Contractor Right to Repair Deficiencies

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is a litigation lawyer practicing at Perley-Robertson, Hill & McDougall LLP in Ottawa, Ontario. He may be reached at 613.566.2823 or obourns@perlaw.ca.

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Regardless of the size of a project, deficiencies happen.  It is important that when they do, the parties understand their respective obligations.  Ideally, when a deficiency is identified the owner or general contractor will inform the responsible contractor of the deficiency and the responsible contractor will take steps to remedy same to all parties’ satisfaction.

However, often there are disputes that arise following the identification of the alleged deficiencies.  These disputes may relate to; who is to blame for the deficiency, perhaps the nature and extent of the deficiency, or whether a deficiency exists at all.  In some circumstances the relationship may have eroded to the point where the general contractor and/or owner may be inclined to fire the contractor and replace them with another entity to complete the job (and repair any deficiencies that exist).  However, the law in Ontario is clear that a contractor that originally completed the work is entitled to a reasonable opportunity to repair any alleged deficiencies before being terminated from the job.

The 2013 decision in Rocksolid v. Bertolissi1 is instructive.  In that case the contractor, who was retained to do stonework at the defendant’s home, claimed  $19,058.89 remaining on a total contract price of $43,064.50.  The defendant counterclaimed for $17,515, being the cost to complete the remaining stonework.  There was unfinished work and alleged deficiencies in the work already completed.  Smith J. determined that at all times the contractor was prepared to attend on site and complete the balance of the installation and repair the deficiencies at the agreed contract price and at no extra cost to the defendant.  Conversely, the defendant refused to provide an opportunity for the contractor to return.

At paragraph 80 of the decision, Smith J. states:

Although the Longwell decision is little more than a head note, it does appear to stand for the proposition that a builder who is ready and willing to complete the work required to make good the contract between it and the home owner, has the right of entry to the house to do so. In that case, it was held that a refusal to permit such entry amounted to repudiation of the contract by the homeowner.

Additional principles were gleaned from C.S. Bachly Builders Ltd v Donna Lajlo, a decision of Hill J:2

–it was unreasonable not to permit a contractor to rectify deficiencies

–an implied term of the contract was its completion in workmanlike manner

–short of a fundamental breach, a contractor is entitled to rectify deficiencies

–it is a matter of mitigation of damages to allow a contractor to correct its work

–any homeowner’s claim cannot include work undone after a contractor justifiably left the site

Based on the above principles, Smith J. summarized the applicable law as follows:

In these circumstances where the contractor was prepared to correct the deficiencies at no charge, where there was no fundamental breach and where there was no urgency requiring immediate repair, I find that it was reasonable for the owner to provide the contractor with an opportunity to return to correct the deficiencies in order to mitigate their damages. I further find that if the owner fails to provide the contractor with a reasonable opportunity to correct the deficiencies in its work, which do not constitute a fundamental breach of the contract and where there is no urgency, the owner is not entitled to claim damages based on his or her cost to have the deficiencies repaired by a third party contractor.

Therefore, given that no opportunity was given to the contractor to return to the site the defendant home owner did not mitigate his damages and was not in a position to claim for the cost to repair the deficiencies by another contractor.  Therefore, the plaintiff’s claim was allowed and the counterclaim was dismissed.

In PSR & Construction v. Dagenais 3 the contractor was retained to undertake various updates in a home owners kitchen, including installation of kitchen cabinets, a granite countertop, and a backsplash.  The home owner complained about the countertop not being evenly installed and the grout had not been completed on the backslash.  The contractor had undertaken to attend on site, finish the grouting and remedy the allegedly deficient work, however, the home owner then stated that she had hired another contractor to do the grouting and that any remedial work would be deducting from the amounts outstanding to the contractor.  Importantly, the contractor was not permitted to attend the site to completer / remedy the work.

