Securing planning consent is a fundamental first step for any development project.
Where a building contract does not expressly oblige either party to apply for or obtain planning consent, or other project specific approvals such as conservation area or listed building consent, who bears this responsibility?
This is an important issue, particularly in circumstances where such consents are not obtained in time for the works to start. If responsibility falls on the employer, then the contractor may be entitled to an extension of time or an adjustment to the contract sum.
This was a key preliminary issue in the recent case of Walter Lilly & Co Limited v Jean Francois Clin .
The Walter Lilly case
The case concerned a dispute between Mr Clin (the claimant employer) and Walter Lilly (the defendant contractor) about who was responsible for obtaining the necessary consent for demolition works to be performed.
The employer engaged the contractor under an amended JCT Standard Building Contract 2005 (with Contractor’s Designed Portion) (Revision 2, 2009). The contract required the contractor to ensure that any works it designed would comply with statutory requirements, but did not include an express term requiring either party to obtain planning or conservation area consent. The local authority subsequently notified the parties that the proposed demolition works required conservation area consent (which the court noted formed part of the planning permission and no longer existed as a separate consent).
It was common ground that the primary responsibility for applying for planning (including conservation area) consent rested with the employer.
However, a key question for the court was whether there should be an implied obligation on the employer to ensure that consent was obtained prior to the commencement of the works.
If this obligation fell on the employer, and he failed to do so, with the result that the contractor could not reasonably be expected to continue with the work, in the court’s view that would have amounted to an act of prevention and therefore a Relevant Event under the contract.
The court held that, in the absence of an express term to the contrary, the employer was under an implied obligation to provide in good time to the local authority the information that its planning officers required to determine the application for consent.
However, he did not have an absolute obligation to secure the consent, because he could not guarantee that consent would be granted. The court found no justification for imposing on the employer (or the contractor) sole responsibility for the consequences of capricious conduct by the local authority.
If the employer supplied the information that was reasonably necessary for the planning officers to make their decision in good time, both at the outset and in response to any reasonable requests, then he would have discharged his duty.
Permission has been given to appeal the decision, and the Court of Appeal is expected to hear the appeal in July 2017.
In the context of a traditional procurement route, such as that in Walter Lilly, it is perhaps not surprising that the employer was held responsible to apply for, and supply information in respect of, the planning consent (and other project specific approvals) in the absence of any express provision to the contrary.
However, where the contractor is responsible for all activities from design through to commissioning under a ‘turnkey’ arrangement, the position may well be different.
The Walter Lilly case offers a reminder for employers and contractors alike to ensure the contract terms expressly reflect the parties’ intentions. It is good practice to take account of planning issues by:
- identifying at the outset all necessary consents (including any project specific approvals such as listed building and conservation area). Any consents the employer will apply for or has obtained should be stated in the Employer’s Requirements. The contract should also state whether the contractor is responsible for obtaining any other consents needed for the works;
- ensuring that the programme takes account of statutory and other time periods for obtaining the consents, including an allowance for delays or potential challenges;
- identifying who is responsible for appealing any decisions and in what circumstances they must appeal; and
- including express terms allocating the risk that necessary consents may not be obtained.
Emily Pittaway is a trainee with the Construction, Engineering & Procurement team and co-authored this article with Emily Dickson.
This article was first published in the February 2017 edition of the JCT Newsletter.