Davie Shipbuilding Ltd. et al. v. Cargill Grain Co. Ltd. et al., [1978] 1 SCR 570

Supreme Court of Canada

Davie Shipbuilding Ltd. et al. v. Cargill Grain Co. Ltd. et al., [1978] 1 S.C.R. 570

Date: 1977-05-31

Davie Shipbuilding Limited (Defendant) Appellant;

and

Cargill Grain Company Limited (Plaintiff)

and

The Foundation Company of Canada Limited (Defendant) Respondents;

and

The Foundation Company of Canada Limited (Defendant) Appellant;

and

Cargill Grain Company Limited (Plaintiff)

and

Davie Shipbuilding Limited (Defendant) Respondents;

and

Cargill Grain Company Limited (Plaintiff) Appellant;

and

The Foundation Company of Canada Limited, Davie Shipbuilding Limited, Cobra Industries Incorporated and Hennessy Riedner & Associates Inc. (Defendants) Respondents.

1976: November 29 and 30; 1977: May 31.

Present: Laskin C.J. and Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Lease and hire of work—Contract for services—Defects in construction—Construction design imposed by owner—Error in owner’s plans—Liability of owner, contractor and engineers—Civil Code, arts. 1688 and 2259.

This is an action for damages based on art. 1688 C.C. against engineers and contractors following the collapse of a marine tower and partial cave-in of a warehouse constructed for plaintiff-appellant Cargill. The Superior Court admitted the liability of the contractor Cobra

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Industries in the collapse of the marine tower, and the obligation of the owner Cargill, since it was legally liable for the fault of its engineer, to indemnify the contractor Cobra, which gives rise to compensation. The Court of Appeal concluded that liability should be divided between the owner Cargill and the contractor Cobra. However the latter was not condemned to pay anything, in light of Cargill’s statement that it owed an amount to Cobra which in view of the Court of Appeal was greater than half the damages suffered by Cargill. The Superior Court found the contractors Foundation and Davie jointly liable for the collapse of the warehouse, and the Court of Appeal reduced their liability to fifty per cent.

Held: The appeals of Davie Shipbuilding and Foundation against Cargill Grain are allowed; the cross-appeals of Cargill Grain against Davie Shipbuilding and Foundation are dismissed; the appeal of Cargill Grain against Cobra is dismissed and the cross-appeal by Cobra is dismissed.

In an action based on art. 1688 C.C., it is possible for the defendant to rebut the presumption of liability by proving various grounds of exoneration, including the fault of the owner. Such fault may be a result of the fact that an owner with knowledge of the matter imposes his views on his contractor and architect or engineer. The owner’s fault may be a complete answer to his action against the contractor and the architect, or at least be a ground for mitigation of the liability. If the owner has great expertise in the field, clearly surpassing that of the persons who performed the work, the latter will completely escape liability. If, however, the owner’s expertise is approximately equivalent to that of the specialists, their liability will only be mitigated. However, one condition is imposed on the exercise of this defence: that the persons performing the work inform the expert owner of any mistakes which could affect the security of the work that they may have discovered in the documents and plans submitted by the owner.

The claim by the owner Cargill against the contractor Cobra for the collapse of the marine tower must be dismissed, since Cargill was a knowledgeable owner with technical expertise far superior to that of its contractor. Furthermore, the latter was worried about the overload on the structure and had brought this to the attention of the owner, who took no action to correct the serious error in the plans.

The owner’s claim against the contractors Foundation and Davie as a result of the partial collapse of the warehouse must also be dismissed. The construction

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design for this warehouse had been imposed by Cargill on its consulting engineers, and the collapse of this structure was attributable to the errors in the plans provided by the owner. In the context of this case, and in view of the owner’s experience in this type of construction, I must conclude that the contractor and the architect should not have to bear the consequences of faulty data provided by the experienced, informed owner.

Concrete Column Clamps (1961) Ltd. v. Demontigny et al., [1976] 1 S.C.R. 541, applied; Wardle v. Bethune (1871), L.R. 4 P.C. 33; Vermont Construction Inc. v. Beatson, [1977] 1 S.C.R. 758; Hill-Clarke-Francis Limited v. Northland Groceries (Quebec) Ltd., [1941] S.C.R. 437; Brown v. Laurie (1854), 5 L.C.R. 65; Bilodeau v. Bergeron, [1975] 2 S.C.R. 345, referred to.

