Auto Concrete Curb Ltd. v. South Nation River Conservation Authority, [1993] 3 S.C.R. 201

South Nation River Conservation Authority and Kostuch Engineering Limited Appellants

v.

Auto Concrete Curb Ltd. Respondent

Indexed as: Auto Concrete Curb Ltd. v. South Nation River Conservation Authority

File No.: 23090.

1993: June 14; 1993: September 9.

Present: La Forest and Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

on appeal from the court of appeal for ontario

Torts ‑‑ Duty of care ‑‑ Negligent misrepresentation relied on to detriment of another ‑‑ Tendering process ‑‑ Contract awarded on basis of proposal to use certain engineering process ‑‑ Loss incurred when permits required for process not granted and alternative process adopted by contractor ‑‑ Specifications drafted by engineering firm not warning of need for permits or of possible difficulty in obtaining them ‑‑ Whether duty of care to warn of the need for permits.

Auto Concrete Curb Ltd. (the contractor) successfully tendered to dredge the River South Nation with a proposal based on using a suction method which required large disposal sites where the water could be separated from the sludge and returned to the river. When it could not obtain the permits necessary to this method, it had to adopt other procedures and incurred a considerable loss. The contractor, in its suit against the engineering firm which had prepared the specifications and against the conservation authority, alleged that the engineer's failure to tell it about the need to get permits and to warn it that this might be difficult to do constituted a negligent misrepresentation upon which it relied to its detriment. The courts below held for the contractor.

Held: The appeal should be allowed.

The standard of care imposed on an engineer preparing tender documents does not require it to advise prospective contractors of the need to obtain permits to do the work by the particular method they propose. Barring specific arrangements to the contrary, the method by which a contractor chooses to execute the work falls within its sphere of responsibility, and neither the owner nor the design professionals employed by the owner have a duty to advise the contractor as to what method to choose, or how to go about accomplishing the work by whatever method the contractor in fact chooses. This settled rule defines legal responsibility and is not abrogated by the fact that some design professionals may in fact choose to advise contractors on the methods they choose to use and on problems which may be associated with the choice of a particular method. The engineer here was not under a duty of care to advise the contractor about problems it might encounter in obtaining permits to do the work in the fashion it proposed.

Cases Cited

Referred to: R. v. Paradis and Farley Inc., 1941 CanLII 48 (SCC), [1942] S.C.R. 10; Vermont Construction Inc. v. Beatson, 1975 CanLII 201 (SCC), [1977] 1 S.C.R. 758; Temar Construction Ltd. v. West Hill Redevelopment Co. (1986), 21 C.L.R. 156.

Authors Cited

Halsbury's Laws of England, 4th ed., vol. 4.

Hudson, Alfred Arthur. Hudson's Building and Engineering Contracts, 10th ed. By I. N. Duncan Wallace. London: Sweet & Maxwell, 1970.

McLachlin, Beverley M. and Wilfred J. Wallace. The Canadian Law of Architecture and Engineering. Toronto: Butterworths, 1987.

APPEAL from a judgment of the Ontario Court of Appeal (1992), 89 D.L.R. (4th) 393, 54 O.A.C. 351, 2 C.L.R. (2d) 262, with supplementary reasons (1992), 89 D.L.R. (4th) 403, 55 O.A.C. 380, 2 C.L.R. (2d) 272, dismissing an appeal, allowing a cross‑appeal and varying a judgment of Yates J. (1988), 30 C.L.R. 245. Appeal allowed.

J. Bruce Carr‑Harris, Kevin P. Nearing and Bernard McGarva, for the appellants.

P. Donald Rasmussen, for the respondent.

The judgment of the Court was delivered by

McLachlin J. -- This appeal arises out of a contract for dredging of the South Nation River. The contractor, Auto Concrete Curb Ltd., was the successful tenderer for the project. The contractor's proposal was based on doing the work by a suction method which required large disposal sites where the water would be separated from the sludge and returned to the river. The method which had been employed by other contractors on other sections of the work was different; it involved removing the sludge mechanically with backhoes and hauling it away in trucks. The contractor was unable to obtain the necessary permits for doing the work by the suction method. Consequently it had to adopt other procedures and lost considerable money.

The respondent contractor sued Kostuch Engineering Limited, the engineering firm which had prepared the specifications and South Nation River Conservation Authority which had published the invitation for tender. The basis of the suit was the allegation that the engineer should have told the contractor about the need to get permits and warned the contractor that this might be difficult to do. The failure to do so, it was alleged, constituted a negligent misrepresentation upon which the contractor relied to its detriment.

The courts below held for the contractor. Based on the evidence of engineers who testified at trial, the trial judge found that sludge dredging would have been within the contemplation of a competent engineer in the preparation of the tender document for the project. On this basis, he concluded that the tender documents were negligently prepared in that they failed to specify restrictions or reservations about the excavation method and failed to warn of permits required on the suction method. The Court of Appeal (1992), 1992 CanLII 8639 (ON CA), 89 D.L.R. (4th) 393, declined to interfere with this conclusion.

In my respectful opinion, the courts below erred in holding that the standard of care imposed on an engineer preparing tender documents requires it to advise prospective contractors of the need to obtain permits to do the work by the particular method they propose. While it may be that the engineers who testified suggested they might have done this, that is not conclusive of the legal standard of care. It was necessary to go beyond the evidence to consider what the legal standard of care was in these circumstances.

It has long been established that, barring specific arrangements to the contrary, the method by which a contractor chooses to execute the work falls within its sphere of responsibility, and that neither the owner nor the design professionals employed by the owner have a duty to advise the contractor as to what method to choose, or how to go about accomplishing the work by whatever method the contractor in fact chooses. (See R. v. Paradis and Farley Inc., 1941 CanLII 48 (SCC), [1942] S.C.R. 10, at p. 18; Vermont Construction Inc. v. Beatson, 1975 CanLII 201 (SCC), [1977] 1 S.C.R. 758, at pp. 767-68; Temar Construction Ltd. v. West Hill Redevelopment Co. (1986), 21 C.L.R. 156 (Ont. H.C.), at pp. 168-69; Beverley M. McLachlin and Wilfred J. Wallace, The Canadian Law of Architecture and Engineering, at p. 145; Hudson's Building and Engineering Contracts (10th ed. 1970), at pp. 529-30; Halsbury's Laws of England, 4th ed., vol. 4, at p. 626, para. 1231, and at p. 686, para. 1344). This settled rule defines legal responsibility and is not abrogated by the fact that some design professionals may in fact choose to advise contractors on the methods they choose to use and on problems which may be associated with the choice of a particular method.

Applying this rule to the facts in the case at bar, I am satisfied that the engineer was not under a duty of care to advise the contractor about problems it might encounter in obtaining permits to do the work in the fashion it proposed. It was also argued that in any event, the contractor had not relied on the engineer. I find it unnecessary to consider this question.

I would allow the appeal with costs to the appellants throughout.

Appeal allowed with costs.

Solicitors for the appellants: Scott & Aylen, Ottawa.

Solicitors for the respondent: Rasmussen, Starr, Ruddy, Ottawa.