Factors affecting head contractor liability


This case — the High Court decision of Brett Carrington and Nicolette Carrington v David Easton and Others [2013] NZHC 2023 — was about allocating responsibility for defective building work in relation to a major renovation which was carried out during 2002 to a 1920s two-storey weatherboard home.
Prior to trial, the plaintiffs in this case had come to a settlement with the council, as well as the roofer and the joinery firm. Therefore, the judge had to consider the liability of the head contractor/builder, who himself had joined a number of third parties to the proceeding.
In this article we briefly discuss two of the more pertinent factors the court looked at to assess the relative liability of the head contractor versus the other parties involved in the construction.

The contractual matrix
The head contractor opposed the plaintiffs’ claim against him in relation to the joinery on the basis that the plaintiffs contracted directly with the joinery firm.
It was clear from the evidence presented that the joinery supplied was defective, both in design and fabrication. However, the issue was whether responsibility for the joinery firm lay with the plaintiffs or the head contractor.

Although the draft contract provided to the plaintiffs had not been signed, it stipulated that the contractor would organise and present quotations for subcontractors to the plaintiffs for approval before the subcontract work could commence.
Although the parties generally adopted this practice, in relation to the joinery the contractor had supplied two quotes, but the plaintiffs decided to obtain a further quote themselves.

The plaintiffs went on to directly accept this additional quote, and pay a deposit. The court was satisfied that the plaintiffs contracted with the joinery company directly and, accordingly, found that the plaintiffs had to accept responsibility for that decision and the defective joinery supplied.
While this would have ordinarily reduced the amount the head contractor would be held liable for, in this case the plaintiffs had already settled with the joinery firm for an amount in excess of the cost of the replacement joinery, and this had already been credited to the claim against the head contractor.

The duty of care of labour-only contractors
The head contractor had engaged two labour-only contractors, which he had joined as third parties to the proceeding. The head contractor submitted that as the labour-only contractors did approximately one-third of the work, they were responsible for one-third of the defects.
The judge stated that this argument was simplistic. Instead, it was necessary to:
Determine whether they owed a duty of care to the plaintiffs, and
Identify whether they actually carried out defective work.

While the judge accepted that “for present purposes” the labour-only contractors may have carried out some of the defective carpentry work, he did not consider that they owed the plaintiffs a duty of care.

The judge said that “in determining whether labour-only contractors … owed the Carringtons a duty of care, the court will look to the assumption of responsibility, any special skill the contractor has, or may hold himself out as having, the need for promotion of standards, and whether there are other means of protection. Assumption of responsibility for the task is not sufficient of itself in cases of this nature.”

In respect of both of the labour-only contractors, among other things:
They worked at the direction and under the supervision of the head contractor, i.e. they were effectively “hammer hands”,
This house was the first time they had worked on a renovation of a weatherboard home, and they did not hold themselves out as having expertise or experience in relation to work on weatherboard houses. They relied on the head contractor’s experience, and
They rendered accounts to the head contractor for their time, who then added a margin and charged their time to the plaintiffs.

It was the head contractor who had directly contracted with the plaintiffs. It was his obligation to observe the relevant building codes, regulations and plans and specifications.
That was a non-delegable duty, i.e. one that he could not avoid by engaging subcontractors.

It followed that the judge found that the labour-only contractors had not assumed any responsibility to the plaintiffs beyond applying their labour at the direction of the head contractor, and did not owe a duty of care.

Take home message
Just because a subcontractor may have carried out defective work, it does not necessarily mean that a court will find them liable.
It is essential that they also owe a duty of care which will depend on the particular circumstances of the case, including the degree of control of the head contractor, the experience of the individual subcontractor and, again, the contractual relationships of the parties.

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.