Supreme Court supports the Building Safety Act

The tragic events surrounding the Grenfell Tower fire in 2017 continue to resonate, including in the now ever more extensive legal regime relating to building safety.

Last week, the Supreme Court gave its decision in the case of URS Corporation Ltd v BDW Trading Ltd (BDW/URS) which related to a dispute over liability for building safety defects concerning two high rise buildings which had been developed between 2005 and 2012.

In BDW/URS, design defects in the buildings were identified which BDW claimed to be a result of a breach of the terms of URS’ appointment as structural engineer. BDW had undertaken remedial works in 2020, even though at that point it no longer had a proprietary interest in the buildings. The claim against URS was based on a breach of professional negligence on the part of the structural engineer, namely URS had not complied with its duty to exercise reasonable skill and care in its design of the buildings.

Following the introduction of the Building Safety Act 2022, BDW amended its claim against URS to account for newly extended rights to bring claims under the Defective Premises Act 1972 (DPA). Broadly, the DPA provides a right of action in regard to dwellings which are not fit for habitation due to their design or construction. The Building Safety Act significantly extended the time limit for bringing a claim under the DPA, and BDW took advantage of that extension in revising its claim against URS. BDW was also permitted to revise its claim to account for the Civil Liability (Contribution) Act 1978 which allows a claim for a contribution to losses which can be made against another party who it is said is responsible for the same loss.

The BDW/URS case went to the High Court, then to the Court of Appeal and finally to the Supreme Court where four appeal grounds were determined:

1) Voluntary remedial works

The 2020 remedial works were carried out by BDW even though, at the time, BDW did not have a proprietary interest in the buildings. BDW had acted voluntarily to address the building safety issues which had been identified. URS argued that this factor took the claim against it outside of its responsibilities, beyond its duty of care. However, the Supreme Court decision was that URS had assumed a responsibility to BDW for its designs and arising from those designs, being negligently prepared, URS was in breach of its duty to BDW. The voluntariness of the remedial works in 2020 and BDW’s lack of proprietary interest did not make BDW’s claim irrecoverable. The argument for some form of voluntariness principle of defence was rejected. Responsible developers who act to remedy building safety defects should not be penalised by barring their rights to recovery.

2) Extended rights of action under the Defective Premises Act

The Building Safety Act 2022 extended the time limit for claims under the DPA to 30 years in the situation where a claim under the DPA has accrued prior to the introduction of the 2022 Act. The Supreme Court decided that this extended liability period applies to DPA claims and to other actions which are separate but in themselves dependent on the extended DPA limitation. The Supreme Court confirmed that this was the case and that it would apply to the ‘onward’ claims which might later be made, for example, against the contractor for the development based on a claim for contribution or in negligence. To do otherwise, said the Court, would create contradictory routes for claims.

3) Did URS owe a duty under the Defective Premises Act to BDW?

The DPA provides that a person taking on work in connection with a dwelling owes a duty of care to see that the work is done in a workmanlike and professional manner, with proper materials and so that the dwelling will be fit for habitation. This duty is owed to those who order a dwelling and to those who acquire an interest in that dwelling. A claimant can attain a right under the dwelling other than by purchase. The Supreme Court decided that URS owed a duty under the DPA and so the remedial works costs were recoverable due to the breach of duty.

4) The claim for a contribution.

Part of the BDW claim was for a contribution from URS for the costs of the remedial works. This claim was on the basis that BDW itself could become liable for a claim by the homeowners. Even though in fact no such claim by the homeowners had arisen, the Supreme Court decided that a right to a contribution arises where the damage suffered is the responsibility of more than one party, and where that one party has either paid, been ordered to pay or has agreed to pay compensation for the damage in question.

In summary, the Courts are continuing to show their support for the Building Safety Act and the principle that those responsible for building safety defects, rather than the actual homeowners, should be the ones to bear the costs of rectification. The decision also confirms that developers can recover reasonable remedial costs even where ‘voluntarily’ incurred, such as in the situation where BDW undertook remedial work promptly to minimise building safety risks, and where BDW no longer had a proprietary interest. Further, developers and not just dwelling owners will have rights under the Defective Premises Act where the dwelling in question is not fit for habitation.

For potential defendants, including developers, contractors and designers, and their insurers, the BDW/URS decision extends the likelihood of building safety claims.