Upload
gowlings
View
1.211
Download
1
Tags:
Embed Size (px)
DESCRIPTION
Environmental Law for Business: Consultant Liability
Citation preview
Environmental Law for Business:
Consultant Liabilityy
Thursday, June 13, 2013
Obligations and Liabilities d hunder the
Professional Engineers ActProfessional Engineers Act
professional dutyp y
legislation
t tcontract
duty to public welfare is tparamount
Definition of professional engineering
“safeguarding of life, health, property, safeguarding of life, health, property,economic interests, the public welfare or the environment”welfare or the environment
DisciplineActions taken against licence or C of A holders due to alleged issues of professional misconduct or incompetence
Prosecuted within PEO (Discipline Hearing)Hearing)
Professional MisconductProfessional Misconduct
• A practitioner is guilty of professional misconduct if:a. the practitioner has been found guilty of an
offence that is relevant to their suitability to practice
b. the practitioner is guilty of professional misconduct as defined in the Regulations
• Section 72 of Regulation 941 defines actions andSection 72 of Regulation 941 defines actions and conduct that constitute professional misconduct Negligence Failure to act to correct or report a dangerous situation Failure to comply with applicable codes, standards, etc. Sealing a final document without having actually prepared or checked it
Undertaking work outside your experience and training Undertaking work outside your experience and training Failure to disclose a conflict of interest Permitting or assisting illegal practiceg g g p Harassment
IncompetenceIncompetence
• Section 28(3) of the Acta. Serious lack of knowledge, skill or judgment,
or disregard for the public welfare to an extent that demonstrates the person is unfit
h ibili i fto carry out the responsibilities of a professional engineer
b Ph i l t l diti di db. Physical or mental condition or disorder
PenaltiesPenalties• Section 28(4) of the Act gives the Discipline ( ) g pPanel powers to impose specific penalties if a practitioner is found guilty revoke or suspend a licence or C of A revoke or suspend a licence or C of A impose terms, conditions or limitations on a licence or C of A
assign exams or a course of study assign exams or a course of study reprimand, admonish or counsel the licence holder impose fines / award costs order publication in summary or in detail, with or without names
Thank you
Bernard EnnisProfessional Engineers OntarioTel: 416‐840‐1079Tel: 416‐840‐[email protected]
Liability in Tort andLiability in Tort and Contract
Gatlin SmeijersA i t G li L fl H d LLPAssociate, Gowling Lafleur Henderson LLP
Civil Liability
TORT ClientTORT Negligence Client3rd Parties
Duty of Care
CONTRACT Breach of ContractLimitation of Liability
Client
Privity of Contract
Negligence
Foreseeability Expectations
l dAlternatives
Knowledge and
Control
Ontario (MTO) v. CH2M
Service
Purpose was to determine:• Presence and extent of PHC contamination • Presence and location of UST
UST
UST
Service Station
Presence and location of UST
Methods:• Relied on map from former operator
MW1
UST Relied on map from former operator• Completed soil vapour survey• Two boreholes and soil/groundwater
samplingUSTMW2
UST Breaches of Standard:• Failed to consult Fire Insurance Plans• Borehole locations not based on vapour
surveysurvey• Failure to perform proper QA/QC
Contract
Simons v. Diagnostic Engineering
“total liability, in the aggregate… shall not
Facts• Oral contract to determine if house had mold problem• Engineer requested client to sign “Service Agreement”
exceed the project costs, as invoiced to the
client..”
g q g gprior to testing
• Engineer erroneously told client that there was a mold problem
• Actual results showed no problemp• Client spent large sum of money needlessly
remediating
Findings of CourtNot Enforceable:•Sufficient notice of limitationFindings of Court
• Consultant fell below standards required under contract and was therefore in breach of the contract
•Sufficient notice of limitation not given•Not clear if specific breach was covered by exclusion
The Red Hand Rule
S l hi h I hSome clauses which I have seen would need to be printed in red ink on the face of the document with aon the face of the document with a red hand pointing to it before the notice could be held to be sufficient.
