Legal developments in construction law: June 2025

1. Developers win again as Supreme Court rejects a "voluntariness principle"

The Supreme Court has delivered its judgment in the litigation between developers and designers over structural defects in high-rise buildings, some of which were constructed in 2005 (see Court of Appeal judgment in September 2023 update).  In dismissing all four grounds of appeal the Supreme Court dealt with some key construction law issues.

The developer's claim against the designers in the tort of negligence was for pure economic loss. There was an assumption of responsibility by the designers to the developers that they would take reasonable care in providing their structural designs, so that buildings constructed on the basis of those designs would not be defective and so cause the developers pure economic loss.  On the assumed facts, it was not in dispute that the designers were in breach of that duty of care and that the developers incurred repair costs factually caused by that breach of duty.

The designers' first ground of appeal was that, because the repairs were carried out when the developers no longer owned the developments, and without any enforceable legal obligation to do so (because, it was said, the developers had a limitation defence to any claim against it by homeowners), the loss suffered was outside the scope of the duty of care and/or was too remote. The designers said there was a "voluntariness principle", a rule of law explaining why the loss in this case was outside the scope of the duty of care and/or was too remote.

Rejecting this argument the Court said that the case law does not support the submission that there is a bright line rule of law that voluntarily incurred loss is outside the scope of the duty of care or too remote.  There is a strong argument that voluntariness most naturally falls to be considered within the concepts of legal causation or mitigation rather than scope of duty of care and remoteness. 

In considering mitigation, reasonableness was of central importance, involving a fact-specific enquiry that would have to await trial, and the reasonableness of the claimant's conduct might also be important in determining legal causation.  Even if not, it appeared that a fact-specific enquiry would be needed to decide whether the "chain of causation" between breach of duty and loss had been broken.  It could not be said, in respect of either concept, that voluntariness constitutes a rule of law to the effect that there has been no legal causation or there has been a failure to mitigate.  In any event, it was strongly arguable that features of the assumed facts indicated that the developer was not, in a true sense, acting voluntarily in paying for the repairs to be carried out.

URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

2. Supreme Court works out just what is caught by the 30-year retrospective limitation period

In its key judgment on design defects issues the Supreme Court had to consider just how far the 30-year retrospective limitation period, introduced by section 135 of the Building Safety Act, extends.  Section 135 applies to a claim under section 1 of the Defective Premises Act but the question for the Supreme Court was whether section 135 applies to claims which are dependent on the time limit under the Defective Premises Act but are not actually claims brought under it.

The Court said that, considering the meaning of the wording used in section 135(3) in its context, there is no reason, as a matter of language, for restricting the application of that section to actions under section 1 of the DPA and, if regard is had to the purpose of the provision, there is every reason not to do so.

Ensuring those directly responsible for building safety defects are held to account was central to the Building Safety Act and various of its provisions, including section 135, but if section 135(3) was restricted to actions under section 1 of the DPA then this purpose would be seriously undermined.  The 30-year limitation period would then apply to claims brought by homeowners against a developer under section 1, but would have no relevance to "onward" claims for contribution, or for the tort of negligence, brought by that developer against the contractor (whether builder, architect or engineer) directly responsible for the building safety defect.

In addition, a developer might need to be able to bring onward claims in order to fund the meeting of its own obligations to homeowners.  It would also be legally incoherent and create two contradictory parallel universes - one for direct claims by homeowners against a developer or designer or contractor for a building safety defect and another for onward claims by the developer against the designer or contractor responsible for the defect.

The Court ruled that where, as in this case, there is a claim for damages for repair costs in the tort of negligence, or there is a claim for contribution in respect of those repair costs, the retrospective limitation period extends to such claims, which are dependent on the limitation period in section 1 of the DPA but are not actions brought under that section, with the consequence that there was no relevant time bar at the time that the repair costs were incurred.

Section 135 does not, however, retrospectively affect any issue at trial as to the reasonableness of the developers' actions in carrying out the remedial works, as a matter of legal causation or mitigation.

URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

3. Can a developer both owe, and be owed, a duty under section 1 of the DPA?

The third challenge for the Supreme Court in its design defects judgment concerned whether developers were owed a duty under section 1 of the Defective Premises Act, which says that:

"A person taking on work for or in connection with the provision of a dwelling…owes a duty:

1. if the dwelling is provided to the order of any person, to that person; and
2. without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;"

It was common ground that the developers owed the statutory duty under section 1, but were they also owed the same duty by those taking on the work (such as the designers) because the dwelling was provided "to the order" of the developers under section 1(1)(a)?

In the Court's view there is no good reason why a person, for example, a developer, cannot be both a provider and a person to whom the duty is owed. The words in section 1(1)(a) should be interpreted as applying to any person, including a developer, to whose "order" a dwelling is being built.  That person will ordinarily be, but is not limited to, its first owner.  This ground of appeal consequently also failed and the designers owed a section 1 DPA duty to the developers.

URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21

4. Claiming contribution – do you need a judgment, settlement or claim, or might something else do?

In the Supreme Court's design defects judgment the last challenge by the designers was to the developers' right to bring a contribution claim against them.  Did the fact that there had been no judgment against the developers, or settlement between them and any third party, and no third party had ever asserted any claim against them, prevent them from bringing a claim for contribution against the designers?

Rejecting this ground of appeal, the Court ruled that it was sufficient that the developers had made a payment in kind (by performing remedial works) in compensation for the damage suffered by the homeowners.

URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 (see Lord Leggatt at paras 209-266)

5. Adjudication on a 'frolic' or failure to take account of a defence?

Resisting enforcement, by the court, of an adjudicator’s decision is hard.  The Court of Appeal has said that it should be only in rare circumstances that the courts will interfere with an adjudicator’s decision and challenging the adjudicator's decision on the ground that they have exceeded their jurisdiction, or breached the rules of natural justice, (save in the plainest cases) is likely to lead to a substantial waste of time and expense.

"Frolic"

In Lapp Industries Ltd v 1st Formations Ltd one of the defendant’s challenges was that the adjudicator had acted in breach of the rules of natural justice by undertaking "a frolic of her own" (i.e. the adjudicator decided the dispute on a point not put before her).

Before considering the complaint, the court said it is important to remember that the case law shows that the "frolic" line of cases is intended to provide a safeguard for a losing party where the adjudicator has decided the dispute (or an important issue within the dispute) upon a basis as to which the parties have not had the opportunity to make submissions or put forward evidence. The touchstone is that the court, making every allowance for the inherently rough and ready and speedy nature of adjudication, will nonetheless intervene where unfairness has occurred.

In rejecting the challenge, the court set out a summary of the approach to this issue:

• the requirement that an adjudicator must observe the rules of natural justice, means, in this context, that they should not decide a point on a factual or legal basis that has not been argued or put forward in the submissions made to them. This rule is, however, often easier to state than to apply;
• if an adjudicator has it in mind to determine a point wholly or partly on the basis of material that has not been put before them by the parties, they must give them an opportunity to make submissions on it. For example, they should not arrive at a rate for particular work using a pricing guide to which no reference had been made during the course of the referral, without giving the parties an opportunity to comment on it;
• in contrast, there is no rule that a judge, arbitrator or adjudicator must decide a case only by accepting the submissions of one party or the other. An adjudicator can reach a decision on a point of importance on the material before them on a basis for which neither party has contended, provided that the parties were aware of the relevant material and that the issues to which it gave rise had been fairly canvassed before the adjudicator.

Failure to consider defences?

