Developers are now able to recover costs from all construction supply chain contractors to remedy building defects within an extended 30-year window, even if the work was carried out voluntarily as a result of safety concerns and it has been sold on, the Supreme Court has ruled.
Housing developer, BDW Trading, known as Barratt, hired engineering firm, URS, which is now owned by AECOM, to design apartments for two developments in London and Leicester between the years 2007 and 2012.
BDW later sold the properties following completion by 2008 and 2015.
Background
Following the Grenfell disaster, the UK government ‘strongly encouraged’ developers to investigate medium or high-rise developments for which they were responsible and remedy any safety defects.
BDW ordered a review of its buildings and identified structural design defects within its London and Leicester buildings which resulted in investigations and remedial works costing millions of pounds.
On the back of this, in March 2020, BDW raised negligence claims against URS before the High Court, seeking compensation for the losses it incurred.
Supreme Court Case: URS Corporation Ltd v BDW Trading Ltd
Judgement of the URS Corporation Ltd v BDW Trading Ltd case, followed several unsuccessful lower court appeals. The Supreme Court ruled in favour of BDW Trading with all four appeals granted to URS to make, dismissed.
Crucially, the Supreme Court rejected the notion that BDW’s remedial works, since they sold the properties, were ‘voluntary’ and thus unrecoverable, affirming that safety concerns and reputational risks negate true voluntariness.
The ruling confirmed that BDW could reclaim the remedial work costs, setting a precedent that developers may recover costs even without legal compulsion, where safety is at stake.
The Court also upheld the retrospective application of section 135 of the Building Safety Act 2022, extending the limitation period for claims under the Defective Premises Act 1972 from six to 30 years. This opens the door to historic claims dating back to 1992, dramatically increasing long-term liability.
Further, it was confirmed that developers can be owed a statutory duty under the DPA, expanding the class of potential claimants beyond end purchasers, in addition to the processing of claims in spite of whether any agreed legal liability was made.
Analysis
Law firm, Watson Farley & Williams said the judgment marked a significant shift in construction law, broadening the scope of duty, extending limitation periods, and increasing exposure to contribution claims. It added stakeholders must now reassess their risk profiles, particularly in light of historic projects and evolving safety obligations under the Building Safety Act.
Theresa Mohammed, a partner in the dispute and resolution group at Watson Farley & Williams said: “The UK Supreme Court has delivered a pivotal judgement, significantly reshaping liability exposure for contractors, consultants, and developers involved in residential and mixed-use developments.
“The ruling, which follows post-Grenfell safety reforms, confirms that URS is liable for structural design defects discovered by BDW in two high-rise developments, despite BDW no longer owning the properties or facing formal claims.”
Response
A Barratt-Redrow spokesperson said: “We are pleased that in this landmark case, the Supreme Court has dismissed the appeal on all grounds and clarified the responsibility of wider companies for remediating defects in developments they were involved in building.
“Whether remediation is required because of defects in design, supply of inappropriate products or workmanship issues, it is vital that the companies who played a part step up and put things right, as we have done with the developments in this case.”
A spokesperson for URS said: “The judgment provides clarity on certain preliminary legal issues relating to legacy matters. It does not resolve the substantive issues, which will be addressed in the next stages of the legal process.”
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