Demolishing uncertainty of “demolition”: Clin v Walter Lilly & Co Ltd [2021] EWCA Civ 136

This appeal raised a question of planning law in the context of a contractual construction dispute between the Appellant property owner, Mr Jean-François Clin (“Mr Clin”), and the Respondent contractor, Walter Lilly & Co. Limited (“Walter Lilly”), a specialist in the renovation of prime residential properties.

The issue in consideration was the correct approach to be taken in determining when construction works are to be treated as amounting to demolition for the purpose of section 74 of the Planning (Listed Buildings and Conservation Areas) Act 1990 (“s. 74”) (“the PLBCAA”), thus requiring conservation area consent (“CAC”).

Facts

Mr Clin is the owner of residential property (“the Building”). The Building consists of what was once two adjoining houses (Nos 48 and 50 Palace Gardens Terrace) and is located within a conservation area in Royal Borough of Kensington & Chelsea (“RBKC”).  Mr Clin had owned No 50 for some time and then purchased No 48 with a view to combining the two. During 2010 and 2011 Mr Clin, by his architect PTP Architects London Ltd (“PTP”), made a series of applications to RBKC for planning permission.  Mr Clin was granted a certificate of lawful development (“CLOPUD”) pursuant to section 192 of the Town and Country Planning Act 1990 (“the TCPA”) on 17 August 2011.  This confirmed the lawfulness of amalgamation (but did not provide permission for any demolition or building works). Mr Clin was put on notice by RBKC in pre-planning advice given in March 2011 that it was considered highly likely that the proposed works would involve substantial demolition requiring CAC.

In September 2012 Mr Clin contracted with Walter Lilly to carry out demolition, refurbishment and reconstruction works to form a single residence out of Nos 48 and 50 Pal-ace Gardens Terrace (“the Works”) (“the Contract”). What was to be left after the demolition were the party walls with Nos 46 and 52, together with much of the front elevation and some of the rear elevation. The Works commenced in March 2013 but were suspended in August 2013 after a representative from RBKC attended the site without prior notice to the parties and expressed the view that CAC, which had not been sought by or on behalf of Mr Clin, was required. RBKC stated that the ‘extent of demolition proposed is considered substantial demolition requiring [CAC]’ and that ‘the correct approach is to view the works being undertaken as a whole, not to break them artificially into distinct elements.’

Walter Lilly issued a notice of delay under clause 2.27 of the Contract on 6 September 2013. The Works recommenced in August 2014, Mr Clin having by then applied for and obtained the relevant permission. The parties were in dispute as to where contractual responsibility for the one year’s delay in progress of the Works properly falls.  Thus, the issue of whether or not CAC was lawfully required for the proposed Works was key to answering that question.

The relevant planning legislation and Shimizu

Part I of the PLBCAA (sections 1 to 68) concerns listed buildings; Part II (sections 69 to 80) concerns buildings in conservation areas. The key provisions of the PLBCAA relevant to this appeal were sections 69, 72 and 74. Section 69 provides that every local planning authority shall determine which parts of their area are conservation areas. Section 72 sets out the general duty relating to the exercise of planning functions by planning authorities, the Secretary of State, inspectors or any others. Special attention shall be paid to the desirability of preserving or enhancing the character or appearance of conservation areas. Section 74 provides that a building in a conservation area shall not be demolished without the consent of the appropriate authority. Thus, there are two questions to consider under s. 74:

1. First, whether a building in a conservation area is to be “demolished” such that CAC is required;
2. Secondly, if it is, whether or not CAC should be granted.

From 1 October 2013 CAC was replaced by “demolition planning permission” as a result of the Enterprise and Regulatory Reform Act 2013 which repealed s. 74 and added a new requirement for demolition planning permission where there was “relevant demolition” (see section 196D of the TCPA).  Nonetheless, there was no substantive change of any relevance to the issues under consideration in this case.

Shimizu and the meaning of demolition

In Shimizu (UK) Limited v Westminster City Council [1997] 1 WLR 168 (“Shimizu”) listed building consent had been granted for the demolition of virtually the whole of a listed building sited on the corner of Old Bond Street and Piccadilly in London except for chimney-breasts, amongst other things. The building then changed hands, and the new owners sought consent further to remove the chimney-breasts as well. The owners claimed, with the House of Lords agreeing, that the removal of the chimney breasts amounted to “alteration” not “demolition”.

