This document discusses consultant liability under environmental law in Canada. It begins by outlining obligations and liabilities for professional engineers under the Professional Engineers Act, including the duty to prioritize public welfare. It then discusses potential discipline actions for issues of professional misconduct or incompetence. Professional misconduct is defined, and can include negligence, failure to correct dangerous situations, or undertaking work outside one's experience. Penalties for misconduct or incompetence include revoking or suspending licenses. The document concludes by discussing liability in tort and contract, including how contractual clauses can limit liability if certain conditions are met. It provides examples of cases where limitation clauses were found to be invalid.

1. Environmental Law for
Business:
Consultant Liabilityy
Thursday, June 13, 2013

2. Obligations and Liabilities
d hunder the
Professional Engineers ActProfessional Engineers Act

3. professional dutyp y
legislation
t tcontract

4. duty to public welfare is
tparamount

5. 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

6. Discipline
Actions taken against licence or C of A
holders due to alleged issues of
professional misconduct or
incompetence
Prosecuted within PEO (Discipline
Hearing)Hearing)

7. 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

8. • 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

9. IncompetenceIncompetence
• Section 28(3) of the Act
a. 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

10. PenaltiesPenalties
• Section 28(4) of the Act gives the Discipline ( ) g p
Panel 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

11. Thank you
Bernard Ennis
Professional Engineers Ontario
Tel: 416‐840‐1079Tel: 416‐840‐1079
bennis@peo.on.ca

12. Liability in Tort andLiability in Tort and
Contract
Gatlin Smeijers
A i t G li L fl H d LLPAssociate, Gowling Lafleur Henderson LLP

13. Civil Liability
TORT Client
TORT Negligence
Client
3rd Parties
Duty of Care
CONTRACT Breach of Contract
Limitation of Liability
Client
Privity of Contract

14. Negligence
Foreseeability Expectations
l d
Alternatives
Knowledge
and
Control

15. 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

16. Contract

17. 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 g
prior 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 Court
Not 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

18. 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

19. 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

20. Thank YouThank You
Gatlin Smeijersj
Toronto office
Tel: 416-862-3511
Email: gatlin smeijers@gowlings comEmail: gatlin.smeijers@gowlings.com
montréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  beijing  moscow  london

21. An Overview of
Environmental
Consultant’s Liability iny
Québec
Olivier Therrien
Partner, Gowling Lafleur Henderson LLP

22. 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 liability
The 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

23. 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

24. 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
Title
Searches
Prior ESA
–Phase I Aerial
Photographs
FireCity
Historical
Use of
propertyActual
Deeds
Corporate
Search
Phase I
Business
• Other requirements(examples):
Fire
Insurance
Plan
City
Directory
(Lovell)
Records
Site visit
(art. 7.2)Owner
On site
Govmt
Agency
Interviews
24
On-site
personnel

25. 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

26. 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

27. 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 exclusionCou ts a e a so e used to e o ce tat o o e c us o
clauses 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

28. 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

29. 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 and
3. Causation
• Common Law Tort of Negligence:
1. A Duty of Care is owed to Plaintiff
2 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 Defendant
4. Causation
5. Damages to the Plaintiff, which are not too remote
29

30. 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

31. 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 lawy p g q
considers 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

32. Thank YouThank You
Olivier Therrien
Montreal Office
Tel: 514-392-9412
oliver therrien@gowlings comoliver.therrien@gowlings.com
montréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  beijing  moscow  london

33. Consultant Liability:Consultant Liability:
Compliance Risks
Mark Madras
Partner, Gowling Lafleur Henderson LLP

34. Compliance Risks
• False information or misleading information
• Non-compliant work or design
34

35. 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

36. 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

37. 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

38. Thank YouThank You
Mark L. Madras
Toronto office
Tel: 416-862-4296
Email: mark madras@gowlings comEmail: mark.madras@gowlings.com
montréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  beijing  moscow  london

39. Environmental Law for Business
Seminar:Seminar:
Consultant Liability
Gowling Lafleur Henderson LLPg
1 First Canadian Place
June 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

40. Agenda
• Environmental Insurance
• Errors and Omissions Insurance
Claims• Claims
• Questions
© 2013, XL Group plc companies. All rights reserved. 40

41. 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

42. Environmental
• Covers: Bodily Injury, Property Damage and Remediationy j y y g
arising 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

43. 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

44. 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

45. 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 expensesy p
to 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

46. 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.

47. Claims
Analysis of >6,500 claims from 2003 to present, revealsy
that 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

48. 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

49. 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

50. 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.

51. 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

52. 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

53. 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 %

54. Questions?
© 2013, XL Group plc companies. All rights reserved. 54

55. Thank you
Carl Spensieri
XL Insurance Company LimitedXL Insurance Company Limited
Tel: 416-623-8826
carl.spensieri@xlgroup.com
© 2013, XL Group plc companies. All rights reserved. 55