APPEALS from a decision by the Court of Appeal of Quebec[1] upholding the judgment of the Superior Court[2] on the principal claim and quashing in part the judgment on the counter‑claim. Appeals of Davie Shipbuilding and Foundation allowed; appeal of Cargill Grain against Cobra dismissed; cross-appeals dismissed.

R. Drouin, Q.C., and G. Charest, for Davie Shipbuilding Ltd.

J.R. Nuss, Q.C., J. Ahern, Q.C., and P. Casgrain, Q.C., for Cargill Grain Co. Ltd.

A.J. Campbell, Q.C., Peter M. Laing, Q.C., and R. Barakett, for Foundation Company.

O. Carter, Q.C., for Cobra Industries Inc.

The judgment of the Court was delivered by

DE GRANDPRÉ J.—In October 1959, in the course of the construction of a large harbour installation at Baie Comeau for receiving, storing and shipping grain, a marine tower partially collapsed; is defendant-respondent Cobra liable for this loss? In August 1960, when all work was drawing to an end, warehouse No. 1 of this complex partially fell in; are defendants‑respondents Foundation and Davie liable for this collapse? These two questions lead us to art. 1688 of the Civil Code.

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The Superior Court and the Court of Appeal concurred in dismissing Cargill’s action against Cobra, but for different reasons. Furthermore, the trial judge found Foundation and Davie jointly liable for all the damages resulting from the collapse of the warehouse, whereas the Court of Appeal, Gagnon J.A. dissenting, condemned them to pay only half the damages. Large extracts from these judgments may be found in [1970] C.S. 145 and [1975] C.A. 265. (Note that the summary by the headnote writer respecting the judgment of the Court of Appeal is not entirely correct.)

As may be seen from reading the judgments, except for Cobra the parties are in a fighting mood. The action before this Court consists of a principal claim and a counterclaim. The principal claim, brought before the collapse of the warehouse, originally contained a great many conclusions, and was also brought against a fourth defendant, namely the Hennessy engineering firm (Gagnon J.A., at p. 268); as the result of a number of discontinuances, the only question raised in this principal claim now is Cobra’s liability as a result of the collapse of the marine tower. Cargill concluded, in its counterclaim, that Foundation and Davie should be liable for the partial collapse of the warehouse. Furthermore, as indicated in the judgments of the Superior Court and the Court of Appeal, other actions were brought following the construction of this complex, but they are not before this Court. I should like to express my regret that the action brought by Cargill against Howe engineering was not joined to the action before the Court; there will be a good deal to be said about Howe engineering, without, however, it being possible to decide the question as it concerns them.

A few words should be said about each of the principals:

CARGILL is a wholly-owned subsidiary of an American company, Cargill Inc., which is probably the largest business in the world dealing in the handling and storage of grain; its activities take it around the world.

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FOUNDATION is a Canadian company doing general business which has participated in work of all types in Canada and elsewhere.

DAVIE, besides its dry-dock business, acts as a general contractor, primarily in the field of steel structures.

COBRA is primarily a manufacturer of steel castings, but on occasion, as in the case at bar, acts as general contractor for the installation of the castings it manufactures.

HOWE is a very experienced company of consulting engineers, which has, in particular, participated in erecting harbour installations throughout the world and in constructing grain warehouses.

For reasons which will become clear below, the expressions used by the Court of Appeal to describe Cargill should be immediately noted. The most complete description appears in the notes of Gagnon J.A. He states that Cargill is [TRANSLATION] “an owner versed in the rules of the trade”, “a knowledgeable owner”. His thinking is summarized in the following paragraph, taken from p. 283 of the report:

[TRANSLATION] In my opinion Cargill, which had at its disposal the know-how of its parent company, the research of the latter’s engineering department, and the services of Addicks, a graduate engineer and in fact the inventor of a new type of warehouse, may be considered an owner having specialized technical knowledge about the structure of this type of warehouse.

Although this paragraph applies to the warehouse, it is also valid for the marine tower. For this part, Crête J.A., speaking for the majority, stated that Cargill “is an expert”, while noting in his turn that Addicks was the [TRANSLATION] “creator of the type of warehouse desired to be constructed at Baie Comeau”.

