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The ruling deemed that structural engineers owe “a duty of care” to developers for economic losses arising from negligent building safety design, even after the properties are sold.
The case related to structural design defects that BDW Trading, the legal entity that operates under the trading names of Barratt Homes and David Wilson Homes, found in two high-rise developments in 2019, both of which were designed by URS.
BDW carried out remedial works and sought to recover its losses from URS, issuing a negligence claim in court.
In the ruling, the Supreme Court dismissed URS’s appeal on four grounds and confirmed that section 135 of the Building Safety Act 2022 applies retrospectively, extending limitation periods for claims under the Defective Premises Act 1972 (DPA) from six to 30 years.
The court rejected URS’s argument that the DPA’s duties are limited to individual purchasers, ruling that developers are owed a “duty of care” under the DPA, even when the developers no longer own a property.
It said: “The fact that there has been no judgment against BDW or admission of liability or settlement between BDW and any of the homeowners, nor even any claim against BDW, does not prevent BDW from claiming contribution from URS.”
A spokesperson for Barratt Redrow said: “We are pleased that in this landmark case, the Supreme Court has dismissed the appeal on all grounds and clarified the responsibility of wider companies for remediating defects in developments they were involved in building.
“Whether remediation is required because of defects in design, supply of inappropriate products or workmanship issues, it is vital that the companies who played a part step up and put things right, as we have done with the developments in this case.”
Reflecting on the case, Nick Stockley, partner, law firm Mayo Wynne Baxter, said: “This ruling creates an easier route for builders to reclaim losses that they incur for the actions of either third parties or sub-contractors.
“The primary position is that a builder will be liable to the building purchaser for any defect.
“If there are defects in the building, then the builder is accountable in the first instance and the builder can then counter-claim against a third party that they consider is responsible for the defect.
“However, the builder is the first one to take the blame. One of URS’ defences was that Barratt Redrow was out of time to sue them.”
This ruling suggests that that the “time out defence” is no longer a fail-safe defence if the genuine blame rests with a design contractor.
This ruling means that any party to any construction project needs to maintain insurance that extends to their work, irrespective of when the work was carried out.
It also means that any sub-contractor cannot realistically exclude liability for their negligence by saying that that liability passed to the builder.
Stockley continued: “The builder still needs to prove negligence by the sub-contractor in order to obtain a contribution from the third party and that will always be a challenge.
“The requirement to prove negligence will mitigate the opening of floodgates, as will the fact that builders can already counter-claim against sub-contractors.
“However, this ruling will give builders a better chance of recovering losses that were not completely their fault.
“This ruling is certainly one to watch but in my view is unlikely to create a swathe of immediate litigation.”
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