Law and Ethics in Engineering Practice - CEN 800 Lecture 1 & 2 2025 PDF

Osler, Hoskin & Harcourt LLP LAW AND ETHICS IN ENGINEERING PRACTICE - CEN 800 Chapters 1, 2, 3, 4 and 33 TORONTO METROPOLITAN UNIVERSITY Andrew Wong, B.A. Sc, L.L.B. 90274389.1 January, 2025 Agenda 1. How the Law Applies to Me 2. Canadian Legal System – Ch...

Osler, Hoskin & Harcourt LLP LAW AND ETHICS IN ENGINEERING PRACTICE - CEN 800 Chapters 1, 2, 3, 4 and 33 TORONTO METROPOLITAN UNIVERSITY Andrew Wong, B.A. Sc, L.L.B. 90274389.1 January, 2025 Agenda 1. How the Law Applies to Me 2. Canadian Legal System – Chapter 1 3. Business Organizations – Chapter 2 4. Global Considerations – Chapter 3 5. Tort Liability – Chapter 4 6. Intellectual Property – Chapter 33 2 Legal_1: 83848958.1 How the Law Applies to Me How the Law Applies to Me Construction or Infrastructure Project ◦ Project Management ◦ Civil ◦ Electrical ◦ Mechanical ◦ Computer ◦ Aerospace ◦ Industrial Complex Contractual Arrangements 4 Legal_1: 83848958.1 Sample DBFMO Project Structure Lenders 5 Legal_1: 83848958.1 Canadian Legal System Canadian Legal System Based on English Legal System ◦ Equity ◦ Common Law Theory of Precedent ◦ Basis of Predictability ◦ Apply Legal Principles Established in Previous Court Decisions ◦ Factual Distinctions and Equitable Relief Provide for Flexibility 7 Legal_1: 83848958.1 Categories of Law Common Law ◦ Judge Made Legislative ◦ Government-Made – codification of existing common law or enactment of new law Federal Provincial Municipal ◦ Statutes are Supplemented by Regulations ◦ Theory of Precedent 8 Legal_1: 83848958.1 Jurisdiction Between Federal and Provincial Governments Parliamentary Supremacy ◦ British North America Act 1867 S#91 – Federal Jurisdiction  It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated… S#92 – Provincial Jurisdiction  In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated… ◦ Ultra Vires 9 Legal_1: 83848958.1 Jurisdiction Between Federal and Provincial Governments (cont’d) Constitution Act, 1982 and Charter of Rights and Freedoms ◦ Guarantees Fundamental Freedoms ◦ Constitution is Supreme Law ◦ Reduced Effect of Parliamentary Supremacy Reasonable Limits S#33 Override 10 Legal_1: 83848958.1  House of Lords Court System (Judicial Committee Supreme Court of of the Privy Council) Criminal -1933 Canada Supreme Court of Other -1949 Canada Court Martial Provincial Federal Court Appeal Court Appeal Courts of Appeal Divisional Provincial Federal Military Court Superior Tax Court of Court Canada Courts Courts Provincial Federal Court Administrative Tribunals Provincial Administrative Tribunals 11 Legal_1: 83848958.1 Court Participants Original Trial ◦ Plaintiff ◦ Defendant Appeals ◦ Appellant ◦ Respondent 12 Legal_1: 83848958.1 Civil Court Case Process Issue Statement of Claim (Plaintiff) Respond with Statement of Defence (Defendant) Discoveries ◦ Documents ◦ Oral Trial 13 Legal_1: 83848958.1 Business Organizations Business Organizations Sole Proprietorship ◦ Individuals Corporation ◦ Share Capital ◦ Non-Share Capital Partnership ◦ General Partner ◦ Limited Liability Partner 15 Legal_1: 83848958.1  Salomon v Salomon & Co. Ltd. – 1897 House Of Lords MR. SALOMON MRS. SALOMON SON SALOMON LOAN SECURED SALOMON & CO. LTD. UNSECURED MATERIAL CREDITORS MATERIAL SUPPLIER SUPPLIER Issue: Did Mr. Salomon rank before the Unsecured Creditors by virtue of being a secured Debenture Holder? House of Lords recognized Salomon’s Corporation as a separate and distinct entity from himself – there was no evidence of intent by Salomon to deceive or defraud. 16 Legal_1: 83848958.1 Fern Brand Waxes Ltd. v Pearl – 1972 ONCA PEARL (DIRECTOR, OFFICER & ACCOUNTANT OF FERN BRAND WAXES LTD) CO#1 CO#2 FERN BRAND WAXES LTD Pearl transferred unauthorized funds to 2 companies controlled by him by loaning them monies from Fern Brand. Some of the funds were used to purchase shares in Fern Brand Waxes Ltd. Court stated that the Defendant should not be allowed to profit from his breach of trust. 17 Legal_1: 83848958.1 Limited Partnership LIMITED PARTNER LIMITED PARTNER (PARTNER #1) (PARTNER #2) SHAREHOLDERS GENERAL PARTNER (CORPORATION) 1% PARTNERS 49.5% 49.5% LIMITED PARTNERSHIP 18 Legal_1: 83848958.1 Different Types of Business Organizations Joint Venture Consortium 19 Legal_1: 83848958.1 Considerations in Selecting Appropriate Business Organization Duration Simplicity/Complexity Taxes Liability Separate Identity 20 Legal_1: 83848958.1 Considerations in Selecting Appropriate Business Organization– (cont’d) Personal Guarantees Property Ownership Registrations 21 Legal_1: 83848958.1 Corporations Articles of Incorporation/Letters Patent Jurisdiction of Incorporation Objects By-laws Resolutions Public vs. Private 22 Legal_1: 83848958.1 Corporations (cont’d) Participants ◦ Shareholders ◦ Directors ◦ Officers ◦ Employees 23 Legal_1: 83848958.1 Director’s and Officer’s Duties Manage the Corporation ◦ Act honestly and in good faith ◦ In best interests of corporation ◦ Exercise the care, diligence and skill that a reasonably prudent person would exercise in a comparable circumstance 24 Legal_1: 83848958.1 Global Considerations Form of Business Organization Political Risks Foreign Legal Systems Licensing Requirements Financial Risks Contract Forms Dispute Resolution 25 Legal_1: 83848958.1 Tort Liability Tort Liability- Overview Different Types of Legal Obligations Different Types of Tort Liability Tort Liability ◦ Introduction ◦ Fundamental Purpose Example: Negligence ◦ Principles ◦ Balance of Probabilities ◦ Duty of Care ◦ Standard of Care ◦ Damages ◦ Development ◦ Strict Liability ◦ Vicarious Liability ◦ Concurrent Tortfeasors 27 Legal_1: 83848958.1 Tort Liability – Overview (cont’d) Product Liability Duty to Warn Economic Loss Case Study Summary 28 Legal_1: 83848958.1 Different Types of Legal Obligations Legal obligations and the corresponding responsibilities may arise in different ways ◦ Contractual: parties voluntarily assume legal obligations Engineer enters into service agreement with client Engineer provides drawings and specifications to client as a part of the service Client pays a fee to engineer for the performance of the service Their relationship is governed by the provisions in the agreement 29 Legal_1: 83848958.1 Different Types of Legal Obligations (cont’d) ◦ Statutes: legislation imposes obligations Criminal Code: do not steal Construction Act: retain statutory holdback from payments Personal Information Protection and Electronic Documents Act: governs how private-sector organizations collect, use or disclose personal information in the course of commercial activities across Canada Professional Engineers Act (Ontario): regulates the practice of Engineering in Ontario (Note: every jurisdiction in Canada has its own regulatory framework for the