Before examining the liability of Cobra, Foundation and Davie, I wish to consider art. 1688.

I. Article 1688

The Civil Code was not making new law when, in 1866, it laid down the rule that

If a building perish in whole or in part within ten years, from a defect in construction, or even from the unfavor-

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able nature of the ground, the architect superintending the work, and the builder are jointly and severally liable for the loss.

In 1927, the figure ten was replaced by the figure five. As was noted by the Privy Council in Wardle v. Bethune[3], this rule simply restated existing law. The fourth Report of the codifiers (p. 99) gives a list of the authorities on which they relied, and I can do no better than refer to the relevant texts compiled in de Lorimier—Bibliothèque du Code Civil, vol. 13, at pp. 475 et seq.

Thus the law attaches to a contract for services a guarantee (the word used in the first version of art. 2259 of the Civil Code) of the solidity of the work; it imposes liability on the contractor and the architect, the latter term including the engineer also. See Vermont Construction Inc. v. Beatson[4].

This liability may be rebutted by proving various grounds of exoneration, including the fault of the owner. This was stated in the decision of this Court in Hill-Clarke-Francis, Limited v. Northland Groceries (Quebec) Limited[5], applying previous decisions of the Supreme Court and the Privy Council. It is sufficient to cite a few words from the reasons of Taschereau J. (not yet Chief Justice), speaking for the Court (at p. 445):

[TRANSLATION] Therefore there is no doubt that the owner of the building does not need to prove the fault of the builder when there is a contract for services, but the latter must free himself of liability by proving that the damage may be attributed to force majeure, act of God, the fault of the owner or the action of a third party.

This statement is simply an echo of what the Court of Appeal said in Brown v. Laurie[6], which was adopted by the codifiers. Just recently again, in another context, this ground of exoneration was admitted in the decision of this Court in Concrete

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Column Clamps (1961) Limited v. Demontigny et al.[7]

Such fault of the owner may arise in very diverse situations. For example, it may result from use of the work for a purpose for which it was not intended. It may also be a result of the fact that an owner with knowledge of the matter imposes his views on his architect and contractor. This is the opinion which is generally accepted in France and I have no hesitation in adopting it. The codifiers noted in their report the fact that the Code Napoléon and their text were identical, except on two points which have no relevance here, the mention of a [TRANSLATION] “fixed-price” contract in the French Code and the addition of the words “superintending the work” in our Code. Possibly also there is a third difference, since our Code speaks explicitly of joint and several liability; however that may be, this aspect is not relevant here.

This solution is in accordance with the philosophy on which the legislation, of which our article is the present expression, has been based over the years. The first goal sought is of a private nature: to protect the owner’s investment, because in the large majority of cases he is ignorant of the technique of construction. The second goal is of a public nature: to ensure a minimum life for buildings. These two goals are both attained at the outset if the owner is himself an expert: he is equipped to see to the protection of his investment, and in doing so, he is in a position to protect the public. This is especially so, since third parties in any case have no recourse against the specialists, on the basis of 1688; if third parties suffer damage, they can only succeed against the architect and contractor by proving fault.

Gagnon, J.A., like his colleagues, agreed that the owner’s error could at least be a ground for mitigation of the liability (at p. 280). A large number of the authorities he cited went further than his statement, and several of them asserted that the owner’s fault may be a complete answer to his action against the contractor and the architect. I have no hesitation in accepting this proposition, in all its rigour.

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In order to escape liability, is it necessary for the evidence to establish that the owner had greater competence than his architect and contractor? Certain expressions used in France lead to this belief; thus in various places it is noted that the knowledge of the owner “outclassed” the knowledge of the specialists. However, I believe that the true meaning of the words used in the case law and theoretical discussion goes beyond a simple question of more or less. The picture must be seen in its entirety. The point of departure is the liability of the specialists; they are liable if the evidence does not establish a cause of exoneration resulting from the owner’s action to the satisfaction of the Court. If he has great expertise in the field, clearly surpassing that of the persons who performed the work, the latter will completely escape liability. If, however, the owner’s expertise is approximately equivalent to that of the specialists, their liability will only be mitigated.

