Defective Workmanship Litigation - Part 2 Including Whether Such Is a Breach of Contract or Negligence CasePage last modified: January 11 2023
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When a Contractor Performs Defectively, Does the Law View the Issue As Breach of Contract or As Negligent Conduct?
A Lawsuit Alleging Defective Workmanship Usually Alleges Both Breach of Contract As Well As Negligence Conduct.
Understanding Various Issues Within the Law of Defective Workmanship Including Claims For Alternate Causes of Action
In a lawsuit involving claims for defective work, allegations usually include issues of contract law as well as issues of tort law; whereas, from a contract law perspective, when a contractor fail to perform properly, such a failure is may be a breach of contract; and, from a tort law perspective, failure to take the reasonable care necessary to perform properly may be negligence.
The Contract Law
Allegations of flaws and defects within a construction project or renovation project usually involve breach of contract for the failure to adhere to an express term or an implied term within the applicable contract, regardless of whether the contract was written or verbal. Generally, a contract will explicitly state that work shall be performed to usual standards of the trade; or, if the contract is silent on the standards, the law will deem that usual standards of the trade were presumed.
Common Concerns, breach of contract by defect
A property owner will sometimes react unreasonably by asserting allegations of breach of contract due to flaws or defects. In many circumstances, the undue reaction occurs due to unreasonable expectations of perfection; whereas, in construction law matters, generally, a contractor is without a requirement to perform perfectly and is instead only required to perform reasonably; and accordingly, a property owner is expected to, and legally required to, allow some minor defects to occur during the course of the workmanship; albeit, subject to the contractor remaining willing to correct any unreasonable defects. This requirement to provide the contractor with some slack was stated within the case of C.S. Bachly Builders Ltd. v. Lajlo, 2008 CanLII 57444 wherein it was said:
 “Mere bad or defective work will not, in general, entitle an owner to terminate a contract”: I. Goldsmith, Canadian Building Contracts (4th ed.), p. 6-4 (passage approved in Argiris (c.o.b. Atlas Painting) v. Calexico Holdings Inc.,  O.J. No. 6291 (Gen. Div.) at para. 12; 568694 Ont. Ltd. v. Davis,  O.J. No. 1030 (Gen. Div.) at para. 5).
 For the defendant, the roof repair deficiencies became a convenient coincidence with her plan to pursue a cash settlement through the vehicle of NFA permitting, in her view, her act of taking the work out of the hands of the contractor.
 While the state of the roof repairs by Bachly amounted to a breach of contract on its part, “breach of contract is a long way from repudiation of contract”: Argiris, at para. 10. The condition of the roof work in this case was not so bad or defective as to deny the defendant the substance of the benefits of the contract and did not amount in substance to a failure or refusal to carry out the contract work and thus amount to repudiation. It is the defendant who failed to fulfil her contractual obligations and thus repudiated the contract. Without justifiable cause, Ms. Lajlo denied the defendant access to the work site and the opportunity for Bachly’s performance to the completion of the contract.
 Although the defendant may be entitled to a set-off for that roof work which was defective, in the absence of a fundamental breach by Bachly, she was obliged in mitigation of her damages to provide the plaintiff a reasonable opportunity to correct its own work. An expert’s report would have been unnecessary. I am satisfied, on the evidence I accept, that Mr. Whittick offered to rectify the deficiencies but that the defendant and her agent, Hanson of NFA, denied that opportunity. In these circumstances, the defendant is not entitled to damages based on her own costs of correction: see Obad (c.o.b. Rockwood Drywall) v. OntarioHousing Corp.,  O.J. No. 282 (H.C.J.) at para. 48 per Blair J. as he then was); 568694 Ont. Ltd., at para. 31; Argiris, at para. 22.
Furthermore, where the property owner prematurely terminates the contractual agreement, known as a repudiation of contract, the contractor may subsequently seek damages for the breach or a quantum meruit for the value of work done. Such was succinctly stated within the case of Pierre Paroyan v. Chee, 1995 CarswellOnt 2952, wherein it was said:
 I believe the law relating to a building contract situation such as that in the present case is set out in Comorowski v. Vanweil 12 O.R. (3rd) p. 444 where it is stated in the headnote as follows:
When a contract is repudiated, the innocent party may elect to treat the contract as terminated and be discharged from his or her own preformance obligations. The innocent party may than elect to cover either damages for breach of contract or on a quantum meruit for the value of work performed before repudiation. On a quantum meruit claim by an innocent contractor, deficiencies in the work are counted for as reductions in the value of the work done, but no account is taken of the owner's cost to complete.
