You know that your Pro-Demnity professional liability insurance covers negligence claims. What might surprise you is that it can also respond if you face quasi-criminal charges under the Provincial Offences Act (POA). Read on to learn more about what you can do before the hammer falls.

Defence cost coverage for POA charges

Pro-Demnity’s policy does provide defence cost coverage when architects are prosecuted for offences related to their provision of professional services. However, Pro-Demnity will not pay your fine if convicted of an offence. Refer to the Defence Costs Coverage Against Contravention of Statutes paragraph found in the What is Covered section of your policy.

In recent years, Pro-Demnity has responded to charges made under provincial or municipal statutes including:

• Occupational Health and Safety Act (OHSA) prosecutions, where architects are named in connection with site safety oversight.
• Building Code Act (BCA) violations, where construction contravenes the Ontario Building Code (OBC) in a departure from approved plans.
• Environmental bylaw offences, such as removing trees from a site over a certain diameter without a permit.

While the fines sought in POA prosecutions may be small (especially compared with the civil damages typically sought against architects) the reputational and financial cost of defending a charge can be significant.

Also, under the Municipal Act, the court has the authority to order remediation when certain environmental bylaws have been breached. Recently, Pro-Demnity was involved in a matter defending an architectural practice, in which the cost of remediation was more than $100,000.

No matter which provincial or municipal statute the architect is charged under, Pro-Demnity will step in to fund a vigorous defence.

Understanding the Process: Part III of the Provincial Offences Act

Environmental, Building Code, and OHSA charges are typically laid under Part III of the Provincial Offences Act, which governs serious provincial offences.

Here’s what to expect:

1. Summons, not a ticket. The process begins with a formal summons requiring attendance in court. There’s no “pay-and-forget” option as with minor traffic tickets.
2. Disclosure and early resolution. The defence receives disclosure (the evidence the prosecutor intends to rely on). Legal counsel can then negotiate resolution or proceed to trial.
3. Trial. If a resolution is not reached, you will have your day in court before a Justice of the Peace. These proceedings resemble a criminal trial, with witnesses, cross-examination, and the potential for fines.

Provincial offence cases move through the courts relatively quickly. Your first court appearance will often be within weeks of receiving your summons, and your trial will typically take place in less than a year.

Enforcement Trends: Cottage Country Cracks Down

Pro-Demnity has seen an uptick in POA prosecutions, particularly in cottage country, where local councils face political pressure to tighten enforcement of environmental bylaws. Municipalities are now more aggressively laying charges related to tree removal, shoreline setbacks, and water quality. Architects have occasionally found themselves named in these charges—especially in cases where site plans were unclear about protected trees or the location of existing waterways.

The best protection is good documentation. If your site plan shows trees being removed, it is best practice to note that such removal may require a permit. Architects should also record the advice they give to clients about environmental permits, site plans, and municipal requirements even if responsibility for compliance rests with the builder or owner. While greater specificity is always preferable to generalities, even recording that “tree removals or site alterations to comply with tree preservation and site alteration by-laws” can be helpful. Those records can make the difference between a short conversation with an investigator and a formal summons.

If charges are laid, Pro-Demnity will appoint experienced defence counsel familiar with municipal and regulatory prosecutions to protect the architect’s interests.

Three ways to protect your architectural practice

1. Keep written records of advice on compliance with building and environmental rules. Documentation is your best defence.
2. Notify Pro-Demnity early if you receive any notice of investigation, summons, or contact from a bylaw officer before speaking to enforcement officials. Contact the Claims department at claims@prodemnity.com or call 416-385-1770. Also refer to our webpage on How to Report a Claim. Early reporting ensures the best possible protection.
3. Understand your coverage. Your Pro-Demnity policy includes valuable benefits and coverages for the usual and customary services you provide as an architect. But insurance doesn’t cover everything. Review your policy carefully and understand any exclusions or limitations. If a prosecution arises alleging a breach of statutes, regulations, or by-laws within a jurisdiction we have agreed to cover in writing, your policy applies. Remember: while Pro-Demnity will fund your defence, it cannot pay fines.

By staying informed and proactive, architects can navigate provincial or municipal prosecutions effectively, with Pro-Demnity as your ally.

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Our Contributor

Your architectural firm has been named in a litigated claim alleging errors, omissions or negligence, and you’ve been asked by your Pro-Demnity lawyer to attend an examination for discovery. This isn’t your first project under pressure, and it won’t be your last.