French legal theory and case law impose one condition on the exercise of this defence: that the persons performing the work not willfully close their eyes to mistakes by the owner which could affect the security of the work. I accept this condition. Having an expert in the field as a client, the persons performing the work are not obliged to go over on site everything the owner sends them as basic data and documents. However, if the persons performing the work have questions on reading these data and documents, they have an obligation to inform the expert owner, thereby giving him the opportunity to make his decisions with full knowledge of the situation.

There is another aspect of 1688 which must be noted. If the circumstances justify application of the rule in favour of the owner, the persons who performed the work must be held jointly liable. However, as between themselves, the burden will finally be on the one responsible for the basic fault. If there was a defect in the plans or in the architect’s part of the transaction, he must indemnify the contractor. Conversely, if the loss results from the construction as such, the architect has a com-

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plete remedy against the contractor. The fact that the architect and the contractor had certain duties to check the other’s work changes nothing; the primary cause must still be sought. See as to this Bilodeau v. Bergeron[8], which, although decided on a point not covered by art. 1688, seems to me to state the relevant principles.

II. Liability of Cobra

This question is dealt with at p. 169 of the reports of the Superior Court and at p. 277 of the reports of the Court of Appeal. It should be noted that the trial judgment included a detailed study of the evidence which was not reproduced.

The trial judge made the following observations:

(1) the work was too weak;

(2) the work was done in this manner through the fault of the engineer Addicks;

(3) Addicks is the owner, for all practical purposes, being its chief engineer and authorized representative;

(4) Cobra was bound to ensure through its own engineers that the plans were workable, even though the tension had not been indicated by the engineer.

On these facts, the trial judge concluded that Cobra was liable to the owner, and at the same time, that the owner, liable in law for the faults of Addicks, had a duty to indemnify Cobra, clearly giving rise to compensation.

For its part, the Court of Appeal, while it recognized that Cobra had followed the plans and specifications it was provided with, stated that in law Cobra had to [TRANSLATION] “make certain that the plans and specifications were adequate”, and that in fact the company had at least partial knowledge of “the structural weaknesses of the marine towers”. As a result, it concluded that liability ought to be divided between the owner of Cobra. However, the latter was not condemned to pay anything, since the Court of Appeal accepted Cargill’s statement that it owed an amount to Cobra which in the view of the Court of Appeal

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was greater than half the damages suffered by Cargill as a result of the collapse of the marine tower. It must be noted that there was an error in this, since the amount acknowledged by Cargill had been paid to Cobra before the judgment on appeal was given. Thus if the Court of Appeal was correct in finding that Cargill and Cobra were jointly liable, the latter must be condemned to pay an amount to be determined.

However, in my opinion, the Court of Appeal erred in finding joint liability in the case at bar. The competence of Cargill and Cobra is very different. Cobra, as the trial judge noted, is above all else a manufacturer, and only in a very limited way a general contractor. It is true that as regards an ignorant owner Cobra could not escape liability by claiming that its expertise was not very great. In the case at bar, Cobra may certainly rely on this very limited expertise against the claim made by Cargill, a knowledgeable owner with technical expertise far superior to Cobra’s. The original error was Cargill’s, as the Court of Appeal found and so there is no doubt that the owner must sustain its damages itself.

It is true that Cobra was worried on several occasions about the overload on the structure and the distortions which appeared during construction. However, this worry and these danger signals were brought to the attention of Cargill, which took no action to correct the serious error in the plans. Cobra thus complied with the condition which I mentioned above, that is, bringing to the expert owner’s attention the questions raised by the plans and specifications. Cobra’s duty went no further, and I cannot concur with the decision of the Court of Appeal that this is a case of partial liability.

Even though the trial judge did not spell out that in his opinion Cargill clearly outclassed Cobra in the case at bar, this is how his judgment must be read on the point, and I concur with him. Cargill’s action against Cobra must therefore be dismissed.

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III. Liability of Foundation and Davie

The warehouse in question was an original design. Sidings constructed in steps at an angle slightly greater than half a right angle served also as the ceiling They were supported by arches of a special design. It was established in argument that this new type of warehouse existed in only one other place, that is, Port Cargill, near Minneapolis, and that it had been built there by the American company itself, with the partial assistance of consulting engineers. All the judges of the Court of Appeal concurred in stating that this design was imposed by Cargill on its consulting engineers, Howe. Gagnon J.A. stated (at p. 284):

[TRANSLATION] It is clear that Cargill did not want to construct a warehouse of the traditional type. Addicks considered the conventional theories of Coulomb and Rankin to be outmoded, old-fashioned, but his error was not in imposing his stepped-siding design.

