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Building disputes between contractors and homeowners

View profile for Perdeep Grewal
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Building disputes between contractors and homeowners

What should you do if you have a potential issue with your builder? 

Should you refuse access to your site? Should you provide them with an opportunity to return and complete the works? Should you terminate the contract? 

These are all common questions. 

As an Associate Solicitor specialising in construction law, I have dealt with several construction related disputes between contractors and homeowners. It is not common for homeowners to let their contractor return to site and carry out any further works. This is usually as a result of past related events or loss of trust and confidence between both parties. Although there is no legal obligation for a homeowner to allow their contractor to return to site, there are potential consequences for failing to do so.

A contractor may suggest the homeowner has terminated the contract by repudiation. Repudiation of a building contract may occur where a contractor carries out work that is defective and fails to, or refuses to, comply with a proper instruction to rectify the work. A homeowner would accept the contractor’s conduct to justify the opinion that they no longer want to comply with their contractual obligations and therefore accept the contract is terminated. 

Alternatively, repudiation may occur if a homeowner refuses to allow a contractor to return to site to remedy any defects, thereby causing the contractor to accept the contract is terminated because of the home owner’s conduct.

A contractor could bring a claim for damages for the loss flowing from the breach, damages for loss of profits, or even a claim for any outstanding payments due. Even if a homeowner is not happy with the works, they should still provide an opportunity for the contractor to carry out remedial works and make good any defects. From a practical perspective, it would usually be cheaper to instruct the existing contractor (if possible in the circumstances) to attend the site and complete the remedial works instead of instructing an alternative contractor.

Parties must also demonstrate that they have mitigated their losses. This means parties should act reasonably to ensure they have provided a contractor with a fair opportunity to attend site. This may not always be practical as tensions can certainly rise between a contractor and a homeowner. The homeowner may also have lost confidence in the contractor. However, home owners must cooperate and demonstrate a willingness to resolve a dispute by allowing a contractor to attend site and complete the remedial works.

How not to act during a building dispute

An example of how not to act during a building dispute was identified in Pearce & High Limited v John P Baxter and Mrs A S Baxter [1999] All ER (D) 152. The parties entered into a JCT Minor Works Contract. The contractor commenced legal proceedings against the employer for outstanding monies owed. Defects were identified during the defect liability period, but the contractor was not notified. The employer instructed an alternative contractor to carry out remedial works and deducted the sums from the retention monies.  

The Court of Appeal held the employer’s right to claim damages was not deprived by failing to notify the contractor to carry out remedial works. However, and more importantly, the amount recoverable was affected as the contractor argued that they could have carried out the works cheaper than the alternative contractor who undertook the works. 

This case demonstrates that parties should be aware that if you are going to instruct a third party to carry out remedial works, your damages may be limited to the actual cost it would have cost the original contractor to carry out remedial works. In other words, a homeowner would not recover the sums they have paid an alternative contractor if the original contractor can demonstrate they would have completed the works at a fraction of the costs.

In order to limit a dispute from escalating, I suggest parties should seek legal advice to ensure they do not adopt the wrong approach when considering whether to prevent a contractor from attending the site.

If you have any questions in regards to building disputes please contact our specialist team of construction dispute lawyers. 

I am an Associate Solicitor specialising in dispute resolution and construction law and can be contacted on 01245 453 804 or alternatively you can email me at perdeep.grewal@birkettlong.co.uk.

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