Canada: Construction Law -Protection! Protection! Protection!

Swift v. Eleven Eleven Architecture Inc
Last Updated: June 9 2015
Article by Scott Brearley

Everyone wants to protect his or her own interests but effective protection can be challenging to achieve. Wise people in all walks of life enter into contracts to control their liability in the event something goes wrong. By managing risks through contractual promises, parties are able to go forward in their dealings with one another with some measure of certainty over what may be lost or gained if their best laid plans do go awry.

On a construction site, with many parties and many interests needing protection, difficulties may abound. Effective protection means close attention must be paid to the contract intended to provide certainty and security over the cost of an error. A recent Alberta Court of Appeal case, Swift v. Eleven Eleven Architecture Inc., well illustrates the importance of taking such precautions.

Philip Swift retained Eleven Eleven Architecture Inc.(Eleven Eleven) to design a new home for him and his wife. That home became dangerous because of problems with the structural engineering work subcontracted by the architect to a firm of engineers, Tomecek Roney Little & Associates Ltd. (Tomecek).

As a result, the architect was in a rather unfortunate position. Even if the home was only dangerously defective because of the subcontracted engineering work, it still meant that Eleven Eleven had not properly performed the contract and a significant liability resulted for the architect.

Prudently, the terms of the architect's agreement contained a term limiting liability to $500,000. That exposure was not insignificant but much more palatable than the $1.9 million needed to fix the home. The engineering firm had not signed the agreement between Mr. Swift and the architect but, by its terms, it was protected in the same fashion as the architect. Tomecek was thus able to take comfort from the terms of an agreement it had not made.

That comfort was unfortunately short-lived for both firms. Mrs. Swift had not signed the architect's contract and, with no authority in Mr. Swift to bind his wife to the limitation of liability clause found in the agreement with the architect, her claim for damages was not limited against either party.

This fact represents a simple and important lesson. Courts will no longer treat a married or cohabiting couple as an indivisible unit and simply assume that one of them can make a contract in the name of the other. A design professional wishing to use contracts to limit a potential exposure should be sure to obtain an agreement to that limitation from every person who could complain when an error is made. Because this had not happened in this case, Mrs. Swift was entitled to recover in full for the damage done to her home.

In addition, Tomecek had still more problems to confront. The deficiencies in its engineering work came to light during construction. Once discovered, the engineer gave Mr. Swift an assurance the engineering work would be fixed. The construction work therefore continued but the fix did not materialize and the cost of remedying the engineer's work increased as construction proceeded.

If the engineering work had been corrected when problems were first discovered, the cost of remediation would have been less. Mr. Swift sued the engineering firm for misrepresenting that the engineering work would be fixed at the time errors were discovered. The engineer again sought the protection found in the architect's contract.

That protection proved illusory. Every contract is different—the protection it affords is a function of what it says. It is not difficult to appreciate that the terms of Eleven Eleven's contract did not protect the non-party engineer for misrepresentations made during the course of construction concerning assurance that its errors would be corrected. Mr. Swift was awarded full recovery for the increased costs of fixing engineering work after construction was allowed to proceed. The Supreme Court of Canada denied the defendants leave to appeal so this decision stands.

The engineer's fate also contains a useful lesson for parties looking to contractual terms to protect against liability. The use of agreements to control risk is prudent and encouraged by legal professionals. We also know that no contractual term will pertain to every conceivable situation. A party wishing to control risk in its business ventures is well advised to utilize the contractual limits of its liability and liability insurance.

An earlier version of this article was published in the November 2014 issue of Insurance People and in Singleton Urquhart's quarterly newsletter, "Letter of the Law" located at

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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