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ASSOCIATION OF PROFESSIONAL ENGINEERS OF ONTARIOPROFESSIONAL PRACTICE EXAMINATION ~ April 26, 2003

PART "A" - Professional Practice and Ethics

This examination comes in two parts (Part "A" and Part "B") whichmust be completed within the allotted three-hour time period. .Both parts of'the examination must be passed at the same sittingin order to be assigned a "PASS"for the Professional PracticeExamination. The result of the combined examination, Part "Anplus Part "B", will be declareci a "PASS" or "FAIL".Use the correct colour-coded Answer Book for each part, place inthe correct envelope and seal after completed.

White Answer Book for Part A white question paper;Coloured Answer Book for Part B coloured question paper;This is a "CLOSED BOOK" examination. No.aids are permitted otherthan the excerpts from the 1990 Ontario Regulation 941 coveringsections 72 (Professional Misconduct) and 77 (Code of Ethics;supplied at the examinatiori. Dictionaties are not permitted.The marking of questions will be based not only on academiccontent, but also o~ legibility and the ability to expressyourself clearly and correctly in the English language. If youhave any doubt about the meaning of a question, please stateclearly how you have interpreted the question.

f Part "An.All four questions constitute a complete paper or .Question 1 is worth 40 mark~. Questions 2, 3 and 4 ara eachworth 20 marks.Where a question asks if a certain action by an engineer wasethical or not, a simple "yes'"or "no" answer is not sufficient.You should identify the applicable clauses in Regulation 941 andcomment on the action in each situation.

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part A - PPE, April 26, 2003 Page 2 of 4

Question # .1

(1) Professional Engineers Ontariots (PEO) Code of Ethics setsout the expected professional behaviour and conduct for PEOmembers and its other licensees.i

/ a) Discuss the compatibility of PEOt 5 Code of Ethics withthe goals of industry and the iole of the professionalengineer in dea_ling with any incompatibility betweenthe two, if any.(b) What is the relationship between PEO's Code of Ethicsand the Definition of Professional Misconduct?

{iiI(a) What is PEOts principal object?(b) List and describe the three main functions that PEaperforms towards the fulfilment of its legislatedmandate.

Question # 2You are a licensed (mechanicai) professional engineer chargedwith enhancing the efficiency of a liquid detergent productionline for your employer, a soap manufacturer. During your workyou have access to confidential company information and observethat the company is adding very small quantities of a well~knowncarcinogen (i.e., a substance suspected of causing cancer) to \hedetergent but is not listing it as an ingredient. Thisconfidential information is irrelevant to your work. However,you are a~are that the additive is a banned substance.Under the circumstances, what action(s) are you obligated to takeas a professional engineer?


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Part A - PPE, April 26, 2003 Page 3 of 4

Question it 3Professional engineer Epsilon was sent by the Canadian firm, ABCInternational Inc., to serve as resident geological engineer inPuere, South America. ABC International Inc. had been hired bythe Puerean government to oversee a project being undertaken byanother Canadian company, XYZ Overseas Inc. The project involvedthe construction of a 40Q-km highway across a mountainous region.Although relatively new to ABC International Inc., Epsilon, withmore than twenty-five years of experience, was given the keyassignment of ensuring that contract agreements between thePuerean government and XYZ Overseas Inc. were met.Epsilon's signature On the p~yroll certifies that the interestsof the Puere~m government were being. served. Almost immediatelyEpsilon beqan to experience doubts about the project. The designfor the highway, which, as it turned out, was originally done byABC International Inc., called for cutting deep channels---someof them more than 100 metres----through the mountains with cliffsrising sharply on both sides of the road. Epsilon was concernedthat with the instability bf the"mountains, it did n6t appear asif enough geological borings had been taken to identify potentialslide areas. Epsilon's fears we~e confirmed, unfortunately, whenseveral slides and other construction accidents occurred killingsome workers. XYZ Overseas Inc. asked Epsilon to add to thepayroll to cover the substantial costs for slide removals.Epsilon viewed the request as ~ne of "padding" and, therefore,not justified by anything in the contract. At first, Epsilon'sposition was supported by Epsilon's firm; however, with mountingpressure by XYZ Overseas Inc., ABC International Inc. orderedEpsilon to add the slide-removal costs to the payroll., Epsilonrefused to do so, insisting that it would be a violation of thePuerean government's interests .which ABC International Inc. wascharged to protect. Epsilon was relieved of the residentengineer's responsibility and was subsequently dismissed by ABCInternational Inc.Discuss Epsilon's actions, as well as those of ABC InternationalInc..and XYZ Overseas Inc. I in terms of Professional EngineersOntario'S Code of Ethics.Is there a recommended recourse that Epsilon might pursue in viewof the dismissal?

