A seismic change to the Construction Industry? Implications of Supreme Court decision on the Building Safety Act 2022

On 21 May 2025, in a much-anticipated case for the construction industry, the Supreme Court handed down its judgment in URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 which addressed a number of legal issues relating to the effects of the Building Safety Act 2022 (“BSA”). This was the first time the Supreme Court had to consider claims brought under the BSA and it took the opportunity to make a wide-reaching impact on the operation of the law in this area.

Background to the Building Safety Act 2022

The BSA was introduced primarily as the government’s legislative response to the Grenfell Tower fire in 2017. The investigations which followed the disaster discovered a number of high-rise residential apartment buildings were built with serious safety defects, the most profound being the general use of unsafe and often highly flammable cladding, as well as the pervasive installation of defective balconies. Other notable structural issues were also identified which led to a public outcry, especially in relation to the question of the financial burden for the repairs. Following Grenfell, the government strongly advised developers to investigate all medium and high-rise apartment blocks and entrenched this in law via the BSA in 2022.

The case: URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

The respondent in this case, BDW Trading Ltd (“BDW”), a property developer, instructed URS Corporation Ltd (“URS”) as a structural engineer to provide structural design and consultancy services for two high rise developments: Capital East and Freemans Meadow between 2005 and 2012. In both developments, BDW ultimately sold long leases to residential leaseholders for each flat and transferred ownership of the common parts to third party management agencies.

Like many other developers at the time, BDW carried out investigations following the Grenfell Inquiry and discovered various design defects in both developments. In 2020 and 2021, BDW carried out remedial works to repair the defects. URS argued it did this voluntarily as no claim had actually been made against BDW requiring it to rectify the works. BDW argued in turn, if the defects had been left unremedied, it would have presented a danger to the occupants and risked serious harm to BDW’s reputation. BDW subsequently claimed the costs of carrying out the remedial works from URS as a result of its failure to exercise reasonable care and skill in the provision of its design services, as well as various other tortious duty breaches. Notably BDW did not initially bring a claim under contract due to the fact that a contractual claim would have been statute barred under the Defective Premises Act 1972 (“DPA”).

Technology and Construction Court decision

BDW brought the claim at first instance to the Technology and Construction Court (“TCC”) in October 2021, at which the TCC decided that the scope of URS’s duty extended to the losses claimed by BDW, except for those which concerned “reputational damage” which was deemed too remote.

Court of Appeal and the Introduction of the Building Safety Act

The BSA came into force after the first instance decision in this matter and fundamentally changed the nature of the claim which had been made by BDW. A key feature of the BSA for this case was the retrospective nature of the Act and, in particular, Section 135 BSA which retrospectively extended the limitation period for claims made under the Defective Premises Act 1972 from 6 years to 30 years in relation to works completed on or before the introduction of the BSA (28 June 2022).

As a result, BDW applied to the TCC to amend its claim to introduce new claims against URS under the DPA, which had previously been statute barred and for contribution under the Civil Liability (Contribution) Act 1978 (”the Contribution Act”). The TCC granted BDW permission to amend its claim accordingly, and URS appealed the granting of this permission to the Court of Appeal. In July 2023, the Court of Appeal dismissed the arguments made by URS and upheld both the first instance judgment against URS and the subsequent granting of permission for BDW to amend its claim.

Supreme Court Decision: URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

URS appealed to the Supreme Court which considered the following grounds:

Ground 1: In relation to BDW’s claim in the tort of negligence against URS, has BDW suffered actionable and recoverable damage or is the damage outside the scope of the duty of care and/or too remote because it was voluntarily incurred?

The Supreme Court decided BDW’s claim in the tort of negligence was for pure economic loss; in essence, as a result of URS’s negligence, BDW had a defective building. This building would either have a lower value than it otherwise would have if it was not defective, or would require incurring the cost of repairing the defects in order to restore the true value of the building. In either scenario, URS was liable for the loss.

The Supreme Court also rejected the voluntariness argument made by URS, who failed to persuade the Court that the loss incurred was outside the scope of any duty of care owed due to the fact that BDW was no longer the owner and had no legal obligation towards the developments and therefore volunteered to carry out the work. In rejecting this argument, the Supreme Court decided that there was no rule of law which prevents the recovery of repair costs on the basis the repair was made voluntarily, but even if there had been, it would not have applied here because BDW’s actions were not truly voluntary given that:

• If the defects were not repaired there was a risk it could result in the personal injury or death of an occupier
• BDW was subject to legal liability under the DPA and whilst the limitation bar under the DPA was in effect at the time of the initial claim, “limitation bars the remedy and does extinguish the right”; and
• There was a risk of reputational damage and, whilst it was decided by the TCC that BDW could not recover for reputational damages, it was nevertheless “a factor in making its actions not truly voluntary” given there was also a public interest and moral pressure on BDW to repair the defects.

