Jean-François Clin v Walter Lilly & Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Flaux,Lord Justice Lindblom |
| Judgment Date | 16 March 2018 |
| Neutral Citation | [2018] EWCA Civ 490 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2016/2198 |
| Date | 16 March 2018 |
[2018] EWCA Civ 490
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
MR JUSTICE EDWARDS-STUART
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Davis
Lord Justice Lindblom
and
Lord Justice Flaux
Case No: A1/2016/2198
Mr Vincent Moran Q.C. and Mr Tom Coulson (instructed by DLA Piper UK LLP) for the Appellant
Mr Sean Branningan Q.C. and Mr Thomas Crangle (instructed by Pinsent Masons LLP) for the Respondent
Hearing date: 16 January 2018
Introduction
At a hearing of preliminary issues in a construction dispute, was the judge right to hold that a term should be implied into the building contract to provide for the employer's obligations as to planning permission or conservation area consent, was he right to frame the implied term as he did, and, if so, what were the consequences for the allocation of risk between the parties under the contract? These questions arise in this appeal.
The appeal is against the order made by Edwards-Stuart J. sitting in the Technology and Construction Court on 5 May 2016, after a hearing of preliminary issues in the proceedings on 19 January 2016. The judgment was handed down on 24 February 2016, and clarified in the judge's order. The appellant, Jean-François Clin, is the owner of two adjoining mid-Victorian terraced houses at 48 and 50 Palace Gardens Terrace in Kensington, which are unlisted buildings in the Kensington Palace Conservation Area. The respondent is Walter Lilly & Co. Ltd., a contractor specializing in the refurbishment, alteration and extension of such buildings. On 25 September 2012 Mr Clin as “Employer” and Walter Lilly as “Contractor” entered into a building contract – a JCT Building Contract with Quantities, 2005 edition, incorporating Revision 2 (2009), with “Contractor's Designed Portion”, and various bespoke amendments. Under the contract Walter Lilly were to carry out works of demolition, reconstruction and refurbishment to the buildings to create a single dwelling-house.
The dispute between the parties arose after the local planning authority, the Royal Borough of Kensington and Chelsea Council, sent a letter to Walter Lilly on 17 July 2013, asserting that the intended work to the rear wall of the buildings would amount to “substantial demolition” requiring conservation area consent. Activity on site was then suspended for more than a year. Although Mr Clin maintained throughout that conservation area consent was not required, an application for such consent was submitted to the council on 2 August 2013, only to be withdrawn two months later. The design of the scheme was then changed and an application for planning permission for the revised proposal submitted in December 2013. Planning permission was granted on 19 June 2014, and work began again on 26 August 2014. Walter Lilly's claim was issued on 22 May 2015, seeking declarations that a “Relevant Event” and “Relevant Matters”, as defined in the contract, had occurred, and that it was entitled to an extension of time of 53.2 weeks. Mr Clin defended the claim. On 18 December 2015 the judge ordered that six issues, which the parties had identified, be determined as preliminary issues. Mr Clin appealed against the judge's order on 25 May 2016, and Walter Lilly filed a respondent's notice on 30 August 2016. Christopher Clarke L.J. granted permission for Mr Clin's appeal on 16 August 2016 and for Walter Lilly's cross-appeal on 27 October 2016.
The issues in the appeal and cross-appeal
The submissions made to us ranged widely across the still contentious preliminary issues. But I think it is sensible to limit our consideration of the arguments on either side to the main questions in issue. This is for three reasons. First, we are concerned only with preliminary issues, which have to be dealt with before the facts have been established on the evidence given at trial – a “fundamental difficulty” in this case, as the judge recognized (in paragraph 82 of his judgment). Secondly, in these circumstances it is both unnecessary and unwise to try to resolve a number of hypothetical questions, some of which may in the end have little, if anything, to do with the facts that will in due course emerge from the evidence. And thirdly, the preliminary issues put before the judge were more elaborate than they needed to be to refine the parties' dispute at this stage of the litigation.
