Clin v Walter Lilly & Co Ltd

In a building contract that does not expressly allocate responsibility for planning approvals, a term may be implied only where strict necessity requires it. The employer may therefore be obliged to use all due diligence to make timely applications, provide sufficient information and co-operate with the planning authority.

That obligation is not an absolute promise that permission or consent will be granted, or granted by a particular date. The authority’s planning decision is outside the parties’ control. The implied term does not itself reallocate delay or loss: the contract’s express risk provisions continue to govern. A warning or request from a local authority is not necessarily a contractual statutory requirement. Its status, and the contractor’s duty to stop work, depend on the full factual and statutory context.

The appeal and cross-appeal arose from preliminary issues in a dispute over a JCT building contract for refurbishment, alteration and extension works. The contractor claimed extensions of time after the local planning authority asserted that proposed demolition required conservation area consent. The High Court, Technology and Construction Court, in [2016] EWHC 357 (TCC), held that an implied term required the employer to provide information reasonably required by the authority in good time, but rejected broader obligations to ensure consent or authority satisfaction. It also amplified its reasoning on risk.

The appeal challenged that amplification and the framing and consequences of the implied term. The cross-appeal challenged the treatment of the employer’s planning responsibility and the authority’s letter. The central questions were how the term should be framed, how contractual risk operated, and what legal significance the letter had.

1. Disposition. Lindblom LJ, with Flaux LJ and Davis LJ agreeing, allowed both the appeal and cross-appeal to the limited extent indicated. The court declined to resolve elaborate hypothetical questions in a factual vacuum, consistently with the overriding objective in CPR Part 1.
2. Implied term. The implication of contractual terms remains subject to strict necessity. The express contract must first be construed, having regard to the background, commercial common sense and the reasonable reader. The principles in Liverpool City Council v Irwin [1977] A.C. 239, Attorney General of Belize v Belize Telecom Ltd [2009] 1 W.L.R. 1988 and Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72 supported that approach.
3. The appropriate implied term was that the employer would use all due diligence to obtain for the Works any planning permission, consent, approval or certificate required by statute or statutory instrument. This included making or procuring a timely application, providing sufficient information and co-operating with the planning authority. The obligation extended to the Works, including the Contractor’s Designed Portion where included within them.
4. The term did not require the employer to ensure that permission was granted, or granted by a specified date. Planning decisions involve administrative discretion, planning judgment, policy and questions of fact and degree, as illustrated by Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 W.L.R. 759 and City of Edinburgh Council v Secretary of State for Scotland [1997] 1 W.L.R. 1447. The court should not add a further term retrospectively to improve the parties’ agreement. Existing express provisions concerning Relevant Events and Relevant Matters governed the allocation of delay and loss.
5. The council’s letter was not itself a Requisite Consent. Whether it constituted a Statutory Requirement depended on its full factual context. A request or warning would normally require more than the letter alone, although a local authority’s requirements in a particular context might qualify. The contractor’s obligation or entitlement under clauses 2.1.1 and 2.3.7 likewise depended on whether the relevant planning consent was lawfully required and had been granted. Those matters were left for determination at trial.

• Court of Appeal (Civil Division): In [2018] EWCA Civ 490, both the appeal and cross-appeal were allowed to the limited extent indicated. The High Court’s amplification of its reasoning on risk was held inappropriate.
• High Court of Justice, Technology and Construction Court: In [2016] EWHC 357 (TCC), preliminary issues were answered on the basis that the employer had to provide information reasonably required by the planning authority in good time, while broader obligations to secure consent or authority satisfaction were rejected.