The good news? With the right preparation from Pro-Demnity, you will walk into your discovery steady and ready for any question that comes your way. This article provides a brief guide of the discovery process, so you know what to expect.

What Is An Examination For Discovery? 

An examination for discovery is an important part of almost every civil lawsuit in Ontario. It is an out-of-court examination under oath of the parties to an action. Every party to the dispute is entitled to examine every other adverse party. The process helps the parties uncover facts, test credibility, and assess liability and damages.

What Can The Architect Expect During Discovery?

In advance of the examinations for discovery, your legal team will prepare your Affidavit of Documents, which lists all the documents in your possession, control, or power that are relevant to the case. This document will be circulated to all parties to the action. Your legal team will schedule a preparation meeting to review these documents, go over the details of the case, and consider questions that you might be asked. 

In our post-COVID world, most examinations for discovery take place on Zoom. When you log onto the Zoom call, you will be greeted by the court reporter who will be transcribing the evidence. The lawyers representing the other parties in the action will be present.

At the onset of the discovery, you will make an affirmation that you will tell the truth. The lawyers will then begin the discovery.

Types of Questions You May Encounter During Discovery

You can expect to be asked a wide range of questions regarding your involvement in the matter at hand. Here are some categories of questions that you can expect:

• Experience and qualifications
• Architectural contract
• Scope of work
• Design development 
• Explaining your drawings
• Construction phase involvement
• Involvement of others (contractors, subconsultants, etc.)
• Industry practice and standards
• The allegations as outlined in the Statement of Claim or Third-Party Claim

Throughout the discovery, your lawyer might be asked to provide “undertakings”, which are formal commitments to provide information or a document at a future point in time. Your lawyer will keep track of all undertakings and help you gather what is needed when your discovery is complete.

You’ve Got This

Prior to any discovery, Pro-Demnity will provide you with more detailed guidance and important tips on how to handle the examination like a seasoned pro and help you navigate the discovery process with confidence. No matter how tricky things might get during a discovery, your Pro-Demnity-appointed lawyer will be by your side to support you.

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Our Contributor

In this article, we explore the compelling reasons behind architects’ growing concerns about personal injury lawsuits as they have the potential to be a considerable financial threat to an architectural practice’s future.

We dissect the intricate logistics of how these legal battles unfold, examining the design features commonly entangled in personal injury claims and, equally crucial, delve into how architects can steer clear of recurrent design pitfalls.

Through sharing of key insights into risk management strategies, we aim to fortify architects against the looming peril of personal injury lawsuits, setting a standard for architectural excellence that values both creativity and user safety.

To download the article below, click on the three ellipses in the menu bar, and select “Download PDF file.”

As an architect, you know that your work involves complex design decisions, technical challenges, and contractual obligations. You also know that sometimes, things don’t go as planned and you may face a claim or a potential claim from a client, contractor, or third party.

But do you know what to do when that happens? Do you know how to report a professional liability claim to your insurer and what benefits you can get from doing so?

At Pro-Demnity, we understand that reporting a claim can be stressful and intimidating. You may worry about the impact on your reputation, your relationship with your client, and your insurance premium. You may also think that you can handle the situation on your own, without involving your insurer.

However, reporting a claim to us is not only a contractual obligation under your policy, but also a smart move that can save you time, money, and hassle. Here are five reasons why you should report a claim to us as soon as possible:

1. You can get access to our Claims team, who can provide you with expert advice, guidance, and support throughout the claim process. They can help you assess the situation, communicate with the parties involved, and resolve the issue in a timely and professional manner.
2. You can avoid breaching your policy conditions, which may result in a denial of coverage or a reduction of your policy limits. If you fail to report a claim, or if you admit liability, make a payment, or enter into a settlement without our knowledge or consent, you may jeopardize your coverage and expose yourself to further risk.
3. You can prevent the claim from escalating or becoming more complicated. By reporting a claim early, you can prevent the other party from taking legal action, filing a complaint, or making further unreasonable demands. You can also avoid missing any deadlines, losing any evidence, or worsening any damages.
4. You won’t be judged by us. We know architects generally strive for excellence, endeavour to meet client needs and take care to avoid errors or omissions in designs and in the performance of architectural services. Our job is to support and guide you to the successful closure of the claim. You always have ready access to resources (our experts as well as our risk education articles, and podcast) to improve your risk management systems, as warranted.
5. You can benefit from our experience and expertise in handling claims. We have a dedicated team of claims professionals and lawyers who have extensive knowledge and understanding of the architectural profession and the insurance industry. They can negotiate with the other party, defend your interests, and protect your reputation.