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Part A - PPE, April 26, 2003 Page 4 of 4

Question # 4Tau, P.Eng.,employed by a large well-known automobile partstesting laboratory, represents the firm on an internationalstandards advisory committee. Eight members of the ten-personcommittee are licensed professional engineers_ After anextensive discussion on a standard at a recent meeting, thecommittee voted in favour. Although Tau was the only dissentingvote, the committee considered Tau's reasons for objecting; and,after further discussions, it agreed that they wereunsubstantiated and passed a motion to accept and publish thestandard.Subsequently, the laboratory where Tau is employed received acontract to .test automobile parts to this standard and Tau wasassigned the job of supervising the tests, preparing the finalreport indicating that the parts meet the standard, and signingit on behalf of the firm. However, Tau is still vehementlyopposed to the standard and therefore refuses the assignment.Tau atgues that signing a ~eport ~ttesting to the conformance ofthe parts to the standard would suggest endorsement of it.Is Tau's argument for refusing to undertake the assignmentcorrect? What action might Tau have taken?

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ASSOCIATION OF PROFESSIONAL ENGINEERS OF ONT ARlO, 'PROFESSIONAL PRACTICE EXAMINATION _ April 26, 2003

PART "B" - Engineering Law and Professional Liabilityr

This examination comes in two parts (part "A" and Part ''B'') which must be completed withinthe allotted three-hour time period. Both parts of the examination must be passed "ft! the samesitting inorder to be assigned a "PASS" for the Professional Practice Examination. The result ofthe combined examination, Part "A" plus Part "B", wil l be declared a upASS" or ''FAIL''.Use the correct colour-coded Answer Book for each part, place inthe correct envelope and sealafter completed.

White Answer Book/or Part A white question paper;Coloured Answer Book/or Part B coloured question paper;This is a "CLOSED BOOK" examination. No aids are permitted other than the excerpts fromthe 1990 Ontario Regulation 941 covering sections 72 (professional Misconduct) and 77 (Codeof Ethics) supplied at the examination. Dictionaries are Dot permitted,The marking of questions will be based not only on academic content, but also on legibility andthe ability to express yourself clearly and correctly in the English language, If you have anydoubt about the meaning of a question, please state clearly how you have interpreted thequestion. 'All four questions constitute a complete paper for Part "BU. Question 1 is intwo parts totalling40 marks, including a choice of four defmition type questions of equal value [lea)] and fourseparate questions of equal value [1(b)]. Questions 2,3 and 4 are each worth 20 marks.

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(MARKS)(40) 1. Pleas~ no te th~ t this q ue~ ~o n 1 is a tw o-part q uestion, w orth 4 0 mar~ intotal. Q uestion l(a) IS' a definitio n ty pe q uestio n, w orth 20 marks. Question

1(b) co nsists o f fo ur p arts o f eq ual v alu e, to tallin g 2 0 m ark s.(20) (a) Br ie fl y def in e a n d explain an y fo~ of the foilow in g:

(i) Mitiga ti on of 'damages(ii) Gratui tous promi se(iii) Paro l e vid en ce ru le(iv) Penalty clause(v) . Consequential damages(vi) Secret Com mission '.

(20) (b) (i) Can there be a d i fference be tween an en gin eer' s m istak e or erroran d an engineer's negligence? Is it p ossib le that an eng ineer might make am is ta ke th at re su lts indam ages but not be liable for negligence? D iscuss andexplain.(ii) W hat is m eant by a "lim itation period"? In your e xp la na ti on ,p le as e p ro vid e three exam ples of lim itation periods relevant to engineers andcontractors.(iii) Explain the basis of the formation of "Contract A" in th eten derin g p ro cess .. D iscu ss w h at an owner can do to avoid C ontract A problemsarising, . .,(iv) In s ome constr uc ti on con tr ac ts , an engineer is authorized to bethe sole judge of the performance of w ork by the contractor. W here such a

pro visio n is stated , is it poss ib le th at th e p ro vis io n will not be enforceable onaccount of the manner in w hich the engineer performs his or her duties?Explain. .',(20) 2. A telecommun icatio ns d ev elo pm en t comp an y leased an o utd ated an d.

