Failure to secure conservation area planning permission led to a dispute which landed an employer and their building contractor in court. The case demonstrates the risks of taking on a construction contracts where responsibility for obtaining permissions has not be set out clearly.
Mr Jean-François Clin appointed contractor, Walter Lilley, to create a single residence from two properties in the Royal Borough of Kensington and Chelsea. Walter Lilly was to carry out demolition, refurbishment and reconstruction works.
Shortly after work started The Royal Borough wrote to Walter Lilley to say that the works amounted to ‘substantial demolition’ and that conservation area permission was required. Work stopped on the site following the intervention and was not to restart for a year.
Mr Clin argued that his plans did not require ‘substantial demolition’ and that conservation area consent was not required. He did, however, revise the design and submitted a further planning application. Permission was eventually granted a year after the work had originally started.
Developer, Walter Lilley, claimed an extension of time for the year-long delay. The parties had used a JCT Building Contract, which did not include a term placing responsibility on either the employer of contractor for securing planning permission. A preliminary hearing was held in the Technology and Construction Court to decide whether there was an implied term which allocated the risk of failing to obtain permission to either party.
The judge decided that a reasonable man would know “that he is likely to need planning permission or, in the case of a residential development.” He concluded that the party best placed to obtain planning permission was the employer, although the employer’s responsibility did not amount to providing a warranty that permission would be granted. The judge also decided the contractor had a responsibility to provide information necessary to secure planning permission. Once both parties had discharged these duties, any losses arising from other failures, in this case the intervention of the Royal Borough, would be the responsibility of the parties ‘where they fell’.
“Taking on a construction contact where planning permission has not been confirmed exposes contractors to the risk of losses,” said James Burgoyne, Director, Claims & Technical, Brunel Professional Risks. “Contractors should make sure that they agree contracts including clear terms setting out which party is responsible for securing permissions before staring work.”