Law Case Review: URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772

Significant judgment on the Building Safety Act 2022 and the Defective Premise Act 1972. URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772

In a previous article, we spoke about some of the changes the Building Safety Act 2022 ("BSA") made to the Defective Premises Act 1972 ("DPA") and the far-reaching effects this would likely have on the construction industry in the future. (Click here to read the full article.)

We now have the first significant judgment at the appellate level, demonstrating the effects of these changes in the case of URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772. The case is complex and touches on several areas of law, and we'll be focusing specifically on the DPA related points in this article.

Underlying facts of this case

BDW Trading Limited ("BDW") instructed URS Corporation Ltd ("URS") to carry out structural design on two buildings in London and Leicester. When reviewing these buildings in 2019 (following the Grenfell Tower disaster), they found them structurally defective due to an inadequate design.

BDW issued proceedings. The BSA came into effect during proceedings, and the new time limit enabled BDW to add further claims under the DPA, which URS challenged.

Retrospective, the BSA and the DPA

Although it was only considered towards the end of the judgment due to the appeal structure, there was a crucial issue about the applicability of the retrospective time limits established by the BSA for DPA claims.

URS argued that the new time limits did not apply to the claims already being issued as they were already progressing through the Court. BDW responded by saying there was no such limitation. 

The Court sided with BDW. They acknowledged the Act accepts matters concluded by the Court, arbitral proceedings, or otherwise settled (BSA s135(6)) are excluded. They noted the BSA was broadly drafted, and therefore, it included a right to bring a claim that had yet to be brought forward and those currently being determined while only excluding those that fell within BSA 135(6).

This will likely be a rare occurrence as most cases started before the BSA came into force and will be working their way towards a conclusion. However, it confirms the Court will give the retrospective provisions of the BSA a broad interpretation.

Generally, regarding its retrospective nature, the Court was asked to consider whether this interfered with URS' human rights, specifically the right to a fair trial. The Court partially rejected this argument and accepted that URS' convention rights were preserved (BSA s135 (5)). This meant that on the facts of this case, it might be decided a breach was made, but it would come down to evidence. For example, suppose URS had destroyed key documents under the reasonable belief the limitation period had passed in, say, 2016. In that case, the judge may decide in their favour. Ironically, a company that is many things but not "human" seeks to rely on "human" rights to vindicate itself.

The applicability of the DPA  

URS raised several arguments why they (a designer) did not owe a duty to BDW under the Act. The Court rejected every single one of them.

URS argued the works related to multiple dwellings and not a single dwelling and therefore did not apply. This was rejected as it had been rejected previously in the leading case of Rendlesham Estates Plc v Barr Ltd [2014] EWHC 3968 (TCC). It came down to common sense; just because some parts of the building may be common parts, it did not prevent the whole building and the individual units from being considered dwellings. The duty was broad enough to cover them together or separately.

URS argued that BDW owed duties to others and, therefore, could not be owed a duty. The Court rejected this on a plain reading as the DPA provided two responsibilities, one to a developer and one by a developer. In any event, the Court noted the situation was analogous to a main contractor who could owe duties to their employer and be owed duties by their sub-contractors.

Another argument deployed by URS was only a few of the claims had been brought against engineers and designers. Therefore it was less likely a duty existed under the Act. The Court robustly commented as follows:

"… given that (i) the DPA has been significantly under-used in its lifetime so far; and (ii) unlike claims against inspectors (which cannot usually be made in contract, or tort following Murphy ), claims by developers against professionals would be largely brought in contract or in tort. Since a claim under the DPA has a higher threshold anyway (see paragraph [187] below), the lack of such claims historically is unsurprising." [emphasis added]

We discussed why the DPA had been underused in our previous article. It was fundamentally limited both by its scope and its time limits. The situation has changed substantially since 2014, specifically when it was altered by the BSA in 2022.

Another point the Court made was that the standard for "unfit for habitation" was higher than the ordinary breach of contract or duty claims. In other words, defects that trigger the duty under the DPA are more limited than those that typically arise under a contract. The Court pointed out that a defective shower tray, although by any standard a minor defect, could still render a house uninhabitable because washing was a fundamental requirement of habitation.

There is already significant guidance on what amounts to "unfitness for habitation" in Rendlesham Estates Plc v Barr Ltd [2014] EWHC 3968 (TCC). Taking a common-sense approach is key when considering this topic. Take the words "unfit for habitation" at face value and ask yourself, "Does this defect render the house impossible or more difficult to live in?" In most cases, the answer to this question will be sufficient to establish whether the defect can render the dwelling unfit for habitation. 

Summary

From reviewing this case, it's clear the courts will enforce the changes from the DPA and implement the increased applicability against the entire contractual chain. There will likely be no escape from a claim under the DPA except for the following:

• Carrying out the work properly and in a workmanlike manner to render the dwelling fit for habitation; or
• Acting under the direction of another.

The DPA requires more significant defects than the standard to provide a cause of action; however, the higher threshold should not be construed as a 'high' threshold. In reality, many defects fall within the ambit of the DPA. 

Construction professionals and contractors should prepare themselves to receive these claims as a matter of routine. We advise you to seek professional advice should a claim against you arise. For more information or advice on this topic, please do not hesitate to contact me, Andrew Cullyer, Construction Litigation Specialist, on 023 8063 9311 or email andrewcullyer@warnergoodman.co.uk.