The facts

The professional services of a structural engineer, Daniel, were retained to design a dome for an agricultural manufacturing plant. Daniel’s mandate included supervision of the work. The project was completed in one year.

About 10 years after completion, the dome showed signs of settling and partially collapsed a year later. Five years after the partial collapse, a second collapse occurred, this time causing extensive damage. The second collapse led to a lawsuit brought by the plant’s owner against Daniel, many years after the dome work was completed. The owner alleged that the collapse of the dome was the result of a design fault and that the construction of the dome did not comply with sound engineering practices. 

The result

It was originally determined that the owner was out of time to bring a lawsuit because the time limit under the Statute of Limitations¹ had been exceeded since the first collapse. However, further investigation determined that the owner was only aware of the essential elements required to initiate a lawsuit after the second collapse, such that they were, in fact, well within the limitation period to bring the lawsuit.

As a general rule, the starting point of the limitation period is the time at which a person is aware that they have a cause of action and have knowledge of all the essential elements required for their lawsuit (i.e., the fault, the damage and the link between the two).

At the time of the lawsuit, Daniel had been retired for four years. After such a long period of time, it would typically be difficult for anyone to remember all the details of a project. Fortunately, Daniel kept all of his plans and specifications in storage, which provided him with an excellent means of mounting his defence. Daniel had also fortunately continued to purchase professional liability insurance from Victor post-retirement, as he recognized the potential for claims to be made years after he wound up his business.* 

Risk factors

Risk factor #1

• Use written records and ensure proper documentation relative to supervision or any other type of site review.
• Proper documentation of your observations can be instrumental in determining whether or not intervening events or circumstances contributed to deficiencies in the construction.

Risk factor #2

• Consider implementing robust documentation practices throughout your projects and maintain records for as long as possible. A claim may be brought long after a project has been completed, and these records are very helpful in establishing a defence.  

¹ Consult a lawyer for any questions regarding the applicability of the Statute of Limitations in your applicable jurisdiction.

*Advice on specific requirements and recommendations should be sought from a licensed insurance broker.

This claim scenario is for illustrative purposes only. Please remember that only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions.