Defective work: Making amends

Discovering that a contractor has not finished work to the standard expected can be a frustrating experience for employer and contractor. Often a client is tempted to break ties with that contractor and get someone else to complete the job - but is this wise? If you’re a contractor, where do you stand should you find yourself in such a scenario?

If an employer decides to pursue a contractor in court for the cost of repairing any defects, it must remember that the court will expect it to give the contractor a chance to keep the cost of repairs to a minimum.

If, as is common practice, the building contract contains a defects liability provision, the contractor may have a contractual right to return and fix defects within a specified period. Failure to allow the contractor back to site will not only be a breach of contract by the employer, but may also amount to a failure to mitigate loss, which would reduce the level of damages an employer can claim.

In William Tomkinson vs St Michael’s Parochial Church Council (1990), the employer gave instructions to third parties to remedy the defects. The court allowed the employer to recover damages for the contractor’s defective work, but the amount of damages was limited to the cost that the contractor would have incurred in remedying it if they had been required to do so.

If the contractor has a right to return and sort out the work itself, an employer should think twice before preventing the contractor from doing so.

In the absence of a contractual right to return to site, an employer is entitled to deny a contractor the opportunity to rectify the damage. However, in City Axis Ltd vs Jackson (1999) the employer refused to permit the contractor to enter the premises to complete snagging works. The court held that it acted unreasonably and therefore it was unable to recover. It should be noted that the court was in part swayed by the relatively trivial nature of the snagging.

An employer should always remember that, although there may be no contractual basis for return, an unreasonable refusal could nevertheless constitute a failure to mitigate loss.

However, could there be times when it is inappropriate for an employer to allow a contractor to re-enter the site to remedy a defect? The courts acknowledge there may be such times and have said that an employer is not expected to “take any step that a reasonable and prudent man would not ordinarily take in the course of his business”.

In judging whether an employer has acted reasonably, the court will also take into account who is to blame for the defect. If it is the contractor, he can only expect a certain degree of leniency in terms of an employer’s duty to mitigate. The onus will always be on a contractor to prove any failure on the part of an employer to mitigate.

The nature of the relationship between the parties may also be taken into consideration. In Iggleden vs Fairview New Homes (2007), the defendant contractor was liable for repairs to a driveway, but there had also been a history of disagreement between the parties as to how the remedial works should be carried out.

The court found that it was not unreasonable for the claimant to say it did not want the defendant to return to the property, stating “it would take a relatively extreme set of facts to persuade me that it was appropriate to deny a homeowner financial compensation for admitted defects, and leave him with no option but to employ the self-same contractor to carry out the necessary rectification works”.

This decision will offer some comfort to employers who have lost confidence in their contractor, but it is unlikely that the above conclusion will be reached where there is an express defects liability provision right to return.

Daniel Tain is a partner in Pinsent Masons