Standard construction practice on most commercial projects involves two main aspects: design and physical construction. Often one entity (an engineer or architect) prepares the design, while a separate entity (a contractor) is hired to construct that design. When design errors are discovered after work is complete, who is at fault – the party that prepared the design, the party that constructed it, or both?

In this article, we explore the recent Nova Scotia case of Seagate Construction v Halifax Regional Municipality to understand who can be held responsible for errors arising from the design process.

Background

HRM, as owner, undertook the construction of a boiler room in Halifax at the Emera Oval. HRM hired DSRA Architecture, a firm of professional architects, to act as the project consultant to design the boiler room. DSRA then hired M. Lawrence Engineering, a mechanical engineering firm, to provide design input related to the boilers being installed.

After the design of the boiler room was completed, HRM hired Seagate, a contractor, to build the boiler room and install the boilers per the design created by DSRA and M. Lawrence. In its role as consultant, DSRA acted as an intermediary between Seagate and HRM. DSRA instructed Seagate and answered questions on behalf of HRM.

When Seagate was hired, the drawings and specifications of the project had already been reviewed and signed off by DSRA. The size of the potential footprint of the project was limited due to existing infrastructure and space at the Oval. DSRA was aware of these sizing restrictions during its design phase. Seagate was concerned about these sizing restrictions and submitted an option to DSRA for alternate boilers to create more space in the boiler room. This was rejected. After the rejection, Seagate submitted a different solution to help create more room, which again was rejected, this time directly by HRM.  Both suggestions from Seagate were provided early in the construction process where adjustments could have been easily made to the design and layout of the project with minimal costs.

Once the boiler room was constructed, Seagate laid out cardboard templates of the boilers and equipment in the boiler room for the review of DSRA and M. Lawrence. M. Lawrence confirmed that the boilers were a “tight squeeze” but opined that they met the Code clearance requirements. Seagate continued to have concerns about the size of the boiler room and raised concerns with M. Lawrence about the equipment fitting inside the boiler room. After a meeting with Seagate and the electrical and mechanical consultants, the consultants decided to relocate the motor control center to another area to create more space.   

Seagate completed all the work required under the contract in accordance with the design of the boiler room provided by DSRA. After completion, DSRA, on behalf of HRM, issued Seagate a Certificate of Substantial Performance for the work on the project. The Oval opened to the public that day, and HRM did not raise any issue with Seagate’s work leading up to or after the Certificate of Substantial Performance was issued.

After the issuance of the Certificate of Performance, Seagate was issued two orders of non-compliance requiring that it demonstrate regulation and Code compliance for the boiler installation clearances. HRM suggested Seagate perform additional work to make the boiler room compliant with the orders issued by the Nova Scotia Department of Labour. HRM alleged that Seagate breached the contract by installing boilers in a manner which did not comply with the applicable Code. Seagate argued that it built that boiler room and installed the boilers per the design and as it was directed to do by DSRA, and thus cannot be responsible for a design that was not Code compliant.

Court Decision

The Court found that Seagate was not responsible for the design error. Seagate was provided with drawings from which to construct the boiler room. Prior to building the boiler room, Seagate expressed concerns about the size of the room but was told by M. Lawrence, as mechanical subconsultant, to build it anyway. Seagate had no authority to adjust or alter the design without the approval of HRM or its delegated consultants, DSRA and M. Lawrence.

M. Lawrence and DSRA were responsible for confirming Code compliance. There was no obligation on Seagate to vet the design themselves with respect to Code compliance. Placing this obligation on Seagate without clear and strong language in the contract to verify the work would be unfair. Seagate was entitled to rely on the design of DSRA and M. Lawrence and had no contractual obligation or authority to verify their instructions.  

Further, it would undermine the division of responsibilities on a construction project to require a contractor to verify a consultant’s work or ignore the design and build something different on its own. If a contractor had the ability to ignore the design, there would be no reason to hire a consultant to prepare the design in the first place. The Court noted that a consultant’s design responsibilities are different than a contractor’s construction responsibilities.

Here, Seagate was hired for the construction of the project. It was responsible for sound workmanship, as opposed to the design of project.  Seagate made no representation as to the design of the project, as the design was outside the scope of its contract. Seagate provided HRM with the services for which it was contracted and did not breach any contractual obligations.

Takeaways

The Court’s ruling confirms that contractors who are not involved in the design process are not responsible for errors in the design unless there is clear and strong language within the contract to that effect.  Where a contractor is hired to carry out a design created by others, it is not responsible for faulty aspects of the intended design, as long as its workmanship is sound. A contractor is permitted to rely on what the owner, through its consultants, provides the contractor to build. A prudent contractor will raise design potential design issues based on constructability, for the overall sake of a project, but is not required to vet a design it did not prepare.

If this matter sounds similar to an issue you have experienced, or you want to confirm that your contracts contain the appropriate terms to protect you from defective design issues, please contact Anthony Burden in Calgary, Ryan Krushelnitzky in Edmonton, or any member of Field Law's Construction Law Group for practical guidance and assistance in this area.

Link to decision: Seagate Construction v Halifax Regional Municipality, 2023 NSSC 176

Special thanks to Mara Stirling, Field Law Summer Student, for assistance authoring this article.