Legal Blog

Fundamental breach & damages

Cornelis Grey Construction Inc. v. Folz 2018 Ont SCJ

Home construction gone bad. Everything depended upon whether the owner or the contractor was in breach of the contract. The judge noted that, absent specific contractual provisions, most construction deficiencies and reasonable delays are to be treated as breaches of warranty and not as breaches of contract justifying termination. In this case, however, the judge held that, at the time of termination of the contract, there were significant construction defects. Adding to this problem, the contractor purported to bill for the balance of the contract price and to demand release of holdback when, under the Construction Lien Act, it was not yet due. When the owners did not pay the amount requested, the contractor cancelled the kitchen counters and cabinetry and pulled off the job. The judge held that the contractor breached its contract and was therefore liable for the amount the owners paid to the contractor plus the amount the owners paid to complete the work less the amount the owners were to have paid under the contract. The judge disallowed the owners’ request for a markup on the amount they paid and for general damages for mental distress, annoyance, and disappointment. The judge did allow $10,000 in general damages for delay.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.