practice of engineering) 30 Legal_1: 83848958.1 Different Types of Legal Obligations (cont’d) ◦ Tort: obligations based on the relationship between the person who owes the duty and the person to whom the duty is owed A civil wrong (not a breach of contract) which the law will redress by an award of damages Based on the type of relationship 31 Legal_1: 83848958.1 Different Types of Tort Liability Defamation: reputation of the plaintiff is damaged by untrue statements publicly made by the defendant ◦ Libel: statements made in writing ◦ Slander: statements are verbal ◦ Injurious Falsehood: disparaging comment to a third party regarding goods, services, or business of plaintiff (business equivalent to defamation) 32 Legal_1: 83848958.1 Different Types of Tort Liability (cont’d) Nuisance: alleviate undue interference with the comfortable and convenient enjoyment of the plaintiff’s land Hollywood Silver Fox Farm Ltd. v Emmett (1936 England) ◦ Facts: Hollywood Silver Fox Farm carried on a business of raising silver foxes which are very skittish - if disturbed during breeding they may refuse to breed, miscarry or kill their young. Due to a dispute between the plaintiff and the defendant the defendant had his son fire off a gun on his land as close to the breeding pens as possible. Hollywood brought action for an injunction against this behaviour. 33 Legal_1: 83848958.1 Different Types of Tort Liability (cont’d) Hollywood Silver Fox Farm Ltd. v Emmett (cont’d) ◦ Decision: The Court held that there was a nuisance and that when considering a nuisance for noise the motive for the production of the noise must be taken into consideration; whether or not he was using the land in a legitimate and reasonable manner. Citing a previous case, the Court held that "[n]o proprietor has an absolute right to create noises upon his own land, because any right which the law gives him is qualified by the condition that it must not be exercised to the nuisance of his neighbours". 34 Legal_1: 83848958.1 Different Types of Tort Liability (cont’d) Negligence: harm is caused to the plaintiff through conduct of the defendant that falls short of what is expected of a “reasonable person” in similar circumstances ◦ "The core idea of negligence is that people should exercise reasonable care when they act by taking account of the potential harm that they might foreseeably cause to other people." 35 Legal_1: 83848958.1 Tort Introduction Private or civil wrong or injury, that may arise independently of contract ◦ No contract is required for tort liability to exist ◦ Does not specifically deal with Criminal Code of Canada Tort liability and liability for breach of contract can both occur 36 Legal_1: 83848958.1 Fundamental Purpose Compensate victims of torts ◦ Put the plaintiff in the same position he or she would have been in, if the tort had never been committed Punishment is not a purpose of tort law ◦ If the circumstances of the tort also constitute criminal activities, punishment of the criminal would be governed by the Criminal Code of Canada 37 Legal_1: 83848958.1 Fundamental Purpose (cont’d) Compensation: civil proceedings ◦ Claim commenced by one person (the plaintiff) against another person (the defendant) ◦ Case must be proven by the plaintiff “on a balance of probabilities” Punishment: criminal proceedings ◦ Person is charged by the crown ◦ Case must be proven by the crown “beyond a reasonable doubt” 38 Legal_1: 83848958.1 Fundamental Purpose (cont’d) Pool of money to fund valid claims by victims ◦ Professionals: lawyers, engineers, architects ◦ Engineers commonly obtain professional liability insurance ◦ Amount and coverage will depend on the type of services and size and magnitude of projects ◦ Exclusions to insurance coverage 39 Legal_1: 83848958.1 Principles of Negligence A plaintiff in a negligence action must prove on a “balance of probabilities” that: ◦ The defendant owed the plaintiff a duty of care ◦ The defendant breached that duty of care by his or her conduct (i.e. did not meet the “standard of care”) ◦ The damages suffered by the plaintiff are caused by the defendant’s breach of the duty of care 40 Legal_1: 83848958.1 Balance of Probabilities Plaintiff must present evidence to show that its case is more probable than the defendant’s case – “more likely to be true” Contrast to criminal cases which are generally based on proof beyond a reasonable doubt ◦ Higher standard – “no reasonable doubt” in the mind of a reasonable person that accused is guilty 41 Legal_1: 83848958.1 Duty of Care “neighbour principle” - generally, every person owes a duty to take reasonable care not to cause injury to persons whom they ought reasonably anticipate would be injured by their act or omission Who constitutes your “neighbour”? ◦ Persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am considering the acts or omissions which are being called into question 42 Legal_1: 83848958.1 Duty of Care (cont’d) When an engineer enters into a contract for services with a client, she thereafter has a duty to the client under both ◦ Contract; and ◦ Tort law 43 Legal_1: 83848958.1 Duty of Care (cont’d) Does the defendant owe a duty of care to the plaintiff? ◦ First, do the facts at hand fit within a category of relationships that the courts have already held give rise to a duty of care? ◦ If no, is the relationship between the plaintiff and defendant one that should give rise to a duty of care? 44 Legal_1: 83848958.1 Duty of Care – Paxton v. Ramji ◦ Facts: Doctor prescribed acne drug to the mother The acne drug carried the risk of causing fetal malformation Doctor was aware that the father had a vasectomy The vasectomy failed and the baby was conceived The baby was born with considerable damage caused by the acne drug The baby sued the Doctor for negligence in prescribing the acne drug ◦ Issue: Did the Doctor owe a duty of care to the baby before conception not to prescribe the acne drug? 45 Legal_1: 83848958.1 Duty of Care – Paxton v. Ramji (cont’d) ◦ Decision: The court held that the Doctor did not owe a duty of care to a future child The Doctor would be put in an impossible conflict of interest position between the best interests of the future child and the best interests of the patient The Doctor cannot advise or take instructions from a future child 46 Legal_1: 83848958.1 Standard of Care Once a duty of care is found to exist, the question then becomes whether the defendant’s conduct breached the “standard of care” This is the skill, care and diligence expected of a reasonable person exercising ordinary intelligence and prudence The standard is one of reasonableness, not perfection 47 Legal_1: 83848958.1 Standard of Care – Young v Bella ◦ Facts: University student studying to become a social worker forgot to footnote a case study in her term paper