In the leading opinion, Lord Hope held at 183F-G that:

‘the word “demolish” when used in reference to a building means to pull the building down – in other words, to destroy it completely and break it up.  In relation to a building, its destruction and breaking up cannot constitute a mere alteration.’

His Lordship emphasised at 185E-H that:

“I do not see the word “demolition” as applying only where the proposal is that every single part of the listed building should be pulled down. It is now commonplace, especially in towns and cities, where the exterior of a building contributes to the architectural or historic interest of a group of buildings such as buildings in a terrace, for the façade to be left standing while clearing the remainder of the site for redevelopment… It went far beyond what could reasonably be described as its alteration, as the works were so extensive and so much was to be pulled down and taken away, although the facade and the chimney-breasts and chimney-stacks were to be retained. The question is ultimately one of fact for the decision of the Lands Tribunal, and I do not think that any more precise definition of this expression is required”.

High Court Judgment

In a judgment dated 17 April 2019 ([2019] EWHC 945 (TCC)) (“the Judgment”), Waksman J (“the Judge”) held that the nature and extent of the proposed demolition Works amounted to substantial demolition such that CAC was required.

At [130] the Judge stipulated that “to say that there remained a box (with significant removals to the important front and rear elevations thereof) and therefore the building actually remained is completely unrealistic”. The only reason why any parts of the facades were retained (i.e. not to be demolished and re-instated or recreated) was because PTP knew that it would not obtain CAC for the pre-application scheme. While it is true that the two party walls for numbers 46 and 52 were retained, that is simply a function of the fact that the Buildings were within a terrace. The removal of the partition wall between Nos 48 and 50 was “particularly significant because it served the structural purpose of supporting at one end all of the internal structures” at Nos 48 and 50.

Whilst it was not agreed between the experts as to whether the opinion of RBKC that CAC was needed, the opinion by RBKC in its letter of 17 July 2013 that the extent of the demolition proposed was substantial was not considered to be unreasonable.

At [38] the Judge observed:

there is nothing in the very clear judgment of Lord Hope in Shimizu to suggest that the question of demolition or not involves a consideration of whether the elements to be removed themselves contribute to the character and appearance of the conservation area. It would be extremely odd if it did, because that would then require a judgment to be made on those matters which are not simple questions of fact and degree and moreover which are then to be considered again at the stage of deciding whether or not to grant consent. The issue of demolition or not is akin to the question as to whether there are building operations amounting to development so as to require general planning permission.”

The Judge granted declaratory relief to Walter Lilly on the basis that Mr Clin breached his implied contractual obligation to use all due diligence to obtain in respect of the Works any permission, consent, approval or certificate required under, or in accordance with, the provisions of any statute or statutory instrument. The Judge ordered that Walter Lilly were entitled to an extension of time of 53.2 weeks.

Grounds of Appeal

Mr Clin appealed against the Judgment, stating that the Judge was wrong to conclude that CAC was required for the Works. Three grounds of appeal were raised:

Ground 1: consideration of character and appearance

It was submitted that where a substantial part of a building is to remain intact, it was appropriate to consider whether the demolition to the Building involved a significant and/or substantial impact on the “character and appearance” of the conservation area. The purpose of the legislative conservation area scheme is to preserve the character or appearance of such areas and so at least a partly qualitative exercise of judgment (and not a purely quantitative exercise) is required. More specifically, section 72 of the PLBCAA expressly requires that, when exercising any planning function, “special attention” is to be paid to the character or appearance of the conservation area in question. Thus, section 72 extends to the function of making a determination that CAC is (or is not) required. The fact that issues of character or appearance may be relevant to a decision whether or not to grant CAC does not mean that they are not also relevant to the threshold question of whether or not CAC is needed.

Ground 2: retention of the party walls

The Judge erred in law and fact by concluding that the retention of a “box” (ie the party walls with adjoining properties) did not preclude a conclusion that there was demolition for the purpose of s. 74.  Mr Clin submitted that the Judge wrongly relied on Lord Hope’s obiter elaboration in Shimizu of the meaning of demolition. The Judge is said to have failed to ask the correct question, namely whether or not the whole or substantially the whole of the Building was removed, focussing instead on what was being removed from inside the Building. He accorded far too little weight to the amount and importance of the original fabric of the Building which was to be retained.  The proposed Works did not amount to the removal of the whole building or its complete destruction. The front of the Building carried a number of distinctive features, including balconies, a stuccoed frontage and horizontal coursing. Whilst the internal fabric was to be entirely demolished, it did not contribute (either at all or to any significant degree) to the character or appearance of the conservation area.

