The case of Clin -v- Walter Lilly has reached the Court of Appeal, just on preliminary points. It now needs to go back to the High Court to work out liabilities.
Work stated in September 2012 to convert two Victorian terraced houses in Kensington into one, under a JCT Building Contract With Quantities, 2005 Edition, with Contractor’s Designed Portion and various bespoke amendments.
In July 2013 Kensington and Chelsea council wrote to Walter Lilly, the contractor, saying that the council believed the works required Conservation Area Consent and if they proceeded without it, there was a danger of prosecution as well as enforcement proceedings. Consent was finally obtained on 19 June 2014 and work began again in August that year. Walter Lilly claimed an extension of time of 53.2 weeks and loss and expense.
The building contract was silent as to responsibility for getting any necessary planning or Conservation Area consents. Could the court imply an obligation and if so on whom?
The court restated the generally accepted position that terms should only be implied into a contract where necessary, so as to give the contract the meaning the parties must have intended, not merely where the court thinks an alternative meaning would be better or more logical or more commercial.
The court also said that generally, but not always, it will be the employer under a building contract who is responsible for getting necessary consents – it is the employer who knows what they want to have built and the employer is the one in the best position to get the consents in place before works start. The contractor usually appears on the scene somewhat later, when work is soon to be commenced. The court therefore held that, in this case, Mr Clin was responsible for applying for the Conversation Area Consent. It did not say that he must get that consent, only that he must use all due diligence to try and get it within a reasonable time. If Mr Clin had then failed to get it, despite using all due diligence, that would not be his fault but nevertheless consequences would flow under the building contract, as drafted, without the need to imply any additional terms to deal with that problem. Precisely what those consequences would be would have to be decided by a new trial in the High Court.
The court considered whether the council’s letter warning of the need for Conservation Area Consent entitled Walter Lilly to stop work. Because the building contract required compliance with “Statutory Requirements”, the court decided that Walter Lilly might in fact have been obliged, not merely entitled, to stop work at that point. However, this would only be the case if Conservation Area Consent was, in fact, needed. That would need to be decided back at the High Court, according to whatever the full facts were.
So what should happen if the council were acting wrongly in demanding that an application for Conservation Area Consent be made or the council was unreasonably slow in granting it? The trial judge thought neither party would carry the can – the contractor could not claim loss and expense and the employer could not claim damages for delay. The Court of Appeal disagreed. It held that the High Court would need to consider, for example, the contractor’s obligation to proceed with the works diligently and complete them before the Completion Date and the obligations on the employer not to cause any impediment, prevention or default, as well as any unreasonable delays or demands by the council. Barring agreement on these issues, a new trial would be necessary in the High Court to establish how the losses caused by the delays should be allocated between Mr Clin and Walter Lilly under the contract, once that court had decided who was responsible for the delays.
Every case like this depends on its facts but this case highlights a few traps. It emphasises the importance of getting consents in advance of work, where possible, and of making clear in the contract who is responsible for applying for any outstanding permissions. Finally, the contract should make clear what will happen if permissions are delayed because of default by one party or both or neither.