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24th April 2018

An implied responsibility for planning?

Jean François Clin v Walter Lilly & Co Ltd (2018) Court of Appeal

Mr Clin was the owner of two adjoining Victorian houses in Kensington, London and engaged the contractor Walter Lilly to demolish and reconstruct the buildings into one single dwelling. A dispute arose after the Royal Borough of Kensington and Chelsea Council sent a letter stating the proposed works would require conservation area consent as they amounted to "substantial demolition". Walter Lilly then suspended work on the site for over a year until permission was granted for a revised proposal and claimed an extension of time for this period.
The matter came before the Court of Appeal for determination of preliminary matters. The Court was asked to consider:

  1.  Whether the judge at first instance was correct in implying a term into the building contract making the Employer responsible for obtaining any required consents;
  2. What the scope of this term, if implied, should be; and
  3. What impact the term may have on the allocation of risk under the building contract.
The contract was silent in terms of who was responsible for obtaining the planning permissions and consents, although both parties agreed an implied term was needed to give business efficacy to the contract. The Court of Appeal upheld the original decision that this responsibility lay with the Employer:  a reasonable person wishing to develop his land should know whether he would require planning permission and as the individual procuring the works he is best placed to know what he wants the works to consist of.

After clarifying that there  was indeed an implied term, the Court of Appeal then confirmed that this was not an absolute obligation on the Employer to obtain consents, since this was ultimately at the discretion of the Local Authority. However the Employer is under a duty to use "all due diligence" to obtain consents and the Court identified a number of steps that would illustrate compliance. These include making a timely application, providing the Local Authority with sufficient information when required and co-operating throughout the process.

The Court of Appeal was clear in saying the terms of the contract as it was drafted adequately addressed the risk associated with the new implied term and that the implied term must therefore be read together with all existing terms of the contract that provide for obligations, responsibility and risk.

Comment:

Responsibility to seek planning permission has therefore been confirmed as that of the Employer unless of course there is an express term in the contract to the contrary.  This case is therefore a timely reminder of the need for the allocation of risk to be considered carefully when drafting a building contract.

For more information please contact Lorna Carter on 01223 532729 or click here to email Lorna.

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