An Auckland building company could not avoid liability for a subcontractor’s poor roofing work, part of a house renovation, by simply cancelling the contract and walking off the job.
In 2018, van den Anker Construction Ltd contracted with the Jess family to alter their garage, creating additional living space. A standard-form Certified Builders Association ‘charge-up’ contract was used; its Cost & Margin (Labour Only) Building Contract.
The family were agreeing to pay for hours worked plus costs of materials and any sub-contractor costs with a nine per cent margin added by den Anker to these extra costs.
The High Court was told the Jess family were overseas for nearly three months while renovations were carried out. On return, they were dismayed by the standard of work. They paid some, but not all of den Anker’s invoices.
Den Anker cancelled the contract, refusing to deal with their complaints.
Quality of the work done got a thorough hearing at a District Court trial where den Anker sued on unpaid invoices totalling $49,900. The trial judge ruled only the roofing work required remedying. But den Anker’s cancellation of the contract meant the building contract was now at an end and it was not liable for roofing repair costs, she said.
On appeal, the High Court ruled cancellation under the Contract and Commercial Law Act discharged all parties to a contract from future performance but still held them liable for obligations accrued up to the point of cancellation.
At time of cancellation, den Anker was liable to make good deficiencies in the roofing installation.
Jess family were entitled to set off their roof remediation costs of $25,800 against den Anker’s $49,900 unpaid invoices, the High Court ruled.
Evidence was given that while den Anker had invoiced the Jess family for the roofing subcontractor’s work, it had not itself paid the subcontractor’s bill.
Wilson McKay Trustee Company Ltd v. van den Anker Construction Ltd – High Court (30.11.23)
24.020