-Lord Denning (J Spurling Ltd v Bradshaw)
18
Take Home Message
1. Always ensure expectations are well defined prior to commencing work
2. Provide a written rationale and disclosure of risks for any deviation from standard practicerisks for any deviation from standard practice
3. Draw specific and documented attention to the exclusion clauseattention to the exclusion clause
4. Exclusion clauses should be drafted to cover specific types of negligence or breach of contract –Do Not rely on boiler plateDo Not rely on boiler plate
Thank YouThank You
Gatlin SmeijersjToronto officeTel: 416-862-3511Email: gatlin smeijers@gowlings comEmail: [email protected]
montréal ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london
An Overview of Environmental
Consultant’s Liability in yQuébec
Olivier TherrienPartner, Gowling Lafleur Henderson LLP
Introduction
• Part I – Contractual liability• Overview of contractual liability (art. 1458 C.C.Q.)• The importance of having a written contract• The importance of having a written contract
• Part II – Limitation or exclusion of liabilityThe nature of the clause• The nature of the clause
• Cases where the clause was found null and of no effect
• Part III - Extra-contractual liability • Overview of general principles (art. 1457 C.C.Q.)• Liability toward third party in Quebec law• The validity of a limiting liability clause against third parties
22
Civil Liability
• Contractual liability: • “ Every person has a duty to honour his contractual
ndertakings ” (art 1458 C C Q )undertakings.” (art. 1458 C.C.Q.)
• The consultant is required to act prudently and diligently
The consultant must use all reasonable means so as to• The consultant must use all reasonable means so as to endeavor to achieve a certain result (obligation of means versus obligation of result):
• See Banque de développement du Canada v. Experts Enviroconseil inc. (Enviroconseil), 2006 QCCS 5244 (CanLII)
• Under article 2100 C C Q the consultant is also bound to:• Under article 2100 C.C.Q., the consultant is also bound to:• Act in accordance with usual practice and “rules of art”
• Perform the work in conformity with the contracty
23
Contractual Liability
• The scope of the contract and the Environmental Site Assessment Phase I standard CSA-Z768-01
Mandatory file studies (art 7 1 6) For example :• Mandatory file studies (art. 7.1.6). For example :
Aerial Historical
TitleSearches
Prior ESA –Phase I Aerial
Photographs
FireCity
HistoricalUse of
propertyActualDeeds
CorporateSearch
Phase I
Business
• Other requirements(examples):
FireInsurance
Plan
City Directory (Lovell)
Records
Site visit(art. 7.2)Owner
On site
GovmtAgency
Interviews
24
On-site personnel
Contractural Liability• Penaranda c Dima 2011 QCCA 1948• Penaranda c. Dima 2011 QCCA 1948
• Contract referred to CSA Z768
• The Court found the consultant liable and held that:• The Court found the consultant liable and held that:• "S.C.P. has failed in its mandate by neglecting to fulfill its
obligation as provided in the CSA Z768. "
• The consultant did not indicate the objective and scope of the environmental assessment work as prescribed by articles 5.2b and 6.3 of the CSA standard
• The Consultant did not proceed to an extensive search of title, instead he simply: “searched names of
i t ti i hi h h iservice stations or companies which may have given rise to environmental risk in the past, in contravention to articles 7.1.1, 7.1.5 and 7.1.6.3” of the CSA Standard
25
Contractual Liability
• Contractual arrangements to exclude or limit civil liability • The contract should be written and signed
• Elements to include in the contract:
A d t il d d i ti f th t f k d• A detailed description of the nature, scope of work and purpose of the report
• Any relevant factors which might limit the performance ofAny relevant factors which might limit the performance of the mandate should be included as well, such as budget, time constraint or agreed reduction of the scope of work
Li it ti t i ti f li bilit ( t lid )• Limitation or restriction of liability (next slide)• Should be included not only in the report, but in the
contract as wellcontract as well
26
Contractual Exclusion or Limitation of Liability• Art.1474 C.C.Q. (as interpreted by case law)Art.1474 C.C.Q. (as interpreted by case law)
• A clause intended to limit or exclude contractual liability is valid, but subject to limitations:• The other party may be made aware of its existence at the time
the contract was created
The party wishing to invoke the clause of limitation has the• The party wishing to invoke the clause of limitation has the burden to prove that the other party was aware of its existence and consented
• The clause has no effect when the professional has committed “gross negligence” or intentional fault
• Courts have also refused to enforce limitation or exclusion Cou ts a e a so e used to e o ce tat o o e c us oclauses when the breach relates to the “principal purpose of the contract”. (This requirement is still debatable)
• Finally Courts have also relied on professional code of ethics• Finally, Courts have also relied on professional code of ethics to refuse to enforce limitation clauses
27
Limitations of Liability
E l h th l f li it ti• Examples where the clause of limitation was found invalid:
3979687 Canada Inc v Consultant LBDC Inc 2010 QCCS• 3979687 Canada Inc. v. Consultant LBDC Inc., 2010 QCCS 905 (CanLII) (appeal settled out of Court):• A consultant wrongfully concluded that a site had been
remediated
• The Court refused to apply limitation clauses and held that the consultant committed gross negligenceconsultant committed gross negligence
• Évaluations Val Beq Inc. v. Digico Réseau Global Inc. 2010 QCCA 412• Among other things, the Court held that according to the
applicable code of professional conduct, the consultant could not exclude his liability
28
Extra-contractual Liability• Quebec Civil Law:Quebec C a
• Art.1457 C.C.Q. provides for "extra-contractual liability"which requires evidence of:1 Proof of fault (duty to act prudently and diligently)1. Proof of fault (duty to act prudently and diligently)2. Damages and3. Causation
• Common Law Tort of Negligence:1. A Duty of Care is owed to Plaintiff2 St d d f C h ld h b b d b2. Standard of Care should have been observed by
Defendant 3. Breach of the Standard of Care by Defendant4. Causation5. Damages to the Plaintiff, which are not too remote
29
Extra-contractual Liability
• Beyond contractual agreements:• A professional is always subject to engage his extra-
contractual liability toward third parties (Art 1457 C C Q )contractual liability toward third parties (Art. 1457 C.C.Q.)
