgment on the three preliminary issues in October 2021, finding for BDW. URS’s appeal against Fraser J’s judgment was heard and dismissed in the Court of Appeal in July 2023. URS’s appeal against the Court of Appeal’s decision was heard by seven Justices of the Supreme Court in December 2024.
During the course of the litigation, the Building Safety Act 2022 was enacted which retrospectively extended the time for bringing claims under the Defective Premises Act 1972 for dwellings which are unfit for human habitation, where the claim arose in the period from 28 June 1992 to 28 June 2022. BDW was allowed to amend its claim to rely upon that new provision, and this formed part of the decision in the Court of Appeal.
The Supreme Court rejected URS’s Ground 1 claim that the loss claimed by BDW was irrecoverable as a matter of law, as being outside the duty of care or too remote. Whilst in some cases, damages voluntarily incurred may not be recoverable, for example, because unreasonable acts by the claimant may break the chain of causation or amount to a failure to mitigate loss, such issues are fact sensitive and fall to be determined at trial. On the assumed facts of this case, it was strongly arguable that BDW did not perform the repairs voluntarily given the risks to the safety of the residential occupants.
URS asked the Supreme Court to overrule the House of Lords decision of Pirelli General Cable Works Limited v Oscar Faber & Partners, in the context of when BDW’s claimed cause of action may have accrued. However, in light of the decision on Ground 1, the Supreme Court said the issue of when BDW’s cause of action accrued did not arise and they declined to make any decision as to whether Pirelli should be overruled.
The Supreme Court said yes. The extension of the limitation period for causes of action accruing under section 1 of the Defective Premises Act to a thirty year period before 28 June 2022 is retrospective and is to be treated as always having been in force, unless that would lead to a breach of a defendant’s rights under the European Convention on Human Rights or the claim was settled or determined before 28 June 2022. URS argued this extended period does not apply to other claims which are dependent upon section 1 of that Act. The Supreme Court rejected that argument, and confirmed that the extension of the limitation period applies not only to claims made under section 1 of the Defective Premises Act, but also to claims which are dependent upon it.
This significant confirmation will allow onward claims, for a contribution or in negligence, to be made by developers against the contractors or consultants directly responsible for the defective workmanship or design that has caused the dwelling to be unfit for human habitation.
The Supreme Court said yes. One of the issues before the Supreme Court was whether the duty in section 1(1)(a) of the Defective Premises Act 1972 is owed to a developer. Section 1(1)(a) says:
‘A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty if the dwelling is provided to the order of any person, to that person … to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed.'
URS argued that it did not owe BDW any duty under that section, as BDW was a developer which had disposed of its property interests in the buildings. The Supreme Court dismissed this ground of appeal, pointing out that section 1(1)(a) expressly refers to those who ‘order’ a dwelling to be built and confirmed that a contractor or consultant can owe a developer a duty under section 1 of the Defective Premises Act. A developer owes duties under that section but, as first owner of the dwelling, is also owed duties by the contractors and consultants that it engages for the development.
URS argued BDW could not claim a contribution from it under section 1 of the Civil Liability (Contribution) Act 1978 because BDW had no judgment against it, there was no settlement agreement with residents of the buildings, and none had asserted a claim, but the Supreme Court dismissed this ground of appeal. Section 1(1) of the Civil Liability (Contribution) Act 1978 says:
‘Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).’
The Supreme Court said the right to contribution arises when damage has been suffered by one party (C) for which two parties (D1 and D2) are both legally liable and D1 seeks a contribution from D2 when D1 has either been ordered to pay, or has agreed to pay compensation for the damage to C. At that point D1 can claim a contribution from D2. In this case, the Supreme Court accepted that the costs which BDW had incurred in remediating the buildings amounted to compensation in kind for the damage suffered by the occupiers. The fact the occupiers had not made a claim against BDW did not prevent BDW from claiming a contribution from URS.
The Supreme Court decided that, in a case where remedial work had been undertaken because there was a risk to the safety of building occupants, the fact payments for that remedial work were made voluntarily did not mean, as a rule of law, the loss was outside the scope of the duty of care or too remote.
The Supreme Court declined to overrule the case of Pirelli, which was decided on a false premise, because that case held that cracks in a building constitute physical damage rather than pure economic loss for the purposes of the tort of negligence. The relevant damage is pure economic loss, not physical damage, as was made clear by Murphy v Brentwood.
Another important outcome from this judgment is confirmation that on-claims, such as a claim for a contribution or a claim for negligence, arising from a liability under the Defective Premises Act 1972 are subject to the same extended limitation period as actions under section 1 of that Act. This means a claim for a contribution, for example, could be made in respect of a liability incurred under section 1 in the period 28 June 1992 to 28 June 2022. This is likely to give rise to an increase in the number of claims made in cases where dwellings are unfit for human habitation.
For further information or advice, please contact our construction team.
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