unused underground pipe system from an Ontario municipality . Thed ev elo pe r's p urp os e in leasingthe pipe w as to utilize it as an existing conduitsystem in w hich to install a fibre optic cable system to be designed, cons tructeda nd oper ate d in the m unicipality b y th e te le commun ic atio ns d ev elo pe r d urin gthe term of the lease. A ll necessary approvals from r egu la to ry a uthor iti es we reo btain ed w ith resp ect to th e p ro po sed telecommun icatio ns n etw o rk .The telecom munications developm ent com pany then entered into ani ns ta ll at ion cont ra ct with a co ntracto r. F or th e co ntract p rice of $4,000,000, th e

co ntracto r un derto ok to com plete th e in sta lla tio n o f th e cable by a specifiedcom pletion date. The contract specified that tim e was of the essence and that

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the, contract was to be completed by the specified completion date, ~ailingwhich the contractor would be responsible for liquidated damages ill theamount ,of $50,000 per day for each day that elapsed between the specifiedcomp~etton date . a x :d t~e ~~bs~quent actual completion date. The contta~t alsocontained a prOVISIOnimiting the contractor's maximwn liability for liquidateddam~ges and for any other claim for damages under the contract to themaximum amount of$1,000,000.

Due ~o its failure to properly staff and organize its workforce, thecontractor failed to meet the specified completion date. In addition, during theinstallation, the contractor's inexperienced workers damaged :significantamounts of the fibre optic cable, with the result that the telecommunicationsdevelopment company, on subsequently discovering, the damage, incurredsubstantial additional expense in engaging another contractor to replace thedamaged cable. Ultimately, the cost of supplying and installing thereplacement cable plus the amount of liquidated damages for which the originalcontractor was responsible because of its failure to meet the specifiedcompletion date, totalled $1,800,000.

Explain and discuss what claim the te lecommunicat ions developmentcompany could make against the contractor in the circumstances. I n : answering,explain the approach taken by Canadian courts with respect to contracts that,limit liability and include a brief summaryof the development of relevant case,precedents.

(20) 3. An information technology finn submitted a bid to design and install,software and hardware for an electronic technology process to control theoperation of large scale sorting equipment for a major international couriercompany.

The finn's 'fixed guaranteed maximum price was the lowest bid and thecontract was awarded to it. The contract conditions entitled the informationtechnology finn to terminate the contract if the courier company did not paymonthly progress payments within 15 days following certification that aprogress payment was due. Pursuant to the contract, the certification wascarried out by an independent engineering fum engaged as contractadministrator.

The work under the contract was to be performed over a 5 monthperiod. After commencing work on the project the information technology firmdetermined that it had made significant judgment errors in arriving at' its bidprice and that it would face a major loss on the project. Its concern about theanticipated loss was increased further when it also learned that, in comparisonwith the other bidders its bid price was extremely low and that, in winning thebid, it had left more t h a n one million dollars "on the table", .

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. Two m~nthl~ progress payments were certified as due by them~ependent engmeenng firm and paid by the courier company in accordance.with the terms of the contr.act. :S:owever, after the third monthly progresspayment was certified as due by the independent engineering finn, the couriercompany's finance department asked the information technology firm'srepresentative on the project for additional information relating to an invoice~o~ a subcon,tractor to !he information technology firm, The subcontracto:'s.invoice compnsed a portion of the third progress payment amount. The counercompany's finance department requested that the additional information beprovided prior to payment of the third progress payment.

There was nothing in the signed contract between the informationtechnology firm and the courier company that obligated the informationtechnology finn to provide the additional information on the invoice from itssubcontractor. However, the information technology finn's representative didverbally indicate to the courier company's finance department that theadditional information would be provided.

The additional information relating to the subcontractor's invoice wasnever provided by the information tecbnology firm.Sixteen days after the third progress payment had been certified forpayment, the information technology finn notified "the courier company inwriting that it was terminating the contract because the courier company was indefault of its obligations to make payments within fifteen days pursuant to the

express wording of the contract.Was the information technology finn entitled to terminatethe contract

in these circumstances? Ingiving reasons for your answer, identify and explainthe relevant legal principle and how it would apply ..

