Introduction and Background to the Appeal
BDW Trading Ltd (a property developer) (BDW) appointed URS Corporation Ltd (URS) as structural engineer for several high-rise residential developments. Post-Grenfell safety reviews in 2019 revealed serious structural design defects in two sets of multiple high-rise residential building developments (the Developments).
From 2020 to 2021 BDW performed remedial works on the Developments, though at this time DBW had no proprietary interest in the Developments and no claims had been made against it by the owners or occupiers of the Developments. Any such claim would have been time-barred.
In March 2020 BDW commenced a negligence claim against URS to recover the costs of the remedial work.
In October 2021, following a trial of preliminary issues, the Court held that:
- The scope of URS’s duty of care included the losses claimed (save for BDW’s claim for reputational damage);
- The remedial works costs were recoverable in principle;
- The losses were not too remote (i.e. they were in the reasonable contemplation of the parties at the time URS was appointed);
- The issues of legal causation and mitigation should be determined at trial; and
- BDW’s claim should not be struck out.
In June 2022, the Building Safety Act 2022 (BSA) came into force which retrospectively extended the limitation period under the Defective Premises Act 1972 (DPA) from 6 to 30 years.
BDW successfully applied to amend its claim so to bring new claims against URS under the DPA. URS appealed.
The Court of Appeal unanimously dismissed the appeal but URS was granted permission to take the matter to the Supreme Court on four grounds.
The Supreme Court
The Supreme Court dismissed all four grounds of appeal as summarised below:
Ground 1: In relation to the negligence claim, were the losses suffered by BDW (i.e. the cost of the remedial works) recoverable and/or were such losses too remote because (a) they had been incurred voluntarily and/or (b) because BDW had no proprietary interest in the Developments?
Held: URS owed BDW a duty of care and had breached that duty and on the assumed facts, BDW’s costs were not “voluntarily incurred” as BDW acted due to the risks of personal injury or death to the homeowners if it did not do so.
Ground 2: Did the extended 30-year limitation period under the DPA apply, and if so, what was its effect?
Held: The retrospective 30-year limitation period applies not only to claims under the DPA but also to related negligence and contribution claims dependent on the same statutory liability. Therefore, developers can bring contribution claims even where the original limitation period expired prior to the BSA coming into effect.
Ground 3: Did URS owe a duty to BDW under the DPA and if so are BDW’s alleged losses recoverable for breach of that duty?
Held: The duty under the DPA is owed to those who “order” a dwelling (s.1(1)(a)) and to every person who “acquires an interest” in the dwelling (s.1.1(b)). There is no reason why a developer cannot both owe a duty (i.e. to the owners/purchasers) and be owed a duty (by those it appoints to design or carry out works), particularly where the developer is the first owner. The purpose of s.1 of the DPA was to protect those who acquire an interest in a dwelling (or dwellings) and who have an interest other than by acquisition or purchase. Developers may therefore bring claims for defective works even if they themselves owe a duty to subsequent purchasers.
Ground 4: Could BDW bring a claim against URS for a contribution under s.1 of the Civil Liability (Contribution) Act 1978 where there has been no judgement or settlement between BDW and any third party and no claims had been made against BDW?
Held: The Contribution Act gives a person who is liable for damage suffered by another a statutory right to recover contribution from anyone else who is liable for the same damage. This is satisfied where a claimant has paid compensation (in this case by funding remedial works) for damage even where no third-party claim has been made or settled. In this case BDW claimed a contribution from URS based on joint liability to the homeowners for damage resulting from the defects. The fact that there was no judgement against BDW or admission of liability or settlement did not prevent BDW from claiming a contribution from URS.
Significance
This case reinforces the objectives of the BSA to ensure that those responsible for historical defects can be held to account, even after completion or disposal of the asset by the original developer. This provides certainty for developers who act proactively and without any current liability to undertake necessary remedial works to ensure the safety of occupants. The judgement is also of significant importance for contractors, sub-contractors and design consultants who may remain liable for defects even if the original developer has disposed of its proprietary interest in the development.
