Can an employer recover tenant compensation caused by remedial works?
Tenant compensation may be recoverable where defective work and the contractor's failure to remedy cause the premises to be vacated, but the employer must prove legal liability, causation, remoteness, reasonableness and mitigation.
Recoverability depends on whether the tenant payment was a reasonable and sufficiently foreseeable consequence of the contractor's breach
If the contractor refuses or neglects a valid instruction to remedy defective work, the employer may appoint others and claim reasonable remedial and associated cost. A payment to a displaced tenant is not automatically recoverable. The employer must show that the payment was legally due or reasonably incurred, that vacation was caused by necessary remedial work, that this type of loss was within the applicable remoteness rule, and that the duration and amount were reasonably mitigated. The final certificate and defects procedure must also be checked for their precise effect.
| Issue | Position |
|---|---|
| Defective work | Breach must be established |
| Failure to remedy | Follow the contractual default steps |
| Tenant displacement | Must be caused by necessary remedial work |
| Tenant payment | Prove legal or reasonable basis |
| Recovery | Subject to remoteness and mitigation |
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