Ground 3: single building

Lastly, the Judge wrongly regarded the Building as two separate buildings and should not have paid any regard to what he considered to be PTP’s (subjective) intentions or motivations.  The two buildings had been amalgamated lawfully into a single building years before.

Therefore, it was submitted that, applying the correct principles, the Judge would or ought to have concluded that CAC was not required for the Works.

The appeal was resisted by Walter Lilly which contended:

• On Ground 1: Questions relating to character and appearance are irrelevant to the issue of whether a building is to be demolished.
• On Grounds 2 and 3: There was no basis on which to interfere with what were findings of fact by the Judge, following the hearing of contested evidence, that the Works amounted to demolition of the Building.
• In any event it is entitled to the relief obtained Judgment because of RBKC’s insistence that the proposed Works could not proceed until CAC was obtained.

Court of Appeal

Ground 1

Carr LJ found that a qualitative exercise by reference to considerations of character and appearance of the conservation area was not necessary when determining whether or not CAC was required. The reasons at [71] were as follows:

• Parliament is unlikely to have intended for the matters identified in section 72 to be considered twice, first when assessing the threshold question of demolition and secondly again for the purpose of considering whether to grant CAC.
• There is no logical connection between the question of demolition and questions of character and appearance of the conservation area. The concept fits, on the other hand, very neatly into a consideration of whether to grant CAC for the Works.
• It would be wholly unrealistic to place on developers the burden of assessing the impact of proposed works on the character or appearance of a conservation area in order to identify whether or not CAC was required. This is a multi-factorial question to be considered by reference potentially to a very wide range of considerations, including the scope of the conservation area, its demographic and population, the nature of any surrounding buildings and their occupation.  The qualitative assessment is pre-eminently a matter for the planning authority to perform.

Carr LJ also held that Shimizu confirms that the question of whether or not demolition of a building is involved is a question of fact and degree to be assessed on a quantitative basis ie by reference to the extent of the demolition (see for example 185F-H, 186C and 187B).  There is no suggestion that there is any qualitative exercise (by reference to impact on the character or appearance of the surroundings or otherwise) to be carried out.

Whilst it may be arguable that the observations in Shimizu at 183B – E were obiter, in Listed Buildings and Other Heritage Assets (5th Ed) by Mynors and Hewitson (“Listed Buildings and Other Heritage Assets”) it is suggested (at 12-053) that “the better view would seem to be that they formed an integral part of [Lord Hope’s] analysis of the statutory code and thus of the decision”. ‘The concept of “demolition” appears in both Parts I and II of the PLBCAA; it is clear that both Parts were before and expressly considered by the House of Lords. At no stage was there any suggestion that the approach to assessing whether or not there was demolition in Part II should be in some way different to the approach in Part I.  This is not surprising; one would expect a consistency of approach to what is a single concept.’ [75]

Carr LJ did not consider it necessary nor helpful to carry out a detailed analysis of which parts of Lord Hope’s opinion formed part of the strict ratio decidendi and which did not.  Her Ladyship emphasised that ‘[e]ven if parts were obiter, they are to be accorded significant weight, given their provenance.’

Grounds 2 and 3

Carr LJ emphasised at [83] that appellate courts are ‘not to interfere with findings of fact by trial judges, unless compelled to do so.  This applies not only to findings of primary fact, but also to the evaluation of those facts and to inferences to be drawn from them.’ There are multiple reasons for this approach:

1. The expertise of a trial judge is in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed;
2. The trial is not a dress rehearsal. It is the first and last night of the show;

• Duplication of the trial judge’s role on appeal is a disproportionate use of the limited re-sources of an appellate court, and will seldom lead to a different outcome in an individual case;

1. In making his decisions the trial judge will have regard to the whole of the sea of evi-dence presented to him, whereas an appellate court will only be island hopping;
2. The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence);
3. Thus, even if it were possible to duplicate the role of the trial judge, it cannot in practice be done.

