January 25, 2017

Canada – Professional Liability: a matter of “when” rather than “if”

Professionals tend to get caught up in construction disputes, no matter their involvement in the project. Much of the reason is that provisions of the Civil Code of Quebec make engineers and architects particularly vulnerable to lawsuits when they have directed or supervised work. With the rise in the number of construction disputes over the years, these professionals have first-hand experience with growing liability risks in the current project environment, where it is more a matter of "when" you will be sued, rather than "if" you will be.

Professionals should expect that during the course of their practice a legal action will likely be taken against them and therefore their contracts should be negotiated accordingly.

There have been other changes that have had an impact on defending against legal actions for professional liability. On January 1st, 2016, reforms to the Code of Civil Procedure came into force, with new rules governing the use of a joint expert to promote access to justice, and reduce costs and delays1. Now courts can impose a joint expertise on the parties, but ironically this can have the unintended effect of making the legal process just as expensive, if not more. Indeed, parties tend to hire their own expert to assist them in understanding technically challenging concepts, in building an adequate defense, and in preparing them to cross-examine the joint expert, regardless of the mandate given to the common expert.

Professionals can still protect themselves. They should start by expecting that during the course of their practice a legal action will likely be taken against them and therefore their contracts should be negotiated accordingly. Preparing for a project is as important as its execution. Complete and detailed contracts, as well as ensuring adequate documentation through the construction project are crucial for effective risk management and help professionals mitigate risk and build their defense in the event of a claim and litigation.

Investing in contracts

To minimize exposure, contract terms and conditions should clearly define the roles and responsibilities of the various parties, allocate risk and lay the ground rules for notification, transparency and accountability amongst all participants. Be mindful, however, that detailed agreements can help restrict the scope of responsibility of professionals, but one’s role on site can still be interpreted as broader than stipulated in the contract.

While disputes might be unavoidable at times, having proper document management and monitoring processes in place and agreed upon should help professionals and firms recognize problems early on and mitigate any potential losses.

Mediation clauses can also help resolve disputes in a more timely fashion, prevent construction projects from stalling for too long, and save a lot of expense. Even unsuccessful mediations can force parties to agree to certain terms, and get them to better understand one another’s position. This can ultimately reduce costs and get a project back on track. With accelerated mediation, the parties can agree that construction can move ahead, even as they try to resolve the dispute.

The importance of documentation

To improve the odds of winning a claim, professionals would be well advised to go the extra mile in maintaining good site records, logging technical queries and requests for information. They should keep written records of all instructions and confirm all oral instructions in writing. They should document the following:

  • Client decisions: the client is responsible for the decisions imposed on the professionals2. Agreements between the parties should be confirmed in writing in an email or in a more formal contract.
  • Worksite visits: a report should be filled by professionals after each visit of the worksite detailing the observations, the reason of the visit, the time and date, as well as adding comments on the work. This process becomes useful in defending a professional and proving his allegations when his liability is at risk due to his supervision. Taking photographs as the work progresses will also be helpful in supporting written documentation for the purpose of advocating one’s position in court at a later date.  
  • Exchanges: documenting correspondences in a logical and efficient way can help professionals lower their defense costs. Organizing the important communications as well as proper documentation help the legal counsel in pinpointing the crucial aspects of the dispute.
  • Additional work: a protocol must be well established and respected by the parties when work not stipulated in the contract is requested. Stating the description of the work, the price and the impact it will have on the timeline of the project, among other things, are the elements parties should agree on in written beforehand.

Getting the right evidence early is crucial in any dispute, and it is particularly true in construction-related matters where expert evidence will be required to assess a range of alleged deficiencies and the applicable rules of the art.  

Taking the steps described above will go a long way in helping the professional carry out proper professional practice risk management for all projects and document all events supporting his or her position in the event of a dispute. 

[1] Code of Civil Procedure, CQLR c C-25.01, article 233.

[2] Art. 2119 Civil code of Quebec and Pièces d'auto GGM inc. c. Construction R. Paradis inc., 2016 QCCS 74.