Contractor Liability for Ground Defects Leading to Loss of the Work

The legal liability framework for loss of the work set out in Article 2118 of the Civil Code of Québec needs no introduction. It establishes a presumption of liability for contractors and professionals in various situations, without requiring proof of fault, and limited means of exoneration. More specifically, the loss of a structure due to a ground defect is an issue that warrants attention, especially in light of the growing scarcity of building land in urban areas. 

What is a Ground Defect? 

Case law tells us that ground defects may arise from the presence of foreign matter, such as debris or contaminants, in the soil, but also from the soil’s geological composition. Accordingly, while the ground in its natural state is not contaminated, any misinterpretation of its resistance or load-bearing capacity is likely to incur liability on the part of contractors. Evolving construction techniques may lead us to believe that any plot of land, whatever its soil composition, can be built on, as long as appropriate methods are applied. 

Contractor Liability 

On its own, proof of a ground defect does not automatically lead to the presumption of liability being applied: it is also necessary to demonstrate that the “loss of the work” has occurred within five years of construction. It is up to the contractor to demonstrate that it has scrupulously complied with the expert reports, plans, and specifications produced by the professionals selected by the client or that the situation stems from decisions imposed by the client in its choices pertaining to the building site or construction methods. 

The fact that the land on which the work is to be built belongs to the client is not sufficient to remove the presumption of liability, as the contractor is required to inform the client if the land is unfit for use. This requirement, however, does not mean that the contractor is liable for all ground defects. Its liability would be incurred if the defect had been detectable when the contractor performed its careful examination in accordance with its knowledge and expertise. If there is any doubt as to the quality of the soil or any other relevant indication in this regard, the contractor must obtain the necessary expert reports or recommend that the client seek them out. 

In one case, for example, a contractor was held liable for failing to take the necessary precautions, despite the fact that the region where the work was being conducted was known for its clay soils, which should have prompted caution regarding the use of concrete foundations. View the case here (in French). 

Conversely, the courts have held that, given clients’ involvement in preparing sites prior to erecting foundations and in drafting plans and specifications and given the absence of any indication of the presence of contaminated soil, contractors may not be held liable for failing to carry out soil surveys, which clients themselves had failed to do. View the case here (in French). 

In all cases, contractors must apply construction methods suited to the nature and composition of the soil on site. A geotechnical study conducted by a professional prior to construction is not, on its own, sufficient to absolve contractors of liability. 

In cases where a contractor also acts as a seller, the applicable quality-warranty provisions also apply. Moreover, as a professional seller, the contractor is presumed to have knowledge of any defect. In such cases, the contractor is unlikely to circumvent its liability by arguing that it was not possible for it to detect the defect, even with the benefit of geotechnical studies performed prior to construction or sale.   

How Contractors can Seek Protection 

In cases where a more sophisticated client retains the services of specialized professionals, particularly with respect to public contracts, the contractor’s duty to inform is applied less strictly. The contractor, however, must not let its guard down, so to speak, by blindly relying on the results of a geotechnical study should excavation reveal different soil characteristics. In such cases, a contractor who fails to notify the client or its professionals in a timely manner may find it difficult to evade liability. 

Of course, every worksite is unique; consequently, it is best to steer clear of generalizations about what contractors should do to protect themselves. It is worth noting that whenever a dispute arises involving loss of the work, the minutes of site meetings and written exchanges involving the client, the contractor, and the professionals are closely examined. Consequently, it is in the contractor’s best interests to document its activities thoroughly. 

Lastly, contractors would do well to ensure that contractual documents include price-revision clauses for work that reveals the presence of soil conditions not previously brought to their attention. Many standard contracts include such clauses, for instance, the recently revised Canadian Construction Documents Committee Stipulated Price Contract (CCDC-2). 

  
In closing, please know that our Construction Law team is able to guide you through all the stages of a construction project.