February 26, 2009 by Canadian Underwriter
Insurance lawyers defending professional liability claims should look into the possibility of limiting liability on the basis of contractual provisions, especially when co-defendents (such as architects) have contracts that limit the scope of liability.
Andrew Heal of Blaney McMurtry made the comment at the Blaney McMurtry “Insurance Law: Winter Update 2009,” held in Toronto.
Heal was outlining a number of strategies for defending professional liability claims. One way to limit liability, he noted, was to look at not only statutory limits on liability, but also contractual limits as well.
He noted architects often include language within their contracts that mirrors insurance policy language, and that expressly calls for contractual limits on their liability.
Lawyers tried to take advantage of this provision in one case connected with the leaking of a roof at an airport terminal. A number of professionals in the construction case were sued and the architects had language in their contract that limited their liability to Cdn$250,000.
The other professionals named in the suit argued that since the roof leaked because of a poor design, and the architects that designed the roof had a contract limiting liability to $250,000, the other professionals should be able to gain the benefit of the architects’ limited contractual liability.
The appellate court didn’t specifically address the argument, however, because it was asked to rule on whether the case involved a genuine issue for trial. The court ruled there was a genuine issue for trial, and thus the question of being able to use the architect’s contractual wording to limit liability for the other, non-architectural professionals was never addressed.
Heal said defence lawyers “should always be pleading, if you’re in a case with an architect or someone who has a contractual limitation on liability, as a co-defendant, because you want to take advantage of that protection. We’ll finally get to a trial where that issue is going to get debated.”