URS Corporation Ltd v BDW Trading Ltd

JurisdictionEngland & Wales
JudgeLord Justice Coulson,Lady Justice Asplin,Lady Justice King
Judgment Date03 July 2023
Neutral Citation[2023] EWCA Civ 772
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: CA-2021-003307/ HT-2020-000084
Between:
URS Corporation Limited
Appellant
and
BDW Trading Limited
Respondent

[2023] EWCA Civ 772

Before:

Lady Justice King

Lady Justice Asplin

and

Lord Justice Coulson

Case No: CA-2021-003307/

CA-2023-000120/

HT-2020-000084

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (KBD)

[2021] EWHC 2796 (TCC) (Mr Justice Fraser)

[2022] EWHC 2966 (TCC) (Mr Adrian Williamson KC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Fiona Parkin KC, Ronan Hanna & Christopher Reid (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Appellant

Simon Hargreaves KC & David Sheard (instructed by Osborne Clarke LLP) for the Respondent

Hearing dates: 25, 26 and 27 April 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on 5 July 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives

Lord Justice Coulson
1

INTRODUCTION

1

With 11 files of authorities, ranging from the well-known ( Pirelli, Murphy) to the obscure ( Tozer Kemsley), and disputes concerning scope of duty, accrual of the cause of action in tort, contribution and the Defective Premises Act 1972 (“ DPA”), this appeal had all the hallmarks of a three-day examination in construction law. However, with the assistance of leading counsel on both sides, and the teams that they led, the issues were swiftly identified and then efficiently debated. Perhaps the most important concerned the date of the accrual of a cause of action in tort against designers of a defective building, in circumstances where the defect caused no immediate physical damage. Did the cause of action accrue when the building was completed to the defective design, or when the developers discovered that the buildings were structurally defective?

2

There are two related appeals. The first is an appeal against the order of Fraser J (“the judge”) dated 22 October 2021 in which he answered various Preliminary Issues in favour of the respondent, BDW Trading Limited (“BDW”). I granted the appellant URS Corporation Limited (“URS”) permission to appeal against that order on 20 January 2022. I shall refer to that as “the substantive appeal”.

3

The judge's order was based on his detailed judgment of 22 October 2021 at [2021] EWHC 2796 (TCC). One of the Assumed Facts against which the Preliminary Issues were decided was that, by the time that the defects were discovered, any action brought by third parties against BDW to enforce any obligation they may have had to rectify the defects “would be time-barred”. 1 Subsequent to the judgment, in June 2022, the Building Safety Act (“BSA”) came into force. Amongst other things, s.135 of the BSA increased the applicable limitation periods for claims under the DPA. So, in consequence, BDW sought permission to amend their pleadings. Those amendments sought to take advantage of the longer limitation periods identified in the BSA and also sought to add claims under the DPA and the Civil Liability (Contribution) Act 1978 (“CL(C)”). 2

4

URS objected to those proposed amendments for a variety of reasons. In two short judgments dated 8 November and 14 December 2022, Adrian Williamson KC (sitting as a Deputy Judge of the High Court) (“the deputy judge”) gave permission to BDW to make the amendments. On 6 March 2023, I granted URS permission to appeal against those decisions, primarily on the basis of the connection between the substantive appeal and the proposed amendments and the wider importance of the points raised. That second aspect of this appeal I shall call “the amendment appeal”.

2

THE BACKGROUND FACTS

5

BDW are developers. They include brand-name developers such as Barratt Homes and David Wilson Homes. In the last 20 plus years they have been responsible for the construction of numerous blocks of flats across the UK. Many of those were designed by the consulting engineering firms who were consolidated as part of URS which itself became part of the AECOM group in 2014.

6

We were shown one of the relevant contracts between BDW and URS. They were in standard form. The relevant warranty, which was at clause 3.3 of the contract, was in the following terms:

“3.3. The Consultant warrants that it has exercised and will continue to exercise in the performance of its duties under this Agreement such reasonable skill care and diligence as is to be expected of a properly qualified and competent member of the relevant profession experienced in carrying out work such as its duties under this Agreement in relation to projects of a similar size scope nature and complexity to the Development and that in the performance of its duties it will act with all such reasonable skill care and diligence to enable programmes and timetables to be met and all work to be completed as soon as practically possible.”