• Caisse populaire de Charlesbourg v. Michaud, 1990 CanLII 3612 (QCCA) ( )
• Misleading third parties into believing that financial statements have been verified
• Crédit-bail Banque Royale Inc. v. Services professionnels Warnock Hersey ltée., J.E. 95-1760 (C.S.):( )
• An evaluating firm may be found liable for damages against third parties caused by its fault
30
Extra-contractual Liability
• Limitation of liability against third parties• Art.1476 C.C.Q.:ʺA t b f ti l d li it hi• ʺA person may not by way of a notice exclude or limit his obligation to make reparation in respect of third persons; such a notice may, however, constitute a warning of a d ʺdanger.ʺ
• Since the exclusion has not been agreed upon such limitation can only have partial legal consequences. The law y p g qconsiders that the clause is a warning to third parties
• This could result in: An assumption of risks by the victim (complete defense)• An assumption of risks by the victim (complete defense)
• Contributory negligence on the part of the victim
31
Thank YouThank You
Olivier TherrienMontreal OfficeTel: 514-392-9412oliver therrien@gowlings [email protected]
montréal ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london
Consultant Liability:Consultant Liability:Compliance Risks
Mark MadrasPartner, Gowling Lafleur Henderson LLP
Compliance Risks
• False information or misleading information
• Non-compliant work or design
34
False or Misleading Information
• Certifications
Communications with officials• Communications with officials
• R v Ronald Carter and Quinte-Eco Consultants
• R v Sinclair’s Landing Inc., James Clarkson Sinclair, Bruce A. Brown and Bruce A Brown Associates Limited
• R v Peermohamed
35
Operations
• Is the environmental consultant liable for the environmental compliance of its work or design?environmental compliance of its work or design?
• R v Gemtec
• R v Brown
36
Compliance Lessons
• Risk of “knowing better”
Ri k f i l idi• Risk of commitment to results overriding inconvenient facts
• Risk of being an instrument of client and forfeiting independent judgement
37
Thank YouThank You
Mark L. MadrasToronto officeTel: 416-862-4296Email: mark madras@gowlings comEmail: [email protected]
montréal ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london
Environmental Law for Business Seminar:Seminar:
Consultant Liability
Gowling Lafleur Henderson LLPg1 First Canadian PlaceJune 13, 2013
Carl Spensieri, P. Eng.
© 2013, XL Group plc companies. All rights reserved.
Carl Spensieri, P. Eng.VP & Env. Branch Manager, XL Insurance Company Limited MAKE YOUR WORLD GO
39
Agenda
• Environmental Insurance
• Errors and Omissions Insurance
Claims• Claims
• Questions
© 2013, XL Group plc companies. All rights reserved. 40
History of Environmental Insurance
• Historically covered under General Liability (occurence).y y ( )
• Pollution first excluded in the US (1970s) and then Canada (early 1980s).
• Exclusion was the industry‘s response to RCRA (US –1976) and increased Public Awareness (Love Canal, Times Beach)
© 2013, XL Group plc companies. All rights reserved. 41
Environmental
• Covers: Bodily Injury, Property Damage and Remediation y j y y garising from Pollution.
• Fixed Site Policy: covers Pollution at/migrating from defined property(ies).
• Consultant/Contractor: covers Pollution arising from defined Services.
© 2013, XL Group plc companies. All rights reserved. 42
Environmental - Cover
• Contractor/Consultant Policy:y• JOB SITE/CONTRACTING SERVICE• OWNED LOCATION• EMERGENCY EXPENSE• EMERGENCY EXPENSE• Non-Owned Disposal Site (NODS)• Transportation• Fines/Penalties: Civil/Administrative; and Punative
(where allowable by law).• Cover extends to Directors & Officers • Offered on a Blanket or Project Specific basis.• Offered on Claims-Made and Occurence basis.