Professor speculated that the case study might be a personal confession of the student to having sexually abused children Professor filed a report with Child Protective Services and brought her concerns up with the Director of the Faculty, who discussed with RCMP and at least ten external social workers Student was not informed until two years later, at which time she sued for irreparable damage to her chosen career prospects The Court found that a duty of care exists between a professor and his or her students 48 Legal_1: 83848958.1 Standard of Care – Young v Bella ◦ Issue: Did the professor’s conduct in reporting her suspicion of child abuse fall below the standard of care expected of a reasonable person in the circumstances? The professor discussed concerns of plagiarism with the student but never mentioned her concerns that the case study was autobiographical 49 Legal_1: 83848958.1 Standard of Care – Young v Bella ◦ Decision: Court found in favour of the student A professor is “required to take the necessary care to get their facts straight before taking a potential career-ending action in relation to a student” 50 Legal_1: 83848958.1 Standard of Care (cont’d) Standard of care expected of an engineer ◦ Professionals cannot escape liability by performing merely up to the capacity of the ordinarily prudent lay person Including: lawyers, doctors, architects, engineers, etc. ◦ An engineer owes a duty to exercise the skill, care and diligence reasonably expected of a reputable member of the profession practicing in the same or similar locality under similar circumstances 51 Legal_1: 83848958.1 Standard of Care (cont’d) Locality Rule ◦ Conduct of the defendant is judged on the basis of the conduct exhibited by a reasonable person “in like circumstances” ◦ Location of the service may be one of the relevant circumstances ◦ If the service was performed in an area with limited access to facilities, equipment and specialists then the defendant will be asked to do what the reasonable person so limited would have done ex. Medical Doctor’s in remote communities 52 Legal_1: 83848958.1 Standard of Care – ter Neuzen v Korn (1995 SCC) ◦ Facts: ter Neuzen became infected by HIV as a result of her participation in Korn's artificial insemination (AI) program from 1981 to 1985. Korn had not warned ter Neuzen of risk of HIV infection. Prior to January 1985, there was no test available for detection of HIV in semen or blood in Canada, and medical literature did not mention AI as a mode of transmission of HIV before September 1985. In the result, Korn was not aware that HIV could be transmitted by AI until July 1985. Expert evidence established that Korn's AI practice, as well as recruitment and screening of donors was in keeping with general practices in Canada. 53 Legal_1: 83848958.1 Standard of Care – ter Neuzen v Korn (cont’d) ◦ Issue: Did Korn’s conduct fall below the standard of care expected of a reasonable person in the circumstances? Is living up to the customs of a profession enough to eliminate liability in negligence? 54 Legal_1: 83848958.1 Standard of Care – ter Neuzen v Korn (cont’d) ◦ Decision: The Court found that Korn adhered to all the standards of his profession of the day and he could not reasonably have known that there was a risk of HIV in the circumstances. However, the Court stated that simply living up to the standards is not generally enough to escape negligence – a person must still act reasonably in the circumstances. In these circumstances, Korn adhered to the relevant standards and acted as a reasonable doctor would have in his time 55 Legal_1: 83848958.1 Standard of Care – Paxton v Alameda County (California, 1953) ◦ Facts: Roofer injured while applying tar and gravel surface to a pavilion roof Files action against the architects who designed the pavilion ◦ Issue: Did the architect use the care ordinarily exercised in like case by reputable members of his profession practicing in the same locality? 56 Legal_1: 83848958.1 Standard of Care – Paxton v Alameda County (California, 1953) (cont’d) ◦ Decision: Architect’s computations were in accordance with standards of good practice in his profession and his community There was no basis for negligence even if there were mistakes in his computations. Locality Rule ◦ Design professional must exercise the appropriate "learning, skill and care ordinarily possessed and practiced by others in the same profession in the same locality, at the same time." 57 Legal_1: 83848958.1 Standard of Care (cont’d) Generalists v. Specialists ◦ Where professionals are, or hold, themselves out to be specialists they will be subject to a higher standard ◦ This is consistent with the expectations of clients ◦ “What would the reasonably competent generalist have done” versus “What would the reasonably competent specialist have done” 58 Legal_1: 83848958.1 Standard of Care (cont’d) Higher Risk implies a Higher Standard of care ◦ Similar to the higher standard imposed on specialists, where an engineer takes on a project where the potential for harm is high, a higher standard of care is required. ◦ McAlister v. Stevenson: “A reasonable man need not show the same anxious care when handling a pound of butter as he would a pound of dynamite.” 59 Legal_1: 83848958.1 Standard of Care (cont’d) Inexperience ◦ Should new, inexperienced engineers be subject to a lower standard then those with average experience in their field? ◦ Courts have generally held that inexperience is not a defence to a claim of negligence 60 Legal_1: 83848958.1 Standard of Care – Roy v Thiessen ◦ Facts: Thiessen is a 24-year-old hockey player with little experience constructing residential houses who acts as a general contractor. Purchasers of Thiessen’s house bring an action against him for damages for negligent construction. ◦ Decision: “the standard of care is not one that varies from house to house based on the age, education or experience of the contractor. If it were otherwise, every purchaser would have to determine the competence of the original contractor before purchasing a building.” 