Walter Lilly & Co Ltd v Clin

In a construction contract, responsibility for obtaining planning permission is ordinarily implied to rest primarily with the employer, because the employer knows the proposed development and is best placed to provide the necessary information in time. The obligation is not an absolute warranty that permission will be granted, nor is it limited merely to taking reasonable steps to procure it. A contractor remains responsible for consent required for work beyond the Employer’s Requirements or for its own design. The risk of unreasonable or capricious conduct by a local authority is not necessarily allocated exclusively to either party. Where a local authority maintains that proposed demolition lacks consent, a reasonable contractor may be required to stop the affected work. If the lack of consent results from the employer’s breach, that may constitute prevention.

The claimant contractor carried out demolition and refurbishment works for the defendant owner under a JCT Building Contract. A local authority stated that proposed demolition required conservation area consent and threatened enforcement. The contractor suspended the relevant work and claimed contractual relief for delay.

The court determined preliminary issues concerning responsibility for planning and conservation consents, implied contractual terms, the effect of the local authority’s letter, and whether any resulting prevention or variation arose. The underlying facts, including the precise scope of existing consents and the works shown on site plans, had not been established.

1. Implied term concerning consents. The court first construed the express contract. The contractor’s obligation to ensure compliance with Statutory Requirements did not transfer to it the general risk of obtaining planning permission or conservation area consent for work forming part of the Employer’s Requirements. It did, however, remain responsible for consent for work going beyond those requirements or arising from its own design.
2. The contract necessarily required the employer to provide the information reasonably required by planning officers in sufficient time for applications to be made. That obligation concerned information which the authority was lawfully entitled to require. It was not an absolute obligation to secure the grant of permission, but it was more than an obligation merely to take reasonable steps. The contractor had a corresponding duty to provide information in its possession which was necessary for the applications.
3. The court declined to imply a term requiring the employer to ensure, before work commenced, that the local authority was satisfied that all necessary consents had been obtained. Business efficacy did not require the employer alone to bear the risk of an authority’s mistaken view. The consequences of unreasonable or capricious local-authority conduct were to lie where they fell.
4. Effect of the letter. The local authority’s letter was not an instruction to stop the works generally. It expressed the unequivocal view that the proposed demolition exceeded the existing consent, required an application if the demolition was to proceed, and threatened possible prosecution. If that view was correct, or not wrong on its face, no reasonable contractor could be expected to continue the affected demolition while the authority maintained its position, except to the extent that the existing consent clearly permitted further work.
5. If the absence of consent resulted from the employer’s breach of the implied term, the resulting inability reasonably to proceed could amount to an act of prevention and a Relevant Event. If it resulted from the contractor’s failure to provide necessary information, the contractor’s failure would be the effective cause. If neither party was in breach, loss caused by wrongful or capricious authority conduct would lie where it fell.
6. The court answered the preliminary issues accordingly. Several questions concerning variation, the precise consent position, and further steps after the letter were left unanswered because they were speculative or depended on unresolved facts. Costs and the appropriate relief were reserved.