The judgment in URS v BDW is the first Court of Appeal decision considering the Building Safety Act 2022. Olivia Jenkins and Helen Stuart explore its wider implications.
The Court of Appeal’s (CoA) first decision covering extended time limits for pursuing claims under the Building Safety Act 2022 (BSA) provides insight into when – and to whom – designers are liable on construction projects.
The BSA and extending limitation periods
The BSA extended the time limits for bringing certain claims, including those under section 1 of the Defective Premises Act 1972 (DPA), from six to 15 years, as well as a longer 30-year retrospective limitation period for certain claims that accrued before the BSA took effect.
Section 1 of the DPA obliges those taking on work in connection with the provision of a dwelling to carry out work in a workmanlike and/or professional manner so that the building is fit for habitation when completed.
Underlying claim
BDW’s “underlying claim” alleges multiple tower blocks containing structural deficiencies were caused by URS’s defective design. URS’s design was produced following its contractual appointment by BDW, the original owner of the blocks.
When the defects were identified and rectified by BDW several years post-completion:
(i) BDW had sold all its interests in the blocks; and
(ii) no claims had been intimated against BDW by others (i.e. the owners).
BDW’s underlying claim against URS remains the subject of ongoing court proceedings in which BDW seeks to recover defect rectification costs and other ancillary losses (related to an evacuation of residents pre-completion of remedial works).
The appeal
Broadly, the CoA found the following:
- The scope of URS’s duty to BDW.
The CoA decided that URS’s duty was co-existent with its contractual design obligations – to produce a design with reasonable skill and care.
The risk of harm was that a defective design would cause BDW economic loss in rectifying the defects and therefore encompassed the losses incurred by BDW.
- A cause of action accrues in negligence where there is no physical damage at practical completion at the latest.
It confirmed that the “date of knowledge” of any negligent design – if later – can provide a separate time period for pursuing that claim under statute, but is irrelevant when calculating when the right to pursue the claim accrued.
The timing of the cause of action was important in this case as BDW had a proprietary interest in the blocks at practical completion and therefore had the right to bring the claim in negligence. Had the cause of action accrued later, its claim in negligence may have failed.
- BDW could bring a claim under the DPA given the extended time limits brought in by section 135 of the BSA.
(i) Section 135 of the BSA was clearly intended to be retrospective in effect. Whilst there were carve-outs, including for cases that had settled or been finally determined, there was nothing to say that it could not apply where proceedings had already been started.
(ii) Given the retrospective application of section 135, BDW owed duties to third parties (such as apartment owners) under the DPA.
(iii) BDW was owed a duty under the DPA by URS. The recoverability of damages under the DPA is not linked to property ownership. There was nothing in the wording of the Act that prevented developers being owed a duty under the DPA, notwithstanding that they may also simultaneously owe a duty under it.
- It was not necessary for a third party to intimate a claim against BDW before BDW’s entitlement to seek a contribution from URS for liability for the same damage could arise (under the Civil Liability (Contribution) Act 1978).
The CoA confirmed that the applicable two-year time limit for pursuing a contribution claim (after liability is determined) does not govern when the right to bring that claim arose.
Comment
The CoA’s approach shows it is becoming more difficult for parties to escape liability for building safety claims.
It was perhaps a slightly unusual case in that BDW undertook the remedial works when it didn’t own the properties and may not have been obliged to the apartment owners to do so. However, the CoA said this and BDW’s motives for carrying out the remedial works were irrelevant as to whether it could recover the losses.
Its confirmation that DPA rights are not limited by property ownership and are also owed to the original developer may be unsurprising, given the wording of the act. However, those taking on work in residential schemes should be aware of the extended limitation periods for claims being brought against them by both owners and developers, given that they cannot be contracted out of.
Should the parties not settle the claims, they will now proceed to be determined at trial and we shall see if that Judgment brings up more interesting points!
Helen Stuart is a partner and Olivia Jenkins a senior associate at Trowers and Hamlins LLP.