There are four issues that are in my view sufficient to dispose of the appeal and cross-appeal justly and in accordance with the “overriding objective” in CPR Part 1. They embrace Mr Clin's grounds of appeal, which are directed only at the judge's “amplification” of his judgment, and also the matters raised in the cross-appeal. They are:
(1) Was the judge right to hold that a term was to be implied into the contract to provide for Mr Clin's obligations as “Employer” in applying for any relevant and requisite planning approvals?
(2) If so, how should that implied term be framed?
(3) How does the implied term affect the allocation of risk between the parties under the contract?
(4) What was the status and significance of the council's letter of 17 July 2013?
The building contract
The judge set out in full (in paragraphs 11 to 28 of his judgment) the provisions of the contract he regarded as relevant to the preliminary issues. I need only refer to those that bear most obviously on the issues in the appeal and cross-appeal.
The First Recital to the contract describes the work that the Employer “wishes to have … carried out”, namely the “Part demolition, extensive ground works, refurbishment, reconstruction, extensions to a pair of terrace houses to form a single house on completion … (‘the Works’) and has had drawings and bills of quantities prepared which show and describe the work to be done”. The Ninth Recital provides that “the Works include the design and construction of” the works comprising “the Contractor's Designed Portion”. The Tenth Recital states that “the Employer has supplied to the Contractor documents showing and describing or otherwise stating his requirements for the design and construction of the Contractor's Designed Portion (‘the Employer's Requirements’)”.
In section 1 of the contract, “Definitions and Interpretation”, clause 1.1 defines a “Statutory Undertaker” as “any local authority or statutory undertaker where executing work solely in pursuance of its statutory obligations, including any persons employed, engaged or authorised by it upon or in connection with that work”. The definition of “Requisite Consent” in the “Schedule of Amendments” is:
“those permissions, consents, approvals, licences, certificates and permits as may be necessary to carry out and complete the Works, including without limitation any approval of reserved matters in respect of the planning permission granted for the Development, Building Regulation consent and bye-law approvals and the requirements of all competent authorities regarding the Development.”
The definition of “Statutory Requirements”, as amended, is:
“any directly applicable provisions of the EU Treaty or any EU Regulation, any statute, statutory instrument, regulation, rule or order made under any statute or directive having the force of law which affects the Works or performance of any obligations under this Contract and any approvals, requirements, codes of practice, regulation or bye-law of any local authority, competent authority or statutory undertaker which has any jurisdiction with regard to the Works or with whose systems the Works are, or are to be, connected.”
The “Works” are defined as:
“the works briefly described in the First Recital (including, where applicable, the CDP Works), as more particularly shown, described or referred to in the Contract Documents, including any changes made to those works in accordance with this Contract”.
In section 2, “Carrying out the Works”, clause 2.1.1 states:
“The Contractor shall carry out and complete the Works in a proper and workmanlike manner and in compliance with the Contract Documents, the Construction Phase Plan and other Statutory Requirements, and shall give all notices required by the Statutory Requirements ….”
Clause 2.3.7 states:
“The Contractor warrants that the Works when completed shall comply with the Requisite Consents and Statutory Requirements.”
Clause 2.4 states:
“On the Date of Possession possession of the site or, in the case of a Section, possession of the relevant part of the site shall be given to the Contractor who shall thereupon begin the construction of the Works or Section and regularly and diligently proceed with and complete the same on or before the relevant Completion Date ….”
Clause 2.17.3 states:
“… the Contractor shall not be liable under this Contract if the Works (other than the CDP Works) do not comply with the Statutory Requirements to the extent that the non-compliance results from the Contractor having carried out work in accordance with the documents referred to in clauses 2.15.1 to 2.15.4 [“Notice of discrepancies etc.”] (other than an instruction for a Variation in respect of the Contractor's Designed Portion).”
Clause 2.28.1 states:
“If, in the Architect/Contract Administrator's opinion, on receiving a notice and particulars under clause 2.27 [“Notice by Contractor of delay to progress”];
.1 any of the events which are stated to be a cause of delay is a Relevant Event; and
.2 completion of the Works or of any Section is likely to delayed thereby beyond the relevant Completion Date,
then … the Architect/Contract Administrator shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair...
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