My thoughts for what they are worth. No offence intended to anyone but based on experience.
1 : The principle issue here is does the work undertaken comply with the Regulations or failing that any subordinate guidance ?
2 : Failing 1 above if there is no guidance or Industry best practice, has the installation been left in a safe state
Given my understanding and what I have read the answer to both is No, and can only be NO because there are both BS7161 requirements as well as Industry best practice that set out clearly and unambiguously what should be done.
The answer to both of the questions above would be used in Court by the Prosecution in the event of an accident or injury/loss, and any defence would need to demonstrate without question that the installation was safe and without danger. The legal eagles deal only in facts and would not even entertain a "in my opinion" argument unless it was given by an expert witness. What would an expert witness say in these circumstances ? I think we all know.
It would be for the Installer to demonstrate that through his actions he has not left the installation in a unsafe condition and frankly I do not think he has. Once having started the installer has both the legal and moral responsibility to do the work to the correct standards Departures from Standards, etc are fine as long as you can demonstrate that they improve or are at least no more dangerous than the solutions in BS7161 or Industry best practice.
If the installer has "ended up" in this situation because they have not assessed the condition of the installation and obtained adequate information prior to the work starting then sorry but the problem is down to them to resolve through agreement with the client unless contractually the installer has have covered this eventuality in the Contract or Quotation, in which case they can rely on this to disconnect and leave disconnected any affected ccts - with suitable warning notices documented to the client.
The problem then becomes the client's not the installers.
Unfortunately the Installer has met someone who for whatever reason is holding out against paying anymore money for the work and further the installer appears to have no Contractual basis upon which to claim for additional unforeseen work.
Now the Installer could disconnect the cct but were the client to put litigation in place, it could be argued by an adept Barrister, that the work should not have commenced and that it was actually now in a less safe condition because it does not meet the current Regulations and best practice has not been followed. This would leave the installer to carry out remedial work at their expense and no doubt pay substantial compensation to the client. Then of course there is the debate about whether the installer's Insurance Company would be happy that the installer has acted with due diligence.
Even thinking of going into a legal situation on the basis of some of the justifications put here would be suicidal as any competent Barrister would tear them to pieces. Basically once your mouth was opened with one of those the only debate would be how many zeros were to go on the cheque
FWIW I think the only option now left is for the installer to formally notify the client that during the course of the work, unforeseen conditions have been discovered that require the cct to be left disconnected or for the client to pay for the necessary remedial work to bring the system into compliance with BS716 or industry best practice. The client should be reminded that they have a legal obligation not to endanger any person in their property as well as a contractual obligation to the Insurance Company to maintain the property in a safe condition.
One possible alternative to disconnect would be to through-wire any metallic fittings thus leaving the cct intact but the affected equipment in situ. The client could be asked to check to see if the remedial work is covered under their insurance as this may be a means of unlocking the deadlock.
Out of interest is there no standard form of contract for small companies/sole traders that can be followed, something which would deal with such eventualities and disputes ??