URS Corporation Limited v BDW Trading Limited [2025] UKSC 21 – Supreme Court hands down significant judgment for the construction industry

Helen Arthur explores a recent Supreme Court judgment on building safety in high-rise buildings, explaining what the decision means for defects claims.

Following a hearing in December 2024 the Supreme Court has now handed down its judgment in the case of URS Corporation Limited v BDW Trading Limited [2025] UKSC 21 and addresses a number of legal issues arising out of building safety defects in two high-rise residential buildings.

In this article we review the decision and what this means for defects claims.

Background

BDW Trading Limited (BDW) as property developer instructed URS Corporation Limited (URS) as its structural engineer in relation to two high-rise residential buildings in Leicester and London developed between 2005 and 2012. BDW then sold the individual properties to residential purchasers through long leases and the freehold interest on to third parties.

In 2019, and as a result of the Grenfell tragedy, BDW undertook investigations into those two residential blocks and found a number of structural design defects. From 2020 to 2021, BDW carried out remedial works despite having no proprietary interest (and no claim having been brought against it by the owners or occupiers of the residential blocks). The extent of the defects were such that for safety residents were evacuated whilst some of the remedial works were carried out.

In March 2020 BDW commenced a tortious negligence claim in the Technology and Construction Court (TCC) against URS to recover the costs of the remedial works. No claim in contract was brought given that such a claim was statute barred along with any claim under Defective Premises Act 1972 (DPA).

First Instance

A preliminary issue trial was heard in October 2021 which determined that the scope of URS’s duty extended to the losses claimed by BDW and these were not considered too remote but that issues of legal causation: i.e. whether BDW remedying the defects despite no proprietary interest in the residential blocks meant that it caused its own losses, could only be determined at trial.

However, BDW’s claim for reputational damage losses was considered too remote.

Building Safety Act 2022 and DPA

On 28 June 2022 (and after BDW had commenced its claim against URS) s.135 of the BSA came into force. S.135 of the BSA retrospectively extends the limitation period for claims under s.1 of the DPA from 6 years to 30 years for works completed on or before 28 June 2022.

S.1 of the DPA imposes the following duty:

1. 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—
   1.  if the dwelling is provided to the order of any person, to that person; and
   2. without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;

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.

Court of Appeal

On 28 June 2022, and as a result of s.135 of the BSA, BDW applied to amend its claim so as to bring a new claim against URS under s.1 of the DPA (given that it was now not time-barred from doing so due to the extended limitation period) and a new claim for contribution under the Civil Liability (Contribution) Act 1978 (Contribution Act) on the basis that both parties had liabilities for the same damage under the DPA to the homeowners.

The TCC gave permission to amend the claim.

This decision was appealed by URS but by a judgment handed down on 3 July 2023 the Court of Appeal dismissed URS’s arguments and essentially upheld the first instance judgment. In dismissing the appeal, the Court of Appeal confirmed when considering when the cause of action accrued that:

• Physical damage as a result of defective design: tortious action accrues when the damage occurs regardless of knowledge or discoverability.
• No physical damage but defective design: tortious action accrues no later than the time of practical completion when, as in this case, the defective structural design had irrevocably been incorporated into the building.

Supreme Court Judgment

The Supreme Court granted URS leave to appeal on four grounds.

Ground 1: Had BDW suffered actionable recoverable damage given, as URS contend, it had voluntarily incurred those losses? If the loss was out of scope, did BDW already have an accrued cause of action at the point it sold the residential blocks?

The Court rejected URS’s claim. It was common ground that URS assumed responsibility to BDW under its contract for professional services and that it breached its duty of care by providing defective designs. BDW therefore had a claim in tort of negligence for its losses – i.e. its remedial costs.

However, URS argued that BDW completed the remedial works voluntarily as:

1. BDW had no proprietary interest in the residential blocks; and
2. no legal obligation to carry out the repairs existed because any claims which could be made against it were time barred;

and this therefore meant that the losses being claimed by BDW fell outside of the duty assumed by URS.

The Court found that there is a “strong argument that voluntariness most naturally falls to be considered within the concepts of legal causation or mitigation rather than scope of duty and remoteness.” As such applying a ‘voluntariness principle’ to causation or mitigation in this case is fact specific and therefore requires a trial to be able to determine whether the costs were reasonable to have been incurred.

In any event the Court considered on the facts it was strongly arguable that BDW did not act voluntarily as if BDW had refrained from carrying out the repairs there was a significant risk that the defects would cause injury to homeowners for which BDW might be legally liable under the DPA or in contract (for breach of collateral warranties)[1] and its risk to BDW’s reputation; so ultimately “BDW had no realistic alternative”[2].

