The Supreme Court Judgment ‘URS Corporation Ltd v BDW Trading Ltd’ – a landmark decision for the construction industry

This blog was co-authored by Ben Smith, Partner; Huw Wilkins, Senior Associate; and Paul Smylie, Senior Associate.

Introduction

The judgment of the UK Supreme Court, delivered on 21 May 2025, in the case of URS Corporation Ltd v BDW Trading Ltd1 addresses several complex legal issues arising from a dispute over liability for building defects discovered in two high-rise residential developments.

Background

During its post-Grenfell investigations, in late 2019, BDW Trading Ltd (“BDW”) discovered alleged design defects in two sets of multiple high-rise residential building developments (the “Developments”) for which it had been the developer and for which the structural designs had been provided by URS Corporation Ltd (“URS”).

The alleged design defects were said to constitute a breach of URS’ appointment contracts as well as common law negligence.

No claim was made against BDW by the owners or occupiers of the Developments and any such claim would (at the time) have been time-barred. However, as BDW considered the defects to be dangerous from 2020 to 2021 BDW performed remedial works on the Developments. Even though by then it had no proprietary interest in the Developments,

In March 2020, BDW brought a claim against URS in the tort of negligence to recover the costs of the remedial works. It could not bring claims against URS in contract or under the Defective Premises Act 1972 (“DPA”) because they were, before the coming into force of the Building Safety Act 2022 (“BSA”), time-barred.

After the introduction of the BSA, BDW applied for and was granted permission to amend its claim to claim against URS under:

1 of the DPA (the BSA having extended the limitation period for such claims retrospectively; and
the Civil Liability (Contribution) Act 1978 (the “Contribution Act”).

URS appealed (unsuccessfully) to the Court of Appeal and then again to the Supreme Court on the basis of certain assumed facts.

The Appeal to the Supreme Court

Ground 12: In relation to BDW’s claim in the tort of negligence against URS, has BDW suffered actionable and recoverable damage or is the damage outside the scope of the duty of care and/or too remote because it was voluntarily incurred (disregarding the possible impact of s.135 BSA)? If the answer to that question is that the damage is outside the scope of the duty of care or is too remote, did BDW in any event already have an accrued cause of action in the tort of negligence at the time it sold the Developments?

It was common ground that URS assumed responsibility to BDW under its contracts for professional services and breached the resulting duty of care by providing defective designs. In principle, therefore, BDW had a claim in the tort of negligence for its loss (i.e., the cost of the repairs).

However, URS argued that BDW was not entitled to any compensation because BDW carried out the repairs voluntarily, in circumstances where: (i) it had no proprietary interest in the Developments; and/or (ii) it had no legal obligation to do so because all claims against it were time-barred. URS argued that English law recognised a principle of voluntariness which rendered BDW’s loss outside the scope of URS’s duty and/or too remote.

Principle of voluntariness

The Supreme Court was clear in deciding that there was no “voluntariness principle”, although the extent to which repair costs had been voluntarily assumed may be relevant to legal causation and mitigation as being concerned with a claimant’s unreasonable conduct. However, the Supreme Court said that the application of legal causation and mitigation are fact-specific and must go to trial. The Supreme Court also noted that its conclusion in this case was consistent with the underlying factors that might make the repairs reasonable. Namely, on the assumed facts:

It was fair and reasonable for URS to be held liable to BDW for the repair costs BDW had incurred because they were the obvious consequence of URS failing to perform its services with the professional skill and care required.
The commercial interest in avoiding reputational damage.
Incentivising a claimant in BDW’s position to carry out the repairs so as to ensure that any danger to homeowners is removed.

Pirelli3

Because of its finding to the first question in Ground 1, the Supreme Court did not need to consider –when BDW’s tortious cause of action accrued.

Nevertheless, the Supreme Court commented on the correctness of the House of Lords decision in the Pirelli case. In the context of pure economic loss the Supreme Court said, obiter, “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 moving to the cause of action accruing at the date of discoverability in the context of defective buildings raises difficult issues. That the Supreme Court made any comment at all is a strong indication that Pirelli will be significantly limited in its application in the future.

Ground 24: Does s.135 BSA apply in the present circumstances and, if so, what is its effect?

The Court considered the broad purpose and scheme of the BSA, including the retrospective extended limitation periods and new causes of action. The Supreme Court adopted the submissions of the Secretary of State for Housing, Communities and Local Government, which it said were particularly helpful in relation to the background, the policy and purpose underlying the BSA in general and section 135 in particular. It noted the submissions were strongly supportive of BDW’s case.

Section 135 BSA

The general scheme of section 135 is to provide for a 15-year limitation period for rights of action under a “relevant provision”, which includes section 1 of the DPA, which accrue on or after the commencement date – 28 June 2022. In relation to rights of action under section 1 of the DPA which accrued before the commencement date, the applicable limitation period is 30 years rather than 15 years (section 4B(4)).

Section 135(3) provides that the amendment to the limitation period “is to be treated as always having been in force”, save where that would involve a breach of a defendant’s rights under the Convention, or in respect of claims settled or determined before 28 June 2022.