(20) 4. Live Rail Inc. ("Live. Rail"), a company specializing in the manufactureand installation of railway commuter systems was awarded a contract by amunicipal government to design and build a transit facility inBritish Columbia:The contact specified electrically powered locomotives. As part of the design,Live Rail was contractually obligated to design an overhead contact system in atunnel. Live Rail subcontracted the subdesign of the overhead contact systemto a consulting design finn, Ever Works Limited ("Ever Works").

Ever Works designed an overhead contact system in the tunnel,however, indoing so it did not carry out any testing nor did ~tgather any data-ofits own relating to the conditions inside the tunnel. It.dId. not even requestcopies of Underlying reports which, had they been e~ammed, would haveindicated that there was a large volume of water perco.latmg through the tunnelrock and that the tunnel rock contained substantIal amounts of sulphurcompounds. The project documentation that was turned over to Ever Works by

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Live Rail did not"include the underlying reports, but did identify the existenceand availability of the underlying reports. .The construction of the rail system through the tunnel was completed in

accordance with the Ever Works' design. However, within eight months ofcompletion, the overhead contact system in the tunnel became severelycorroded and damaged due to the water seepage inthe tunnel.

A1 ; a result of the corrosion damage, the municipality had to spendsubstantial additional money on redesigning and rewiring the system.

What potentiailiabilities in tort law arise in this case? Inyour answer,explain what principles of tort law are relevant and how each applies to thecase. Indicate a likely outcome to the matter.

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ASSOCIATION OF PROFESSIONAL ENGINEERS OF ONTARIO

PROFESSIONAL PRACTICE EXAMINATION - AUGUST 21, 1999PARI itA" - professional practice and Ethics

The total examination is in two parts, and both must be completed within the three-hour period. Each part of the examination, A & S,' must be passed at one and the -,same sitting In order to "PASS" the Professional Practice Examination. The result of-the combined examination, Part A plus Part S, will be declared as "PASS'" or "FAIL".Use the correct colour-coded Answer Book for each part, place in correct envelopeand seal after cqmpleted:

White Answer Book for Part A white question paper;Coloured Answer Book for Part B coloured question paper;

This I S a "CLOSED BOOK" examination. No aids are permitted other than the excerptsfrom the 1990 Ontario Regulation 941 covering sections 72 (Professional Misconduct}and 77 (Code of Ethics) supplied at the examination. Dlctionarles are not permitted.- ,The marking of questions will be: based not only on academic content, but also onlegibility and the ability to express oneself. If you have any doubt about 'the meaningofa question, submit with your answer a clear statem~nt of how you have mterpretedthe question.' .Candidates must attempt Question number 1 and any three of the other fourquestions; ie., four questions constitute a complete paper for Part HAH All fullquestions are of equal value. When answers for more than the three optionalquestions are submitted (ie., not including Question 1)' without stating which threeare to be considered, only the first three answers, as they appear in the examinationbooklet(s), will be graded.Where a question asks i f a certain action by an engineer was ethical or not, a simple"yes" or "no"answer is not sufficient. You should identify the applicable clauses inRegulation 941 and comment on the action in each situation. .

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Question #1 This Question to be answered by all candidatesa) The Professional Engineers Act does not explicitly restrict professional engineersfrom practising outside of their discipline. In fact, some engineers do so. How doesthe Act deal with this' matter?b} The Professional Engineers.Act establishes a number of committees. Two of theseare the complaints committee and the discipline committee. Briefly describe thefunction of these two committees.c) Under what conditions can professional engineers advertise their services to thepublic? Are there any restrictions to the form and content of the advertisement?d) Explain the implications of clause 72-2-g of Ontario Regulation 941. How does thisclause affect professional engineers?

-e) What is the professional engineer's stamp? When and why is it used?'Question #2You area Consulting Professional Engineer. For more than 15 years you have workedexclusively on environmental matters, Recently you conducted an environmentalassessment for a residential development proposed along the shore of Lake Latouchein the Town of SouthHead. Your client for this work was the Town of SouthHead.The project bas been completed and you have received payment for your work.A neighbouring Town, Eastni, also borders on part of Lake Latouche. Eastni hasrequested that. you carry out an environmental assessment of Lake Latouche as itrelates to the lands in Eastni ..Canyou ethically undertake this work? Are there' any restrictions on the use of datawhich you gathered when working for SouthHead?

