Remedies - Cost of Completion

Question 1

Groves v John Wunder Co. (Cost of Completion vs Diminution of Value Approach)

Answer 1

• The ordinary straightforward standard of relief is cost of completion to put the plaintiff back in the position had there not have been a breach of contract by the defendant.
• The court is very unlikely to give the breacher the benefit of the lesser amount (cost of completion) if the breach was committed in bad faith.
• The court will apply the diminution of value approach if fixing the contract’s outcome is grossly disproportionate to the nature of the defect. What you can’t do, however, is say the cost of completion is grossly disproportionate to the value of the asset itself.

Question 2

Nu-West Homes Ltd v Thunderbird Petroleums Ltd

Answer 2

• The cost of completion measure will not be available when the cost the of rectification (fixing it) is greatly (grossly disproportionate) in comparison to the nature of the defect. In that case the court will award the diminution of value.
• Some things to consider in applying the principle from Groves v. John Wunder Co.
  o (1) Is the cost of completion claim that is being sought by the innocent party reasonable?
  - Example: how important it is to fix the defect from Vermont to New Hampshire granite?
  - The court will consider cost of completion if you can give a reasonable articulation of why.
  o (2) is there any bad faith on the part of the defendant?
  if there is bad faith, the court will be less likely to give the defendant the lesser amount (cost of completion).