SNC-Lavalin inc. c. Deguise: The Professional Responsibility of the Geologist

In this litigation, commonly known as the “Pyrrhotite case”, the use of concrete aggregate containing this iron sulphide, coming from the quarry belonging to Carrière B&B inc. [“B&B”], caused the swelling of concrete and the deterioration of the foundations of more than 800 buildings in the Trois-Rivières area. SNC-Lavalin Inc. [“SNC”] and its geologist Alain Blanchette [the “geologist”] were sued in professional liability for having endorsed the use of these aggregates. The Court of Appeal addressed the question of their liability.

Summary of the relevant facts

In the late 1990s, B&B began operating its quarry and supplying aggregate to concrete mixers, including Béton Laurentides inc. and Construction Yvan Boisvert inc. [“concrete mixers”]. For a few years, no problems were noted with the quality of the aggregates.

Towards the end of 2001, concrete swelling problems related to aggregates coming from the neighbouring Maskimo quarry gave rise to some 30 disputes. As they were concerned about the situation, the concrete mixers mandated external geologists to carry out petrographic tests on B&B’s aggregates. They received an initial professional opinion that the B&B aggregates could generate the same type of problem. Despite this, the concrete mixers continued to lay foundations with B&B concrete.

At the same time, in 2003, the geologist’s services were retained by Ciment Saint-Laurent to conduct a petrographic analysis of the aggregates from the B&B quarry, but without revealing their origin. In his 2003 report, the geologist concluded that the percentage of pyrite was normal and not deleterious, and did not contraindicate the use of the aggregate. The results of this analysis were circulated with the concrete mixers and some contractors operating in the area.

At the end of 2003, Béton Laurentides retained the services of the geologist to conduct a new petrographic analysis of B&B aggregates, which would lead to the production of three new reports. Generally speaking, these reports indicated that the aggregates could be used to make concrete, but that periodic controls should be carried out, considering the high percentages of iron sulphide (pyrite and pyrrhotite) observed.

In the summer of 2006, B&B obtained a report from another expert, which concluded that B&B’s aggregates were of the same type as those from Maskimo and were likely to cause concrete to swell. At the same time, the geologist issued a report indicating that these aggregates meet the requirements for use in making concrete, but should not be used for architectural concrete or exposed aggregate concrete.

Ultimately, it is only in November 2007 that the geologist produced a report indicating that this aggregate should not be used for concrete.

Findings of the Superior Court

The Superior Court held that SNC and the geologist were liable contractually with respect to the quarries and concrete mixers, because of the faulty performance of their service contract. They were also extra contractually responsible with respect to the victims, namely the various owners of the buildings with hidden defects. In a substantive decision, the Court of Appeal agrees with the decision of the trial court.

Court of Appeal Analysis

The existence of professional misconduct

The Court of Appeal points out that the geologist and SNC, as professionals, are subject to an obligation of means and that the assessment of the professional’s conduct may be based on the expert opinions on record relating to the standards applicable to a geologist, but also on the provisions contained in the service contract and the standards cited therein. The Court adds that the trial judge rightly referred to the provisions of the Code of ethics applicable to geologists to assess the existence of professional misconduct. Furthermore, he was correct in concluding that the geologist breached the general duty of care and prudence incumbent on any service provider by failing to show nuance and disclose the existence of a risk that could have serious consequences.

Indeed, the geologist disregarded the existing literature on the dangers of iron sulphides in concrete aggregate. He should have been more cautious since these were the highest concentrations that he had ever seen and also given that he had been involved in the Maskimo quarry files. The geologist therefore breached his professional obligations by failing to make a clear recommendation not to use these aggregates in the manufacture of concrete.

The causal link between the faults and damages

The geologist and SNC argued that the concrete mixers and quarries had ignored the recommendations of their experts regarding the dangers of the aggregate, which was equivalent to a novus actus interveniens, a rupture in the causal link. The Court of Appeal recalls that this argument requires proof of (1) the complete disappearance of the causal link between the geologist’s fault and the prejudice and (2) a subsequent event, unrelated to the initial fault, from which a new causal link is woven.

However, the recommendations received in 2002 and 2006 by external experts were not clear recommendations to stop using B&B’s aggregate. It was therefore not unreasonable to continue to rely on the geologist, who in turn reassured them about the quality of the concrete aggregate. Thus, only an apportionment of liability could take place, given that the argument related to a breach of the causal link was rejected.

Extra-contractual liability towards owners

As for his responsibility towards the owners of the buildings by the pyrrhotite, the geologist pleads that his reports were prepared exclusively for the benefit of the quarries and concrete mixers and were not intended to be disclosed to third parties. In this regard, the Court of Appeal notes that the benefit of confidentiality belongs to the client, who could waive it without formality. Moreover, the professional’s liability is not related to his knowledge of the persons who will rely on his opinions or to the destination of his work in relation to its original purpose.

The Court of Appeal also points out that case law recognizes the possibility that a contractual fault may give rise to extra-contractual liability towards third parties, provided that there is towards them an autonomous legal obligation independent of the contract. In the case of a professional, such an obligation may be found in the ethical rules that bind him. These rules provide that a geologist must consider the interests of the public and the possible consequences of carrying out his or her recommendations and work on the property of others. Thus, the service contracts were not stipulated for the exclusive benefit of the concrete mixers and quarries, since the performance of his work necessarily affected third parties who were going to use the concrete to lay the foundations of their buildings.

As to the causal link in matters of the extra-contractual liability of professionals, the Court concludes that the geologist could not have been unaware in providing his reports that the concrete aggregates would be used in the construction of buildings. Thus, he must have known that his failure to advise his contracting partners of the dangers of using concrete aggregates was likely to cause damage to the owners of these buildings.

Finally, the Court of Appeal considers the interviews and reports in which the geologist participated, and in which it is mentioned that the cracking of the concrete made with Maskimo aggregate was due to the quality of the cement rather than to the pyrite. This would lead the average layperson to conclude that it was not the cause of the problems related to the concrete of the foundations. In addressing the public, he should have been more attentive to his ethical obligation and the possible consequences of his recommendations on the property of others.

The period of liability

Since the services of the geologist and SNC had been provided over several years, the Court of Appeal agrees with the trial judge, holding that they were liable from the time the first report on the aggregates from the B&B quarry was submitted to Ciment Saint-Laurent in 2003 until the first time the geologist indicated that they should not be used to make concrete, in 2007.

Although he did not know the origin of the aggregate and the intended use of the 2003 report, the Court of Appeal notes that the geologist was well aware that his mandate was to assess the quality of the aggregate in view of its incorporation into cement concrete. Thus, it did not affect the results and method of the test. He had to abide by his Code of ethics and applicable standards, based on the knowledge available at the time. His ignorance of the origin of the aggregate and the delivery of the conclusions of his report to Ciment Saint-Laurent’s customers did not make the potential consequences of this error unpredictable.