What then was the cause of the collapse? According to Gagnon J.A., and on this point all the judges concurred, [TRANSLATION] “the primary error consisted of an incorrect calculation of the force exerted by the grain inside the building”. This statement is found several paragraphs after the following extract (at p. 281):

[TRANSLATION] Inquiring as to the causes of the loss, the judge referred to the reports of the engineer Boik of the Henry J. Kaiser Company (Canada) Ltd., called by Cargill to determine these causes and suggest remedial action, and also to the testimony of the engineer Potvin. He accepted Boik’s opinion, which attributed the fundamental error to “the original design assumptions for grain pressure”. This pressure, which had been underestimated, was exerted on the stepped sidings of the warehouse, causing the rupture of the superstructure and collapse of the foundations.

Notwithstanding these statements, Gagnon J.A., concurring on this point with the trial judge, found Foundation liable for a secondary cause, that is, defects in the filling under the warehouse, making the foundations unstable. The two judges of the majority on appeal did not accept this argument; I will dismiss it immediately, for two reasons:

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(a) in fact, Gagnon J.A., himself recognized that [TRANSLATION] “had the work been performed strictly according to the plans and specifications the building would not have resisted the pressure of the grain” (p. 284);

(b) in law, the primary error is the only one which should be considered, so that the defects, even supposing that they had been proved, become secondary, and the principle restated by Pigeon J. in Concrete Column Clamps, cited above, must be applied (at p. 553):

I do not think the slightest importance should be attached to the evidence that certain supports or jacks were defective. For that to affect the outcome of the case, it would have been necessary to show that those defects would have brought about the collapse of the structure without the overload resulting from the failure to tension cables on the lower slabs. The evidence was to the contrary: the failure only occurred as pouring of the third slab was ending.

The question is thus whether the basic error, clearly attributable to Addicks, and so to Cargill, may be relied on in whole or in part by Foundation and Davie to escape liability. Gagnon J.A., in his dissent affirming the trial judge, found the persons who performed the work totally liable because they had not reviewed and corrected the theoretical data Cargill had sent to them. Gagnon J.A.’s thinking may be found in the following extract, at p. 284:

[TRANSLATION] There is no doubt that Cargill did not want anything but a warehouse with stepped sidings, and it may be said without fear of error that, in this sense, Addicks imposed this construction design. It is quite a different thing to argue that Howe was retained only to prepare plans and specifications, and that it was exempt from the ordinary duties of an engineer of making certain of the security of the work, and from its contractual obligations.

He concludes, at p. 285:

Addicks’ initial error does not relieve the contractors of their full liability, and this error, which was imposed on neither the engineer nor the contractors, does not in my opinion justify a mitigation of the contractors’ liability.

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Furthermore, Crête J.A., speaking for the majority, after concurring with the finding that the primary cause of the collapse was the errors in Cargill’s plans, and after citing lengthy extracts from the trial judgment, stated his disagreement with the finding of total liability (at p. 289):

[TRANSLATION] Addicks, Cargill’s factotum, was the creator of the type of warehouse desired to be constructed at Baie Comeau. He designed the plans, and on the site, he really acted as director of the work, even going so far as to decrease or ignore Howe’s authority.

After noting, as did the trial judge and Gagnon J.A., that Addicks for all practical purposes was Cargill, because he [TRANSLATION] “realized [for the latter] a new concept of his own for unloading ships and storing grain”, he concluded (at p. 289):

[TRANSLATION] From this point of view, considering the remarks the Court made previously with respect to the application of Art. 1688 C.C. in the case of Cobra, and considering that the evidence established overwhelmingly, if not beyond any doubt, that the collapse in question was primarily attributable to the errors in the plans designed by Addicks, I would find contributory fault on the part of the owner and the contractor.

