URS Corporation Ltd v BDW Trading Ltd (Rev1) [2025] UKSC 21 (21 May 2025)

A developer sued engineers for negligent design years after construction. The Supreme Court found the negligence claim was time-barred as the cause of action accrued on construction, not discovery. However, a claim under the Defective Premises Act 1972 could proceed.

Facts

The respondent, BDW Trading Ltd (BDW), a major residential property developer, engaged the appellant, URS Corporation Ltd (URS), a firm of consulting engineers, to provide structural design services for apartment blocks. The buildings were completed between 2010 and 2012. Several years later, between 2017 and 2019, significant structural defects were discovered, allegedly stemming from URS’s negligent design. BDW issued proceedings against URS in 2019, claiming damages for the cost of remedial works. The claim was founded on two primary grounds: common law negligence and breach of statutory duty under section 1 of the Defective Premises Act 1972 (DPA). URS contended that the negligence claim was time-barred by the six-year limitation period under the Limitation Act 1980 and that they, as consulting engineers, did not fall within the scope of the DPA.

Issues

The Supreme Court addressed two preliminary issues:

1. Negligence and Limitation: When does the cause of action in tort for economic loss arising from latent defects in a building accrue? Does it accrue when the defective work is complete and physical damage is incorporated into the building (as per Pirelli General Cable Works Ltd v Oscar Faber & Partners), or when the claimant discovers the defect and suffers financial loss (as per Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2))?
2. Defective Premises Act 1972: Does the duty under section 1(1) of the DPA to see that work is done in a workmanlike manner so a dwelling will be fit for habitation apply to professional consultants, such as architects and engineers, or is it limited to those physically undertaking the construction work?

Judgment

The Supreme Court unanimously allowed the appeal on the limitation issue but dismissed the appeal on the DPA issue.

Negligence Claim

The Court held that the claim in negligence was statute-barred. It reaffirmed the principle established in Pirelli, ruling that where a building contains defects that create a danger to its occupants or the building itself, physical damage occurs when the defective elements are incorporated. Consequently, the cause of action accrues at this point, not upon later discovery of the defect or the incurring of economic loss to remedy it.

The claim in this case is one in which the loss consists of physical damage to the property, in the form of the defective foundations and structure of the buildings… The case is therefore squarely within the scope of the Pirelli principle. The cause of action in tort accrued when the defective foundations were constructed and the structural steelwork erected on them, because at that point the buildings suffered physical damage.

The Court declined to extend the ‘discoverability’ approach from pure economic loss cases like Nykredit to cases involving physical damage in buildings, emphasising the need for legal certainty and noting that Parliament had already intervened via the Latent Damage Act 1986 and the Building Safety Act 2022 to mitigate the harshness of this rule.

Defective Premises Act 1972 Claim

The Court dismissed URS’s appeal on this point, holding that professional consultants are subject to the duty under section 1 of the DPA. The judges reasoned that the statutory phrase ‘takes on work for or in connection with the provision of a dwelling’ is deliberately broad. It encompasses not only the builders who physically construct the dwelling but also professionals like engineers and architects whose design and supervision work is integral to its provision.

In our view, the words ‘takes on work for or in connection with the provision of a dwelling’ in section 1(1) of the 1972 Act are wide enough to include the work of professional architects, engineers and designers who contribute to the design of a dwelling.

This interpretation ensures that those responsible for creating defects that render a dwelling unfit for habitation can be held accountable under the Act, fulfilling its protective purpose.

Implications

The judgment provides critical clarification on two longstanding issues in construction law. Firstly, it confirms that for tortious negligence claims concerning latent building defects, the limitation clock starts ticking from the moment of construction, not discovery. This reinforces a strict limitation regime, though its effects are now heavily modified by the longstop provisions in the Latent Damage Act 1986 and, more significantly, the extended retrospective limitation periods introduced by the Building Safety Act 2022 for DPA claims. Secondly, the decision confirms that the scope of the DPA extends beyond builders to include professional consultants, significantly widening the pool of potential defendants for claims involving new dwellings that are unfit for habitation.

Verdict: The appeal was allowed in part. The negligence claim was found to be statute-barred, but the claim under the Defective Premises Act 1972 was allowed to proceed.

Source: URS Corporation Ltd v BDW Trading Ltd (Rev1) [2025] UKSC 21 (21 May 2025)