URS Corporation Ltd –v- BDW Trading Ltd

A judgment of the UK Supreme Court has provided clarity on the impact of the retrospective extended time limits brought in by the Building Safety Act 2022—legislation brought in by the UK government in response to the Grenfell Tower fire.

Background

The case arose out of the design of high-rise residential developments in London and Leicester. BDW Trading Ltd (BDW) was the developer, and it had engaged URS Corporation Ltd (URS) as its structural design consultant.

The London development had completed in 2008. The Leicester developer had completed in 2015.

Following the Grenfell Tower disaster in June 2017, BDW undertook widespread investigations of the developments. Investigations showed that the developments had been built to “dangerously inadequate structural designs”. Residents had been evacuated from one of the blocks. However, by the time BDW had discovered the defects it had already sold the developments to third parties. Nonetheless, it carried out remedial works (at a cost of “many millions of pounds”)—arguing that, as a “responsible developer”, BDW “could not ignore the problem once it had come to light.”

In October 2021 BDW brought a claim against URS to recover the costs of remedial works.

The Law – Defective Premises

Section 1 of the DPA imposes a duty on developers (like BDW), contractors and professional designers (like URS) to build dwellings properly. That duty is owed to those who “order” a dwelling and to every person who “acquires an interest” in the dwelling.

The DPA does not apply in Northern Ireland. However, Article 3 of the Defective Premises (Northern Ireland) Order 1975 provides for a similar duties to those detailed in Section 1 of the DPA.

In June 2022, section 135 of the Building Safety Act (BSA) came into force and retrospectively extended the limitation period for accrued claims under section 1 of the Defective Premises Act 1972 (DPA) from 6 years to 30 years.

Section 135 of the BSA does not apply in Northern Ireland. However, in September 2024, the Defective Premises Act (Northern Ireland) Order 2025 brought the retrospective extended limitation period into force in Northern Ireland.

The Appeal

Following the introduction of Section 135 of the BSA, BDW successfully applied to amend its claims so as to (amongst other things) bring a new claim against URS under Section 1 of the DPA.

URS appealed but its appeals were dismissed by the Court of Appeal. The Supreme Court granted URS permission to appeal on four grounds.

One of the issues for the Supreme Court to determine was whether URS owed a duty to BDW under section 1 of the DPA, as a person who had “ordered” a dwelling.

URS argued that it did not, on the basis that the DPA distinguished between those who owed duties (“providers”, including contractors, designers and developers) and those to whom they are owed (including the purchaser of the dwelling).

Decision

The Supreme Court rejected URS’s argument, concluding that:-

“…there is no good reason why a person, for example a developer, cannot be both a provider and a person to whom the duty is owed. That will most obviously be the case where the developer who orders relevant work is the first owner.”

In reaching that conclusion, the Court noted that the purpose of the DPA was to “protect the interests of those who acquire an interest in a dwelling (who may conveniently be referred to as “purchasers”) and of any person who has an interest in the dwelling other than by acquisition or purchase, most obviously its first owner.”

Relevant work had been carried out by URS “to the order of” BDW. URS therefore owed a duty to BDW under section 1 of the DPA.

Carson McDowell view

In a landmark judgment, the Supreme Court has confirmed that the duty under Section 1of the DPA is owed to any person to whose "order" a dwelling is being built. That can include a developer.

Residential developers may be encouraged by the prospect of an avenue to seek to recover costs of remedial works for building defects.

However, particularly with the length of the extended limitation periods under the DPA and its equivalent in Northern Ireland, contractors and professional consultants may be concerned about an increased prospect of facing a claim for an historic building defect.

If you would like any further information or advice on these issues, please contact John Dugdale or another member of our Construction team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.