A relief for developers – The Supreme Court’s decision in URS v BDW
On 21 May 2025, the Supreme Court handed down a pivotal judgement in the case of URS Corporation Ltd (Appellant) v BDW Trading Ltd (Respondent) [2025] UKSC 21. This was the first appeal to consider the interpretation and application of the Building Safety Act 2022 and is undoubtedly one of the most significant construction-related decisions of the Supreme Court in recent years.
The background
On 14 June 2017, 72 people tragically lost their lives in the fire at Grenfell Tower. Investigations discovered that the main cause of the tragedy was the use of unsafe cladding on the outside on the building. The tragedy triggered industry investigations to identify whether other High Risk Residential Buildings had unsafe cladding and/or facades. Meanwhile the Government also acted and the highly anticipated Building Safety Act 2022 (BSA) was introduced by Parliament to place stricter legal liabilities on developers and prioritise the safety of developments and residents.
It was against that background that BDW (as the developer) carried out investigations on high rise developments removing unsafe cladding and in the process, in a limited number of cases, finding structural design defects were also present in the buildings. BDW then carried out remedial works on these properties, notwithstanding the fact that BDW no longer had a proprietary interest in the Developments (having sold long leases of the flats to residential purchasers).
Despite there being no obvious physical damage to the buildings and no claims brought by the residents / leaseholders, BDW considered remedial works were necessary as there was an increased risk to residents’ health and safety. BDW consequently brought a claim against URS in the tort of negligence in relation to defects in the structural design which had been carried out by URS.
June 2022 saw Section 135 of the BSA come into force, which retrospectively extended the limitation period under Section 1 Defective Premises Act 1972 (DPA) from 6 to 30 years. As a result, BDW amended their claim to include claims under the DPA and the Civil Liability (Contribution) Act 1978, as well as in the tort of negligence.
BDW’s claim was successful in the first instance but URS appealed the first instance decision, arguing that BDW chose to carry out the works voluntarily and should not be able to claim money back. The Court of Appeal unanimously dismissed URS’ appeal but the Supreme Court granted permission for URS to appeal again on the four grounds discussed below.
Grounds of Appeal
The four key grounds of appeal in the Supreme Court were as follows:-
Ground 1: Did BDW suffer actionable and recoverable damage that fell within the duty of care owed to it by URS or was the claim was too remote as it was “voluntarily incurred” by BDW?
URS argued that as BDW chose to undertake the remedial works when it no longer owned the properties and was under no legal obligation to do so, arguing that it was a “voluntary decision”. This raised the question that if a claimant makes a voluntary payment, does it mean that it cannot be recovered from a wrongdoer?
The Supreme Court dismissed this ground and rejected the idea that a developer could not claim costs because it acted “voluntarily”; URS still owed a duty to BDW in the tort of negligence and the claim was not too remote.
It was held that the question of “voluntariness” was to be assessed on the reasonableness of the decision to undertake the works, taking into relevant account factors such as the risk of the claimant becoming liable for personal injury, death and repairs, reputational damage and the general public interest. In this case, the Supreme Court agreed that BDW had no realistic alternative than to carry out the remedial works to remove any potential dangers and liability.
This decision supports the position that a developer who acts quickly in remedying defects to protect residents (and their own reputation) even when the decision is made voluntarily can normally still claim against the original negligent designers or contractors.
Ground 2: Did the retrospective extended limitation periods under s135 BSA apply?
Section 135 BSA extends the limitation period under s1 DPA from 6 years to 30 years for causes of action accruing before 28 June 2022 and provides that the amendment to the limitation period should be treated as having always been in force.
It was common ground that s135 BSA retrospectively applies to a claim brought under s1 DPA. However, URS argued that the retrospective nature of s135 did not apply to the related claims in negligence and for contribution. The Court dismissed this and held that s135 BSA does apply to related claims dependant on the extended limitation period in s1 DPA.
Essentially, URS’ argument was that the extended limitation period applied to developers but not those further down the supply chain. However, the Court noted that to restrict s135 BSA to only actions under s1 DPA would limit any onward claims a developer might make against a contractor or designer directly responsible for the defects. This would contradict the central purpose of the BSA that those responsible for historic building safety defects should be held accountable.
Ground 3: Did URS owe BDW a duty under s1 DPA?
URS argued that s1 of the DPA applied only to purchasers of properties and not to BDW as a commercial developer. The Court dismissed this ground and held that the duty applied to developers such as BDW as they were the first owner and constituted a “person” to whose “order” URS carried out work. It is therefore possible for a developer to both owe a duty to purchasers of dwellings and also be a person to whom a duty is owed by consultants and contractors.
The effect of this decision is that all contractors, subcontractors and construction professionals of residential dwellings owe developers a duty under s1 of the DPA. This gives developers a robust statutory route to recover the costs of fixing defective work with a 30-year limitation period, existing even where contractual claims may have expired.
Ground 4: Was BDW entitled to claim for contribution against URS under s1 of the Contribution Act when there has been no judgement or settlement with a third party and no claim asserted?
BDW sought to claim contribution towards the remedial costs from URS on the basis that they were both liable to the homeowners in respect of the same damage. The Court held that BDW was not prevented from doing this by the fact there was no judgement or claim against BDW from a third party. Damage occurred which both parties were liable for and BDW paid compensation for that damage in the form of carrying out the remedial works. BDW therefore had the legal right to recover a contribution from URS.
This decision therefore makes it clear that a contractor or consultant can, in principle, be ordered to contribute where a developer chooses to proactively rectify defects (to avoid a likely liability and claims), despite the developer not having been yet pursued legally (or having reached a commercial settlement with the homeowners).
Summary
In this case, the Supreme Court unanimously dismissed each ground of appeal brought by URS, thereby providing some much-needed clarity on when and how developers can recover from their supply chain the costs of fixing dangerous defects in buildings. The decision reinforces the goal of the BSA, which was intended to make it easier to pursue the parties who are ultimately responsible for defects and make them bear the costs of fixing unsafe work.
Developers will welcome the decision – as it provides legal precedent for them to recover the costs of remedial works, even for historic defects. However, for contractors, designers and consultants who may be implicated in historic works which are said to now be unsafe and/or in need of rectification, the ruling increases the likelihood of claims being brought against them under the new legislation.
For the construction sector in general, it is likely that past projects will be subject to more scrutiny, and that developers will feel more comfortable proceeding with remedial works, knowing that there is likely to be recourse for them to pursue their supply chain under the extended DPA limitation periods.
Talk to our team
Clarke Willmott LLP have experience acting for clients across the supply chain and provide advice in respect of their obligations and rights under the new Building Safety Act and related issues.
If you wish to discuss any of the issues which arise out of this decision or have any BSA related questions or queries, please do not hesitate to contact Mark Christie or Amy Johns.
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