The culmination of these factors meant that BDW was “not exercising a sufficiently full and free choice so as to be regarded as acting voluntarily in effecting the repairs”.

Ground 2: Does section 135 of the BSA apply in the present circumstances and, if so, what is its effect?

In short, yes. The Supreme Court determined that the extensions to the limitation period should be treated as if it had always been in force. This applies not only to claims directly brought under the DPA but also to consequential claims which are dependent on it. In reaching its decision, the Supreme Court made the following notable observations:

• The BSA was part of the Government’s response to the need to identify and remediate historic building safety defects as quickly as possible, to protect leaseholders from physical and financial risk, and to ensure that those responsible are held to account.
• According to the Supreme Court: “The BSA is both forward and backward-looking” with the forward-looking provisions aimed at improving building, safety and performance standards in new developments and to place new duties on accountable persons, and the backward-looking provisions aimed at addressing the problem of historical building safety defects. Section 135 is an example of a backward-looking provision.
• The Supreme Court was conscious that the Government would not have intended to punish developers who carried out remedial work prior to the BSA coming into force, stating that: “Not only had they acted responsibly but they had done so in response to and in accordance with the Government’s strong encouragement. Such penalisation of developers would be contrary to the purpose of the legislation”.

Ground 3: Did URS owe a duty to BDW under section 1(1)(a) of the DPA and, if so, are BDW’s alleged losses of a type which are recoverable for breach of that duty?

The issue at stake here is that under section 1(1)(a) of the DPA, a duty is owed to a person who has ordered the dwelling to be built, and under section 1(1)(b) a duty is also owed to anyone who subsequently purchases the dwelling. This puts BDW in the unusual position of both owing a duty to the leaseholders and being owed a duty by URS. However, the Supreme Court decided that the two were not mutually exclusive, stating:

“Of course, a person cannot owe itself a duty. But there is no inconsistency, or logical fallacy, in saying that a developer can both owe a DPA duty (e.g., to a subsequent purchaser) and be owed that duty (by the builder/architect/engineer).”

Consequently, the Supreme Court found that URS did owe a DPA duty to BDW, as URS had carried out relevant work to the order of BDW who was the first owner of the developments.

As to the question of BDW’s losses, URS failed in its argument that these were not of a type which are recoverable for a breach of that duty, having attempted to argue the damage contemplated by the DPA arose as a result of the ownership of a dwelling unfit for habitation. The Supreme Court held that once it is accepted that the wording of the DPA contemplates claims by developers against contractors, then it follows that losses incurred by a developer for remedying defects caused by it contractor’s breach of duty is recoverable.

Ground 4: Is BDW entitled to bring a claim against URS pursuant to section 1 of the Contribution Act notwithstanding that there has been no judgment or settlement between BDW and any third party and no third party has ever asserted any claim against BDW?

Finally, the Supreme Court determined that BDW was not prevented from bringing a claim for contribution against URS by the fact that there has been no judgment against BDW or settlement between BDW and any third party. The Supreme Court held that it was sufficient that BDW has made a payment in kind by performing remedial works in compensation for the damage suffered by the occupiers, with Lord Leggatt stating that:

“There is no further requirement that, before an action can be brought, D1’s liability to pay compensation to C and the amount which D1 is liable to pay in compensation must have been established by a judgment against D1, an admission by D1 or a settlement agreement between D1 and C.”

What the judgment means for the construction industry

This is a significant judgment for both developers and leaseholders, as well as multiple other professionals who work in the construction industry or who are impacted by, and navigating their way through the BSA and other recent legislation which has transformed the regulatory landscape in this area.

It is positive news for those developers actively trying to remedy the many defects found across high-rise residential apartment blocks all around the country. This judgment provides greater certainty that developers will be able to recover the costs of repairing those defects from the contractors who were ultimately responsible for them, albeit this of course assumes these contractors are solvent and have the means to pay what are likely to be substantial costs for remedial work to be carried out.

The complete 89 page judgment can be accessed here.

The Hamlins Real Estate Disputes team has expertise in both commercial and residential matters. We seek to obtain the best outcome possible for every client, no matter how big or small the issue may be. If you would like a conversation to find out how we might help you, please get in touch.