Defective Workmanship Litigation - Part 3 Involving Mitigation Requirement By Permitting Contractor to Correct DefectsPage last modified: May 13 2022
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Is a Project Owner Required to Give a Contractor a Chance to Correct Defects?
A Contractor Must Receive a Reasonable Opportunity to Correct Defective Work Prior to Termination By a Project Owner; However, In Circumstances Where It Is Clear That the Contractor Is Unable to Properly Perform, the Law Permits Immediate Termination.
Understanding Various Issues Within the Law of Defective Workmanship Including Mitigation By Allowing Corrections
In a defective work case, a common issue that arises is the nature of the breakdown in the relationship between the property owner and the contractor. The manner in which the relationship broke down may adversely affect the property owner where there was a failure to allow a reasonable opportunity for the contractor to correct defects.
A property owner may wish to immediately expel a poorly performing contractor; however, a property owner that does so may be deemed to have repudiated the contract thereby voiding certain rights in legal action. Essentially, a poorly performing contractor must be provided a reasonable opportunity to correct defective workmanship. This reasonable opportunity is in keeping with warranties within the contract, whether as express warranties or implied warranties, and was well explained in Rocksolid v. Bertolissi, 2013 ONSC 7343 where it was said:
 In the case of Don Pocock Construction Ltd. v. Brady,  O.J. No. 688, 2004 CanLII 13959 (ON SC) at para. 42, Timms J. held that a contractor had a right to return to the jobsite to repair deficiencies in certain circumstances. He stated as follows:
The plaintiff asserts that, at common law, a builder has the right return to the site to repair deficiencies. In support thereof, he cites Longwell Enterprises Ltd. v. McGowan [(1989), 37 C.L.R. 13 (B.C. Co. Ct.) [Longwell]]; Missios (Re) O.L.A.T.D. No. 90 (Licence Appeal Tribunal) [Missios]]; Karl Mueller Construction Ltd. v. Northwest Territories (Commissioner) (1989), 35 C.L.R. 31 (N.W.T. S.C.) [Karl Mueller Construction Ltd.]]; Middlesex Condominium Corp. No. 86 v. Core Developments Ltd. [ O.J. No. 431 (H.C.J.) [Middlesex Condominium Corp.]]; and Pavao v. Pinarreta  O.J. No. 1197 (Div. Ct.) [Pavao]]
The defendants accept that, in the right circumstances, the court may grant a mandatory order as requested. They do not dispute that, at common law, a builder has the right return to a site to repair deficiencies. They argue, however, that if there has been a breach of contract on the part of the contractor, that right is lost. In support of that, they cite Tucci v. Concepts Construction Ltd. [(2000), 2 C.L.R. (3d) 291 (Sup. Ct.) [Tucci]] and Dominico v. Earle [ O.W.N. 375 (A.S. Marriott, Assistant Master) [Dominico]], 3027539 Nova Scotia Limited v. Ajay and Meenu Mogon [(2002), 2002 NSSC 96 (CanLII), 210 N.S.R. (2d) 124, 23 C.L.R. (3d) 88 (S.C.) [3027539 Nova Scotia Limited]] and Hadrian Development Ltd. v. Sansom [(1991), 46 C.L.R. 218,  B.C.J. No. 2504 (S.C.) [Hadrian Development]]
 In para. 45 of Don Pocock Construction Timms J. stated:
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.
 In the decision of C.S. Bachly Builders Ltd. v. Donna Lajlo,  O.J. No. 4444, 2008 CanLII 57455 (ON SC) at para. 65, C. Hill J. stated as follows:
The plaintiff acknowledges deficiencies in the carpentry and related work of its roofing sub-trade. Mr. Tompkins did not suggest these deficiencies were trivial. However, Bachly was entitled to the opportunity to correct the unsatisfactory work, to lay off the correction cost against its sub rather than absorb it, and to complete its contract. … It was unreasonable not to permit Bachly to rectify the roofing deficiencies.
 In Bachly C. Hill J. held that an implied term of the defendant’s contract was that the contractor’s work be done in a workmanlike manner. I agree and find that the same term also applies to Rocksolid’s contract with the Bertolissis. However, the deficiencies did not go to the root of the contract. In Bachly, the court stated at para. 82 that:
… I am not satisfied, on the whole of the evidence I accept, that the entirety of that work was so defective as to go to the root of the contract such as to amount to a fundamental breach by the plaintiff. This is essentially a fact-driven determination. Nor does the evidence support any intention by Bachly to no longer be bound by the contract.
