The matter of who bears responsibility when an error is discovered in a project arises in court from time to time. As recent cases demonstrate, assigning liability between developers, designers and builders is tricky.
The 2022 Somerset Condominium vs. JV Somerset Development Inc. case in Alberta focussed on a developer’s duty of care. Unit owners claimed alleged design and construction deficiencies in waterproof membranes compromised the structural integrity of the balconies, making them dangerous and in need of replacement. Compensation was sought from the developer as well as the architect and project manager.
As MLT Aikins partner Jodi Wildeman and associate Bennet Misskey wrote at the time, “The Alberta Court of Appeal held that the law was not certain enough to conclude on summary judgment that a developer with no hands-on involvement in the construction of a building could not be held liable for dangerous deficiencies. Rather, the issue had to go to trial.”
In another case, a court decision in Nova Scotia, summarized by Field Law LLP partner Anthony Burden and summer Student Mara Stirling, determined a contractor hired to carry out a design created by others is not responsible for faulty aspects of the intended design if its workmanship is sound.
Seagate Construction had been hired by the Halifax Regional Municipality (HRM) to build a boiler room and install the boilers at an outdoor year-round facility, as per the design created by DSRA Architecture and mechanical engineers M. Lawrence Engineering.
All work was completed by Seagate as required under its contract, even though Seagate had expressed concerns to M. Lawrence about the size of the boiler room. As Burden and Stirling write, “Seagate had no authority to adjust or alter the design without the approval of HRM or its delegated consultants, DSRA and M. Lawrence.”
Subsequent to the facility’s opening and the issuance of the Certificate of Performance, Seagate was issued two orders of non-compliance. HRM alleged a breach of contract and asked Seagate to perform additional work to make the boiler room compliant with the orders issued.
The court determined Seagate had done its job, performed sound workmanship, but was not required to vet the design, write Burden and Stirling. The design itself was outside of its scope as defined by the contract, and therefore not a breach of that contract.
Sahil Shoor, partner with Gowling WLG, told the Daily Commercial News project parties spend considerable time negotiating on large scale infrastructure projects. The result is that often the design is 25 to 35 per cent complete by the time the RFP is issued to the constructors.
“A contractor who has had no role in the design phase should ensure that its construction contract explicitly states this, and that it is taking the design as presented in order to price its scope of work. This would allow the contractor to limit its liability because the design may not be fully complete by the time the RFP is issued for the construction component of the project.”
Related is the subject of liability expiration timelines, as discussed in detail in a 2021 Legal Notes column.
At that time, Shoor had told the Daily Commercial News the first date to remember is the basic two-year limitation period within which a claim action must commence.
“The clock starts to run when the plaintiff has actual or constructive knowledge of material facts upon which it may make a plausible inference of the defendant’s liability.”
However, in some cases, a structural problem may only become apparent after being revealed by a separate event two or more years after completion. In this case, a new limitation period kicks in, capping liability at 15 years.
Prevention beforehand is always desirable. As suggested in the Construction Contract Administration and Field Review, site meetings provide an excellent opportunity for the architect to establish an onsite presence with the contractor. Minutes of the site meetings should indicate any actions and responsibility at that time.
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to editor@dailycommercialnews.com.
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