The Building Safety Act’s 30-year retrospective extension of liability for building defects can be applied to all parties in the construction supply chain, the Supreme Court has ruled.
A panel of judges this week rejected the argument of structural engineer URS that it should not be held responsible for costs incurred by developer BDW to remedy two sets of multiple high-rise residential building developments.
Among its grounds, URS argued that the 30-year retrospective liability only extended to claims made by leaseholders against developers or housebuilders.
But the judgment said: “It would also be legally incoherent and create two contradictory parallel universes – one for direct claims by homeowners against a developer or designer or contractor for a building safety defect and another for onward claims by the developer against the designer or contractor responsible for the defect.”
In its ruling, the court quoted evidence deposited by housing secretary Angela Rayner.
Rayner said that accepting URS’s argument would mean that “contractors causatively responsible for historical building safety defects will be able to avoid liability in claims such as negligence or contribution claims brought against them by developers”.
“This outcome would undermine the legislative purpose of the BSA in ensuring those who caused historical building safety defects should pay for their remediation,” she said.
Commenting on this part of the judgment, Nick Stockley, partner at law firm Mayo Wynne Baxter, said: “The ruling says that the developer will have a less restricted route in pursuing their contractors.
“The developer can already pursue the contractors for defective works or defective services but this ruling makes that option less restricted than it was before the ruling.”
Stockley said that the ruling means that any party to any construction project needs to maintain insurance that extends to their work, irrespective of when the work was carried out.
It also means any subcontractor “cannot realistically exclude liability for their negligence by saying that that liability passed to the builder”, he said.
BDW, the parent company for housebuilder brands Barratt Homes and David Wilson Homes, launched proceedings against URS, the engineering firm responsible for the structural design, in March 2020.
A judgment in October the following year ruled that BDW’s alleged losses were recoverable in principle.
However, URS was given permission to appeal in December 2023 and argued that BDW’s costs were “voluntarily incurred” and thus irrecoverable.
But the Supreme Court unanimously rejected that argument in its judgment on Wednesday (21 May).
“There is no rule of law which meant that the carrying out of the repairs by BDW rendered the repair costs outside the scope of the duty of care owed or too remote,” Lords Hamblen and Burrows said in delivering the majority judgment.
The court reaffirmed that even if BDW was not legally obliged to act, it had compelling reasons to undertake the repairs.
These included the safety risks to residents, reputational concerns, and a public expectation to act responsibly. “BDW had no realistic alternative,” the justices found, adding that it was not acting “voluntarily in a true sense”.
In addition, the Supreme Court ruling allowed BDW to seek a contribution from URS under the Civil Liability (Contribution) Act 1978, even though no homeowner had sued BDW.
It was “sufficient that BDW has made a payment in kind (by performing remedial works)”, the judgment said.
Rob Horne, partner and head of construction at law firm Osborne Clarke, said the ruling offers “significantly more clarity” on cost recovery under the BSA.
Proactive developers “should not be penalised by having rights of recovery barred”, he added.
Alex Delin, partner at law firm Irwin Mitchell, said the Supreme Court’s decision “sets a marker” for future loss recovery and signals that courts will support prompt remediation and cost-sharing among responsible parties.
Stockley played down predictions of a flood of new claims following the ruling, saying: “This ruling is certainly one to watch but in my view is unlikely to create a swathe of immediate litigation.”
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Nicola Harley