Supreme Court publishes decision on URS Corporation Ltd v BDW Trading Ltd

Story so far…

URS was the structural engineer for BDW in relation to residential tower blocks that were developed between 2005 and 2012. 

Following the Grenfell disaster on 14 June 2017, BDW undertook investigations into the designs and discovered structural defects attributable to URS's design. As a result, BDW incurred costs in relation to remedial works and the decanting of residents. These defects were discovered after 2019, by which time BDW no longer owned the properties, and the freehold interest had been passed to third parties. Nevertheless, BDW undertook the necessary remedial works to rectify the buildings.

In 2020 BDW issued professional negligence claims against URS as contractual claims were, by that time, past limitation. It was argued that URS had not complied with its duty to exercise reasonable skill and care in the design of the buildings. However, in 2022, following the enactment of the Building Safety Act 2022 ("BSA"), the time limit for making claims (including Defective Premises Act ("DPA") claims) was extended, rekindling a potential claim against URS. BDW sought permission to amend their pleadings to include the newly available DPA claim as well as a claim under the Civil Liability (Contribution) Act 1978.

The first instance decision decided that URS's duty of care included the claimed losses despite BDW no longer holding the freehold interest in the properties. 

URS appealed on several grounds challenging that the losses were outside their duty of care, the date the cause of action was determined to have raised (the date of discovery rather than the date of practical completion) and a procedural point regarding strike out of BDW's claim. The Court of Appeal unanimously dismissed URS's appeal.

The Supreme Court granted URS permission to appeal again on four grounds, the decision of which was published on 21 May 2025.

Supreme Court Decision

Ground 1

In relation to the negligence claim against URS, had BDW suffered actional and recoverable damage that was outside the scope of URS's duty of care or because it was taken on voluntarily given that it held no freehold interest (disregarding the extended limitation period)?

It was held that is common ground that URS had assumed responsibility to BDW for the designs and, in providing defective designs, had breached that duty. Further, the cases URS relied upon did not establish a ‘voluntariness principle’ whereby repair costs are irrecoverable because there was no proprietary interest in the buildings. It may impact legal causation and mitigation, but this is fact specific and to be determined at trial. 

Ground 1 dismissed.

Ground 2

Does the extended 30-year BSA limitation period apply to causes of action accruing before the BSA's implementation on 28 June 2022?

Section 135 of the BSA, which introduced the extended limitation is to be retrospective and treated as if it had always been in force. It was agreed that this extended limitation applies to DPA claims and other actions that are ‘by virtue’ the application of a DPA claim - in this case a negligence and contribution claim. The wording of section 135 is not limited only to claims “under” the DPA, therefore there is no reason to restrict the BSA in such a manner; to interpret the BSA as URS suggested would undermine the purpose of the BSA, which was to ensure that those responsible for building defects can be held to account.

Ground 2 dismissed.

Ground 3

Did URS owe a duty to BDW under the DPA and, if so, are BDW's losses recoverable?

Section 1 of the DPA imposes a duty on persons taking on work for or in connection with the provision of a dwelling to see that the work is done in a workmanlike and professional manner, with proper materials, so that the dwelling is fit for habitation when completed. 

Section 1(1)(a) of the DPA states that the duty is owed to those who ‘order’ a dwelling and section 1(1)(b) states that the duty is owed to every person who acquires an interest in that dwelling. 

The purpose of the DPA is to protect the interests of those who acquire an interest in a dwelling and those who have an interest in a dwelling other than by purchase (e.g., the first owner). Relevant work was carried out by URS to the order of BDW, so URS owed a duty under the DPA and there was no question that repair costs were recoverable under that breach.

Ground 3 dismissed.

Ground 4

Is BDW entitled to claim against URS under the Contribution Act when there has been no judgment, settlement or asserted claim between BDW and any third party?

BDW was claiming a contribution from URS for the cost of repair for which BDW on the basis that BDW would be liable for that cost to the homeowners. The right to contribution arises when damage is suffered for which each party is liable and one party has paid, been ordered to pay or has agreed to pay compensation for the damage. There does not need to be any claim asserted in order for the contribution liability to arise. 

Ground 4 dismissed. 

Key Points

While this Supreme Court decision has not changed the position following the earlier decisions, it has confirmed:

• that consultants do owe a duty of care for pure economic loss when the claimant no longer holds a freehold interest in the building;
• the retroactive application of the DPA limitation extension in relation to existing litigation and its interaction with other claims, such as negligence;
• whether the duties under the DPA are owed to developers, as well as property owners and whether a party can concurrently owe a duty and be owed a duty under section 1; and
• how scenarios that fit these types of facts interact with the Contribution Act. 

If you require any further information on the points above, please contact James King or William O’Brien.