The Tort Law
In tort law, claims are framed as negligence allegations for the failure to perform workmanship in a manner expected of a reasonable contractor. Interestingly, the reasonable contractor, being a hypothetical contractor for the purpose of legal analysis, is generally expected to perform workmanship to the usual standards of the trade, as is similar to the usual requirements in contract law; and accordingly, at first glance, it may seem that whether a case proceeds as a contract law case or as a tort law case makes little, if any, difference; however, legal professionals tend to frame defective workmanship lawsuits as both a breach of contract claim and a negligence claim as there may be slight, but important, differences in the manner in which courts assess and award the damages. Furthermore, if a failed contract is deemed to exist, meaning that some concern, such as illegality of contract or another contract law principle that negates the enforceability of the contract, legal claims in negligence law are, generally, unaffected by the contract law concerns.
Pleading Both Theories
Prior to the Supreme Court decision in the case of Central Trust Co. v. Rafuse,  2 S.C.R. 147, there was great debate among legal scholars as well as conflicting court decisions about whether multiple causes of action seeking concurrent or alterative liability could be claimed within the same lawsuit; and in particular, whether a breach of contract claim could be brought in conjunction with a negligence claim. The Supreme Court resolved the debate within Central Trust by deciding that alternative legal theories seeking concurrent types of liability could be claimed within the same lawsuit; and thus, it is legally proper to plead multiple causes of action, such as both breach of contract and negligence, at the same time. Specifically, the Supreme Court stated:
48. I must now attempt to draw conclusions from what I fear has been a much too lengthy survey of judicial opinion on the question of concurrent liability. My conclusions as to what I conceive, with great respect, to be the opinion with which I am in agreement on the various issues underlying this question may be summarized as follows.
49. 1. The common law duty of care that is created by a relationship of sufficient proximity, in accordance with the general principle affirmed by Lord Wilberforce in Anns v. Merton London Borough Council, is not confined to relationships that arise apart from contract. Although the relationships in Donoghue v. Stevenson, Hedley Byrne and Anns were all of a non‑contractual nature and there was necessarily reference in the judgments to a duty of care that exists apart from or independently of contract, I find nothing in the statements of general principle in those cases to suggest that the principle was intended to be confined to relationships that arise apart from contract. Indeed, the dictum of Lord Macmillan in Donoghue v. Stevenson concerning concurrent liability, which I have quoted earlier, would clearly suggest the contrary. I also find this conclusion to be persuasively demonstrated, with particular reference to Hedley Byrne, by the judgment of Oliver J. in Midland Bank Trust. As he suggests, the question is whether there is a relationship of sufficient proximity, not how it arose. The principle of tortious liability is for reasons of public policy a general one. See Arenson v. Casson Beckman Rutley & Co.,  A.C. 405, per Lord Simon of Glaisdale at p. 417. Junior Books Ltd. v. Veitchi Co.,  1 A.C. 521, in which an owner sued flooring subcontractors directly in tort, is authority for the proposition that a common law duty of care may be created by a relationship of proximity that would not have arisen but for a contract.
50. 2. What is undertaken by the contract will indicate the nature of the relationship that gives rise to the common law duty of care, but the nature and scope of the duty of care that is asserted as the foundation of the tortious liability must not depend on specific obligations or duties created by the express terms of the contract. It is in that sense that the common law duty of care must be independent of the contract. The distinction, in so far as the terms of the contract are concerned, is, broadly speaking, between what is to be done and how it is to be done. A claim cannot be said to be in tort if it depends for the nature and scope of the asserted duty of care on the manner in which an obligation or duty has been expressly and specifically defined by a contract. Where the common law duty of care is co‑extensive with that which arises as an implied term of the contract it obviously does not depend on the terms of the contract, and there is nothing flowing from contractual intention which should preclude reliance on a concurrent or alternative liability in tort. The same is also true of reliance on a common law duty of care that falls short of a specific obligation or duty imposed by the express terms of a contract.
51. 3. A concurrent or alternative liability in tort will not be admitted if its effect would be to permit the plaintiff to circumvent or escape a contractual exclusion or limitation of liability for the act or omission that would constitute the tort. Subject to this qualification, where concurrent liability in tort and contract exists the plaintiff has the right to assert the cause of action that appears to be most advantageous to him in respect of any particular legal consequence.
52. 4. The above principles apply to the liability of a solicitor to a client for negligence in the performance of the professional services for which he has been retained. There is no sound reason of principle or policy why the solicitor should be in a different position in respect of concurrent liability from that of other professionals.
53. 5. The basis of the solicitor's liability in tort for negligence and the client's right in such case to recover for purely financial loss is the principle affirmed in Hedley Byrne and treated in Anns as an application of a general principle of tortious liability for negligence based on the breach of a duty of care arising from a relationship of sufficient proximity. That principle is not confined to professional advice but applies to any act or omission in the performance of the services for which a solicitor has been retained. See Midland Bank Trust Co. v. Hett, Stubbs & Kemp, at p. 416; Tracy v. Atkins (1979), 1979 CanLII 760 (BC CA), 105 D.L.R. (3d) 632, at p. 638.
54. Applying these conclusions to the facts of the case at bar, I am of the opinion that if the respondent solicitors were negligent in the performance of the professional services for which they were retained they would be liable in tort as well as contract to the appellant, subject, of course, to the other defences which they have raised.
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