The Supreme Court rules on Building Safety Act issues

The Supreme Court has last week issued its eagerly awaited decision on various issues arising under the Building Safety Act and the Defective Premises Act. The decision will be of direct relevance to many other building safety claims currently before the courts and those yet to be commenced. Whilst generally consistent with the Court of Appeal’s decision, the Supreme Court has left one important issue for further consideration in future cases.

URS Corporation Ltd v BDW Trading Ltd: a recap

BDW engaged URS to provide engineering services in relation to two separate developments comprising more than 500 apartments across a number of separate blocks (the “Two Developments”). The various parts of the Two Developments reached practical completion between 2005 and 2012 and individual apartments were sold to members of the public.

Prompted by the Grenfell Tower disaster in June 2017, BDW undertook a general review of its previous developments. This review led BDW to believe that the structural design for the Two Developments was deficient and that the structures forming part of the Two Developments were dangerous, although no physical damage to the structures had yet occurred.

Despite having sold the apartments and having retained no other proprietary interest in the Two Developments, BDW incurred significant costs in carrying out investigations, temporary works, evacuation of residents and permanent remedial works. BDW commenced TCC proceedings against URS seeking to recover these costs, claiming that URS’s structural design had been negligently performed.

The absence of a proprietary interest in the Two Developments, and the fact that any liability BDW may have had to individual owners was time-barred at the point it decided to carry out remedial works, raised a number of difficult legal issues. Further complicating matters, a retrospective extension of the limitation period applicable under the Defective Premises Act 1972 (the “DPA”) had been enacted under the Building Safety Act 2022 (the “BSA”) after the completion of BDW’s remedial works. Various legal issues arising from these circumstances were determined by the Court of Appeal in 2023, based on assumed facts and leaving liability issues to be determined at a later date if necessary. For our Law-Now on that decision, please click here.

The Supreme Court has now upheld the Court of Appeal’s decision for the reasons summarised below.

Liability in Tort

BDW’s claim included reliance on tortious duties. URS objected that the specific circumstances in which BDW had decided to incur the cost of remedial works were too remote and did not fall within the scope of the tortious duties relied upon by BDW. The focus of this argument in the Supreme Court was on the voluntariness of BDW’s decision, taken without any proprietary interest in the Two Developments and without having any enforceable legal obligation to carry out remedial works.

The Supreme Court rejected any firm rule of law that voluntary decisions of this nature fell outside the tortious duties owed by a designer such as URS. Previous cases where voluntary decisions had been considered to be too remote depended on their own circumstances. Not all voluntary decisions would be too remote. Whether or not the costs incurred by BDW were too remote in the circumstances of this case would therefore need to be determined at the trial of the claim.

The Court also noted that questions of voluntariness more naturally fell for consideration under the headings of causation and mitigation i.e. whether the chain of causation had been broken and/or whether BDW’s voluntary acts were recoverable as reasonable steps in mitigation. These questions would also need to be determined at the trial of the claim.

Given the Court’s decision, it was not necessary for it to rule on the point at which any cause of action in tort would accrue for limitation purposes. URS had invited the Court to overrule the House of Lords decision in Pirelli General Cable Works Ltd v Oscar Faber & Partners where it was held that tortious claims for defective buildings arise at the point at which relevant damage occurs (held to be physical damage in that case). The Court noted that the date of discoverability had been taken as the relevant date in other jurisdictions in so far as claims not involving physical damage were concerned, but left the issue for further consideration in a future case.

The Defective Premises Act 1972

As noted above, the BSA introduced a 30 year retrospective limitation period for claims under the original form of the DPA prior to its amendment by the BSA. The Supreme Court generally agreed with the Court of Appeal’s findings as to the impact of this retrospective extension:

• The extended limitation period was applicable to proceedings, such as those commenced by BDW, which had already been commenced at the time the BSA was enacted.
• There was no need to restrict the rights of action provided by the DPA to individual purchasers of a dwelling. Commercial developers such as BDW were also able to rely upon the DPA where they fell within its terms.
• Nor were the rights provided for by the DPA conditioned on the continuation of an ownership interest in the property concerned.

The Civil Liability (Contribution) Act 1978

The Civil Liability (Contribution) Act 1978 (the “Contribution Act”) allows two persons who are both liable to a third person for the same damage to recover contribution between themselves if one of them has made a payment to the third party in respect of their liability. In the present case, BDW alleged that both itself and URS were liable to the owners of the apartments and that it was entitled to claim contribution from URS in respect of the costs it had incurred in effecting repairs to the Two Developments.

URS argued that the right to contribution required a claim to be made by the third party, in this case the owners. It argued that BDW had incurred the repair costs voluntarily in the absence of a claim by the owners and could not, therefore, seek contribution under the Contribution Act.

The Supreme Court agreed with the Court of Appeal’s finding that a formal claim was not required before the right to claim contribution arose, but disagreed that the right arose as soon as two persons became liable to a third party in respect of the same damage. It was sufficient in the Court’s judgment that a payment had been made to the third party, which could be a “payment in kind” such as the carrying out of remedial works.

Conclusions and implications

The Supreme Court’s decision provides welcome clarity on a number of difficult issues raised by the BSA and DPA of relevance to historic building safety claims. The decision will be of direct relevance to a large number of other building safety claims currently before the English courts.

One issue in relation to which the Court has not provided clarity is the date on which tortious claims for defects not involving physical damage are taken to accrue for limitation purposes. In specifically reserving this question for further consideration, the door has been left open for claimants in future cases to argue for a more lenient approach than currently exists under the Pirelli decision.

Although this case represents the first appellate decision in relation to the BSA, it will certainly not be the last. The Court of Appeal’s decision in the Triathlon case dealing with Remediation Contribution Orders is likely to be delivered soon (for our Law-Now on the FTT’s decision in that case, please click here). An appeal is also soon to be heard in relation to the ability of parties to adjudicate claims under the DPA following the TCC’s decision in BDW v Ardmore (for our Law-Now on that decision, please click here).

* CMS acted for URS in these proceedings.

References:

Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 

URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772