Liability for historical building safety defects under the Building Safety Act 2022 and Defective Premises Act 1972.

In mid-May the Supreme Court judgement was handed down in the case of URS v BDW.  The case involves several key pieces of legislation and legal principles. 

The decision is a landmark point in the context of the building safety legislation and liability for historical building safety defects. It strongly reinforces the purpose and policy of Part 5 of the BSA 2022, which is primarily aimed at holding to account those responsible for historical building safety defects. 

Background facts 

BDW, a developer, constructed two high-rise residential developments between 2005 and 2012. URS consultant engineers provided structural designs for the developments. In 2019, BDW discovered design defects that created safety risks and carried out remedial work.  Although, BDW had  

• sold its proprietary interest in both developments  
• no claims against it by any third-party owner or occupier of the developments. 
• any potential claims brought by third parties to enforce obligations owed to them (under the DPA 1972 or in contract (for breach of collateral warranties)) would be time-barred under the Limitation Act 1980. 

In March 2020, BDW started proceedings against URS in the tort of negligence to recover the costs of the remedial works. Then followed a trial of preliminary issues, and it was held that the scope of URS's duty of care included the losses claimed (save for BDW's claim for reputational damage), which were recoverable in principle and not too remote. The judge also held that issues of legal causation, whether BDW's actions had broken the chain of causation such that it caused its own loss and if it had failed to mitigate its loss, were fact dependent and could only be determined at trial. BDW applied to amend its claim following the introduction of the BSA 2022, as it retrospectively extended the limitation period for DPA 1972 claims from six to 30 years.  The amendments sought to: 

• remove the previous admission that when the defects were discovered and the repairs undertaken, any liability of BDW to any third party was time-barred (due to the retrospective extension of the limitation period). 
• Add claims against URS under the DPA 1972 and for contribution under the Contribution Act 1978. 

The High Court granted permission for these amendments. 

URS appealed both the preliminary issues decision and the permission to amend. The Court of Appeal dismissed URS's appeals.  

Decision 

The URS then appealed to the Supreme Court on four grounds, and these were all dismissed as follows: 

• Ground 1: The recoverability of BDW's losses in negligence.  Decision - there is no rule of law which meant that "voluntarily" carrying out repairs rendered the repair costs outside the scope of the duty of care owed or too remote 
• Ground 2: The effect of the retrospective limitation period under the BSA 2022. Decision - section 135 of the BSA 2022 extends to claims that are dependent on the limitation period in section 1 of the DPA 1972 but are not actions brought under that section 
• Ground 3: Whether URS owed a duty to BDW under the DPA 1972. Decision - the duty under section 1(1)(a) is owed to any person, including a developer, to whose "order" a dwelling is being built 
• Ground 4: Whether BDW could claim contribution without a judgment or settlement with third parties. Decision - BDW is not prevented from bringing a claim for contribution against URS simply because there has been no judgment against BDW or settlement between BDW and any third party, and no third party has ever claimed against BDW 

Capsticks’ view 

Four grounds were considered as detailed above.   

• Ground 1: The practical consequences include that developers and building owners who incur costs to rectify defects, even voluntarily, will likely be able to recover costs from negligent designers or builders in a negligence claim. Additionally, the general public’s interest and moral pressure to address dangerous defects may mean that decisions of this nature are not always voluntary.   
• Ground 2: Secondly, extending the retrospectivity of section 135 of the BSA 2022 to claims, in particular contribution claims, that are dependent on section 1 of the DPA 1972 (rather than simply under section 1) extends the effectiveness of the DPA 1972.  This goes beyond what was previously expected.   
• Ground 3: The third ground was as expected, with confirmation that developers are owed a duty under the DPA 1972.  They may have a statutory cause of action against those who undertake work in relation to a dwelling, along with an extended limitation period, alongside claims in negligence.   
• Ground 4: Finally, the fourth ground of contribution with a decision recognising that practical steps taken to address defects can form the basis of a contribution claim, even in the absence of formal legal proceedings or settlements with affected third parties. This broadens the circumstances under which a party can seek contribution from another liable party. 

How Capsticks can help  

Our experts have extensive construction expertise and provide support to our clients from the development of their business case through to completion of the project. If you or your organisation are impacted by a similar topic as the case above, please contact Catherine Kay for more information on how Capsticks can assist.