'\ At the same time, the Lake L uche Cottager's Association wishes to retain you to;:represent it at a propose ntario Governmental Environmental Hearin . One of thedirectors of the Association IS an acquaintance 0 yours rom your se 001 years.Can you represent the Cottager' s Association? In the event that whatinformation can you use and how should you determine your fee str

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Question #3Kappahires Mu, a Professional Engineer, to design a freight/passenger elevator. Mudevelops a design and meets with Kappa to discuss it. The two disagree over theresulting design. While Kappa feels that the design could be simplified, Mu believesthat a simpler solution could endanger the public. Kappa demands that Mu turn overthe drawings to Tau, a professional engineer who has agreed to complete the projectas Kappa wishes. Kappa is willing to pay Mu for the drawings and the workcompleted thus far, but Mu refuses to give Kappa the drawings.Is Mu obligated to give Kappa the drawings? Does Mu have any other obligations orresponsibilities? Discuss Tau's agreement with Kappa as it relates to the Code ofEthics and definition of Professional Misconduct.Question #4Upsilon is an engineer in training (EIT) with three years of engineering experience inan environmental consulting engineering firm. Eta, the professional engineer whosupervises Upsilon, directs Upsilon to sample the contents of steel storage drumslocated on a client's property. Over the years, this client has brought a substantialamount of work to the firm and helped it to stay in business during the lean recessionyears. From the look and smell of the drums, Upsilon suspects that an analysis of thesamples will show hazardous waste in the drums. Upsilon knows that if the substancecontains hazardous waste the regulatory authorities must be notified.Upsilon informs Eta of the likely contents of the drums and asks what to do next. Etainstructs Upsilon to report the presence of the drums and that samples had beentaken, and not to do the analysis. Eta suggests that the analysis would normally bedone at this stage in the project but the local labs are all too busy. Since the clientdoes other business with the firm, Eta intends to tell the client where the drums arelocated and that they may contain questionable material and to suggest that they beremoved.Did Eta's actions fulfil an engineer's professional obligations and responsibilities?Should Eta have done anything further? Does Upsilon have any obligations to fulfil,given that Upsilon is an EIT?

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Question # f . !Lambda, the owner of a development company, is istructure on a parcel of land in a rural area of soutLambda entered into an agreement with ConsuJ " Suiting engineering firm, toundertake the construction supervision on 'payroll plu basis. Consultex assignedP.Eng. Epsilon to the supervision. Epsilon assign a small staff to the site to inspectand supervise the work. Epsilon made regular vistts to the site to meet with the staffand supervise the work .

.. .Lambda was raised in a nearby rural area and was eager to help the local economyby involving local workers, including some of Lambda's relatives. Lambda calledEpsilon to a meeting and urged that local help be added to the inspection/supervisionteam. Lambda willingly offered to bear all extra costs associated with the extra staff.Epsilon indicated the work was adequately supervised and the 'lncreesed costs couldnot be justified. Epsilon was concerned that sucfi a commitment would createproblems and drive up ~he ineering fees which could damage Consultex'sreputation, Furthermore> _p~ilbn hreaten~d to withdraw from the agreement, ifLambda insisted. .What problems might have arisen? Was Epsilon's action ethical? Relate yourdiscussion to the COde of Ethics and definition of Professional Misconduct .

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ASSOCIATION OF PROFESSIONAL ENGINEERS OF ONTARIOPROFESSIONAL PRACTICE EXAMINATION ~AUGUST, 1999 "

PART HB"~Engineering Law and Professional Liability "The total examination is intwo parts, and both must be completed within the three-hour period. Each part of the examination-A and B--rnust be passed independently" in orderto"HPASS" the Professional Practice Examination; the result of the combinedexamination, Part A plus Part B, will be declared as "PASS" or "FAIL".Use the correct colour-coded Answer Book for each part:,

White Answer Book for Part A white question paper;Coloured Answer Book for Part B coloured question paper;

This is a HCLOSED BOOK" examination. No aids are permitted other than theSection from Ontario Regulation 941/90 covering "Code of Professional Conduct"and "Code of Ethics" supplied at the examination. Dictionaries are not permitted.The marking of questions will be based not only on academic content, but also onlegibility and the ability-to express oneself. If you have any doubt about the meaningof a question, submit with your answer a clear statement of how you have interpretedthe question.Candidates must attempt Question number 1 and any three of the other fourquestions; i.e., Four questions constitute a complete paper for Part "8". All fullquestions are of equal value.When answers for more than the three optional questions are submitted (i.e., notincluding Question 1),without stating which three are tobe considered, only the firstthree answers as they appear in the examination booklet(s) will be graded.