This finding is a partial acceptance of the defence of interference put forward by Foundation and Davie against Cargill. The word “interference”, in this context, has been accepted, and according to the cases, refers to the intervention of the owner in the construction itself, or to his intervention in the preparation of the plans. Penanrun, Les architectes, 1892, at pp. 266 et seq.; Boubli, La responsabilité des architectes…, 1971, at p. 91. The case at bar is of the second type. We are clearly faced with a case in which the design is the owner’s and in which the basic plans were made by the owner, who gave them to the engineer, accompanied by theoretical data and calculations based on research carried out by Cargill for years, on its experience at Port Cargill, and on tests made at that place. In this context we must determine whether the trial judge, and later Gagnon J.A., were correct in finding the persons performing the work totally liable, or whether it is necessary to reduce their liability to fifty per cent, as the two judges in the majority did, or whether it

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should be completely erased, as Foundation and Davie submit.

I must immediately disallow the position adopted by the trial judge. As Crête J.A. noted, at p. 288, the trial judge disposed of this defence by stating that [TRANSLATION] “the principle only applies when the owner is a person very competent in the field and the builder is incompetent”. In law, this proposition is false, and it is sufficient to refer to the citations found in the reasons of Gagnon J.A.

In his dissent, Gagnon J.A. did not concur in the opinion of the trial judge, although he arrived at the same conclusion. His dissent was based on the obligation which he considered is incumbent in all circumstances on the engineer, and up to a certain point on the contractor, to check the data sent them by the expert owner. I cannot agree that the contractor is liable on the basis of his obligation to check. Although as regards an ignorant owner the contractor is liable with the engineer if there is loss, this liability is based on the guarantee of security, and not on the obligation to check the data. It must not be forgotten that the duties of the engineer and the contractor are different, the former being a specialist to whom the design and preparation of plans and specifications are normally entrusted, and the second merely carrying out the work. If the second is required to do the checking which the judgment appealed from would impose on him, the presence of the engineer is no longer useful, for all practical purposes. Furthermore, this is borne out by the evidence. Foundation had no engineer responsible for checking the plans, and no one has suggested that Foundation did not have, in this particular case, an adequate organization.

Thus if there was an obligation on someone to check Cargill’s design and basic data, that someone was Howe engineering, and the question which arises is: in the context of the case at bar, did Howe have this obligation? The judges of the majority did not spell this out, but if we reread what they wrote on the subject of Cobra’s liability, it is seen to contain the view that Foundation and Davie were negligent, like Cobra, in not verifying

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the owner’s data. In other words, all the judges of the Court of Appeal concurred in stating that there was a duty to check, some finding that non-performance of this duty created partial liability, and the remaining judge holding that the consequence of it was total dismissal of the contractors’ defence.

With respect, I must say that in law I do not believe that this duty to check existed in the circumstances of this case. It is sufficient to look at the owner’s expertise, which resulted from numerous factors, all related to the long-term and short-term preparation of the plans and specifications for a structure such as the one involved here. The long-term preparation included, inter alia, laboratory research, study of models, the Port Cargill construction, and on-site study of the reaction of the grain in the Port Cargill warehouse. The short-run study included fifteen pages of theoretical data from an owner which had concluded, through its chief engineer Addicks, that this design of stepped siding, which also served as a roof, was original enough to justify a patent application, made in 1956 and eventually granted in 1962. In such a context I have no hesitation in finding that, in law, the owner had such experience that it could not, if the data were faulty, make its engineer, and even less its contractor, bear the consequences.

Furthermore, the evidence disclosed that the parties did not modify in fact the position they had in law. Let us first look at the documents which, for the most part, preceded the signing of the contracts between Cargill on the one hand, and Foundation and Davie on the other hand. The first contract meeting was a visit by certain representatives of Howe to Cargill in Minneapolis from April 16 to 18, 1958. The memorandum which was written immediately thereafter, and which was recognized as correct, included the statement “workhouse and storage will be designed by Cargill and checked by C.D. Howe”. On July 29, 1958, even before an agreement had been made between Howe and Cargill, a Howe engineer wrote to Addicks requesting certain information and

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instructions regarding various points, including the following with respect to the warehouse:

Using the usual design methods from Coulombs, Rankines and other conventional theories, we arrive at a load much higher than you have shown. For checking purposes, may we have any details of how this loading was arrived at. Is it theoretical or obtained from your own measurements of actual pressures in bins now in use?

On August 14, 1958, a meeting took place in Montreal between Howe and Cargill, following which a transcript was written by Howe and sent to Cargill, which included the statement that on the subject of another aspect of the warehouse, all the structural details were to be “supplied by Cargill for inclusion in our set of plans”. On September 4 and 5, another meeting took place, the transcript of which states, inter alia:

Stress analysis of tubular frames due to grain pressure on siding were discussed. Mr. Addicks and Mr. Asleson left design data on their theory in this office which is now being checked and compared with other known theories, on which we will report to Mr. Addicks in due course, to arrive at some final decision and perhaps compromise.

On September 8 Addicks wrote to Howe, sending several drawings, and stated:

These are the loadings that we are using in figuring the stresses in the steel superstructure and will compare with your results.

On September 10, two days later, Addicks again wrote to Howe, speaking of “our method” and sending other documents, one of which gave “the references from which we accumulated our data which we combined to make up our Sketch Sheets”.

It was at that point that the contract between Cargill and Howe was made, which was only a purchase order referring to the offer of service of April 14, 1958 which spoke of Howe’s desire “to do engineering services on the above project”. I wish to emphasize the fact that, if from the beginning all the engineering work was to be entrusted to Howe, the expression would have had to be “to do all engineering services” or something similar.

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On October 31, 1958, other drawings were sent by Addicks to Howe, and this letter continued to refer to “our solution” and “our basic vectors”, and concluded “These should be checked and corrections or differences noted so we can continue future figuring on checked figures”. In my opinion, all these documents together establish that the expert, knowledgeable owner wanted to keep complete control of the basic data in support of its design.

Cargill made much of several references in a letter of May 11, 1959 from Addicks to Howe to the fact that “your firm is responsible for the engineering design”. However, this statement must be seen in its context. This letter of May 11 was intended to withdraw from Howe its right of supervision of the work, and the reservation made with respect to the design is only a way of pointing out that all contractual relationships were not severed. To see this, it is only necessary to look at other letters from Addicks, for example that of July 4 to Howe, in which he stated “any changes that I require will be done direct to you”, or that of August 11, again to Howe, in which Addicks stated “our understanding with Davie Shipbuilding is that any change whatsoever in the design or detail of this work must come through Cargill Grain Company Limited”. In my opinion, the true relationship between the parties is contained in these letters.

The contracts between Cargill on the one hand and Foundation and Davie on the other hand point out the important role which Cargill reserved for itself in preparing the plans. Clause 8 of these contracts states:

8. Alterations and Omissions

Revisions to the drawings, or further drawings and specifications may, from time to time, be issued by the Owner or the Engineer during the progress of the work, as deemed necessary. Any quantities stated on the drawings or in the unit price schedule are intended as estimates only and may be increased or decreased at the discretion of the Owner.

The Owner may, from time to time, without invalidating this Contract, make changes in the aforesaid drawings

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and specifications, issue additional instructions and require additional work in which case the unit prices and/or lump sums bid by the Contractor shall apply provided that no additional work or changes shall be ordered which will materially change the character of the work. The Owner or his designated representative may also, from time to time, direct the omission of certain items of work from the Contract if such work is found not to be necessary for the project, and the Contractor shall not receive any payment for the work so deleted nor receive any compensation due to the Contractor’s overhead being spread over a smaller volume of work unless such reductions exceed 25% of the value of the Contract as a bid.

Furthermore, if it were necessary to go further and reread the testimonial evidence, it could be seen that Fleming, president of Howe, as well as Os and Hilborne in Port Arthur or Hughes and Harris in Montreal, stated the same thing. A few extracts from their testimony will be enough:

Fleming:

A. I was present briefly at a meeting. I don’t know the date, between Phil Harris and Mentor Addicks in Montreal. I happened to be in Montreal then and sat in for a little while while they were discussing this programme.

Q. And what was stated in that meeting?

A. Well, it was in the way of trying to have the theory explained by Mentor Addicks.

Q. And what was Mr. Addicks’ attitude?

A. Well, he would attempt to explain, but he would reach a point usually where he said, more or less, stated “That is it. This is what we are going to do”.

Os:

Well, as far as grain pressure is concerned, our office never checked it according to the ordinary theories, because this was Addicks’ figures that they used in their structures, and that they insisted we use, so we only got started on checking the figures and we were told to cut it out. We had to use his figures. There is a lot of other designs outside of that, but they are based on those figures, essentially.

