A recent decision of the Alberta Court of Appeal, Swift v
Tomecek Roney Little & Associates Ltd., 2014 ABCA 49, has
significantly reduced the protection that consultants rely upon
when they include limitations of liability provisions in their
contracts. As well, the case highlights issues that can arise
when a consultant enters into an agreement with an owner on a
project that has multiple owners.
In this case, the plaintiffs Mr. and Mrs. Swift jointly
purchased land on Vancouver Island to build a large custom
home. Mr. Swift, as sole signatory, entered into a design
agreement with an architectural firm ("the Architect")
that contained a limitation of liability clause that purported to
limit the Architect's liability to $500,000 for "any
and all claims ...which arise solely and directly out of
the Designer's duties and responsibilities pursuant to this
Agreement ... whether such claims sound in contract or in
tort" (the "Limitation Clause"). The
Limitation Clause purported to extend protection to the
An issue arose during construction suggesting that the
structural design did not meet the building code in respect of
seismic design. The structural engineer
("Engineer") issued design revisions that it considered
sufficient to bring the design up to code. Construction of
the house was completed using the revised design.
The trial judge found that the revised design did not meet the
building code and that $1.9 million in remedial work was
required. He also found that the Limitation Clause limited
liability to $500,000 and applied to limit the liability of the
One of the issues in the action was whether Mrs. Swift, who did
not sign the agreement with the Architect, was also bound by the
Limitation Clause. The trial judge held that even though Mrs. Swift
was not a signatory to the agreement there was sufficient evidence
to establish that Mr. Swift was acting on behalf both himself and
Mrs. Swift when he signed the agreement with the Architect. The
trial judge concluded that the Limitation Clause bound them
The Court of Appeal reversed the decision of the trial judge on
both issues, and in doing so it reduced the contractual protection
consultants often rely upon.
Most significantly, the Court ruled that when the Engineer
issued deficient revised drawings to address the seismic issue,
that was a "misrepresentation". The Court of Appeal
ruled that the revisions, not being the original work, did not
arise "solely and directly out of the Designer's
duties" and that the misrepresentation was not the kind
of tort (i.e. negligence) that the parties intended to be limited.
Consequently, the Engineer's liability was not
The Alberta Court of Appeal ruled that there was nothing in the
agreement or in the conduct of the parties that could make Mrs.
Swift a party to the agreement with the Architect. Without an
express agent-principle relationship, Mr. Swift could not affect
the legal rights of Mrs. Swift so as to bind her to the Limitation
Going forward, a consultant should ensure that any limitation of
liability provision expressly limits liability for the original
design work and any for revisions and that it expressly limits
liability for any misrepresentations in the design work. A
sub-consultant should also understand the protections that it may
or may not enjoy under the prime consultant agreement.
To avoid some of the trouble faced by the Engineer in this
action, a consultant should ensure that all owners of the property
are parties to the consulting agreement and that any limitation of
liability provision is extended to future owners, partners or
anyone else who might later make a claim against the consultant or
ensure that an indemnity is given by the current owner to protect
against claims by subsequent owners.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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