61 Legal_1: 83848958.1 Standard of Care (cont’d) Time ◦ Judged by the professional standards prevailing at the time the work was done, not by what may be known or accepted at a later date 62 Legal_1: 83848958.1 Standard of Care (cont’d) No Guarantee of Success ◦ Engineers do not guarantee that their work will be successful – provided they have satisfied the standard of care, the fact that the work proves unsatisfactory in some way will not render them liable in negligence 63 Legal_1: 83848958.1 Standard of Care – Trizec v. EllisDon ◦ Facts: Trizec, a real estate developer, was building “Banker’s Hall”, an office building in Calgary Trizec hired a geotechnical engineering firm, Hardy BBT Limited to assess soil conditions prior to construction The general contractor, EllisDon, relied on Hardy’s assessment during construction However, Hardy’s assessment was incorrect As a result, the project had to be completed with one less level of underground parking and was delayed 116 days Trizec sued Hardy in negligence 64 Legal_1: 83848958.1 Standard of Care – Trizec v. EllisDon (cont’d) ◦ Issue: Did Hardy breach its standard of care? ◦ Decision: Although Hardy’s assessment was incorrect, it did meet the standard of care and was not negligent The standard of care in this case was that of a reasonable geotechnical engineer, not one of perfection Hardy was not liable to Trizec for damages 65 Legal_1: 83848958.1 Brantford (City) v Kemp & Wallace-Carruthers & Associated Ltd. (ONCA) ◦ Facts: Engineers were consulted by Brantford through their architects in regard to a prospective building sited on a former garbage dump. Since the building was sited on a former garbage dump, the soil conditions were unique Engineers recommended a “floor on earth” design with the outer walls supported on piles but the inner partition walls supported on granular fill. The engineers recommendation was substantially cheaper than full piling and carried some risk. Full piling would have carried no risks. The advice of the engineers was unqualified, though some of the engineer’s staff had internally queried the adequacy of the design. The foundation ultimately failed. 66 Legal_1: 83848958.1 Brantford (City) v Kemp & Wallace-Carruthers & Associated Ltd. (cont’d) ◦ Issue: Did the Engineers meet the appropriate standard of care? ◦ Decision: It was the duty of the engineers to inform the City of Brantford or their architect of the element of risk. Because they did not sufficiently warn the city or their architect, they breached the standard of care owed in the circumstances. Providing a sufficient warning to the client was what was required of a reasonable engineer. 67 Legal_1: 83848958.1 Standard of Care (cont’d) Errors in Judgment vs. Negligence ◦ It is sufficient if an engineer follows an accepted body of professional opinion, even though there may be a substantial body of opinion to the contrary, provided the engineer chooses the school of opinion with reasonable competence 68 Legal_1: 83848958.1 Standard of Care (cont’d) Substantiating Negligence ◦ Determination if there was a breach of the duty of care based on an examination of the facts in light of the applicable standard of care to be followed ◦ Look at the circumstances and expert testimony 69 Legal_1: 83848958.1 Standard of Care (cont’d) Contract: provisions in the agreement may alter these usual duties – increase the expectations ◦ Agree to exercise a higher standard of care in the circumstances than that imposed by law ◦ Guarantee their work will produce a specified result ◦ Undertake to exercise a degree of competence of the most specialized and trained members of the profession 70 Legal_1: 83848958.1 Damages Seminal case from England (1932) Donoghue v. Stevenson ◦ Facts: Plaintiff became ill after consuming a bottle of ginger beer given to the plaintiff by a friend The bottle reportedly contained a decomposed snail There was no contract between the plaintiff and the manufacturer 71 Legal_1: 83848958.1 Damages (cont’d) Concept of Forseeability ◦ The losses or injuries sustained by the plaintiff must not be “too remote” a consequence of the impugned conduct ◦ The courts ask if it was “reasonably foreseeable” that the harm to the plaintiff would have been caused by the conduct of the defendant 72 Legal_1: 83848958.1 Damages (cont’d) Donoghue v. Stevenson (cont’d) ◦ Decision: The Court held that the manufacturer was under a legal duty to the ultimate consumer to take reasonable care that the ginger beer was free of defect likely to cause injury or death The Court provided a remedy to those who suffer property damage or personal injury as a result of the careless acts of others 73 Legal_1: 83848958.1 Damages and Foreseeability (cont’d) Barron v Barron ◦ Facts: A man drinking coffee while driving chokes on the coffee and crashes the car His wife, the passenger at the time of the crash, sues for injuries sustained ◦ Issue: Was the crash a reasonably foreseeable consequence of drinking coffee while driving? Would your answer be different if the husband had a history of coughing and choking when drinking coffee? 74 Legal_1: 83848958.1 Damages and Foreseeability (cont’d) ◦ Decision: Because of the husband’s well documented history of coffee-induced coughing and choking leading to reduced control of his vehicle, the Courts found in favour of the wife Therefore, the Court took into consideration the particular facts of the case and the specific circumstances of the plaintiff 75 Legal_1: 83848958.1 Damages and Foreseeability (cont’d) Mustapha v Culligan of Canada Ltd. (SCC) ◦ Facts: Mustapha had purchased bottled water from Culligan for 15 years. The last time he witnessed the delivery he saw a dead fly, and parts of another dead fly in one of the unopened bottles. This image severely scarred him, causing significant psychological harm. Mustapha brought a claim against Culligan for the psychiatric harm resulting from the negligence of Culligan claiming he could no longer drink, shower, or have sex as a result. 76 Legal_1: 83848958.1 Damages and Foreseeability (cont’d) Mustapha v Culligan of Canada Ltd. (SCC) (cont’d) ◦ Decision: In this case it is clear that there was a duty of care owed, as manufacturers owe a duty of care to their consumers and it is also clear that Culligan's conduct breached this duty. There was also damage suffered as Mustapha developed a major depressive disorder which had a significant impact on his life. However, in respect of the issue of foreseeability, the Court must consider if the breach would result in psychiatric harm to a reasonable person. In this case there is no question that this breach would not result in the psychiatric harm of a reasonable person. Although this extreme reaction was imaginable, it was not reasonably foreseeable 77 Legal_1: 83848958.1 Damages (cont’d) Economic Loss: ◦ Donoghue v. Stevenson did not deal with economic loss ◦ Economic loss: financial or business losses (e.g., loss of profits, costs of repair, loss in value) 78 Legal_1: 83848958.1 Damages (cont’d) Hedley Byrne ◦ Facts: Plaintiffs are advertising agents who asked their bankers to inquire on the credit rating of a business associate The defendant bankers negligently reported that the credit rating of the business associate was favourable The plaintiffs did business with the business associate relying on the advice of the bankers As a result, the plaintiffs lost money 79 Legal_1: 83848958.1 Damages – Hedley Byrne (cont’d) ◦ Decision: The Court held that when one person relies on a special skill of another