Does an owner engaging a third party to carry out part of the contractor's original scope of works relieve the contractor from its duty to ensure that the works are carried out in a proper and workmanlike manner?
Facts
During the construction of a house, the owner decided to engage a third party to construct a balustrade that originally formed part of the contractor's scope of works. After the house was completed, the owner was seriously injured when the balustrade collapsed in the first week of occupation.
The owner sued the contractor in contract for failing to carry out the balustrade work in a proper and workmanlike manner, in that, amongst other things, the contractor failed to properly supervise the installation of the balustrade and failed to ensure that the balustrade was installed in accordance with the relevant Australian standard.
The contractor contended that the balustrade was omitted as a provisional sum item and ceased to form part of the work to be completed by the contractor under the building contract.
Finding
The Court of Appeal held that the third party contract that the owner had entered for the balustrade works was not necessarily inconsistent with a continuing liability of the contractor under the building contract for the installation of the balustrade stating:
"The effect of the building contract was that the (contractor) was responsible for ensuring that all work which fell within it (whether or not the work in question was carried out by the (contractor) personally or by some other party such as a subcontractor) was carried out in a proper and workmanlike manner."
It was held that nothing in the conduct of the parties revealed an intention to omit the balustrade works from the building contract. The fact that the owner forwarded invoices received from the third party to the contractor, who told the owner and the third party that he would arrange payment of the invoices, was consistent with an intention that the contractor remained responsible for supervising the balustrade installation work and ensuring that it was carried out in a proper and workmanlike manner.
Application
The giving of the work to a third party without the contractor's consent is ordinarily a breach of the building contract. It was therefore open to the contractor to refuse to consent to the proposal or to impose its own terms on that consent. The contractor would not have been liable had it demanded a release from liability as the price of giving its consent to transfer the balustrade work to the third party.
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