Under Clause 11.2(5) a Defect is a part of the works which is not in accordance with the Works Information, so this covers the situation you describe.
If the Contractor has indicated that he does not intend to correct the Defects then Clause 45.1 sets out the procedure to be followed - the PM assesses the cost of having the work done by others, and deducts that sum from payments due to the Contractor. I don't believe it is really relevant whether this comes from retention or any other amount due.
If the Contractor has indicated that he does not intend to correct the Defects then Clause 45.1 sets out the procedure to be followed - the PM assesses the cost of having the work done by others, and deducts that sum from payments due to the Contractor. I don't believe it is really relevant whether this comes from retention or any other amount due.