© 2013, XL Group plc companies. All rights reserved. 43
Environmental - Exclusions
• Contractor/Consultant Policy:y• Faulty Work• Intentional and Dishonest Acts• Known Circumstances• Known Circumstances• Products• Worker‘s Compensation• Contractual Liability
© 2013, XL Group plc companies. All rights reserved. 44
Errors and Omissions - Cover
• Architect / Engineer Policyg y• PROFESSIONAL LOSS
•Monetary judgement, award or settlement of compensatory damages;compensatory damages;
•Fines/penalties (where allowable by law);•Legal Expense associated with above
• MITIGATION EXPENSE•Reasonable and necessary costs and expenses y pto prevent further harm, injury or damage to persons or property.
© 2013, XL Group plc companies. All rights reserved. 45
WRITTEN ON A CLAIMS-MADE BASIS ONLY
Errors and Omissions - Exclusions
• Architect / Engineer Policyg y• Employer Liability• Warranty and Guaranty• Fiduciary Liability• Fiduciary Liability• Intentional and Dishonest Acts• Joint Venture or Co-Venture*• Known Circumstances• Claims from Related Entities• Workers Compensation• Workers Compensation
© 2013, XL Group plc companies. All rights reserved. 46
* Policy will respond to Insured‘s interest in JV/Co-Venture.
Claims
Analysis of >6,500 claims from 2003 to present, reveals ythat Claims happen for one of two reasons:
• Technical: Error and/or omission of a technical nature.
• Non-technical: Breakdown in project or practice management processes.
Note: All claims arise from a technical E&O; however, in many cases non-technical issues greatly exacerbate the magnitude of Claim.
© 2013, XL Group plc companies. All rights reserved. 47
Claims
Technical Risk Drivers:
• Structural, Geotechnical and Survey Professional Services are most prone to Professional (E&O) Claims.
• Interestingly, the revenues Professionals derive from these Services appear to be disproportional to risk (i.e., highest exposure is often billed at lowest rate).
© 2013, XL Group plc companies. All rights reserved. 48
Claims
Non-Technical Risk Drivers:
• Communication, Project Team Capabilities, Client Selection and Contract Terms are each a major driving force in Claims (>90% by cost or file count).
• Communication is the most significant at 39%.
© 2013, XL Group plc companies. All rights reserved. 49
Claims
• Negotiation/Contract Clauses (9%)g ( )
• Contract not in place prior to commencement of workwork.
• Unclear Scope of Work• No formal evaluation and delegation/assignment of
Project Risks/LiabilitiesProject Risks/Liabilities.• No contingency found built into contract.
Most often disputes arise re: payment associated with Professional Services. Professional initiates claim re: collection of fees and Client inturn initiates
© 2013, XL Group plc companies. All rights reserved. 50
claim alleging E&O.
Claims
• Client Selection (15%)( )
• Client in poor financial condition [How often do you review your clients financial statements?]review your clients financial statements?]
• Client has history of claims/litigation.• Client is inexperienced with respect to work being
performed by Professional (i e first largeperformed by Professional (i.e., first large remediation project at a Client‘s site).
• Client consistently late in paying fees.
Most often disputes arise when Client‘s expectations are not reasonable/inline with Professional‘s.
© 2013, XL Group plc companies. All rights reserved. 51
Claims
• Project Team Capabilities (31%)j ( )
• Inexperienced Design staff (i.e., junior engineers undertaking Phase I ESAs designing RAPs)undertaking Phase I ESAs, designing RAPs).
• Inexperienced field supervisors or project managers.Project outside of firms normal project type or• Project outside of firms normal project type or territory (i.e., unfamiliar with local practices, regulations).P j t t d t thi• Project team spread to thin.
© 2013, XL Group plc companies. All rights reserved. 52
Claims
• Communication (39%)( )
• Lack of procedures to identify conflicts, E&O.• Lack of documentation re: change of scope• Lack of documentation re: change of scope,
budget, timelines.• Lack of regular client meeting to discuss potential
disputes site issues etcdisputes, site issues, etc.• Scope of services not clearly defined/explained to
Client.
Communication is key in almost 40% of Claims!
© 2013, XL Group plc companies. All rights reserved. 53
y %
Questions?
© 2013, XL Group plc companies. All rights reserved. 54
Thank you
Carl SpensieriXL Insurance Company LimitedXL Insurance Company LimitedTel: [email protected]
© 2013, XL Group plc companies. All rights reserved. 55