and the second person knew of that reliance, then the second person was duty bound to take reasonable care in exercising the special skill 80 Legal_1: 83848958.1 Damages (cont’d) ◦ Relevance: Scope of Damages ◦ Tort law traditionally provided relief where damages to person or property had occurred ◦ Hedley Byrne expands the scope of damages to include financial loss that results from the negligent advice Special Skills 81 Legal_1: 83848958.1 Development Application of Hedley Byrne to engineers Edgeworth Construction Ltd. v. N.D. Lea ◦ Facts: Contractor successfully bids on a contract to build a section of highway Contractor suffers financial loss allegedly due to errors in the drawings prepared by the engineers Contractor sues engineers for negligence claiming that it had reasonably relied on the drawings in preparing its bid and in executing the work There was no contract between contractor and engineer 82 Legal_1: 83848958.1 Development (cont’d) ◦ Decision: Court held that the engineers could be liable in tort to the contractor since: i. The engineers undertook to provide the information to the bidders for the work I. The purpose of supplying the information was to allow the bidders to prepare a price to be submitted to the owner, which the engineers knew II. The contractor relied on the information to prepare the price; the reliance was reasonable 83 Legal_1: 83848958.1 Development (cont’d) Winnipeg Condo v. Bird Construction ◦ Facts: Building constructed in 1974 by Bird Construction for Tuxedo Properties Co. Tuxedo used the building as apartments until 1978 when they sold them as condos, at which point the building owner became Winnipeg Condo Corporation #36 In 1989, a section of the wall cladding fell The condo corporation then sued Bird 84 Legal_1: 83848958.1 Development (cont’d) ◦ Issue: There was no contract between the condo corporation and Bird, so they cannot sue in contract law. Is there a duty of care owed by a builder to subsequent purchasers? ◦ Decision: It was reasonably foreseeable to Bird that if they constructed negligently, subsequent purchasers might suffer damage Therefore, the Court held that a contractor has a duty in tort to subsequent purchasers. 85 Legal_1: 83848958.1 Strict Liability Strict Liability: liability that does not depend on actual negligence or intent to harm. ◦ Does not necessarily apply the concept of fault Defendant may be responsible for unintentional, non-negligent harm 86 Legal_1: 83848958.1 Strict Liability (cont’d) Example: ◦ Worker’s compensation legislation Fault is not necessary for compensation to be provided Employers pay premiums into a fund based on the salaries of their employees Employees receive compensation notwithstanding fault 87 Legal_1: 83848958.1 Vicarious Liability Liability is based on the relationship between the parties One person is responsible for the misconduct of another person because of the relationship between them Employer are often held liable for the negligent performance of an employee ◦ Consistent with fundamental purpose of tort law – compensate the injured party ◦ Presumably employer is in a better financial position than the employee ◦ “deep pockets theory” – employer has deep pocket of funds from which an injured party will more easily obtain compensation 88 Legal_1: 83848958.1 Vicarious Liability (cont’d) It is argued that vicarious liability is fair since it places losses which are created by an activity on the person who profits from it (i.e., the employer) Employer is arguably in a better position to mitigate the losses through insurance or pricing of the services Encourages care in the selection and supervision of employees 89 Legal_1: 83848958.1 Vicarious Liability (cont’d) Dutton v. Bognor ◦ Facts: House is built with inadequate foundations Building by-laws required the foundations to be approved by a local building inspector The building inspector failed to make a proper inspection before providing the approval The house falls down 90 Legal_1: 83848958.1 Vicarious Liability (cont’d) ◦ Decision: The Court held the contractor liable to the home owner for the improper foundations The building inspector was liable since he failed to carry out a proper inspection The building inspector’s employer was also held vicariously liable for the failure of the building inspector The building inspector is personally liable and the employer is also vicariously liable for the failure of the building inspector 91 Legal_1: 83848958.1 Vicarious Liability (cont’d) Vicarious liability will only be imposed on employers for acts of their employees, not for acts of independent contractors 92 Legal_1: 83848958.1 Vicarious Liability (cont’d) 671122 Ontario Ltd. V Sagaz Industries ◦ Facts: Sagaz, a designer of automobile seat covers, hires a consultant, Stewart Landow, to assist in marketing its seat covers Landow bribes the head of Canadian Tire’s automotive division Because of the bribe, Canadian Tire terminated its supply relationship with Design Dynamics in order to carry Sagaz’s product When the bribe was discovered, Design sued Landow as well as Sagaz, as Landow’s employer 93 Legal_1: 83848958.1 Vicarious Liability (cont’d) ◦ Issue: Should Sagaz be vicariously liable for the conduct of Landow? ◦ Decision: Sagaz was not vicariously liable for Landow’s conduct The central question is whether the person engaged to do the work is performing them as a person in business on his own account – i.e., employee or independent contractor Consider: (1) the degree of control over the worker; (2) ownership of tools; (3) who has the chance of profit; (4) who bears the risk of loss 94 Legal_1: 83848958.1 Concurrent Tortfeasors More than one party can be liable in tort Principle that multiple defendants can be liable for the same damage. ◦ A plaintiff can thus bring an action against multiple defendants, who are liable for their proportionate share. 