Compliance with statutory requirements: whose job is it anyway?
Another case has come before the Technology and Construction Court (TCC)* warning against the perils of unwittingly amending standard form contracts, this time focusing on the often-overlooked topic of compliance with statutory requirements e.g. planning consents, as in this case.
The contract in question was an amended JCT Standard Building Contract with Quantities (2005 Edition, Revision 2 2009 with Contractor’s Designed Portion (CDP)).
As the parties had not stated in the contract whose responsibility it was to obtain planning permission, the Court concluded at a preliminary hearing that there was an implied term in the contract that the employer was required to use “all due diligence” to obtain the necessary planning consents for the works prior to their commencement.
However, one of the issues raised before the Court at the preliminary hearing was whether the contractor was required to obtain the necessary planning consent for the demolition work which formed part of the CDP (and therefore whether it fell outside the ambit of the employer’s implied obligation) because the contract stated that any works “designed by the Contractor will fully comply with the Statutory Requirements“. The Court said this just makes the contractor responsible for work that goes ‘beyond the Employer’s Requirements’. But in what circumstances would the CDP ‘go beyond’ the Employer’s Requirements? Surely the purpose of the CDP is to fulfil the Employer’s Requirements?
This was certainly the view of the TCC when the contractor’s claim for an extension of time and associated loss and expense came before them. The TCC concluded that it must mean the job of obtaining the relevant planning consents for the CDP was not the responsibility of the contractor but instead fell under the ambit of the implied obligation on the employer.
The contractor (Walter Lilly) was therefore entitled to its extension of time and associated loss and expense for the full period of delay (53.2 weeks) caused by the employer’s failure to obtain the necessary planning consents, as the contractor was effectively “prevented” from doing the works (known as the “prevention principle”).
This case once again highlights that clear and consistent drafting and risk allocation is therefore essential when amending standard form contracts, to both ensure that the parties’ intentions are reflected, and that the parties fully understand the consequences of those amendments.
* Walter Lilly & Co Ltd v Clin Back to Our Thinking →