In the recent case Clin v Walter Lilly  EWCA Civ 490, the Court of Appeal has found that a term to deal with planning permissions can be implied in a construction contract.
Mr Clin contracted with Walter Lily & Co Ltd, a building contractor, to create a single house from two adjoining properties in Kensington. The parties used a modified standard form JCT Building Contract to set out their agreement. Subsequently, the local authority notified Mr Clin that the proposed works constituted a “substantial demolition” and conservation area consent would be required.
Obtaining consent involved significant delays. Mr Clin obtained consent one year later and construction was finally restarted. Walter Lily sought a declaration that due to the delay, it was contractually entitled to an extension of time to complete the work. Mr Clin defended the claim.
In this case, the Court of Appeal was hearing an appeal/cross appeal on the preliminary issues only. As a result, the facts of the case had not yet been sufficiently established to provide definitive answers to certain questions before the Court.
Primary responsibility rests with employer
The Court stated that, in the absence of an express obligation set out in the contract, a term could be implied into the contract that the primary responsibility for applying for planning permission rests with the employer. The Court framed this responsibility as an obligation to use “all due diligence” rather than an obligation to obtain planning permission.
The Court found that despite many bespoke amendments to the standard form JCT Building Contract, neither party insisted on an amendment to cater specifically for the circumstances that they now found themselves in. However, the Court found that the term that it had implied into the contract (employer to use all due diligence) would work together with the current terms of the contract. Therefore, once the facts had been established, an analysis of the terms of the contract, both implied and explicit, would reveal whether Walter Lilly was entitled to an extension.
This case is a reminder, if one is necessary, that clear, professional drafting is essential. If an employer intends that a part of a contractor’s obligations is to obtain certain permissions, then this must be clearly stated in the contract including the types of permissions. It is important to keep in mind that if a contract is silent on whose responsibility it is, it is likely that a Court would place the responsibility with the employer.
Similarly, if the contractor intends that the contracted time period for completion of construction should start only once the relevant planning permissions are obtained, then this should be clearly stated. Delay in obtaining planning permissions is all too common. To avoid costly and perhaps unwelcome consequences, the allocation of risk in a situation where there is delay or failure to obtain necessary permissions should be clearly agreed upon and set out in the contract. As this case makes clear, careful and professional drafting can go a long way to avoiding long and costly litigation.
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.
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