Supreme Court clarifies scope of Building Safety Act with recent decision

BDW instructed URS as structural engineer in its development of two residential tower blocks between 2005 and 2021. Following the tragic Grenfell Tower fire in 2017, design defects were discovered in these buildings in late 2019. BDW carried out remedial works in 2020 and 2021, by which time it had disposed of its proprietary interest in these properties.

In March 2020, BDW issued proceedings against URS in the tort of negligence for losses incurred in the remediation of these buildings, including losses for reputational damage. A preliminary issue trial took place in October 2021 and it was held that the scope of URS’s duty covered the losses claimed, which were all recoverable in principle, except for those relating to reputational damage; these losses were in the contemplation of the parties at the time of URS’s appointments and were not too remote; the issue of causation and whether BDW had failed to mitigate its losses by carrying out the works (thereby incurring losses voluntarily) were fact dependent, which could only be determined at trial.

When section 135 of the Building Safety Act 2022 (BSA) came into force, which retrospectively extended the limitation period for claims accrued prior to 28 June 2022 under section 1 of the Defective Premises Act 1972 (DPA) from six years to 30 years, BDW applied to amend its claim by adding further claims against URS under the DPA and for contribution under the Civil Liability (Contribution) Act 1978 (CLCA).  Permission to amend was granted.

URS appealed against both the decisions determining the preliminary issue and permitting the amendments to BDW’s claim. The Court of Appeal dismissed these appeals in July 2023.  

The Supreme Court granted permission to appeal in December 2023 on four grounds and has now determined as follows:

Ground 1: In relation to BDW’s claim in the tort of negligence against URS, has BDW suffered actionable and recoverable damage or is the damage outside the scope of the duty of care and/or too remote because it was voluntarily incurred (disregarding the possible impact of section 135 of the BSA)? If the answer to that question is that the damage is outside the scope of the duty of care or is too remote, did BDW in any event already have an accrued cause of action in the tort of negligence at the time it sold the Developments?

Although BDW carried out remedial works voluntarily, the losses arising from the repair costs were still within the scope of URS’s duty of care owed to it.  It must have been reasonably contemplated by URS at the time it assumed responsibility that BDW would suffer the type of loss it has incurred, therefore the loss, although a pure economic loss, was not too remote. There is no rule of law rendering voluntarily incurred losses irrecoverable in negligence claims. The reasonableness of the costs incurred by BDW in its voluntary remediation may be of importance in determining legal causation and mitigation, which are fact specific and can only be determined at a trial.

Ground 2: Does section 135 of the BSA apply in the present circumstances and, if so, what is its effect?

It is clear section 135 has retrospective effect.  The time extension under section 135 of the BSA applies not only to claims under section 1 of the DPA, but also to claims for damages for repair costs in negligence claims as well as claims under the CLCA that are dependent on such a claim under the DPA. This is so that developers can bring onward claims against other parties responsible for the defects not just as a matter of justice but also to enable developers to fund the remediation costs to meet their own obligations to homeowners.  

Ground 3: Did URS owe a duty to BDW under section 1(1)(a) of the DPA and, if so, are BDW’s alleged losses of a type which are recoverable for breach of that duty?

BDW can owe a duty to leaseholders as well as be owed a duty by those who took on work in connection with the provision of a dwelling. As URS provided services to the order of BDW, it also owed a duty to BDW and the remediation costs are recoverable under the DPA.

Ground 4: Is BDW entitled to bring a claim against URS pursuant to section 1 of the CLCA notwithstanding that there has been no judgment or settlement between BDW and any third party and no third party has ever asserted any claim against BDW?

A payment in kind by performing remedial works is sufficient for BDW to make out a claim for contribution against URS under the CLCA. This is so even in the absence of any judgment, settlement, or any claims against BDW by other parties.

In dealing with ground 2, the court considered the background to the BSA and its underlying policy and purpose. Amongst the ruling on the extent of section 135’s operation, it confirmed unequivocally that Part 5 of and Schedule 8 to the BSA relating to historical building safety defects are backward looking and have retrospective effect. The decision provides welcome clarity on a number of issues for those debating the retrospectivity of these provisions, for example leaseholders and landlords seeking recovery of costs incurred before the enactment of the BSA by way of a Remediation Contribution Order, ahead of the Court of Appeal’s decision on Triathlon and Hippersley Point.

Developers will find the decision helpful for a number of reasons.  Whilst building defects remediation costs are classed as pure economic loss, the decision clarifies the loss would not be too remote in circumstances where the developer engages a professional to carry out works in a construction project. The wide interpretation of section 135 clarifies developers can bring claims against those responsible for building defects in negligence and seek contribution within the extended limitation period in addition to DPA claims, opening up onward claims against those responsible for the defects of the buildings and also enabling developers to fund remedial works. The court’s confirmation that the costs in carrying out remedial works voluntarily as sufficient ground to make out a claim under the CLCA also encourages early remediation of buildings by developers before any claims are made or determined.  

The decision provides welcome clarity to those dealing with defective buildings, albeit it still leaves some ambiguities such as the relevance of reputational losses and the status of the House of Lords decision in Pirelli on the accrual of a cause of action.

Generally, it appears the judiciary’s approach on the issue of historical defects remediation continues to focus on remediating buildings as a matter of priority, and rightly so. The First-tier Tribunal demonstrates this by granting all but one reported application for Remediation Orders under section 123 of the BSA as at the date of this article. By providing developers with clarity as to the wide scope of recourses available against other parties involved in construction projects, the Supreme Court’s decision may also incentivise developers to prioritise fixing defective buildings.  

It is hoped that the developing case law concerning building safety will encourage more progress in defect remediation. As at the date of this article, and according to the Government’s latest update for April 2025, the number of residential buildings identified with unsafe cladding with a height of 11 metres or over has increased to 5,052 from 3,797 in October 2023.  Of these, 2,477 (49%) have started remediation programme, but only 1,652 (33%) have completed such works. More speed and action will be required to resolve the cladding crisis, whilst more litigation is anticipated on this area.