[Page 588]

This statement may be found in Hilborne’s testimony: “…it was then confirmed we had to use Cargill’s pressure figures…”

Hugues:

A. We checked the arithmetic on those calculations.

Q. But you did not check the correctness of them?

A. No. This is the way Cargill wanted this building designed, according to their research program which was covered by the patent presented here today.

Q. So you are taking the position that because Cargill was furnishing you with certain directives and certain information, you had to follow it without checking them?

A. We checked the arithmetic in them.

Q. Yes, but did you check according to the scientific principles of engineering, did you check the correctness of their calculations?

A. Mr. Ahern, Cargill are well versed in the handling of grain. They are one of the largest companies in the world. They undertook a research program which started in 1956; we came into the act in 1958. In the time we have got available, what means would we have of repeating this research program that they have undertaken. They take us to Port Cargill; they say “There are two buildings that are designed on this theory”.

Q. But why should they take you there, if they did not expect you to study their figures and check it yourselves?

A. No, sir. Absolutely not, sir. The reason they took us there is because the results they came up with is rather contrary than what we would get with our more conventional theories.

Q. So according to you, you only checked the arithmetic?

A. The arithmetic and the correct loadings for wind, snow and ice, for the locality at Baie Comeau.

Q. You did check that?

A. The loadings?

Q. Yes?

A. Yes, but not the grain pressure.

Harris:

…and at that time I had done enough calculations based on more—what shall we say—conventional

[Page 589]

methods of calculation and I still felt that before we could use any figures such as these that he should give us more information. He really became quite impatient with me over this, and I cannot remember what his exact words were, but certainly his meaning was at the end of the meeting with me—I don’t know whether I should—stop bothering about this kind of thing and get on with the part of the design that we were responsible for in Montreal.

The statements of these various representatives of Howe were not contradicted. Addicks did not testify because of the state of his health.

This is all in the context of a decision Cargill made to proceed very quickly, giving only a short time limit to each of its engineers and contractors; that was pointed out by Gagnon J.A. (p. 267). The result was that everyone was working under pressure. Gagnon J.A. mentioned this in respect of Cobra at p. 277, but it is clear that Foundation and Davie were subject to the same treatment.

Two points should be mentioned. First, if Howe was supposed to check everything, why did Cargill entrust the checking of the underwater undertows to another company?—as to this, see the statement of Gagnon J.A. at p. 272. Secondly, in the same way, if the checking included not only the mathematical calculations, as Foundation and Davie claimed, but also the design itself and the basic data, as Cargill submitted, how can it be explained that after the collapse, when an expert opinion by the Kaiser company was requested, only the drawings prepared by Cargill, and not the Howe plans, were sent to that company? In my opinion, these two steps confirmed that the Howe plans were only plans of execution made after checking the mathematical data of the design, without the design itself being subject to checking.

One point remains. Did Howe inform Cargill of the questions which it had regarding some of the basic calculations? The answer may be found in the extracts from the evidence which I have just

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cited, and it is clearly yes. I find therefore that both Foundation and Davie are in a position to successfully rely on the fault of the owner, which completely exonerates them, in the circumstances of the case at bar.

For these reasons,

(1) I would allow the appeals of Foundation (No. 13,265) and Davie (No. 13,211) and dismiss Cargill’s cross-appeals with respect to these two parties; in the result, I would quash the judgments appealed from and dismiss Cargill’s counter-claim against Foundation and Davie; the whole with costs against Cargill in all Courts;

(2) I would dismiss with costs Cargill’s appeal against Cobra (No. 13,257) and affirm the wording of the judgment of the Court of Appeal.

With respect to Cobra’s cross-appeal, which is pointless in the circumstances, I would dismiss it without costs.

Appeals of Foundation and Davie Shipbuilding allowed with costs.

Cross-appeals of Cargill dismissed with costs.

Appeal of Cargill against Cobra dismissed with costs.

Cross-appeal of Cobra dismissed without costs.

Solicitor for Davie Shipbuilding: Ross Drouin, Québec.

Solicitors for Cargill: Ahern, de Brabant, Nuss & Drymer and Philippe Casgrain, Montreal.

Solicitors for Foundation: Monette, Clerk, Michaud, Barakett & Lévesque, A.J. Campbell and Peter M. Laing, Montreal.

Solicitor for Cobra: Owen Carter, Quebec.

Solicitors for Hennessy Riedner: O’Brien, Hall &. Saunders, Montreal.