Redefining recoverability post-BSA: URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

Background

In the wake of the Grenfell Tower tragedy, the UK Government urged developers to inspect high-rise buildings for defects. In late 2019, national housing developer Barratt Homes (BDW) discovered serious safety defects in two sets of its residential buildings in which URS Corporation Ltd (URS) had provided the structural designs. Consequently, the BDW opted to evacuate the residents in the affected buildings and rectify the defects. 

Claim

In March 2020, the BDW initiated a negligence claim against URS to recover the costs of the remedial works. BDW contended that the repairs were necessary and the defects were a result of URS’s failure to exercise reasonable skill and care as stipulated in their professional appointment terms. 

At the preliminary issue trial, it was determined that the losses claimed (excluding the reputational damage suffered by BDW) fell within the scope of URS’s duties and therefore, were recoverable in principle. However, a ruling on causation was reserved for the trial. 

Whilst awaiting trial, the Building Safety Act 2022 (BSA) was enacted. Section 135 of the Act extended the limitation period from six years under the Defective Premises Act 1972 (DPA) to 30 years. This directly challenged URS's defence that BDW's claim was time-barred. Consequently, BDW amended its claim to bring new claims against the URS under section 1 of the DPA and the Civil Liability (Contribution) Act 1978 (Contribution Act). URS appealed both the preliminary decision and BDW's application to amend its claim. In July 2023, the Court of Appeal unanimously dismissed URS’s appeals. 

Grounds for appeal 

The Supreme Court subsequently granted URS permission to appeal on four grounds. 

1. Causation: Did BDW's claim for damages fall within URS's scope of duty or were the remedial costs too remote as they were voluntarily incurred?

2. Application of section 135 of BSA: Does the extension of the limitation period apply retrospectively, and what is its effect?

3. Scope of URS's duty: Did URS owe a duty to BDW under section 1(1)(a) of the DPA and, if so, are BDW’s alleged losses recoverable? 

4. Application of section 1 of the Contribution Act: Is BDW entitled to bring a claim against URS under section 1 of the Contribution Act notwithstanding that there has been no judgment or settlement between BDW and any third party nor third party claims against BDW in respect of the defects identified?

Decision

In a unanimous judgment, the Supreme Court upheld the decisions of the lower courts, affirming that BDW are entitled to recover the costs for the remedial works from URS. 

The Court rejected URS's argument, clarifying that there is no common law principle which prevents a claimant from recovering losses incurred voluntarily. Indeed, the Court proposed that BDW had not rectified the defects voluntarily in any meaningful sense, but rather they had a moral duty to do so in order to protect the residents of the affected buildings. 

Turning to the question of limitation, the 30-year period under section 135 of the BSA was confirmed to also apply to claims made under section 1 of the DPA. Additionally, the Court extended the scope of duty owed under section 1(1)(a) of the DPA to any party whose dwelling house has defects, including a commercial developer. This validates BDW's claim under the DPA and confirms that its repairs were completed timeously. 

Finally, the Court allowed BDW's contribution claim against URS despite any prior judgment, settlement or claim by a third party.  The remedial works carried out by BDW were held to constitute a form of compensation to the third-party residents. 

Practical considerations for the construction industry

Undoubtedly, this ruling is pivotal for all stakeholders who operate within construction industry, reinforcing the magnitude with which the policy objectives of the Building Safety Act are being implemented to enhance building safety across the UK. 

Developers

• The Supreme Court has confirmed that developers can pursue upstream claims against consultants and contractors where remedial works have been undertaken to address safety defects even if they no longer own the property and in the absence of any third-party claim been made against them.
• This clarification will encourage developers to rectify defects without delay, reassured that costs can be recovered from the responsible party within the project's design team. 

Contractors & consultants 

Whilst this decision is favourable for developers, it is likely to raise concerns among other parties involved in construction projects. 

• Contractors and consultants with design responsibilities may now become more susceptible to negligence claims from developers wishing to recover the cost of remedial works. 
• Contractors and consultants should consider revising their appointments/contracts to tighten up the provisions regarding their liability and scope of duty.
• Equally, this development is likely to have a cascading effect on insurers as parties may seek more comprehensive cover to mitigate potential liability arising from defects. 

Our Construction team can provide tailored advice on the impact of URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 on your business. If you would like to discuss the article further, please contact Aine McGuinness or Alice Flynn.