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Owner’s claim was annulled due to unjustified rejection of remedial action

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Legal news
calendar 25 May 2014
globus Denmark

An owner had to pay the total contract sum even though the contractor’s work had defects. The reason was that the owner unjustified had rejected the contractors request to remedy the defects. The rejection was unjustified because the owner was not able to prove that the remedial measures would have been inconvenient.

An owner made an agreement with a contractor regarding the construction of four balconies on the owner’s property. Various defects on the balconies were found at the handing-over meeting in January 2011. February 2011 was set as the deadline of the remedial measures.

In January 2011 the contractor repaired the majority of the damages. However, the owner still claimed that the balconies were defect and at the end of February 2011 he gave notice of this.

Soon after – in the beginning of March 2011 – the contractor informed the owner that repairing of the balconies would take two days. The owner did not reply and the contractor requested a reply twice in March.

In early July 2011 the owner replied. The owner asked the contractor to remove the balconies because he had made an agreement with another contractor. The contractor refused and submitted the dispute to arbitration.

Court of Arbitration agreed with the contractor
During the proceedings an expert survey was made. It appeared from the survey report that the contractor had repaired the majority of the defects, which had been found at the handing-over meeting, within the agreed deadline. This was emphasized by the Court of Arbitration in the decision.

The Court of Arbitration also emphasized that the owner had rejected the contractor’s request to remedy the defects. The rejection was unjustified because the owner was not able to prove that the restoration would have been of material inconvenience.

Because of this, the Court of Arbitration determined that the owner could not claim a deduction in the contract sum corresponding to the defects the surveyor had found. Furthermore, the owner could not claim payment for the survey expenses.

IUNO’s opinion

It is a fundamental principle within construction law that the contractor is entitled to repair defects as long as it does not cause unnecessary inconvenience to the owner. This decision shows that an owner may lose his claim in connection with defects, where the owner unjustified rejects a contractor’s offer to remedy the defects.

For that reason, IUNO recommend that owners are careful when rejecting a contractor’s offer to remedying defects. Deadlines for the remedial measures may however be useful. If it after several attempts to remedy the defects is obvious that the contractor cannot repair the defects successfully, the owner must ensure that he is able to prove that it will cause material inconvenience if the contractor continues to try to remedy the defects.

[Court of Arbitration, case no. C-12509]

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Aage

Krogh

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Powers Bates

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Grønlund Jakobsen

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Skall Søby Nielsen

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Kræmer Pedersen

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Valentin Olsen

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