Landmark Supreme Court decision on liability for building-safety defects: URS Corporation Ltd v BDW Trading Ltd

The Supreme Court’s landmark judgment in URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 (“URS v BDW”) offers welcome clarity for the construction industry on key issues – including:

• the scope and effect of the Building Safety Act 2022 (the BSA);
• limitation periods available for claims under the Defective Premises Act 1972 (the DPA); and
• contribution claims under the Civil Liability (Contribution) Act 1978 (the Contribution Act).

The judgement continues the trend of judicial recognition of developers’ claims for the cost of remedying defects caused by contractors and/or consultants.

Practical effect

The decision offers support for developers who have spent money remediating defects in medium to high-rise developments – it clarifies that:

1. key legal routes are available for developers to recover these costs from consultants and/or contractors through claims for breach of the DPA, negligence, and through Contribution Act claims;
2. these routes apply broadly, including:
   a) where remedial works are undertaken “voluntarily” i.e., without a direct obligation on the developer to remediate; and
   b) where a developer no longer owns the development;
3. Contribution Act claims by developers can succeed where:
   a) the developer has remediated defects that both the developer and another party are liable for; and
   b) no formal legal claim has been brought against the developer;
4. remedial works can constitute a “payment in kind”, and trigger rights under the Contribution Act – even if compensation has not been determined or paid separately.

The judgment gives welcome clarity to developers who are remediating building-safety defects – it eases their assessment of recovery prospects, and expands the routes available to recover costs and losses caused by contractors and consultants.

Contractors, consultants, and their insurers should also review their risk exposure in light of URS v BDW. Where defects relate to poor workmanship, professional indemnity cover may not respond. Conversely, URS v BDW will broaden the scope of insurers’ risks e.g., through professional indemnity cover.

Key facts

BDW Trading Ltd (BDW) had contracted URS Corporation Ltd (URS) to provide structural design services for two high-rise residential developments – Capital East in London, and Freemens Meadow in Leicester.

Given the gravity of the Grenfell Tower tragedy in 2017, like most developers BDW examined its developments to identify pertinent safety risks. BDW found that Capital East and Freemens Meadow had various defects, which BDW considered were due to negligent design by URS.

BDW remediated both developments, and commenced proceedings against URS for the remedial works costs and related losses. Since BDW’s initial claim was brought before the BSA 2022 came in to force, BDW’s initial claim was based on negligence.

When BDW discovered the defects and remedied them, BDW:

1. was not subject to a claim by third-parties; and
2. had previously sold and had no proprietary interest in the developments.

These were addressed as preliminary threshold issues for BDW’s claim. The High Court (TCC) found that, in principle BDW’s losses should be recoverable.

Enter the BSA

The BSA came into force in stages from 2022, and changed the legal position significantly – it retrospectively extended the limitation period that applies to claims for breach of section 1 DPA claims to 30 years.

BDW therefore applied to amend its claim. The Court allowed BDW to expand the legal basis of its claim against URS to include breach of the DPA – i.e., (in brief) that BDW’s costs and losses remediating defects were caused by URS failing to ensure the developments were “fit for habitation” once complete.

Appeal

URS appealed. However this was dismissed by the Court of Appeal, which found that (in brief):

1. for URS’ duty to extend to BDW’s claimed losses, BDW did not need to:
   a) be under a directly enforceable legal obligation to remedy the defects; or
   b) hold a proprietary interest in Capital East and/or Freemens Meadow;
2. contractors and consultants can owe duties under the DPA to commercial developers; and
3. prior legal claims by third-parties against developers are not a pre-requisite for Contribution Act claims.

Supreme Court

URS appealed again, this time to the Supreme Court on four grounds.

Ground 1: Negligence, ‘voluntariness’, and recovery of purely economic loss.

