Quality assurance of construction materials can be viewed as a chain of trust that runs from end users through distributors and ultimately to the original sources.
A recent ruling from the Quebec Court of Appeal shows how badly broken that chain of trust can become and underlines the liability risk for Canadian contractors when defects are found in materials they have selected for use in their projects.
Between the years 2003 and 2008, over 1,200 homes, multi-unit residential units and commercial buildings in the Mauricie region between Montreal and Quebec City were found to have been built using concrete containing pyrrhotite, a sulphide known to cause chemical reactions that weaken the concrete mix. Repair estimates are in the hundreds of millions of dollars plus interest, making it among Canada’s largest and most complex construction liability cases.
As a result of the first of three waves of trials and its recently concluded appeal, liability was spread among various levels of material supply. The largest portion (70 per cent) was assigned to SNC-Lavalin and geologist Alain Blanchette. Lesser portions were handed to vendors, concrete mixers and a quarry. Five per cent was assigned to the general contractors.
As outlined in a published case summary by Trevor McCann, Catherine Tyndale and William Plante-Bischoff of Clyde & Co. LLP of Montreal, the general contractors claimed in their defence that the presence of pyrrhotite was a latent defect about which they could not have been aware.
The Clyde & Co. authors note the court didn’t entirely agree, citing article 2118 of Quebec’s Civil Code (CCQ) that determined, “the presence of pyrrhotite in the foundations was both a latent defect and a construction deficiency.”
This meant that while the contractors could not claim that the choice of concrete was an external event — after all, they had made that selection themselves — they could rely on warranties of quality and the unique five-year presumption of liability under Quebec Common Law.
As a result, the court of appeal concluded that, “the contractors were not liable for any portion of the damages, as they were entitled to rely on a certification from the suppliers that the concrete met CSA standards,” write Clyde & Co.
The court further ruled the aggregate and mix suppliers must indemnify the contractors for any amounts that might ultimately be paid to the various building owners.
The court also confirmed that SNC-Lavalin’s geologist Blanchette was negligent in his professional representation to the quarry and the concrete suppliers.
“They relied on those findings to market the aggregate to make concrete. There was available information showing the harmful effects of pyrrhotite that Mr. Blanchette either disregarded or of which he was unaware.”
Where does this leave contractors in terms of liability exposure when it comes to validating their selection of other building materials?
“It’s a question of what is reasonable in the circumstances,” Clyde & Co. partner Robert Emblem told the Daily Commercial News. “When the court of appeal looked at the positions of the contractors and the suppliers, they found the contractors’ actions reasonable — they were entitled to rely on the suppliers’ certifications that the concrete met the CSA standards.”
However, as Emblem further explains, “Depending on the specific use that the materials are put to and the level of expertise, the contractor may be better placed than the supplier. For example, if you as a contractor have a specialized ability and know what type of material and qualities are required, to simply sit back and rely on a supplier who may be less sophisticated may be judged to be unreasonable in the circumstances.”
It’s an issue worthy of increased attention, particularly as new materials and installation techniques begin to gain prominence in energy-efficiency expectations in Canada’s National Building Code.
“As a contractor, you want to be vigilant about the quality of your materials,” says Emblem. “It goes back to the warranties. You will be contractually liable and will have to turn back to suppliers.”
John Bleasby is a Coldwater, Ont. based freelance writer. Send comments and Legal Notes column ideas to editor@dailycommercialnews.com.
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