In essence the finding of fact must be plainly wrong if it is to be overturned. Only in the following situations can a decision be overturned:

1. Where the trial judge fundamentally misunderstood the issue or the evidence, plainly failed to take evidence in account, or arrived at a conclusion which the evidence could not on any view support;
2. Where the finding is infected by some identifiable error, such as a material error of law;
3. Where the finding lies outside the bounds within which reasonable disagreement is possible.

As Carr LJ lucidly put it at [86]: ‘[t]he appeal court does not carry out a balancing task afresh but must ask whether the decision of the judge was wrong by reason of some identifiable flaw in the trial judge’s treatment of the question to be decided, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion.’

With this in mind, Carr LJ held that there was no reason to interfere with the Judge’s finding on the facts that the Works amounted to demolition of the Building for the purpose of s. 74. The removal of the partition wall between Nos 48 and 50 was particularly significant because that wall had served the structural purpose of supporting at one end all of the internal structures at Nos 48 and 50. With the removal of the partition wall, the sites of both houses were being cleared for redevelopment. [95]

The Judge was entitled to conclude that the presence of substantial steel structures and a “box” representing the house did not point away from demolition. [91] The Judge was also entitled to conclude that so much of the Building was being demolished and the (relevant) site being cleared for redevelopment that the Works amounted to demolition. The correct test was applied and Carr LJ stipulated that ‘[w]hat is left of Mr Clin’s appeal (after the dismissal of Ground 1) amounts to little more than disagreement with the Judge’s finding on the facts.’ [94] Additionally, Carr LJ stated at [97] ‘that it would be a most surprising outcome for the Judge’s conclusion that the Works amounted to demolition to be overturned as wrong in principle or in some way perverse on the facts in circumstances where both experts were expressly agreed that RBKC’s view in 2013 that CAC was required was not unreasonable.’

Commentary

In Listed Buildings and Other Heritage Assets (at 12-018) it states that the distinction between demolition and alteration or extension have caused “considerable problems in practice, not least following the decision….in Shimizu“. However, Clin has provided more context and principle on the meaning of demolition for practitioners to understand. Clarity of ‘demolition’ is paramount, not only because of the criminal liability that can attach to a breach of s. 74 (see section 196D(1) of the TCPA), but also considering the significant expense that necessarily follows from non-compliance with implied contractual terms or statutory provisions (the financial value of the dispute was around £3 million, excluding legal costs).

The Court of Appeal confirmed that ‘the decision in Shumizu reinforces (if not dictates) the conclusion as a matter of principle that the assessment of whether works amount to demolition is a quantitative exercise.’ [72] It would be difficult, if not impossible, for any developer to have any degree of certainty as to whether CAC was required in the first place. [71] Developers need only consider whether they are demolishing the building(s). The issue of demolition is to be taken as whole, rather than sub-divided into each element of removal contributing to the character and appearance of the conservation area.

Carr LJ observed at [58] that ‘for there to be “demolition” of a building, it is not necessary for every part of the building to be removed.  Works involving the removal of so much of the old building as to clear a site for redevelopment can amount to demolition’, even if the “box” representing the house remained. Thus, there is an aspect of common sense, as to whether the house is effectively demolished. Shimizu and Clin demonstrate that a property in a terrace (with sidewalls and façades – and indeed chimneys – being maintained) can nevertheless be demolished. [91]

Whilst the 50% “rule of thumb” test – whether 50% of the building has been removed – may be useful to determine whether intended works amount to substantial demolition, any strict percentage test is only of limited value, as the courts will be astute to what makes up the structure of the building. Although regard should only be in relation to the building itself, not to the size of the whole site. S. 74 refers to demolition of a “building”, not the whole site on which it stands, and so elements such as the rear garden are irrelevant in relation to the demolition question. [93]

Carr LJ also made obiter dicta comments at [79-80] on an aspect in Shimizu that did not sit well. The House of Lords held that where the word “building” appeared in the phrase “listed building”, the extended definition of “building” as including “any part of a building” in section 336 of the TCPA does not apply. The reason for this separation was because the listing process itself delineates what has been listed (which may be only part of the building). However, that logic does not apply to an unlisted building in a conservation area, where the definition of “building” is left at large.  Therefore, as Carr LJ stated at [80], ‘to the extent that Lord Hope decided that the word “building” in Part II of the PLBCAA is not to be taken as including “any part of a building”, I would respectfully query it.’ The answer to this dilemma, unfortunately for readers, will have to wait for another day.