To Err is Human; to Recover Losses is Legal

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    Paralegal SCOPE contributor Scott McEachern is an Oshawa-area paralegal who works primarily in small claims. In this article, Scott explains legal concepts involved in faulty workmanship claims, including what to ask for, when and from whom.
Faulty workmanship happens.

Constructors, mechanics, technicians, and others who are paid to build, assemble, install, fix, or repair things are human. They will, from time to time, make mistakes that can be costly to correct, if correctable at all, resulting in litigation to recover the resulting losses.

Legally, these are called faulty workmanship cases come under the headings of contract law and tort law. Under contract law, the issue is “breach of contract,” for the breach of an expressed or implied term within the workmanship agreement. This holds true whether an agreement was in writing or was created verbally.

Either way, the workmanship must be performed to usual and proper standards. Under tort law, the issue is negligence, for the failure to perform workmanship to usual and proper standards.

Legal professionals tend to frame faulty workmanship lawsuits as claims for both breaches of contract and negligence. There may be slight, but important, differences in the manner in which courts assess and award damages owed for faulty work, depending under which basis for claim the matter is determined.

    Two Strategies are Better Than One

When setting out claims as either breach of contract or negligence, a legal professional will do so with each basis as an alternative to the other. This is known as “pleading in the alternative.” The idea of pleading in the alternative keeps both strategies open. Either the breach of contract strategy, or the negligence strategy, or both, can win the case if it goes to trial.

In faulty workmanship situations, the question arises: Does a property owner have a right to sue for the cost of repairs or corrections to workmanship, before the flaws in workmanship cause any actual loss or harm?

This question was hotly contested for years, with many legal advocates suggesting that the law should not allow property owners to sue for pure economic loss – the cost of repair – before an incident or accident resulting in injuries or damage actually occurs. In Winnipeg Condominium Corporation #36 v. Bird Construction Co. Ltd., [1995] 1 S.C.R. 85, however, the Supreme Court of Canada decided that where there is a “real and substantial danger,” liability can arise for repair of defects before the defect causes any actual harm.

Decisions since the Winnipeg decision clarify that costs of repairs are available when there is a “real and substantial danger.” For example, the recent case of Vargo v. Hughes, 2013 ABCA 96 determined that the danger need only be “likely to occur,” rather than imminent.  

In Winnipeg, the court also found that, even when there is no “privity of contract,” a property owner can bring legal action against those who originally performed faulty workmanship.

Privity of contract means that someone who was not a party to a contract cannot sue for breach of contract. In other words, “lack of privity” usually prevents someone from suing for breach of contract when a contract existed between other parties, but not them. In tort law, whoever provides workmanship owes a duty of care to people who will own that work in the future. This can create a legal conundrum for contractors.

    Vicarious Liability (Who to Sue?)

Another question that often arises as a result of common construction and contracting arrangements is the question of who should be sued and who is ultimately liable for the repair of defects or injuries to persons or losses to property.

In construction and contracting arrangements, the property owner often hires a general contractor. The general contractor then hires subcontractors, who may hire subcontractors, known as sub-subcontractors. These subcontractors may hire subcontractors and tradesmen. The result is that there is no direct relationship between the property owner and those who may produce faulty workmanship and defects.

Regardless, the general contractor is ultimately responsible for any faulty workmanship and defects produced by subcontractors and tradespeople he hires. This principle is known as a “non-delegable duty” and is explained in Vandenbrink Farm Equipment Inc. v. Double-D Transport Inc., 1999 CanLII 14947.

A property owner may sue the general contractor without having to uncover the identity of the actual subcontractor at fault for causing the defect. The property owner, or others who are affected by the faulty work, may choose to sue the sub-contractors anyway. For example, there may be concerns for the solvency of the general contractor. There is no absolute need for the property owner to sue anyone except the general contractor, however.

    Reasonable Expectations: Durability and Suitability

Contractors may hold the mistaken belief that their legal obligations under a contract are simply to do what was specified within the contract. This belief can lead to legal action for failure of durability or suitability of the work product.

When a contractor agrees to supply materials and perform work, the law imposes an implied term within the contract, that the materials and work will be both reasonably durable as well as reasonably suitable for the job. In Dirm Inc. v. Bennington Construction Ltd., 2010 ONSC 3298, the court explains:

    “I further conclude that, while not an expressed term of the contract between these parties, it was an implied term of the contract that the concrete finish would be durable. Reasonable durability of the concrete has a certain degree of obviousness and as such it is a reasonably implied term of the contract: M.J.B. Enterprises Ltd. v. Defence Construction (1951) Limited, [1999] 2010 ONSC 3298 (CanLII) 1 S.C.R. 619 at paras. 27-19. The delamination appeared within less than one month after the pouring of the concrete.”
    General Damages – Distress by Breach

Another interesting point about defective workmanship involves the various heads of damages in which claims may be brought.

When defects occur, the property owner may endure annoyance, inconvenience, distress, and upset. However, age-old principles of law have held that claims for general damages – called “pain and suffering” — are improper in breach of contract cases and that only the actual losses incurred in correcting faulty workmanship may be claimed. Traditionally, if a contractor created a defect that a property owner spent $1,000 to repair, the property owner could seek only the actual loss, $1,000, from the contractor.

Today, the tide is changing. In Fidler v. Sun Life Assurance Company of Canada, [2006] 2 S.C.R. 3, the Supreme Court held that when the parties to a contract reasonably contemplated “peace of mind” benefits at the time a contract was formed, and that mental distress might occur if the contract was breached, then an award for general damages may be proper.

In the years since the Fidler decision, the principle of including mental distress as general damages in breach of contract cases continues to evolve. In some cases, awards for breach of contract have included amounts for loss of enjoyment that was “reasonably contemplated” when the contract was created. (see: Van Duren v. Chandler Marine Inc., 2010 NSSC 139 )

It seems that, where a contract was entered into to obtain relief from suffering, general damages for intangible sufferings upon breach of contract, including anxiety, distress, frustration, irritation and loss of an amenity, are recoverable.

It also seems, however, that the law is evolving as to whether general damages are available where a contract purpose included an intent to obtain emotional benefits such as enjoyment, pleasure, relaxation, and even fond memories.

Related Information:

Before becoming a paralegal, Scott McEachern was an insurance broker, licensed by the Registered Insurance Brokers of Ontario. Scott works primarily in the Small Claims Court, focusing on disputes involving contractors, and cases involving intentional torts.

Visit Scott’s business site to learn more about his Durham-Region practice.

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