In a recent Alberta decision, the court found that a homeowner’s dissatisfaction with a contractor’s work did not entitle him to withhold payment for the work completed.
The contractor owns a home building franchise in Alberta. The contractor acted as the building contractor for the renovation of a farmhouse for the benefit of the homeowner.
The contractor went to court claiming that the homeowner had failed to pay in full for completed work and associated supplies and owed the contractor the sum of $77,691 plus interest and costs.
The homeowner’s defence was that the installation of the materials was so substandard that he was required to dismantle it and have it all redone by another contractor, which ended up costing him $56,009. The homeowner’s dissatisfaction with the contractor’s workmanship was summarized into three general areas: poor workmanship; poor aesthetic appearance; and lack of waterproofing. Essentially, the homeowner invoked the doctrine of fundamental breach, that is, the work was of such poor quality that it deprived him of the very thing for which he had bargained.
At issue was whether the home renovation contractor’s workmanship was so deficient that the customer was relieved of any obligation to pay.
The court stated that the question was whether the homeowner was entitled in law to terminate the contractor from the project as he did, without liability.
The court cited previous case law relating to a fundamental breach in the residential renovation context as follow:
“This renovation contract is a performance contract. If the Plaintiff substantially completed its work, then it is entitled to be paid the remainder of the contract price less the amount it would have cost the Plaintiff to remedy the deficiencies. If, as the Defendants allege, the Plaintiff fundamentally breached the contract, the Defendants are entitled to accept this as repudiation of the contract, pay only the value of the work on a quantum meruit basis and maintain a claim for their damages being the cost of rectifying the renovation work.
A fundamental breach entitling the innocent party to repudiate the contract must be a breach that goes to the root of the contract and therefore deprives the contracting party of substantially the entire benefit of the very thing for which it contracted […]”
In this case, the parties agreed that the work contracted for, including extras, was substantially completed.
As such, the court found that there was no fundamental breach of the contract on the contractor’s part and that the homeowner was not entitled to repudiate the contract, or purport to terminate it as he did. Rather, the court found that the homeowner had an obligation to permit the contractor to address his concerns prior to hiring a replacement contractor. The court then stated:
“On the whole, I find this to be an extreme case of buyer’s remorse. […]
There is no doubt that [the contractor]’s product did not meet [the homeowner]’s expectations. However, he did not afford them the opportunity to make good. Moreover, he undid their work. Tearing something down does not mean that it was not done in the first place. [The homeowner]’s actions do not relieve him from liability for [the contractor]’s services and materials.”
Additionally, the court found that the homeowner was not allowed a set off for his backcharge claim of $56,009 because he did not give the contractor the chance to address the construction concerns that he had.
As a result of the foregoing, the court found the homeowner liable to the contractor for the full unpaid amount of $77,691, with interest.
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