Planning Consent: Implied Terms And Risk In A JCT Contract

On 16 March 2018, the Court of Appeal (CA) handed down a decision in the case of Jean-Francois Clin v Walter Lilly & Co Ltd (2018) confirming that a term should be implied into a JCT form of contract providing for an obligation by the Employer to use all due diligence to obtain consents and approvals in relation to the works, including planning permission.

We review the background to this decision and its implications.

BACKGROUND

The factual background to the dispute in summary:

Mr Clin owns two adjoining houses in Kensington and, in September 2012, appointed Walter Lilly to carry out extensive building and alteration works to create one single house. The contract used was JCT 2005 with Quantities incorporating Revision 2 of 2009 including certain design and build obligations - with bespoke amendments (the Building Contract) Problems arose when in a letter of 17 July 2013 to Walter Lilly, the local planning authority (LPA) stated that the intended work would need conservation area consent (the July 2013 Letter). Whether or not the LPA was correct in that assertion remains in dispute. In any event, as a result, work on site was suspended for over a year. After various steps were taken, the design was altered and in June 2014, planning permission was granted for the revised proposal. Work on site restarted in August 2014. Walter Lilly applied for an extension of time of 53.2 weeks, a dispute arose and these proceedings were commenced in May 2015. THE ISSUES CONSIDERED BY THE COURT OF APPEAL

The procedural background to the CA decision is convoluted. In short, there were hearings of preliminary issues in the Technology and Construction Court (TCC) in 2016 resulting in this appeal by Mr Clin and cross-appeal by Walter Lilly.

The CA distilled the various arguments into the (preliminary) issues to be considered which were as follows:

Was the TCC Judge right to hold that a term was to be implied into the Building Contract to provide for Mr Clin's obligations as "Employer" in applying for any relevant and requisite planning approvals? If so, how should that implied term be framed? How does the implied term affect the allocation of risk between the parties under the Building Contract? What was the status and significance of the July 2013 Letter? Issue 1 - should a term as to planning permission be implied?

Did Mr Clin have an obligation under the Building Contract to ensure that all requisite planning consents were obtained prior to the commencement...