Another of the defendant's challenges was that the adjudicator had failed to consider two of its defences.  The court set out the relevant law:

• the adjudicator must attempt to answer the question referred to them, which may consist of a number of separate sub-issues.If the adjudicator has endeavoured generally to address those issues in order to answer the question then, whether right or wrong, their decision is enforceable;
• if the adjudicator fails to address the question referred to them because they have taken an erroneously restrictive view of their jurisdiction (for example, failing even to consider the defence or some fundamental element of it), then that may make their decision unenforceable, either on grounds of jurisdiction or natural justice;
• however, for that result to obtain, the adjudicator's failure must be deliberate. If there has simply been an inadvertent failure to consider one of a number of issues embraced by the single dispute the adjudicator has to decide, then such a failure will not ordinarily render the decision unenforceable;
• any such failure must also be material; in other words, the error must be shown to have had a potentially significant effect on the overall result of the adjudication;
• a factor which may be relevant to the court's consideration is whether or not the claiming party has brought about the adjudicator's error by a misguided attempt to seek a tactical advantage;
• an inadvertent failure to consider one of a number of issues will "ordinarily" not render the decision unenforceable. This qualification admits the possibility that an inadvertent failure may in an extraordinary case bring the principle into play. No clear guidance is available about when an inadvertent failure will render the decision unenforceable. Since the essence of the adjudication process is that the real dispute between the parties should be resolved, the touchstone should be whether the inadvertent failure means that the adjudicator has not effectively addressed the major issues raised on either side; the failure must be material in the sense of having had a potentially significant effect on the overall result of the adjudication.

The court added that it considered it necessary that a natural justice challenge shows that the relevant failing by the adjudicator "went to the heart of the dispute".  Even if an adjudicator has gone on a "frolic" or has failed, deliberately, to consider a defence, that is of no moment unless such failure pertains to a critical part of the decision ultimately reached.

Lapp Industries Ltd v 1st Formations Ltd [2025] EWHC 943

6. Continuing duty to advise, warn or review the state of the works?

In a dispute about a house extension and refurbishment, a key issue was whether the plans and specification, together with the structural engineer's information, were sufficient for construction or whether further detailed construction drawings were required.  The householder claimant alleged that the provider of architectural/surveying and contract administration services had a duty to review, and had failed to review, the designs and specifications for certain of the works.  The defendant professional indemnity insurer alleged, however, that all the case law supporting a 'duty to review' applies where the architect has previously provided a design, and then has had cause to review it.  Since the claimant said that there had been a failure to provide that design, there was no design to review.  But was that right?

The court noted that the case law on a continuing duty to review, advise, or warn had been comprehensively analysed in Lendlease Construction (Europe) Ltd v Aecom Ltd (see December 2023 update) but it did not review the analysis, instead noting the following relevant points:

• in general a designer who also supervises or inspects work is under an obligation to review the design until it has been constructed and, after that, if something occurs to make it necessary or at least prudent for the designer to do so. Whether, however, that was the case would always depend on the particular terms of the contract;
• the cause of action for a failure properly to review the design is a different cause of action from a failure to provide a proper design in the first place. The causes of action will therefore accrue on different dates;
• There is nothing in the case law which states, or even suggests, that the duty to review can only arise where a design has already been provided; whether there is a duty to review something which has not actually been produced will all depend on the particular facts of the case.

In the court's view there is no obvious distinction in principle between someone who is contracted to design but does not in fact do so, and someone who is contracted to design and does so, whether competently or negligently. In every case where such person is also under a duty to supervise or to inspect then it is, subject always to the express terms of the contract, at least reasonably arguable that, if something occurs to make it necessary or at least prudent for them to consider whether a sufficient design has been provided to enable the structure to be properly built, they must consider that question even if they have provided no design at all, just as much as if they had provided some design.

Carrington v American International Group UK Ltd [2025] EWHC 1010

7. New coalition to tackle London's building cladding crisis

The Joint Remediation Partnership Board, a new coalition from City Hall, the government, local councils, the London Fire Brigade and regulatory bodies, is to establish, and oversee, a plan to accelerate the removal of unsafe cladding on residential buildings over 11 metres, including buildings in London that fall under government, private developer and social housing remediation programmes.

London has four times the national average of high-rise homes and there are currently 1,513 buildings in government remediation programmes that have not yet started on site.

