URS Corporation Ltd v BDW Trading Ltd

The Court of Appeal dismissed the appellant's substantive and amendment appeals. The court held that the scope of a design professional's duty to a developer included the economic losses flowing from construction in accordance with a negligent design (claims for investigation, temporary works and remedial works were recoverable). The court confirmed that where there is no physical damage the cause of action in tort accrues at the latest on practical completion (so that knowledge of the defect is not the triggering event). The court also held that s.135 of the Building Safety Act 2022 operates retrospectively as expressed in the Act and that the deputy judge was entitled to permit amendments adding a Defective Premises Act 1972 claim and a contribution claim under the Civil Liability (Contribution) Act 1978 where those amendments were reasonably arguable.

Background and parties: BDW (developer) sued URS (designing engineers) alleging negligent structural design of residential developments (Capital East; Freemens Meadow). The pleaded losses included costs of investigation, temporary works, evacuation and permanent remedial works. There were no asserted physical building failures prior to remedial action; defects were discovered in 2019 after BDW had largely sold their interests.

Procedural history: Preliminary Issues were decided by Fraser J ([2021] EWHC 2796 (TCC)). BDW subsequently sought permission (granted by the deputy judge) to amend pleadings to rely on Defective Premises Act 1972 claims and a contribution claim under the Civil Liability (Contribution) Act 1978, and to invoke extended limitation periods in s.135 Building Safety Act 2022. URS appealed the Preliminary Issues decision (substantive appeal) and the deputy judge's amendment decisions (amendment appeal) to the Court of Appeal.

(i) Nature of claim / relief sought: BDW sought damages in negligence for costs associated with defective structural designs; later amendments sought relief under the Defective Premises Act 1972 and a contribution from URS under the Civil Liability (Contribution) Act 1978, relying also on extended limitation periods in the Building Safety Act 2022.

(ii) Issues framed:

• Scope of URS's duty of care to BDW (whether the claimed losses fell within that duty);
• The date of accrual of the cause of action in tort where defects caused no immediate physical damage (practical completion v discovery);
• Whether the deputy judge erred in permitting amendments adding DPA and contribution claims and in allowing BDW to rely on the BSA retrospective limitation provisions.

(iii) Court's reasoning: The court treated the designer's duty as co-existent with contractual obligations and concluded the risk to be guarded against was that negligent design would render the structure deficient, making remedial costs recoverable. The court rejected characterising the pleaded losses as reputational and held precedent (including Pirelli and New Islington) supports accrual at practical completion for latent design defects where no physical damage has occurred. The court interpreted s.135 Building Safety Act 2022 as plainly retrospective in effect (subject to the limited exception expressly provided) and concluded the deputy judge properly exercised case-management discretion in allowing amendments that were reasonably arguable, so summary refusal was not required.

The appeals are dismissed. The court held that (1) the designer’s conventional duty of care encompassed the claimed remedial and related economic losses; (2) where a defective design is incorporated into the completed works but causes no immediate physical damage the cause of action in tort accrues at the latest on practical completion; (3) s.135 of the Building Safety Act 2022 is to be treated as retrospective as expressed in the statute and does not exclude parties to ongoing litigation from benefiting, save for the limited exception expressly provided; and (4) the deputy judge did not err in allowing reasonably arguable amendments to add Defective Premises Act and contribution claims.

[2021] EWHC 2796 (TCC) (Fraser J) (Preliminary Issues); [2022] EWHC 2966 (TCC) (Adrian Williamson KC sitting as deputy judge) (permission to amend). Appeal to Court of Appeal: [2023] EWCA Civ 772 (this judgment).