95 Legal_1: 83848958.1 Concurrent Tortfeasors (cont’d) District of Surrey v. Carroll-Hatch ◦ Facts: Architect designs a police station Architect hires engineers to provide structural designs for the police station Building is structurally damaged due to settlement problems which could have been avoided if proper soil tests had been conducted 96 Legal_1: 83848958.1 Concurrent Tortfeasors (cont’d) ◦ Decision: Both the architect and the engineer were held liable to the owner – they had breached their duty to warn the owner that proper soil tests should have been taken The architect and the engineer were concurrent tortfeasors The court apportioned liability to the architect (60%) and the engineer (40%) 97 Legal_1: 83848958.1 Product Liability Product liability law is governed by both the law of contract and the law of tort Contract ◦ Persons who purchase goods from sellers and are unhappy with Their product or are injured by it may be able to utilize warranties provided for by legislation ◦ Sale of goods legislation may imply condition into the contract ◦ e.g., the goods will be merchantable and fit for their intended purpose 98 Legal_1: 83848958.1 Product Liability (cont’d) Tort ◦ Applicability to Engineers Donoghue v. Stevenson: duty of care is owed to all reasonably foreseeable victims of the defendant’s negligent conduct Duty extends to all purchasers and other foreseeable users and consumers of the product, whether they purchased it or not Duty will be owed to third parties who are injured by the malfunctioning of a defective product 99 Legal_1: 83848958.1 Product Liability (cont’d) Intermediate examination: liability of the manufacturer will usually follow if a product is used by the consumer without the possibility of intermediate examination Contributory negligence could apply where the user could have, or did, examine the product before use 100 Legal_1: 83848958.1 Duty to Warn Some products are inherently dangerous ◦ e.g., cigarettes, chemicals, etc. Manufacturers have a duty to warn consumers of the appropriate use of the product or the risks associated with its use Duty to warn extends not only to dangers which are inherent in the ordinary, intended use of a product, but to risks which flow from the foreseeable use of the product, even if such use was not intended by the manufacturer However, there need not be warnings of a risk of danger which is “so obvious and apparent that anyone would be aware of it” 101 Legal_1: 83848958.1 Duty to Warn (cont’d) Ho Lem v. Barotto Sports ◦ Facts: Hunter purchased a shot-shell reloading machine He did not follow instructions During the use of the machine hunter was injured Hunter commences claim against the manufacturer 102 Legal_1: 83848958.1 Duty to Warn (cont’d) ◦ Decision: Court held that adequate instructions for use had been given to the hunter The hunter did not win the case since he had not followed the instructions of the manufacturer Manufacturer had satisfied its responsibilities by providing an adequate warning Damages not caused by the manufacturer’s failure to warn but were instead caused by the hunter’s failure to follow the manufacturer’s instructions 103 Legal_1: 83848958.1 Economic Loss Economic loss: financial or business losses (e.g., loss of profits, costs of repair, loss in value) 104 Legal_1: 83848958.1 Economic Loss (cont’d) Duty to Warn: Rivtow Marine ◦ Facts: Barge operators fitted a crane onto their barge It was discovered that the manufacturer did not warn the barge operators of a defect in the crane Defect in the crane would lead to cracking and collapse 105 Legal_1: 83848958.1 Economic Loss (cont’d) ◦ Decision: Court held that the manufacturer was under a duty to warn the barge operators of the defect once they became aware of it Manufacturers were liable to the barge operators for the economic loss attributable to the failure to warn – they were liable for lost profits while the crane was out of service for repairs 106 Legal_1: 83848958.1 Economic Loss (cont’d) Economic Loss dependent on Property Damage suffered by third parties: CN Railway v. Norsk ◦ Facts: A tug boat operator negligently allowed the barge it was towing to collide with a railroad bridge owned by the Crown In addition to the Crown’s claim for damage caused to the bridge, the railway companies which used the bridge sued the tug boat operator for economic loss as a result of not being able to use the bridge 107 Legal_1: 83848958.1 Economic Loss (cont’d) ◦ Decision: Courts are generally concerned about allowing economic loss claims since they may lead to indeterminate and unlimited liability The court in this instance was satisfied that there was sufficient “proximity” between the tug boat operator and the railway company to justify liability The tug boat operator ought to have foreseen the economic loss that would result from damage to the bridge, given the need for the railway company to reroute traffic during repairs 108 Legal_1: 83848958.1 Economic Loss (cont’d) Product Liability: Winnipeg Condo v. Bird Construction ◦ Economic loss is recoverable – the cost of repairing the defects and correcting the dangerous cladding ◦ It was reasonably foreseeable that a defect in the construction would pose a risk of danger to a subsequent purchaser or user of the building 109 Legal_1: 83848958.1 Case Study Facts: ◦ Jeans Unlimited (the seller of jeans) enters into a contract with an architect to prepare complete drawings and specifications for the construction of a new store in Toronto ◦ The drawings and specifications include structural engineering designs ◦ The architect contracts with an engineer to prepare the structural drawings and specifications – Jeans Unlimited is not a party to this contract 110 Legal_1: 83848958.1 Case Study (cont’d) Facts (cont’d): ◦ A recent graduate hired by the structural engineering firm prepared the structural designs ◦ Not having a lot of experience with the applicable structural design requirements, the recent graduate did not pay attention to all the details ◦ A professional engineer in the engineering firm reviewed the recent graduate’s work ◦ The professional engineer considered the design satisfactory even though the professional engineer did not perform a detailed check ◦ Nine months after the jean store opened, the roof collapsed during a snow storm 111 Legal_1: 83848958.1 Case Study (cont’d) Facts (cont’d): ◦ An engineering expert was retained by Jeans Unlimited to conduct an investigation into the collapse of the roof ◦ The engineering expert provided a report to Jeans Unlimited In the engineer’s expert opinion, the structural support system for the roof was inadequately designed The support system for the roof did not take into account snow load criteria required by applicable design requirements If the applicable design requirements had been complied with the roof would not have collapsed 112 Legal_1: 83848958.1 Case Study (cont’d) Question ◦ What liabilities in Tort Law may arise? ◦ What is the likely outcome? 