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(QUESTION 1 TO BE ANSWERED BY EACH CANDIDATE)(MARKS)(25) Briefly define and explain any five of the following:.

(a)(b)(c) ,(d)(e)(f)(g)(h)(i)

The "liberal" approach to contract interpretationGratuitous promiseFraudulent misrepresentationSecret CommissionCommon lawAlternative dispute resolution ("ADR")Rule of contra proferentemConcurrent tortfeasorsIndirect damages

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(25) 2. A contractor decided to use a computer program toprepare its bid for tendering ona construction project. Having been approached by a software developer promoting itssoftware package for bid preparation, the contractor dealt directly with, the softwaredeveloper and entered into a contract in the form of a licence agreement authorizing- thecontractor to use the software. However, the contract between the contractor and thesoftware developer also included an express provision which limited the softwaredeveloper's liability on account of any damages that the contractor-might suffer as a resultof using the software to the amount of the licence fee paid by the contractor for the use ofthe software. The licence fee for the software package was $25,000.

The contractor used the software program to prepare a bid for an important contractopportunity. Unfortunately, the software contained a software defect. a flaw which resultedin the bid price that the contractor submitted on the project being understated by $2,000,000.Because of the understated price, the contractor was the lowest bidder and the contract wasawarded to the contractor.

The owner insisted that the contractor perform its obligations on award of thecontract, even though the contractor attempted to persuade the owner that its low price wasdue to a software defect. The contractor perfonned the work under the contract as best as itcould, and upon completion of the contract determined that its loss on th e project amountedto $1,400,000.

The contractor claimed that its loss 0[$1,400,000 was entirely due to the softwaredefect. The contractor retained an independent expert who confirmed that the contractor hadperformed as well as it could have on the project and that th e losses were in fact due to the.pricing error that had resulted from the software defect.

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ii -i T he con tractor sued the so ftw are d ev eloper to reco ver its loss.E xplain _and discuss w hether the contractor could succeed in a breach of contractclaim against the softw are developer. In answ ering, p lease include a brief summ ary and

d es crip tio n o f th e d ev elo pmen t o f rele va nt c as e p re ce de nts re latin g to th e e nfo rc eab ility o fc on tr ac tu al p ro vis io ns th at lim it l ia bi li ty .

(2S) 3. A rbour Pulp & Paper C om pany C 'A RB OU R") entered in to a w ritten equipm entsup ply con tract w ith R ecov ery E xchangers an d T urb ines Inc. (-R ECOVERY "). A ccord ingto th e a gre emen t, RECOVERY was to d es ig n, manu fa ctu re a nd d eli ve r a h ea t r ec ov er y s te amgenerator to ARBOUR's.pulp an d paper m ill in Onta rio fo r a p urc ha se p ric e o f$ 3.5 m illio n.ARBOUR w ould arrang e to install the eq uip ment in its m ill aspart o f a c og en er atio n s ys temforthe purpo se of con vertin g steam into electricity .

. A c co rd in g to th e a gre eme nt, RECOYERY was to b eg in manu fa ctu ri ng th e e qu ipmen ton February 1, 1992 and deliver the finished product to A RB OU R oil or before M arch 30,1993. The agreem ent provided that A RB OU R w ould pay the $3.5 m illion purchase pricein m onthly instalm ents over the m anufacturing period. The agreem ent contained thefo llo w in g p ro visio n: .

"E ach instalm ent of the purchase price shall becom e due and payable by A RBO URon the last day of the m onth for w hich the instalm ent is to be m ade. If A RBOU Rfails to pay any instalment w ithin 10 days after such instalment becom es due,R EC OV ER Y shall be entitled to stop perform ing .its 'w ork under th is contract orterm inate this contract." ,A s the w ork progressed, RECOVERY invoiced ARBOUR for each monthlyinstalm ent. A lthough A RBO UR paid the first instalm ent on tim e, it w as m ore than 20 dayslate in paying each of the second, third, fourth, fifth and six th instalm ents. R EC OV ERY

never m ice com plained.about the late paym ents, even w hen A RB OU R apologized for the .d e_ la ye dp aymen ts a nd c ommen te d in me etin gs with REC OV ERY that A RBO UR 's currentcash flow difficu lties resu lting from the im pact of recession ary tim es, w ere the reaso ns forth e l ate p aymen ts .

