Consumer protection or commercial burden? A summary of URS v BDW [2025] UKSC 21
The Supreme Court’s decision in URS v BDW [2025] UKSC 21 is an important decision in construction law. It also deals with several points of general legal significance relating to the Limitation Act 1980, claims under the Defective Premises Act 1972, claims under the Contribution Act 1978, and interpretation of the Building Safety Act 2022.
Following the Grenfell Tower tragedy, the Government investigated safety standards in tower blocks and discovered pervasive defects in structures across the country, such as unsafe cladding. It has since encouraged building developers to carry out any remedial work necessary to ensure new safety standards are met.
Facts
The respondent to this appeal, BDW Ltd, is a property developer. The appellant, URS Ltd, provides consulting engineering services. Like many other developers, BDW conducted investigations in to the safety of its residential high-rise developments post-Grenfell. It discovered design defects in two of its developments, for which it had engaged URS to provide the structural design. BDW carried out remedial works on the flats, even though (a) it had since sold its freehold interest in them, (b) no claims had been made against BDW by the residential tenants, and (c) any such claim would have been time-barred.
Procedural history
BDW brought a negligence claim against URS to recover the costs of the remedial works. At first instance, URS argued – unsuccessfully – that the losses incurred by BDW for the remedial works to the developments fell outside the scope of URS’s duty of care to BDW, or alternatively that if BDW’s loss was recoverable in principle, that it was too remote.
When the 2022 Act came into force, section 135 retrospectively extended the limitation period for accrued claims under section 1 of the 1972 Act from six to thirty years. This imposes a duty on developers and engineers to carry out works properly. BDW applied to amend its claim to include new claims for breach of the s.1 duty, as well as contribution under the 1978 Act.
URS appealed both preliminary judgments. In 2023, the Court of Appeal (Coulson, King and Asplin LJJ) unanimously dismissed URS’s appeal. While URS was granted permission to appeal to the Supreme Court on four grounds, its appeal was unanimously dismissed by the Justices in their judgment dated 21 May 2025. This case summary will deal with each ground in order of general importance, rather than the order in which they appeared in the judgment.
Judgment
Ground 1 – applicability of the “scope of duty” test to cases of pure economic loss where there has been an assumption of responsibility by the defendant to the claimant
The first ground of appeal was that BDW’s loss was not recoverable from URS as it was outside the scope of URS’s duty of care to BDW. Alternatively, URS argued that since BDW had a limitation defence against possible claims by the tenants (putting aside s.135 of the 2022 Act), the losses had been voluntarily incurred and thus too remote.
The Court disagreed. The SAAMCO test for “scope of duty” looks at the purpose of the duty. Here, the purpose was plain: URS’s designs should not cause BDW to incur repair costs. URS’s designs fell short of this purpose and so the loss is within the scope of URS’s duty.
The Court also held that the loss was not too remote. The test to be applied in this case (i.e. a negligence claim resting on a contractual assumption of responsibility) is set out in Wellesley Partners v Withers [2015], i.e. whether the defendant, when they assumed responsibility, can be said to have reasonably contemplated as a serious possibility the type of loss suffered by the claimant. The Court held that the repair costs must have been reasonably contemplated by URS when they provided the designs.
The Court also held that there is no bright-line rule of “voluntariness” capable of limiting recovery and, in any event, BDW was not acting truly voluntarily because: (a) BDW would suffer reputational damage if it did nothing once it knew of the danger to the occupants; (b) BDW would still be liable to the tenants under 1972 Act as, even where the claims are time-barred and thus unenforceable, limitation bars the remedy and does not extinguish the right of action, and (c) the defects, left unremedied, could cause death or personal injury to the tenants and thus make BDW liable under the 1972 Act or in contract.
Ground 4 – entitlement to bring a contribution claim where the defendant’s liability has not been ascertained by a judgment or settlement
The fourth ground was that BDW could not bring a contribution claim as: (a) there was no judgment or settlement between BDW and any third party, and (b) no third party had ever asserted any claim against BDW. Lord Leggatt, delivering the main judgment on this issue, held that the true position is that the right of the first defendant (D1) to recover from the second defendant (D2) arises when: (a) damage has been suffered by the claimant (C) for which D1 and D2 are each liable, and (b) D1 has paid, been ordered to pay, or has agreed to pay compensation in respect of the damage to C. At that point, the two-year limitation period begins to run and D1 is entitled to recover contribution from D2.
There is no requirement that, before a contribution claim can be brought, D1’s liability to pay compensation has been ascertained by a judgment, settlement or admission. This is because s.1(6) of the 1978 Act defines “liable” in s.1(1) as “any such liability which has been or could be established in an action by or on behalf of the person who suffered the damage”. A liability which could be established in court proceedings on the existing facts is thus sufficient to make a person liable in respect of any damage for the purposes of a contribution claim, even if no proceedings have been brought.
Ground 3 – whether a developer could simultaneously owe the duty under s.1 of the 1972 Act to third parties and be owed the duty by negligent contractors
The third ground was that URS did not owe a duty under s.1(1)(a) of the 1972 Act because it could not owe the duty (to tenants) and be owed the same duty (by URS). In any event, URS argued that BDW’s losses were not of a type recoverable for breach of that duty. The Court disagreed and held that to conclude developers are not owed the s.1 duty by the professionals responsible for the design and construction of the building would hinder consumer protection, as most lay purchasers will buy from a developer.
Ground 2 – the retroactive effect of section 135 of the 2022 Act
The second ground questioned the applicability and effect of section 135 of the 2022 Act. Section 135 of the 2022 Act provides a retrospective 30-year limitation period for actions accruing by virtue of section 1 of the 1972 Act. The Court held that it also applies to claims in negligence or contribution by developers against contractors.
The underlying policy of the BSA is to ensure that those responsible for historic building defects can be held to account. This would be undermined if s.135 was limited to s.1 DPA actions only (i.e. this would mean that while a homeowner could bring a claim against a developer, that developer would be unable to make any “onward” contribution or negligence claims against the contractor directly responsible for the defect). As Asplin LJ noted in the Court of Appeal at para [223], “it would be contrary to public policy […] to dissuade a builder from rectifying defective work”.