113 Legal_1: 83848958.1 Case Study (cont’d) Discussion ◦ Project Structure Typical for an owner to directly hire an architect to prepare complete architectural and engineering drawings and specifications The architect will then directly hire the engineers as subconsultants The owner does not usually have a contract with the engineers 114 Legal_1: 83848958.1 Case Study (cont’d) ◦ Fundamental Purpose of Tort Law Compensate a party that has suffered damages as a result of a negligent act or omission ◦ Tort liability can arise even where there is no contract ◦ Will not address the contractual relationships in this answer ◦ Likely that plaintiff is Jeans Unlimited and defendant is engineering firm and engineers ◦ Plaintiff must prove the three requirements on a “balance of probabilities” – duty of care, breach of the duty of care and damages 115 Legal_1: 83848958.1 Case Study (cont’d) ◦ Duty of Care Engineer and engineering firm ought reasonably anticipate that Jeans Unlimited would be relying on their designs in the construction of the store and would be injured by their negligent act or omission ◦ Standard of Care The court would look at the expert testimony to determine what the reasonable degree of skill, care and diligence would be of the engineer of ordinary competence In this instance the engineer failed to take the snow load criteria into account On the facts, the engineer breached the standard of care 116 Legal_1: 83848958.1 Case Study (cont’d) ◦ Damages Damages were incurred since the inadequately designed roof collapsed Damages include the cost of repairing the store and the economic loss arising from the store being closed 117 Legal_1: 83848958.1 Case Study (cont’d) ◦ Vicarious Liability The engineer is personally liable and the engineering firm will be held liable for the negligence of its employees based on the “deep pockets” theory This is consistent with the theory behind tort law to compensate the injured party Engineering firm will contact its professional liability insurance company 118 Legal_1: 83848958.1 Summary People have various liabilities and corresponding responsibilities ◦ Contractual and tort Tort is based on relationships between parties and does not require a contract Fundamental purpose is to compensate the injured party Must establish: duty of care, breach of the duty of care and damages caused by the breach Concurrent tortfeasors Vicarious liability 119 Legal_1: 83848958.1 Intellectual Property Intellectual Property Overview ◦ Patents of Invention ◦ Trademark ◦ Passing Off ◦ Copyright ◦ Industrial Designs ◦ Trade Secrets 121 Legal_1: 83848958.1 Patent of Invention Inventions must be: Patentable subject matter: art, process, machine, manufacture or composition of matter Novel and useful (a mere idea alone is not patentable) The idea must be reduced to something physical/tangible e.g. Nintendo game boy (1993) Exclusive right to make, use or sell the invention Term of a patent is 20 years from date of application Patent rights can be assigned or licensed to others 122 Legal_1: 83848958.1 Patents of Invention (cont’d) Is it the employer’s invention or the employee’s? Generally, it is the inventor or assignee who is entitled to apply for the patent Engineer may be requested by his or her employer to execute an agreement that assigns to the employer patent rights. Remedies of Patent Holder Damages sustained by patent holder Injunction Recovery of profits obtained by infringer Delivery up 123 Legal_1: 83848958.1 Patent of Invention – Whirlpool Corp v Camco Inc (SCC 2000) ◦ Facts: Whirlpool developed a dual-action washing machine agitator that utilized the bottom portion of the shaft for the usual oscillating motion but added an upper sleeve that was designed to work as an auger. The auger propelled water and clothing downwards toward the agitator's oscillating vanes so as to produce more uniform scrubbing. Whirlpool secured three Canadian patents for this work. ◦ In the first patent, the dual agitator was powered by a drive shaft. ◦ A second patent (known as the '803 patent) substituted a clutch mechanism for the drive shaft Both patent specifications described the agitator's vanes as being rigid. ◦ Whirlpool's third patent, known as the '734 patent, featured flexible vanes on the lower agitator instead of rigid vanes Camco later developed a washing-machine that used similar processes and Whirpool sued for infringement 124 Legal_1: 83848958.1 Patent of Invention – Whirlpool Corp v Camco Inc (cont’d) ◦ Issue: Were the distinctive vanes (ridged and flexible) sufficiently distinctive to merit separate patents? ◦ Decision: The Court found in favour of Whirpool with respect to the inventive character and nature of the flexible vanes Flexible vanes were a new and useful manufacture that was reduced into a tangible invention, thereby meeting the requirements for a patent In the result, Whirpool was able to sue for the infringement of three separate patents 125 Legal_1: 83848958.1 Trade-Mark TM’s are words or designs used to distinguish wares or services manufactured, sold, leased, hired, or performed by someone from those of others (e.g. the Apple computer logo) Owner has exclusive right to use trade-mark The trade-mark must be distinctive (i.e. not confusing and clearly distinctive) Registered trade-marks are effective for a period of 15 years: can be renewed for unlimited 15-year periods A trade-mark can be used by a third party under a license or an assignment Forgery of a TM with intent to deceive or defraud the public is a criminal offence Remedies Injunction on future use Liable for damages or profits 126 Legal_1: 83848958.1 Trade-Mark - Mattel Inc v 3894207 Canada Inc (2006 SCC) ◦ Facts: A Quebec company, 3894207 Canada Inc., applied to register the trade- mark “Barbie’s” in relation to a small chain of Montreal-area restaurants American toy manufacturer, Mattel, Inc., objected on the grounds that this could create confusion and infringe on its trade-mark over the BARBIE doll, described by Mattel as an iconic figure of pop culture ◦ Issue: Would 3894207 Canada Inc.’s use of the mark “Barbie’s” cause confusion and infringe on the trade-mark BARBIE held by Mattel? 127 Legal_1: 83848958.1 Trade-Mark - Mattel Inc v 3894207 Canada Inc (cont’d) Mattel Inc v 3894207 Canada Inc (cont’d) ◦ Decision: Whether a new trade-mark infringes on a current trade-mark is determined by asking whether the ordinary rushed consumer is likely to think both products are made by the same producer. Several factors are considered, including: (i) inherent distinctiveness; (ii) history of use; (iii) nature of the product; (iv) nature of the trade; (v) resemblance of the mark; (vi) general circumstance Based on a consideration of the above factors, the Court concluded that the restaurant trade-mark “Barbie’s” was not likely to be confused with Mattel’s BARBIE trade-mark 128 Legal_1: 83848958.1 Passing-Off Passing off is a type of common law legal action against someone who uses your trade-mark or a similar trade-mark to yours Unregistered trade-mark Requirements Reputation in trade-mark Confusion Harm sufferred You must show that customers purchase from someone else because they mistakenly believe that they are dealing with you (e.g. Walt Disney Prod’ns injunction against use of name “Fantasyland” for amusement park and hotel in West Edmonton Mall; injunction granted) Remedies Restraint on future use Liable for damages or profit 129 Legal_1: 83848958.1 Passing-Off (cont’d) Ciba-Geigy Canada Ltd. v Apotex (1992 SCC) ◦ Facts: Ciba-Geigy