Deposit With Builder - Planning Permission

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Meridianman | 08:24 Mon 01st Jul 2013 | Law
4 Answers
We have been planning to have an orangery and extension in our house. We selected our contractor/builder, agreed a price and then paid them the deposit (£14,000) in order for them to make the application, conduct the survey etc. We agreed, in writing, that if the application failed we would pay them their costs for this if the application failed (£900). They submitted the planning application in January.

The application did indeed fail in March on a technicality but we then agreed we would give them a chance to provide another design(s) to see if we would move ahead with that. During that time our main contact at the company left (who had been excellent) and the response to enquiries etc slowed down dramatically. They came up with two more drawings, one of which we like but was just too expensive. We negotiated on price but not to a price we could afford.

I finally advised them two weeks ago that as we couldn't reach agreement that we would like our deposit back minus the £900. It took a week to get a response and they have now advised that the rules on permitted development changed on 30th May and as such can't accept our cancellation on the ground of planning permission. They want to charge us for costs to date on the project (which he had told us back in January in writing would be £900 but I sense he'll try to charge for the new designs) and for loss of profit on the contract. They never told us at all that legislation had changed and in fact he told me two months ago that it was unlikely to ever change and we should move on.

My thoughts are that they should have returned the deposit when the planing was denied so to now use this against us 3 months reeks of, at best, sharp practice. We don't want the original design now, not least because the service has since been terrible and given what they're trying to do to us now.

Can anyone give me a steer as to where we now stand with regards our deposit and the action I should take. The whole project is covered under the DGCOS scheme which I guess is where we end up but I'd be keen if anyone has any views on this before we embark down that route.




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You entered into a contract with the construction company and a great deal will depend on the wording of the contract, your demands do not seem unreasonable to me but I have not seen the terms that were agreed. My best advice would be to write to the construction company and request they refund your rather large deposit less what they can retain according to the agreement and to respond in writing within a specified reasonable period.
If you are not satisfied with their reply you have to make a decision to commence legal action, for which I suggest you obtain legal advice, or use the services of DGCOS , I believe you should take legal advice after receipt of the construction company’s response either way.
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Thanks Tony. There doesn't appear to be anything in the T&Cs that relate to what they are saying but I'm no lawyer so I think that is where we'll need to go.
Appreciate you taking the time to make a comment.
Nothing to add to Tony's help, Adam.
As a working member of the trade, I must say that the size of the deposit is quite ridiculous. An architect/designer would not have charged so much upfront.
In this case, I guess part of the deposit was for building works which, as yet, have no Planning Consent.

I worry about their ability to see the job through. If they ever do it, that is. Their cashflow must be almost non-existent if they are unable to easily refund. Give a company like this a large sum, and they'll spend it. Now they struggle to find it.

Easy to say now, but this should never have happened in the first place. Firms like this give even the cowboys a bad name.
Good luck with this.
I'm confused when you say the contract was for them to obtain planning permission but then you say the application failed because permitted development rights changed. Permitted development rights are to do with what doesn't need planning permission so if your contract was to get you planning permission then the PD changes wouldn't have affected that. What exactly did you contract with them?

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