7

It was envisaged that, following completion of the developments, the individual flats would be sold. Accordingly, clause 3.10 of the contract required URS to enter into collateral warranties in favour of the first tenant and the first purchaser. The form of collateral warranty was attached to the contract.

8

These proceedings are concerned with two developments: Capital East, on the Isle of Dogs in London, and Freemens Meadow, in Leicester. 3 The Capital East development consisted of 5 separate tower blocks ranging from 10 to 18 stories in height and containing a total of about 350 apartments. Practical Completion of the development occurred in or around March 2007 to February 2008. 4 The apartments were sold by BDW by way of individual contracts of sale. Although BDW had a 200 year head lease, their interest in that head lease was transferred in December 2008.

9

The Freemens Meadow development comprised 7 towers, each of 6 stories, and each containing 32 separate apartments. Practical Completion of these blocks occurred between February 2005 and October 2012. The individual apartments were sold to

purchasers on long leases and BDW's freehold interests were transferred on various dates, the last being in May 2015
10

Following the Grenfell Tower disaster in June 2017, developers like BDW undertook widespread investigations of their developments. In late 2019, BDW discovered cracking in the structural slab of a building known as “Citiscape”, which they had developed, and which had been designed by one of the firms that are now part of URS. It was discovered that the structural integrity of the slab was seriously deficient, and the building was at risk of impending structural failure. The block had to be evacuated and extensive remedial works carried out.

11

As a result of this discovery, BDW undertook a wholesale review of the structural design of their developments which had been designed by URS. On the Assumed Facts, the review showed that, for some developments, including Capital East and Freemans Meadow, the structural design had been negligently performed. As a result, the existing structures were dangerous.

12

The discovery of the structural defects at Capital East and Freemens Meadow led to the commencement of these proceedings on 6 March 2020. The claims particularised in the Particulars of Claim were limited to claims in negligence. BDW made no claim against URS for breach of contract (presumably because such claims were, on any view, statute-barred). The judge noted at [20] that “the existence of the contract is what leads to a conventional duty of care on the part of the designer, which was in express terms. That is a duty of care co-existent with the designer's contractual duties. This is entirely conventional”. As previously noted, this claim in tort is now the subject of the disputed amendments, alongside other amendments which add claims under the DPA and the CL(C)

13

Although the blocks at Capital East and Freemens Meadow did not exhibit cracking of the type which had been identified in the investigation into Citiscape, the investigation showed they had been built to dangerously inadequate structural designs. Indeed in one of the Capital East blocks, residents were evacuated. That is therefore the first particular feature of this case: although the buildings are defective, they have not suffered any physical damage.

14

The second particular feature of this case is that, by the time the defects came to light in 2019, BDW no longer owned or had any proprietary interest in the relevant buildings. BDW's position is that, as a responsible developer, they could not ignore the problem once it had come to light. As a result they have incurred significant costs, running to many millions of pounds, in order to carry out investigations, temporary works, evacuation of the relevant block and permanent remedial works. URS maintain that BDW never suffered any actionable damage, either because they sold the buildings for full value before the problems came to light and/or BDW were not liable to carry out any remedial works and had a complete limitation defence to any claim brought against them by the purchasers, so their losses were outside the scope of URS' duty of care.

15

Those two particular features of this case – the lack of physical damage and BDW's sale of the buildings for value before the defects were discovered — gave rise to the Preliminary Issues in this case. As the judge noted at [5], those Preliminary Issues do not expressly address the issue of limitation at all: it is the ghost at the feast. Furthermore, contrary to the usual sides taken in this sort of limitation debate, it is a curious feature of this case that BDW say that its cause of action accrued on the earliest possible date (namely practical completion of the buildings) whilst URS, the negligent designer, argue for the latest possible date: they say that, if there was a cause of action in tort, it would not have...

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