B y the m iddle of Septem ber 1992, it becam e apparent to R EC OV ER Y that due to. seriou s cost overruns resu lting from its ow n desig n errors and lack of p ro ductivity, it w ou ldstand to lose a substantial am ou nt of m oney on th e contract by the tim e the equ ipm ent w ou ldb e com pleted. A ltho ugh the instalm ent for A ug ust had been invo iced and Was d ue o n Au gu st31, 1992, A RBOU R had not yet paid it by Septem ber 15, 1992. On Septem ber 15, 1992,R ECOVERY term inated the co ntract.

W as RECOVERY entitled to term inate the contract? E xplain.

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(25) .4. ~ive Ra!l Inc. ("Live Rail"), a company specializing in the manufacture andinstallation of railway commuter systems was awarded acontract by a municipal governmentto design and build a significant transit facility in British Columbia. The contact specifiedelectrically powered locomotives. As part of the design, Live Rail was contractuallyobligated to design an overhead contact system in a tunnel. Live Rail subcontracted thesubdesignofthe overhead contact,system to a consulting design finn, Ever Works Limited("Ever WorksH):

Ever Works designed an overhead contact system in the tunnel, however, in doingso it did not carry out any testing nor did it gather any data of its own relating to theconditions inside the tunnel. It did not even request copies of underlying reports which, hadthey been examined, would have indicated that there was a large volume of water percolatingthrough the tunnel rock and that the tunnel rock contained substantial amounts of sulphurcompounds. The project documentation that was turned over to Ever Works by Liv~Raildid not include the underlying reports, but did identify the existence and availability of theunderlying repo,rts.

The construction of the rail system through the tunnel was completed in accordancewith the Ever Works' design. However, within eight months of completion, the overhead, contact system inthe tunnel became severely corroded and damaged due to the water seepagein the tunnel resulting in a very humid atmosphere that promoted stress corrosion crackingdamage, accelerated by the presence of hydrogen sulphide, ammonia and nitrites.

As a result of the corrosion damage, the municipality had to spend substantialadditional money on redesigning and rewiring the system.

, , 'What potential liabilities in tort law arise in this case? In your answer, explain whatprinciples of tort law are relevant and how each applies to the case. Indicate a likely

outcome to the matter.

(5) 5. (a) The Ontario Human Rights Code protects employees against certain types ofbehaviour in the workplace. Briefly identify (list) five examples of inappropriate conductin the workplace that are prohibited by the Ontario Human Rights Code.

(8) (b) The question of how long an engineer or a contractor can be sued fornegligence or breach of contract is one that is of concern to professional engineers and tocontractors. Describe"the liinitation periods during which engineers and contractors can besued in tort arid in contract.

(7) (;), A professional engineer entered into a written employment contract with aToronto-based environmental-engineering firm. The engineer's contract of employmentstated that, for aperiod offive years after the termination of employment, the engmeer would

' TO R _H lO: l3 S 67 (1 ,l 9 9 06O II S 17 Page 4 of 5 pages, PART B - August, 1999

44


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n ot p ra ctis e p ro fe ss io na l e ng in ee ri ng e ith er a lo ne , o r i n cOnju nc ti onw itf i. o r a s a n emplo ye e;a ge nt, p rin ci pa l, o r s ha re ho ld er o f a n e ng in ee rin g finn an yw lie re w ith in th e C ity o f T oro nto ..

D urin g th e e ng in ee r's emp lo yme nt w ith th e e nv iro nmen ta l e ng in ee rin g firm .th e engineer dealt d irectly w ith m any o f th e fin n's clients. T he engineer becam e ex trem elysk ille d in c arry in g o ut e nv iro nme nta l im p ac t stu die s and env ir onmenta l c omp li an ce auditsand established a go od perso nal reputatio n w ithin the C ity of Toronto.

T he eng ineer term inated the em ploym ent contract w i th th e e nv ir onmen ta le ng in ee rin g firm a fte r th ree y ea rs, a nd imme dia te ly se t u p an eng in ee ri ng f irm inanothe r pa rto f the C ity of T oro nto . T he engineer's previous em ploy ers then commen ced a cour t ac tionfor an injunction , claim ing that the engineer had breached the em ploym ent contract andshould no t be p erm itted to p ractise w ith in th e C ity lim its.

D o you th ink the engineer's form er em ployers should succeed in an action.ag ainst th e engineer? In answ ering, state the principles a cou rt w ould apply in arriv in g at adecision.~\ . . .~.~~

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