In Walter Lilly & Co Ltd v Clin  the court held that, unless the contract expressly provides otherwise, the employer is under an implied contractual duty to provide information reasonably required by the local authority in good time to obtain planning consents.
Mr Clin owned two properties in the Royal Borough of Kensington and Chelsea and decided to turn them into one residence. In September 2012, he entered into an amended JCT contract with the claimant contractor, Walter Lilly, to do just that. The contract contained no express term requiring either party to obtain planning or conservation area consent, but it included an amendment under which Walter Lilly confirmed that any works designed by it would comply with the Statutory Requirements.
Work progressed until July 2013, when Walter Lilly and Mr Clin’s architect received a letter from the council stating that the extent of proposed demolition amounted to "substantial demolition” under section 74 of the Planning (Listed Building and Conservation Areas) Act 1990 and so conservation area consent was required.
Walter Lilly suspended the demolition works for a year and claimed an extension of time in respect of this delay, on the basis that Mr Clin should have obtained the necessary consents. Meanwhile Mr Clin’s architect engaged in vigorous correspondence with the council, arguing that the works did not involve “substantial demolition” and that Walter Lilly had given the council the false impression that the extent of the proposed demolition work went beyond the existing conservation area consent. Eventually, Mr Clin decided to revise the design of the development. A further planning application was submitted in December 2013 and planning permission was finally granted in June 2014.
There were several preliminary issues to be settled by the court. However, the key one was whether, in the absence of an express term in the JCT contract stipulating who should be responsible for obtaining planning permission, there was an implied obligation on the employer to ensure that all required consents were obtained prior to commencement of the works.
The court held that, in the absence of an express provision to the contrary, there was an implied obligation on the employer to ensure that it provided the information reasonably required by the local authority in good time to allow the planning officers to make their decision. This is an extension of the existing implied duty on the employer to give the contractor all necessary information in good time.
Points to note from the judgment include:
- By “information reasonably required by the local authority” the court meant information that the planning officers were lawfully entitled to expect, not that which they might unreasonably demand.
- This implied duty did not mean that the employer assumed the risk that planning permission would be given. There was no justification for imposing on either party sole responsibility for the consequences of capricious conduct by the local authority. Since the contract had not specified how this risk should be borne, no provision should be made and the risk should be left to lie where it fell.
- As long as the employer provided such information in good time, both initially and then subsequently, in response to any reasonable requests, then he would have discharged the duty.
- Even though the amended contract required Walter Lilly to confirm that any works designed by it would comply with the Statutory Requirements, the court held that this clause did not transfer the general risk of obtaining planning permission or conservation area consent to Walter Lilly. However, it would be responsible for obtaining consent for any work that went beyond that set out in the Employer’s Requirements.
The message from this judgment is clear for employers and contractors alike:
- Identify, at the start of the project, those consents that are likely to be required.
- Agree who will bear the risk of failure to obtain such consents and whether and in what circumstances any refusals should be appealed.
- If the employer intends the contractor to be under an obligation to provide information to the planning authority, the contract should expressly say so, failing which the duty will probably fall back on to the employer by implication.
- Remember to factor into the project timetable the statutory time periods to obtain the necessary consents, together with an allowance to cover the risk of delays and potential challenges.