It was determined that the work completed by the contracted was substandard and the home owner had justifiable complaints about all of the work done.  However, following the decisions cited above, the Deputy Judge held that:

Where the owner fails to provide the opportunity, the owner is not entitled to claim damages to have the deficiencies repaired. In the typical case, either the contractor or the owner is found to have repudiated the contract.

In attempting to determine who repudiated the contract it was held that the contractor failed to comprehend the justifiable level of dissatisfaction of the home owner, but also that the home owner bears equal responsibility for the “sorry state of affairs” because she (a) never paid any part of the contract price, (b) did not give the contractor the opportunity to repair the defects, and (c) tore out the backsplash installed by the contractor.  Therefore, it was determined that this was a case of double repudiation in accordance with Pelliccione v John F. Hughes Contracting 4 where Ferrier J. stated:

[52] And so, I find that there was a double, mutual repudiation by both Dubinsky and Kugelmass….both parties agreed to terminate their contract by their mutual hostility, and by their inability, jointly, to restore their relationship to a working one, which would have involved paying money, giving and receiving instructions about the balance of the work, […] returning to the job site, and restoring the special relationship that was so necessary. […] The contract was thus terminated […] by express or implied agreement, and there was no single repudiation nor breach, by either side […]

The result of double repudiation is that;

[53] [T]he plaintiff [contractor] is entitled to be paid the contract price for the work he did […] less a set-off for uncompleted work, and less the cost of repairs for any deficiencies or defects in the work done […] that is, damages for breach of contract by way of defects in performance.

As a result the contractor’s claim and the home owner’s counterclaim were both dismissed.  The amount owed on the contract was not owned to the contractor because of the numerous deficiencies, however, the home owner was not entitled to a further sum given that the amount she was no longer required to pay the contractor was deemed to be sufficient to repair the deficiencies.

In a Nova Scotia Small Claims Court decision in Lee v. All Tech Ltd.5 home owners were unsatisfied with a contractor’s refinishing of the floor in a particular area of their home.  There was some falling out between the home owners and the defendant and the home owners refused to give the contractor “any opportunity to come back and inspect the job and attempt to improve it”.  It was determined that the home owner’s position created two problems: (1) it unfairly created a situation where the Defendant could not have a close look at the work to be better prepared for the trial; and (2) was a complete failure of the plaintiff to mitigate its damages.  The result was that the claim was dismissed.

[Update – Aug. 25, 2015] In a recently released Ontario decision, Beta Construction Inc. v He-Xing Chiu and Kin-Hung Chiu 6 home owners were again denied the ability to claim against the contractor for deficiencies where the contractor was not provided an opportunity to remedy them himself.   As stated by Master Albert, the home owner failed to provide the contractor with;

[…] a list of items that were deficient, incomplete or otherwise unacceptable to them and an opportunity to return to carry out any repair or warranty work or to inspect the work. Nor did the [home owners] allow [the contractor] to re-attend to inspect after they launched their counterclaim in this action. They specifically denied [the contractor] entry when he requested access for the purpose of viewing the items complained about by the [home owners] in this legal proceeding.

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Owen Bourns is a litigation lawyer in Ottawa, Ontario.  He may be reached at 613.566.2823 or at obourns@perlaw.ca

  1. Rocksolid v. Bertolissi, (2013) ONSC 7343 (ONSC)
  2. PSR & Construction v. Dagenais, (2014) CanLII 29444 (ON SCSM) at para 89 citing C.S. Bachly Builders Ltd v Donna Lajlo, 2008 CanLII 57444 (ON SC)
  3. PSR & Construction v. Dagenais, (2014) CanLII 29444 (ON SCSM)
  4. Pelliccione v John F. Hughes Contracting, (2005) CanLII 34822 (ONSC)
  5. Lee v. All Tech Ltd., (2010) NSSM 74 (CanLII) at para 10
  6. Beta Construction Inc. v He-Xing Chiu and Kin-Hung Chiu, 2015 ONSC 5288 (CanLII)
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