Application of Section 135 to other contingent claims

The parties agreed that s.135 BSA applies to a claim brought under s.1 DPA. The issue was whether the retrospectivity of s.135(3) BSA applies to other claims which are dependent on the time-bar applicable to claims under s.1 DPA. In this case the claims in negligence and for contribution made by BDW against URS.

The Court confirmed that s.135(3) of the BSA applies to claims which are dependent on the limitation period in s.1 DPA but are not actions brought under that section.

The Supreme Court noted that the central purpose and policy of the BSA was to ensure that those responsible for historic building safety defects could be held to account; the “polluter pays” principle.

The Court noted this purpose would be undermined if s.135(3) BSA were restricted to actions under s.1 DPA - while a homeowner would be able to bring a claim against a developer under the DPA, it would limit any ‘onward’ claims that the developer might make against the contractor directly responsible for the defect for contribution or in negligence.

Any contrary conclusion, the Supreme Court said would be legally incoherent and create two contradictory routes for claims depending on the identify if the defendant. It would also penalise responsible developers who are proactive in identifying and remedying building safety defects.

Ground 35: Did URS owe a duty to BDW under s.1(1)(a) DPA and, if so, are BDW’s alleged losses of a type which are recoverable for breach of that duty?

Unsurprisingly, the Supreme Court upheld the Court of Appeal’s decision that a developer could both owe a duty and be owed a duty under the DPA.

The Supreme Court stated that the scheme of section 1(1) of the DPA means that:

Under section 1(1)(a) the duty is owed to a person to who has ordered the dwelling to be built. This most obviously includes a person who ordered a dwelling to be erected, converted or enlarged on their own land, which will cover developers who order relevant work and are the first owners. The Supreme Court found that the wording of the DPA is wide enough to cover circumstances where a person has no proprietary interest in the land and therefore no proprietary interest in the dwelling.
Under section 1(1)(b) the duty is also owed to all those who subsequently purchase (or acquire any other interest in) the dwelling which covers any subsequent purchaser of the dwelling.

The Supreme Court said that there was no reason why a person could not be both a provider and a person to whom a duty is owed, and rejected the suggestion that these were mutually exclusive categories.

Further, the aim of the DPA, of improving the quality of construction of new housing, was better served if the duty under the DPA was imposed on anyone engaged in the provision of a new dwelling and owed to anyone to whom the dwelling is provided or who subsequently acquires an interest in the dwelling.

In respect of the recoverable losses, Lord Hamblen and Lord Burrows, who gave the leading judgment on Grounds 1 to 3, said that as the wording of section 1(1)(a) of the DPA contemplates claims by developers against contractors, it follows that that the DPA also contemplates the losses incurred by a developer in remedying defects by its contractor’s breach of duty. Lord Leggatt went further and said that the economic loss suffered as a result of a breach of the duty may arise from liability to the current owner of the dwelling and that there is no justification for regarding this type of loss as outside the scope of the DPA. This indicates a broad liability under the DPA which would also extend to consequential losses.

Ground 46: Is BDW entitled to bring a claim against URS under section 1 of the Contribution Act 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 held that the right to recover contribution arises when (1) damage has been suffered by C for which D1 and D2 are each liable; and (2) D1 has paid or been ordered or agreed to pay compensation in respect of the damage to C. This was the point at which the two year limitation period for a contribution claim to be brought arises, but it does not mean that an action could not be brought before that point.

Lord Leggatt, who gave the leading judgment on Ground 4, said that it first needs to be possible to identify an amount of money for which D1 is liable and of which D2 must be ordered to pay a proportion. Accordingly, D1 can recover a contribution when it has made or been ordered or agreed to make a payment in respect of which the contribution is sought. The Supreme Court confirmed that it was sufficient that BDW had made a “payment in kind” by performing remedial works in compensation for the damage suffered by the homeowners as it was capable of valuation in monetary terms.

Commentary

Ultimately, this important Supreme Court judgment reinforces the principle that costs should ultimately be borne by those responsible and is aligned with the overall policy of the BSA and its related secondary legislation.

This judgment has a number of practical effects:

Developers can recover reasonable costs in negligence even if they have been incurred “voluntarily”. This will encourage developers to undertake necessary remediation work without delay in line with the policy behind the BSA.
For remedial work carried out after section 135 came into force (28 June 2022) developers can argue that the works were reasonable mitigation because the potential DPA liability to homeowners was no longer time-barred by the BSA. For work done before that date, however, the position is less clear cut and will turn on the facts.
Developers have a direct statutory cause of action, which has a 30-year limitation period, against those responsible for defects rendering the dwelling unfit for habitation.
Where a party carries out remedial works to address damage, they can claim contribution from another, liable, party for the cost of those works, even if no homeowner has brought a claim, obtained a judgment or agreed a settlement.
The decision, however, gives members of the supply chain, including contractors and consultants, and their insurers more issues to consider and likely more claims to defend.