As such Ground 1 fails as “There is no rule of law which meant that the carrying out of the repairs by BDW rendered the repair costs outside the scope of the duty of care owed or too remote…it is entirely appropriate for the negligent defendant (URS) to be held liable to the claimant (BDW) for the repair costs BDW has incurred because they were the obvious consequence of URS failing to perform its services with the professional skill and care required. It is fair and reasonable that the risk of that loss should be borne by URS and not BDW.”[3]

In respect of the second part of Ground 1 as to when BDW’s tortious cause of action accrued the Court did not need to consider this albeit it acknowledged that for pure economic loss “there are strong arguments of principle for accepting that there can only be an actual loss once the pure economic loss has been discovered or could reasonably have been discovered” and “whether to develop the common law on the tort of negligence in the context of defective buildings, so as to move to the cause of action accruing at the date of discoverability, raises difficult issues.”

Ground 2: Does s.135 of BSA apply and what is its effect?

The extension of the limitation period for claims arising under s.1 of the DPA is to be treated as always having been in force. The extension of the limitation period applies not only to claims under s.1 of the DPA but also to claims which are dependent or parasitic on it, in this case a negligence and contribution claim. The Court confirmed that s.135(3) of the BSA[4] applies to claims which are dependent on the limitation period in s.1 DPA but are not actions brought under that section.

The Court also sought to highlight a strong policy point in respect of the purpose and intent of the BSA in ensuring those responsible for historical building safety defects can be held accountable.

If section 135(3) were restricted to actions under section 1 of the DPA then this would undermine the purpose of the BSA. “The consequence would be that the 30-year limitation period would apply to claims brought by homeowners against a developer under section 1 of the DPA, but would have no relevance to what one may call “onward” claims for contribution or for the tort of negligence brought by that developer against the contractor (whether builder, architect or engineer) directly responsible for the building safety defect”[5]

Ground 3: Did URS owe a duty to BDW under s.1(1)(a) of the DPA? If so, were the losses claimed by BDW recoverable for a breach of this duty?

Under s.1(1)(a) of the DPA the duty is owed to a person who has ordered the dwelling to be built and under s.1(1)(b) the duty is also owed to all those who subsequently purchase or acquire any other interest in the dwelling.

The Supreme Court upheld the Court of Appeal decision that BDW, as developer, can both owe a duty and be owed a duty. Those duties are not mutually exclusive: “…the purpose of the DPA is better served if the DPA duty is widely, rather than narrowly, owed. So, for example, on the facts of the present case, 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.”[6]

Ground 4: Is BDW entitled to bring a claim against URS under the Contribution Act where there is no judgment against BDW or any claim being made against it?

BDW having incurred the remedial costs claimed a contribution from URS under the Contribution Act on the basis both parties were liable to the homeowners for the same damage. URS sought to argue that a claim in contribution did not arise as there was no judgment against it nor any settlement agreement ascertaining the existence and amount of liability.

The Court dismissed URS’s claim and held that BDW is not prevented from bringing a claim for contribution against URS, “it is sufficient that BDW has made a payment in kind (by performing remedial works) in compensation for the damage suffered by the homeowners”[7].

Takeaways

1. This is a significant judgment in the construction sector and underpinning this is a clear policy intent of the BSA in terms of enabling recoverability, particularly for developers, faced with significant historical building safety defects.
2. Developers owe and can also be owed a duty under the DPA and therefore have a direct statutory cause of action under s.1 of DPA with 30-year retrospective limitation period.
3. Developers who incur costs remedying defects even where they are not faced with claims from homeowners are likely to be able to recover those costs by way of a claim under the Contribution Act.
4. Parasitic claims or as the Court referred to as “onward” claims in the tort of negligence or contribution arising from a liability under the DPA will be subject to the same extended limitation period.

[1] Para 63 “Such claims would not be time-barred because, by reason of sections 11 and 12 of the Limitation Act 1980, the three-year limitation period for personal injury and death (whatever the cause of action) runs from discovery or discoverability of the injury or death (as an alternative to running from accrual of the cause of action). In any event, section 33 of the Limitation Act 1980 confers a discretion on a court to disapply the primary limitation period so as to allow a claim for personal injury or death to go ahead”.

[2] Para 66

[3] Para 67-69

[4] S.135(3) BSA: “The amendment made by subsection (1) in relation to an action by virtue of section 1 of the Defective Premises Act 1972 is to be treated as always having been in force.”

[5] Para 107

[6] Para 153

[7] Para 266