Lessons learned: our top construction cases from 2025

As we enter 2026, our Associate Liam McKay reflects on four noteworthy decisions from the Court of Session and the UK Supreme Court in the field of construction law that were handed down in 2025.

1. Black Holes and Revelations: Simmers v Green Cat Renewables and Others – Court of Session, Outer House

This case serves as an important reminder of risks that can arise where one party engages a contractor, but the ultimate beneficiary of the works is not a party to the contract.

Mr Simmers contracted with the defenders (Green Cat Renewables and others) for the design and construction of some wind turbines. These were to be built on land which Mr Simmers intended to lease in the future to three companies (special purpose vehicles, or “SPVs”) that he planned to set up. Mr Simmers took the defenders to court, arguing they had breached their contracts and that they had also been negligent. However, the ultimate losses were suffered not by Mr Simmers himself, but rather by the SPVs. The dilemma was that the SPVs were not parties to the contracts. The question for the court was therefore whether Mr Simmers could seek damages on behalf of the three special purpose vehicles under the principle of “transferred loss”.

Transferred loss is a complex legal principle. The underlying idea is that a loss suffered by breach of contract, or an act of negligence, should be recoverable from the party responsible for the breach and/or the negligence. Such a loss should not fall into a “black hole” in circumstances where, for example, the loss has been suffered by a third party to which no contractual obligations nor duties were owed. In such circumstances, the law should, as a matter of fairness, find a way to allow for recovery of the loss. That objective can be accomplished by “transferring” the loss to someone who was a party to the contract or to whom the duty in question was owed. That person can then sue on behalf of the third party and recover the loss on their behalf. The Scottish courts have not always agreed on how this principle ought to be applied, or even whether it exists.

The decision

Lord Braid concluded that the principle does exist, at least where the contract demonstrates an intention to benefit the third party who suffered the loss and the party suffering the loss had no right of action to recover the loss themselves. However, he found that Mr Simmers did not advance an argument that the contracts with the defenders were intended to benefit the three special purpose companies, and so dismissed the claim for losses sustained.

Key takeaway

The case demonstrates that the law can be harsh in respect of construction projects that do not go to plan, in circumstances where the ultimate losses are not suffered by those who contracted for the works. This harshness reinforces the importance of fully considering the legal position at the outset of a project, and ensuring measures (such as collateral warranties) are in place to protect the ultimate beneficiaries of the project.

2. Adjudication Enforced: BDW Trading Limited v Ardmore Construction Limited – UK Supreme Court

In this case, the Supreme Court ruled that a developer could bring an adjudication in a claim under the Defective Premises Act 1972. However, it is unclear whether the same outcome would prevail in Scotland.

This dispute arose from a project to build a block of flats in Hampshire. Years after the flats were finished, fire safety defects were discovered. The developer (BDW) used adjudication and won a decision saying the contractor (Ardmore) had to pay compensation. BDW then went to court to enforce that adjudicator’s decision.

Ardmore argued that the adjudicator had lacked jurisdiction to decide the case. Their point was the contract only allowed for adjudication for disputes arising under the contract or in connection with it and BDW claimed it wasn’t a straight contract claim.

The decision

The Supreme Court rejected Ardmore’s argument, by reference to a previous decision in the case of Fiona Trust & Holding Corp v Privalov. Fiona Trust was about the interpretation of arbitration clauses in English law. Applying the same approach to interpretation as was adopted in that case, the court decided that the words “under this Contract” included all disputes arising “out of” or “in connection with” the contract. Therefore, a claim based on the Defective Premises Act could be referred to adjudication.

The Scottish courts have previously expressed doubts about whether Fiona Trust is compatible with Scots law. Coupled with the fact that the BDW case was about an English-only statutory claim, it very much remains to be seen what the outcome will be if a similar claim arises in Scotland.

3. The right prescription: Greater Glasgow Health Board v Multiplex and Others – Court of Session, Outer House

In this case, the Health Board sued Multiplex – the principal contractor for the construction of the Queen Elizabeth University Hospital campus in Glasgow – in relation to allegedly defective cladding.

