By: Catriona Otto-Johnston and Chloe Mathioudakis
The Court will not always resolve a construction contract dispute against a contractor who clearly provided deficient work. If you have been wronged by a residential renovation that’s gone off the rails, or if you’re a contractor and a client is refusing to pay based on this premise, it is important to first understand what kind of contract you have, and whether the alleged breach goes to the root of the contract. Whether you have done wrong or been wronged, Field Law can help you through this process.
Look to the Nature of the Contract
In the recent decision of 1314058 Alberta Ltd v Albers, 2018 ABQB 9, the Court considered whether victims of a “residential renovation gone wrong” could collect from their contractor for his admittedly faulty work. In this case, the Defendants hired the Plaintiff to renovate their newly purchased home. The Defendants accepted a fixed-price quote. After two months, the work stopped based on issues with the workmanship. By then, the Defendants had paid the Plaintiff a portion of the contract price.
The Plaintiff sued for the remaining portion of the contract price, less the cost of fixing the deficient work. The Defendants filed a counterclaim, contending that the Plaintiff’s poor workmanship constituted fundamental breach of the contract,allowing them to accept this repudiation of the contract and sue for damages (the expense of completing/fixing the renovations).
In the end, the Court found that there was no fundamental breach of contract on the Plaintiff’s part, despite his admission that he’d provided sub-par work. The Court stated that for defective workmanship to constitute a fundamental breach, the Defendants would have to have been deprived of substantially all of the benefit for which they had contracted, and that this was not the case.
Mitigation is Key
Part of the reason the Court found for the Plaintiff was that the Defendants were obligated to mitigate their losses by taking reasonable steps to minimize the costs of fixing the deficiencies that remained. Not only did the Defendants fail to do so, they repeatedly admitted at trial that they made a decision not to do anything to address the problems that resulted from the renovations pending the outcome of the lawsuit, even when one of the deficiencies allegedly endangered the Defendant family.
How Does This Decision Affect You?
A contract for renovations may not always guarantee that those renovations will turn out the way you expect. Field Law can help you negotiate your contracts before you sign them and assist in the unfortunate situation of a renovation gone wrong. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law.