See: https://www.london.gov.uk/media-centre/mayors-press-releases/mayor-backs-governments-ambition-end-londons-cladding-crisis

8. Commons Housing Committee says fixing BSR building safety sign off delays "a priority"

The House of Commons Housing Communities and Local Government Committee has written to the MHCLG Secretary of State and the Minister for Building Safety, Fire and Local Growth with their findings and recommendations from their inquiry into Grenfell and building safety. Included in their findings and recommendations is their recommendation that delays in the ability of the Building Safety Regulator to sign off on the safety of buildings must be addressed as a priority.

The Committee said that improvements need to be made to the BSR's operating efficacy, as well as the quality of building control applications submitted.  The government must review how it can best support the BSR to make improvements in its day-to-day operations. This could include making changes to its remit to allow it to carry out its work on an organisation-by-organisation basis, rather than on the current system of going building-by-building.

It must also continue to work with the BSR and the sector to ensure that developers are enabled to submit better quality applications that allow them to pass through the building control gateways in cases where their buildings meet fire safety requirements, for example through the distribution of relevant guidance (or review of existing guidance).

The letter set out a number of other findings and recommendations, including a warning that there is a serious risk that the Government’s proposed reforms to the building safety regime will fail, if concerns around the capacity of the building control sector to inspect buildings are not addressed.

See: committees.parliament.uk/publications/47864/documents/250397/default/

9. BSI invites comments on PAS 9980

The British Standards Institution invited views on the draft PAS 9980 Fire risk appraisal and assessment of external wall construction of existing blocks of flats – Code of practice.

The PAS gives recommendations on:

• Whether or not buildings are likely to require a fire risk appraisal of external walls (FRAEW); and
• guidance on undertaking an FRAEW of an existing multistorey, multi-occupied residential building.

See: https://www.constructionleadershipcouncil.co.uk/news/draft-pas-9980-fire-risk-appraisal-and-assessment-of-external-wall-construction-of-existing-blocks-of-flats-code-of-practice/ and https://standardsdevelopment.bsigroup.com/projects/2024-00624

10. Up on the roof (garden); the story continues…

The Ministry of Housing, Communities and Local Government has issued a statement on whether a roof garden is considered a storey when determining whether a building is a higher-risk building (HRB):

Having considered the views of the Tribunal in the First Tier Tribunal decision of 3 July 2024, the MHCLG says that it recognises the need to provide clarity in the legislation and is consulting the Building Safety Regulator and other relevant stakeholders on a proposal to amend the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 to make it clear that roof gardens should not be considered a storey when determining whether a building is a higher-risk building under section 120D of the Building Act 1984 and section 65 of the Building Safety Act 2022.

In the meantime, the MHCLG’s view remains that roof gardens are not storeys for these purposes. This is the basis for current government guidance, to which the sector and regulatory bodies should continue to refer.

See: https://www.gov.uk/guidance/criteria-for-being-a-higher-risk-building-during-the-occupation-phase-of-the-new-higher-risk-regime

11. Government first Grenfell Phase 2 progress update

The Government has published the first quarterly progress update on implementation of the Grenfell Inquiry’s Phase 2 Report, together with an update on the recommendations from Phase 1 relating to Personal Emergency Evacuation Plans (PEEPs).

See: Grenfell Tower Inquiry Government Progress Report - GOV.UK

12. June release of the JCT Target Contract family

June sees the release of the Target Cost Contract 2024 family, which, with the Tendering Practice Note 2024, concludes the publication of all documents in the JCT 2024 Edition.

The documents in the release are:

• Target Cost Contract 2024 (TCC 2024)
• Target Cost Sub-Contract Agreement 2024 (TCCSub/A 2024)
• Target Cost Sub-Contract Conditions 2024 (TCCSub/C 2024)
• Target Cost Contract Guide 2024 (TCC/G 2024)
• Target Cost Sub-Contract Guide 2024 (TCCSub/G 2024)
• Tendering Practice Note 2024 (PN/Tender 2024)

See: JCT Announces Release Schedule for Target Cost Contract 2024 – The Joint Contracts Tribunal

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