URS Corporation Limited v BDW Trading Limited

A structural engineer’s conventional duty to exercise reasonable skill and care protects its client against the economic loss caused when a negligent design is incorporated into a structurally defective building. Remedial costs remain within that duty although the client later disposes of the building or has no enforceable obligation to undertake the works.

Where a defective design causes no physical damage, the cause of action in negligence accrues, at the latest, on practical completion. Discovery of the defect is irrelevant to accrual.

The extended limitation periods introduced by section 135 of the Building Safety Act 2022 apply retrospectively to ongoing proceedings. A developer may be owed the statutory duty under section 1(1)(a) of the Defective Premises Act 1972. A contribution claim does not require a prior claim by the person who suffered the damage.

BDW engaged structural engineers whose designs were incorporated into residential developments. After disposing of its interests, BDW discovered that the buildings were dangerously defective and incurred substantial investigation, evacuation and remedial costs. The defects had caused no physical damage.

Fraser J decided preliminary issues concerning the scope of the engineers’ duty and accrual of BDW’s negligence claim in BDW’s favour: [2021] EWHC 2796 (TCC). After the Building Safety Act 2022 came into force, a deputy judge permitted BDW to add claims under the Defective Premises Act 1972 and the Civil Liability (Contribution) Act 1978: [2022] EWHC 2966 (TCC).

The appeals concerned the scope of the engineers’ duty, the date on which the negligence claim accrued, the retrospective effect of the new limitation periods, the statutory duty owed to a developer, and whether contribution required a prior third-party claim.

1. Both appeals dismissed. The engineers’ conventional professional duty protected the developer against economic loss caused by the incorporation of a negligent structural design. The relevant risk was that the buildings would contain structural defects requiring remediation. Investigation, evacuation and remedial costs therefore fell within the duty’s scope. They were not transformed into reputational losses by the developer’s possible motives for undertaking the work.

2. The developer’s negligence cause of action accrued, at the latest, upon practical completion. At that point the dangerous design had been irrevocably incorporated into the buildings, producing a damaged asset and actionable economic loss. The claimant’s knowledge or discovery of the defects was irrelevant to accrual. The rule in physical-damage cases did not govern because these buildings had sustained no physical damage.

3. Disposal of the buildings did not extinguish or alter the existing duty. Nor did the absence of a legally enforceable obligation to remediate prevent recovery. A limitation defence is procedural and does not extinguish the underlying liability. The law should not discourage a responsible developer from rectifying dangerous work.

4. Section 135(3) of the Building Safety Act 2022 makes the extended limitation periods retrospective. The words treating the amendment as always having been in force include ongoing litigation. Section 135(6) creates an express exception for claims already settled or finally determined, but none for pending proceedings. Convention-rights objections remain protected by section 135(5).

5. Under section 1(1)(a) of the Defective Premises Act 1972, a professional taking on work connected with providing a dwelling owes the duty to the person to whose order the dwelling is provided. That person may be a commercial developer. A developer may simultaneously owe duties to purchasers under section 1(4). Recovery under the Act is not conditional upon ownership when remediation occurs.

6. A cause of action under section 1(1) of the Civil Liability (Contribution) Act 1978 exists where B is or could be liable to A, C is or could be liable to A, and both liabilities concern the same damage. A formal claim by A against B is not a condition precedent. The developer had pleaded those ingredients, and the contribution amendment was properly allowed.

• Court of Appeal: By [2023] EWCA Civ 772, unanimously dismissed the substantive appeal and the amendment appeal.
• High Court, Technology and Construction Court: Fraser J decided the preliminary issues concerning scope of duty and accrual principally in BDW’s favour in [2021] EWHC 2796 (TCC).
• High Court, Technology and Construction Court: Adrian Williamson KC, sitting as a deputy judge, permitted amendments adding claims under the Defective Premises Act 1972 and the Civil Liability (Contribution) Act 1978 in decisions including [2022] EWHC 2966 (TCC).