URS assumed responsibility to BDW under its professional design service contracts, and had breached its duty of care. Therefore, BDW had a claim in the tort of negligence for its loss (the repair costs). Against that context, the Supreme Court went on to hold that:

1. there is no legal “voluntariness” principle that prevents recovery e.g., by rendering loss too ‘remote’, or outside the scope of negligence at common law;
2. BDW’s decision to remediate was not “voluntary” in any event – the defects could have caused death or injury to homeowners. If that had occurred, BDW would invariably face claims, e.g., under the DPA, or for breach of contract, particularly given the extended limitation periods that apply following the BSA;
3. BDW’s reputation was at risk – if BDW had not remedied the defects after becoming aware of the risks for homeowners, BDW’s reputation would suffer. The Court also recognised the moral imperative on developers to remediate defects and mitigate risks to homeowners; and
4. BDW had liability to homeowners and others in respect of the defects, regardless of the limitation rules that applied at the time of the remediation. Limitation rules may offer a defence against time-barred claims – however a limitation defence does not remove the underlying legal cause of action.

The Supreme Court’s finding that BDW was “not exercising a sufficiently full and free choice so as to be regarded as acting voluntarily in effecting the repairs” is key. This has important implications for developers considering remedial works, and potential recovery of costs.

URS v BDW clarifies that in order to recover remedial works costs, developers do not always need to have a direct legal obligation to remediate. The English courts are receptive to developers recovering remediation costs and associated losses from those responsible for the defects.

Ground 2: Limitation and s.135 of the BSA

This concerned the extension of the limitation period to 30 years for claims based on s.1 of the DPA, that accrued before 28 June 2022 (implemented via s.135(3) of the BSA).

The Supreme Court clarified the position – firstly, the extended limitation period applies retrospectively. Secondly, it is not limited to claims brought solely under s.1 of the DPA.  Instead, the limitation extension also applied to BDW’s claims for negligence, and under the Contribution Act.

The Court’s findings included (in brief):

1. the wording of BSA s.135(3) i.e., “an action by virtue of” rather than “under” s.1 of the DPA), does not mean that section 135(3) BSA only applies to claims made directly under section 1 DPA;
2. if s.135 were interpreted otherwise, this would diminish the BSA’s effect contrary to Parliament’s intention i.e., for the BSA to:
   a) ensure those directly responsible for building safety defects can be held accountable; and
   b) avoid penalising responsible developers who take the initiative to appropriately identify and remediate building safety defects;
3. a balance must be struck – BSA s.135 should not be applied automatically “for all purposes“. Instead, it applies to claims for building safety defects that relate to DPA s.1 – even if the claim does not directly rely on DPA s.1. In URS v BDW, it was sufficient that DPA s.1 applied in the circumstances of BDW’s claim.

Ground 3: Property developers and the duties in DPA s.1(1)(a)

The DPA sets out statutory duties on those taking on work in connection with construction of residential dwellings. In particular, duties to “see that” that dwellings are properly designed and constructed, and “fit for habitation” when completed.

Breach of the duty at DPA s.1(1)(a) has proven to be a useful legal cause of action for developers seeking to recover costs of rectifying defects from those responsible.

URS v BDW bolsters this – the Supreme Court’s findings on this issue were (in brief), that developers can both owe duties under section 1(1)(a) DPA, be owed similar DPA duties, and this can occur at the same time.

This confirmation will be welcomed by developers, as it confirms their ability to:

1. take legal action under the DPA to recover remedial works costs and other losses; and
2. benefit from the extended 30-year limitation period enacted via the BSA.

Ground 4: Contribution Act claims

The Supreme Court also clarified the position in relation to claims for contribution to remedial works costs. The Court’s key findings were that developers’ rights to recover a contribution from others (e.g., a design consultant) under the Contribution Act include situations where:

1. both parties (developer and design consultant) may be liable for losses of a third party (e.g., a homeowner);
2. the developer has paid (whether by agreement or Court order) sums to a third party (e.g., a homeowner) by way of compensation; and
3. that undertaking remedial works amounts to a ‘payment in kind’, and is sufficient to trigger rights under the Contribution Act – even if the developer has not paid compensation separately.

This breaks legal ground. The Supreme Court decided that a contribution claim does not require the value of compensation to have been previously determined by a judgment or agreed settlement. As a result, the date that remedial works are undertaken can trigger the two-year limitation period for Contribution Act claims, and extend the limitation period for developers’ claims against contractors and design consultants.