The UK Supreme Court’s decision in URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21, delivered on 21 May 2025, brings important clarification to several intersecting areas of construction and professional negligence law.
The case addressed wide-ranging legal questions arising from structural design flaws in residential buildings and has significant consequences for developers, consultants, and insurers navigating post-Grenfell liability risks.
Background
BDW Trading Ltd (“BDW”), a major residential developer, uncovered design failings in several high-rise buildings during safety inspections undertaken in the wake of Grenfell. URS Corporation Ltd (“URS”) had been engaged to provide structural engineering services for the developments.
By the time defects were discovered, BDW had already transferred ownership of the buildings. Nonetheless, concerned about safety and reputational risks, BDW funded extensive remedial works between 2020 and 2021.
Since limitation had already expired for claims in contract or under the Defective Premises Act 1972 (“DPA”) at that time, BDW initially sued URS in negligence. Following the enactment of the Building Safety Act 2022 (“BSA”), which retroactively extended the limitation period for DPA claims, BDW amended its pleadings to include claims under:
- Section 1 of the DPA; and
- The Civil Liability (Contribution) Act 1978.
The case reached the Supreme Court after earlier decisions by the lower courts found against URS.
Supreme Court Findings
The appeal covered multiple legal grounds. The following are the key points addressed by the Court.
Was BDW’s Loss Actionable in Tort?
URS argued that BDW’s loss – incurred voluntarily, after it had relinquished ownership and at a time when it faced no legal claims – was too remote or outside the scope of any duty of care URS may have owed.
The Supreme Court rejected this argument. It held that there is no principle in English law that disqualifies voluntarily incurred costs from being recoverable per se. Rather, the reasonableness of such expenditures is relevant to factual causation and mitigation, which are matters for trial.
It was accepted that:
- URS had breached a duty of care by delivering flawed designs;
- The financial loss BDW suffered in remedying the defects flowed directly from that breach;
- BDW acted reasonably given the safety concerns and reputational risks involved.
Rethinking Pirelli: When Does Economic Loss Arise?
Though not strictly necessary to resolve the appeal, the Court took the opportunity to revisit Pirelli v Oscar Faber. Historically, that case fixed the start of the limitation period at the date of physical damage, not when the defect was discovered.
The Supreme Court signalled openness to a different approach, particularly for pure economic loss in construction disputes. It noted that discoverability of defects may, in principle, offer a fairer and more practical starting point for limitation. This may mark a shift in the jurisprudence in future cases.
Retrospective Limitation Periods under Section 135 BSA
The central policy question was whether section 135 of the BSA, which extended limitation periods for DPA claims retroactively, also affected related claims—such as those in negligence or for contribution. The Court held that:
- Section 135 applies not only to direct claims under the DPA but also to dependent claims, such as negligence or contribution claims that hinge on the extended limitation period.
- Restricting section 135’s scope solely to DPA actions would frustrate the BSA’s intent – namely, ensuring that responsible parties remain accountable for historic building safety defects.
- Developers who remediate defective works should not be barred from recouping costs from consultants and designers just because no prior claim had been made against them.
This interpretation reinforces the “polluter pays” principle underpinning the BSA.
Developers Can Both Owe and Receive Duties Under the DPA
URS argued that BDW, as a developer, could not benefit from the DPA because it was itself part of the construction supply chain.
The Court rejected that view. It confirmed that:
- A person who commissions the construction of a dwelling, including a developer, can be owed a duty under section 1(1)(a) of the DPA;
- There is no reason why someone cannot be both a duty-holder and a duty-recipient;
- A proprietary interest in the land is not necessary to be owed the duty, broadening the category of potential claimants.
This interpretation aligns with the DPA’s consumer protection objectives and clarifies that developers who take responsibility for remediation can recover associated losses.
Contribution Claims Without Prior Litigation or Settlement
Finally, the Court examined whether a developer can seek a contribution from a third party (here, URS) in the absence of any judgment or third-party claim.
The Supreme Court held that:
- A contribution claim under the Civil Liability (Contribution) Act 1978 does not require the claimant to have been sued or to have paid out money following a court order;
- It is sufficient if the claimant has incurred compensatory expenditure, even in kind (e.g. carrying out remedial works);
- The value of such remedial works is quantifiable and gives rise to a contribution right if others are also liable for the same damage.
This ruling clarifies that responsible developers can initiate contribution claims even in the absence of direct legal action against them by third parties.
Summary: What Has Changed?
- Before: Voluntarily Incurred Costs; May have been unrecoverable where no legal obligation to act existed. Now: Can be recoverable if reasonable and causally linked to the defendant’s breach.
- Before: Pirelli Limitation Rule; Limitation started from physical damage, not discovery. After: Court suggested moving toward date of discovery in pure economic loss cases.
- Before: Scope of BSA Section 135; Unclear whether extended periods applied beyond DPA claims. Now: Confirmed to apply broadly, including to dependent claims in tort/contribution.
- Before: DPA Duties to Developers; Ambiguity over whether developers could benefit from DPA protections. Now: Developers can be owed duties under the DPA – even without owning the property.
- Before: Contribution Without Claim; Some doubt as to whether payment or legal action was required first. Now: No prior claim needed; remedial action alone may trigger contribution rights.
Conclusion
The Supreme Court’s decision in URS v BDW reflects an evolving judicial approach to construction liability, marked by greater deference to legislative policy (particularly under the BSA), a practical view of developer responsibilities, and a flexible understanding of recoverable losses. For developers, consultants, and insurers, this ruling reshapes risk landscapes and reinforces the importance of proactive legal and safety strategies.