brought an action against Apotex and Novopharm, alleging that their versions of the prescription drug metoprolol were causing confusion to the public due to their similar appearance to Ciba-Geigy’s version of the drug Lopresor. The drugs both has the same “get-up”—shape, size and colour. Ciba-Geigy argued that its metropropol tablets had a unique “get-up” and that this “get-up” had become associated with its product 130 Legal_1: 83848958.1 Passing-Off (cont’d) Ciba-Geigy Canada Ltd. v Apotex (cont’d) ◦ Issue: Did Apotex’s version of metropropol cause confusion such that an individual would be mistaken? ◦ Decision: Court held that in an action for the alleged passing-off of a prescription drug, the plaintiff must establish that the conduct complained of is likely to result in the confusion of physicians, pharmacists or patients/customers in choosing whether to prescribe, dispense or request either the plaintiff’s or defendant’s products Court found that patients/customers would likely be confused by the similar “get up” of the drugs 131 Legal_1: 83848958.1 Copyright Subsists in original literary, dramatic, musical, artistic work, communication signals, sound recordings, performances Term: life of the author + set number of years Includes engineering plans Licence or Assignment Form over substance 132 Legal_1: 83848958.1 Copyright (cont’d) Direct Infringement of Copyright ◦ Rights can be infringed if a party does, without consent, that which only the owner of the copyright has the right to do ◦ Pursuant to section 3 of the Canadian Copyright Act, the owner of the copyright has the following express rights: To produce or reproduce the work or any substantial part thereof in any material form whatever; To perform the work or any substantial part thereof in public To publish the work or any substantial part thereof if the work is unpublished To authorize the above acts by another ◦ No registration required 133 Legal_1: 83848958.1 Copyright (cont’d) The creator of a work in which copyright subsists also has “moral rights” Moral rights include right to be identified as author of the work and the right to the integrity of the work 134 Legal_1: 83848958.1 Copyright - Cinar Corporation v Robinson (2013 SCC) ◦ Facts: Robinson created a children’s story titled Robinson Curiosity—adventure story based partly on Robinson Crusoe and his own personal experiences Robinson and a partner, Nilem, approached Cinar Corporation to create a show based on the stories; the talks with Cinar ultimately fell through Cinar corporation instead created a show called Robinson Sucroe Robinson and Nilem commenced an action for copyright infringement ◦ Issue: Did Cinar’s production of Robinson Sucroe constitute an infringement of Robinson’s and Nilem’s rights? Did Cinar copy a substantial portion of Robinson’s and Nilem’s work? 135 Legal_1: 83848958.1 Copyright - Cinar Corporation v Robinson (cont’d) Robinson Robinson Curiosity Sucroe 136 Legal_1: 83848958.1 Copyright - Cinar Corporation v Robinson (cont’d) ◦ Decision: The Court considered two factors i. Is the work a form of original expression? Yes, it required a substantial amount of skill and judgment ii. Has the work or a substantial part thereof been reproduced with the result of producing additional or new copies of the work in any material form? Yes, a substantial part of the work was copied latent and patent similarities were perceptible throughout Patent: visual similarities between characters, plot, etc. Latent: atmosphere, motif, dynamics, structure 137 Legal_1: 83848958.1 Copyright - Snow v The Eaton Centre Ltd (1982 Ontario) ◦ Facts: Snow, a sculptor, had sold a sculpture of a flock of geese to the Eaton Centre. As part of Christmas decorations the geese had red ribbons placed around their necks. Snow brought an action against the Centre to get an injunction to have the ribbons removed. Snow argued that his naturalistic composition has been made to look ridiculous and requested an interim injunction ◦ Issue: What constitutes an infringement of moral rights under the Copyright Act? 138 Legal_1: 83848958.1 Copyright - Snow v The Eaton Centre Ltd (cont’d) Snow’s Geese without Ribbons 139 Legal_1: 83848958.1 Copyright - Snow v The Eaton Centre Ltd (cont’d) ◦ Decision: The Court held that while the Eaton Centre has commercial rights in the sculpture, Snow still held moral rights and the ribbons were prejudicial to his honour and reputation. The Court applied a test for moral rights: ◦ Subjective component (creator’s perspective): met by Snow's frustration with the situation ◦ Objective component (perspective must be reasonably arrived at): colleagues and experts in the field agree with the prejudice to Snow's honour and reputation The interim injunction was granted 140 Legal_1: 83848958.1 Industrial Designs Industrial Design Act gives protection to originators of certain industrial designs Designs (shape, pattern, ornament) that are applied to finished articles (greater than 50) and are multiplied by an industrial process An industrial design must have features that appeal to the eye and not purely functional Design must be novel and original (e.g. Coke bottle) Term: exclusive right to use design for 10 years from registration (not renewed) Assignment must be in writing 141 Legal_1: 83848958.1 Trade Secrets: What are they? A trade secret may consist of a formula , pattern, device, compilation of info used in one’s business, which gives advantage over competitors, i.e., formula for a chemical It is confidential information (e.g. ingredients of Coke) Legal action elements: − Show information was confidential − Show secret information was communicated to the person at fault in circumstances implying a duty of confidence − Degree of secrecy Duty of confidence: employer and employee 142 Legal_1: 83848958.1 Questions? 143 Legal_1: 83848958.1 Andrew Wong Partner, Commercial Andrew is a civil engineering graduate whose practice includes work in Thank you! international and Canadian construction law and infrastructure matters including project planning and related corporate advice, risk assessment and procurement issues. His project experience includes advising on public-private partnerships and alternative financing and procurement. His work includes reviewing, negotiating and drafting project agreements, EPC contracts, design-build agreements, construction agreements, tender and request for proposal documents, architectural service agreements, engineering service and consulting agreements, construction management agreements, and other related corporate/commercial and technical agreements including joint venture agreements, development agreements, purchase orders, operation and maintenance agreements and supply agreements. Andrew also provides construction lien advice. 144 Legal_1: 83848958.1