URS Corporation Ltd v BDW Trading Ltd (2025) is a significant and profound case for the construction industry, following the Grenfell tragedy, which saw the Supreme Court uphold a decision that allows developers to recover the costs of repair from negligent contractors and designers.
This even includes circumstances where its liability to building owners had been “timed-out”, and the defects had been repaired “voluntarily”. This will have significant consequences for designers, contractors, and manufacturers who are found negligent in respect of historic cladding and fire safety defects.
The Supreme Court ruled on four key points:
1. Recoverability of “voluntary” remedial costs in negligence
A crucial point addressed is whether costs incurred by a claimant to rectify defects are recoverable in a negligence claim even if these costs were “voluntarily” incurred, meaning there was no immediate, enforceable legal compulsion from third parties for the claimant to carry out the work. BDW Trading undertook remedial works on developments it no longer owned and URS Corporation argued these costs were voluntarily incurred and thus outside the scope of duty or too remote.
The Court held there is no rule of law preventing the recovery of repair costs in a negligence claim simply because they were “voluntarily” incurred. Recoverability depends instead on factual questions of causation and mitigation. Whilst the “voluntary” nature of the action can be relevant, the core consideration is the reasonableness of the claimant's conduct in undertaking the repairs.
Factors that may support the reasonableness include:
- The claimant facing legal liability to homeowners for personal injury or death not in negligence, but under contract, or statutory liability such as the Defective Premises Act (DPA). These may have different liability periods to a negligence claim.
- There could be a genuine commercial interest in avoiding reputational damage.
- General public interest and moral pressure to address dangerous defects.
2. Retrospectivity and scope of Building Safety Act 2022 (BSA) provisions
The scope and retrospective effect of provisions within the BSA, were considered, particularly section 135, which increased the limitation period for DPA claims to 30 years.
The Secretary of State for Housing, Communities and Local Government (unusually) made submissions to the Supreme Court, confirming the relevant BSA provisions were absolutely intended to have retrospective effect and were “central to achieving the aims and objectives of the BSA”.
The Court clarified there was “no reason as a matter of language for restricting the application of section 135(3) to actions under section 1 of the DPA”, so applying it equally to claims for negligence or contribution.
The justification was for “ensuring that those directly responsible for building safety defects are held to account was central to the BSA”. Otherwise, it would create two contradictory parallel universes – one for direct homeowner claims and a second for claims by developers against responsible parties.
3. Is the DPA duty owed to developers?
URS Corporation argued that the DPA was intended to address unfairness suffered by purchasers of new dwellings, not to protect developers who do not inhabit the dwellings. The Court disagreed, “there is no good reason why a person, for example, a developer, cannot be both a provider and a person to whom the duty is owed”.
URS Corporation, having undertaken work related to the provision of dwellings, owed a statutory duty under section 1(1)(a) of the DPA to BDW Trading as the developer who ordered the work, even where there was an intention by the developer to exit the development by sale and not to occupy.
This is significant, granting developers (of all types) a direct cause of action in statute against those primarily responsible for defects, and will benefit from the extended 30-year time limit introduced by the BSA.
4. Contribution claims
The final point considered was if a developer could bring a contribution claim against a party like URS Corporation where: (i) there was no judgment or settlement between the developer and a third party, or (ii) no third party had claimed against the developer.
The Court determined that the right to recover contribution arises when:
1. damage has occurred for which both parties are liable, AND
2. the party seeking contribution has paid, been ordered, or agreed to pay compensation for that damage.
Critically here, such “payment of compensation” includes a payment in kind, such as carrying out remedial works, which can be valued monetarily. It is not necessary for liability to the injured party to have been established by a judgment, admission, or settlement.
Combined practical effects and analysis
The combined effect of these findings is significant in the context of building and fire safety defects and remediation but may also have wider application.
Developers can now recover reasonable costs in negligence even if incurred “voluntarily”, aligning with the broader goals of the BSA. These costs, arising from defective work, should ultimately be borne by those directly responsible for the defects, achieved through the significantly expanded utility and effectiveness of DPA claims and contribution claims.
This decision is strong in implementing the principles enshrined in the BSA into case law and will likely to be seen in combination as a significant shift in the law in enabling the pass-down of liability for defective design, construction, and specification. The Supreme Court’s decision sends a clear message to the construction industry that participants such as residential property developers, who are acutely exposed to building safety liabilities and remedial costs, can utilise the enhanced provisions in Part 5 of the BSA for recovering costs from supply chain parties.
Whilst common defence arguments relating to breach, causation and mitigation of loss will remain in play, supply chain members and their insurers are unlikely to find much favour with the courts in relation to arguments that developers had “voluntarily” incurred, or should have avoided, losses incurred by undertaking/ funding works to remediate building safety defects in their historic projects.