The basic rule of prescription is that a court action must be raised within 5 years of loss. The contract between the Health Board and Multiplex was agreed on 18 December 2009. Practical completion of the Hospital was achieved on 26 January 2015. The court action commenced on 4 March 2022, more than 5 years later.

The question for the court was therefore: was it too late for the Health Board to seek compensation?

The decision

Lord Braid held that the Hospital suffered a loss on 26 January 2015, at the point of practical completion. The breach of contract was in respect of the construction of the hospital, not the design. That breach could have been resolved up to the date of practical completion. Assuming that the breach had not been resolved by that time, 26 January 2015 was the date on which the hospital suffered a loss. The cladding defect, although unknown, existed at that time and remedial works and the costs associated with the same became inevitable at that time.

However, there are bases on which the 5-year clock can be postponed or paused. The Health Board tried to argue that it was induced into refraining from making a claim against Multiplex, and that the period of time during which it was induced in this respect ought not to count in calculating the 5-year period.

However, Lord Braid noted that the Health Board did not lead any evidence to show that it was induced into refraining from making a claim. The Health Board argued that it did not know that the cladding was defective. Lord Braid said that this alone was not enough.:

“Ignorance of a state of affairs is not necessarily the same as labouring under an error as to that state of affairs.”

Lord Braid emphasised the need to prove that some positive conduct has induced the wronged party into refraining from bringing a claim. Simply not knowing certain facts at the time, and arguing that had one known those facts, one would have timeously brought a claim, is insufficient:

“If I venture outside without an umbrella, not knowing whether it is raining or not, I cannot be said to have been in error as to the weather conditions. On the other hand, if I am told it is sunny, when in fact it is raining, then I will have ventured out under error.”

Key takeaway

This case serves as a reminder that it is critically important to timeously investigate issues that may be symptomatic of defects in design and/or construction, so that any prospective claim is timeously raised and served.

4. Collateral Damage: Legal and General Assurance (Pensions Management) Limited v The Firm of Halliday Fraser Munro and Others – Court of Session, Inner House

This case concerned time bar in the context of collateral warranties.

The Union Plaza office block in Aberdeen was designed and built in the late 2000s. Practical completion was achieved on 8 July 2008. In terms of the architects’ appointment agreement, the architects were required to deliver a collateral warranty to any future purchaser of the block.

On 20 December 2013, LGA purchased Union Plaza. On 6 January 2014, LGA entered into a collateral warranty with the architects: “In summary, the collateral warranty provides that [LGA] are deemed to have relied upon [the architects’] skill and judgement on matters within the scope of the appointment and that [the architects] had used all reasonable care and skill in the performance of their architectural services. It also states that [the architects] shall owe no greater duties or obligations to [LGA] than they owed to [the developer].”

Prior to purchase, LGA was aware of some water ingress in Union Plaza; although the cause of this was unknown, and it was thought to have been rectified. In November 2018, LGA learned that (still ongoing) water ingress was due to design defects. A court action was raised and served on the architects on 17 December 2018.

The architects argued that (i) the 5-year prescription period for any claim under the construction contract began on 8 July 2008, the date of practical completion, and (ii) the language of the collateral warranty provided that the architects would owe “no greater […] obligations to [LGA] than they owed to [the Employer] – therefore the same prescriptive period (2008-2013) applied to LGA’s claim under the collateral warranty.

The decision

Ultimately, the court decided LGA’s claim was not too late. It was concluded that a collateral warranty is a separate contractual agreement from the original construction contract and therefore, because LGA served the court papers within five years of the warranty being granted (January 2014), LGA’s claim under the collateral warranty had not prescribed.

Key takeaway

This case demonstrates that the ultimate beneficiary of a construction project can potentially bring a claim for defects in design and/or construction many years after the project achieves practical completion, depending upon the existence and specific terms of a collateral warranty.

How we can help

2025 was a busy year for decisions affecting the construction industry and there’s every chance that 2026 could be even more eventful.

If you have any queries relating to construction contracts or any other issue mentioned in this article, please contact Liam McKay or a member of our Contentious Construction team.