It is noteworthy to point out that the contractor is entitled to a reasonable opportunity to mitigate rather than a perpetual or endless opportunity to mitigate. Of course, what is a reasonable opportunity will vary in each circumstance. Furthermore, and despite the abovesaid, a property owner may terminate a renovation contract without providing a reasonable opportunity to mitigate where it is apparent that the contractor is unable to adequately perform the work. This was explained well in the case of IDH Build Group Ltd. v. Fitzsimmons, 2021 ONSC 5188 wherein it was said:
 Ferrier J. set out the applicable legal principles regarding the repudiation of a building contract, citing I. Goldsmith and T. Heintzman, Goldsmith on Canadian Building Contracts, 4th ed. (Scarborough, ON: Carswell, 1988), as follows:
Repudiation is a unilateral act of one party to a contract which, in essence, indicates that he no longer regards himself as being bound by the contract. A repudiation may be express, i.e., by a party announcing his intention no longer to be bound by the contract, or implied, i.e., by a party acting in such a manner as to indicate such an intention, e.g., by committing a breach which goes to the root of the contract. (pp.1-63, 64)
... a contractor is under an obligation equivalent to that of the owner not to delay the work beyond any express period for completion and, in the absence of such a provision, to carry out the work with reasonable expedition. (p.5-12)
An owner is entitled to have his work completed within the time specified in the contract, or within a reasonable time if no specific time is provided for.... A sufficient delay will enable the owner to terminate the contract. (p.5-16)
...if such delay amounts to repudiation of the contract, the owner may terminate the contract for inexcusable non-performance and have the work finished by others. (p.5-16)
But even when delay has been caused by the owner, the contractor must still complete within a reasonable time.... (p.5-17)
An owner is entitled to terminate a contract if it is clear that either before the commencement of the work, or during the course of it, the contractor is not in substance able or willing to perform the work.
If it is clear that a contractor is unable to complete a contract, and in substance repudiates it, an owner must accept the repudiation and arrange to have the work completed by another contractor.... (p.6-3)
The statement, "An owner is entitled to terminate a contract if it is clear that either before the commencement of the work, or during the course of it, the contractor is not in substance able or willing to perform the work" is known as the fundamental breach exception to requirement that a contractor be provided with a reasonable opportunity to correct defects. It is noteworthy that this exception is an abstract objective concept and determining where a line-in-sand should be drawn becomes problematic. Expel a contractor too early and the property owner risks accusations of failure to mitigate in any subsequent legal action; but yet, provide an opportunity to correct defects and the contractor may continue to cause further defects. At some point, the property owner is with right to lose confidence in the contractor and to deem the defective workmanship as so significant as to amount to a breach of contract by the contractor; however, this line-in-sand is indeterminable until determined by a judge in a court of law. As expelling a contractor too early may have grave consequences in subsequent legal action, it is highly important that a property owner carefully document and gather evidence to support any decision to do so.
Expense Reasonably Incurred
A common subsequent argument of a contractor is that a property owner spent too much on repairs thereby failing to mitigate. Essentially, the contractor states that the corrective work was done too expensively and the property owner should be unable to blame the contractor for any excessive amounts. This is a good argument, and may indeed be a worthy argument; however, often a contractor fails to recognize that at the time the defects were corrected the property owner was under-the-gun to expedite repairs or corrections before any consequences of the defects arise. Later, when the defects are corrected and the problems are resolved, it may be discovered or recognized in hindsight that a lesser priced option was available. In this situation, the law recognizes these concerns and while the law does impose a duty to mitigate upon the property owner, this duty to mitigate requires only that the property owner act reasonably - the law does not require the property owner to act perfectly. These requirements and expectations were well stated in Viper Concrete 2000 Inc. v. Agon Developments Ltd., 2009 ABQB 91 as:
 The plaintiff has a duty to mitigate its damages. Red Deer College at p. 330:
... the defendant cannot be called upon to pay for avoidable losses which would result in an increase in the quantum of damages payable to the plaintiff
 The burden of proof is on the defendant to show that the plaintiff failed to mitigate.
See: Fridman, at p. 779; Harvin D. Pitch and Ronald M. Snyder, Damages for Breach of Contract, 2nd ed., looseleaf (Toronto: Thomson Carswell, 1989) at p. 8-20.9.
 The question to ask is whether the actions of the plaintiff, in mitigating its damages, were reasonable. Pitch and Snyder summarized the analysis for determining whether the plaintiff properly mitigated its damages at p. 8-15 to 8-16:
In determining whether the plaintiff's efforts at mitigation were reasonable, the court will consider the plaintiff's actions on the basis of facts which existed when the contract was breached, i.e., when the plaintiff was faced with the obligation to act immediately. In so doing, the court places its sympathy squarely with the plaintiff... The court does not impose upon the innocent plaintiff an exacting standard but instead adopts a practical perspective in line with business realities.
 The test is not whether a less costly course was available; rather, the test is whether the plaintiff's conduct was reasonable as described in Nu-West Homes at para. 58:
In my view, one should be careful not to weigh in too fine a set of balances the conduct of the aggrieved party. The wrongdoer is entitled to expect the aggrieved party to act reasonably. He is not entitled to have him act perfectly. In my view the proper test to be applied is that set out by Lord MacMillan in Banco de Portugal v. Waterlow & Sons, Ltd.,  A.C. 452 at 506, where he states:
Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measure which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the incidence of the party whose breach of contract has the difficulty. It is often easy after an emergency has passed to criticize the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.
Page 1 - Defect Issues, introduction Page 2 - Cause of Action, contract law or tort law Page 3 - Mitigation Requirement, reduce losses Page 4 - Mitigation, future risk of harm defect Page 5 - Who to Sue, privity of contract and vicarious liability Page 6 - Mandate to Produce, expectations overule specifications Page 7 - General Damages, aggravation and disappoinment