Reporting a claim to us is easy and convenient.  You may call us at 416-386-1770 or email us at claims@prodemnity.com. We will respond to you promptly and assign a Claims Specialist to assist you.

Remember, reporting a claim to us is an obligation under your professional liability insurance policy, but it’s not an admission of fault or a sign of weakness. It is a responsible and proactive step that can help you manage your risk and protect your practice.

Don’t hesitate to contact us if you have any questions or concerns about reporting a claim. As your ally, we are here to help you.

Pro-Demnity’s Risk Services Department, staffed by experienced architects, has seen a thing or two over the years in its involvement with claims against architects. And it’s hard to unsee them. Although new claims cross our desks every week, we have observed that quite a few are due to the same types of common mistakes as they were five, ten or perhaps even thirty years ago. Most of these are easily avoidable if one follows some basic tips.

We’re speaking specifically about claims related to construction phase services, most particularly, site reviews. Site review is arguably an area in which the greatest liability exists for architects. It’s also an area where improving one’s process and approach, could prevent claims, or at the very least, ensure that you will be better defended by Pro-Demnity against claims that may arise.

Many of these tips may seem obvious to most architects but, keep in mind, they have been gleaned from actual claims we’ve handled.

Twelve Tips to improve your site review and decrease claims:

1. It may go without saying that you should charge a sufficient fee to allow you to perform thorough professional services with diligence and without cutting corners. Most architects do. Pro-Demnity takes note of those that don’t.
2. Only do what you’re contracted to do; do it fully, or not at all. If not contracted to perform a service – don’t “dabble” in it. There is no such thing as “partial” site review. For example, if you are not retained to perform site review, do not step foot on the site during the construction phase for any reason. If you do, it may be deemed by the Courts that you were, in fact performing site review, despite what your agreement states. When retained to do site review, be professional and carry out as complete and thorough performance of your services possible in accordance with your agreements.
3. Document every direction, warning or notice you provide to your client, contractor, or anyone else during a project. If someone says or does something that you feel does not appear correct, do not let it slide. Oral advice only becomes valuable when put in writing.
4. Make sure your site reviewer is experienced and intimately familiar with the requirements of the contract documents and applicable Codes. Do not send the most junior member of your firm to perform site review.  Remember this is an area where massive liability exists for architects.  Be comprehensive in noting deficiencies and make sure to follow-up on outstanding items.
5. Do not feel pressured to side with your client or contractor in making interpretations of the documents, evaluations on site or in making certifications. You have a duty as a professional to be impartial. If you are feeling pressure and require support, feel free to have a discussion with someone in Pro-Demnity’s Risk Services Department.
6. Be extremely careful in considering proposed substitutions and properly evaluate how any such change will impact performance and durability. Ensure your client understands the pros and cons and signs off on it. It goes without saying that inferior products, although accompanied by a desired credit, may be detrimental to the project down the road, which may leave you vulnerable to a claim.
7. Always insist upon and follow up in obtaining a certificate of insurance from your engineering consultants and ensure that their limit per claim equals or exceeds yours. Do not agree to limiting their liability in your agreements with engineers without consulting with us. Otherwise, you may be on the hook contractually for any shortfall caused by an engineer’s errors, omissions, or negligent acts.
8. When receiving reports from your engineering consultants, do not edit, re-write or “put in your own words” the recommendations in their reports, replies to RFI’s or other directions provided. Architects sometimes tend to do this in their cover letters. Stick to your own discipline and do not second-guess, embellish or try to simplify the advice of your consultants.
9. Do not confuse your role as a contract administrator with that of a lawyer. For example, when asked whether a delinquent contractor is in “default” of its contract, this may constitute legal advice, which you are not qualified to provide. Rather, restrict your advice to supplying your client with factual information on the performance (or lack of) of the contractor and request that it consult with its legal counsel to make a determination of whether the level of performance or non-performance of a contrac,t as indicated by you, constitutes sufficient basis to determine whether a contractor has defaulted on its contract.
10. Be cognizant of your limitations. Most architects are not a code experts, building science experts, engineers, lawyers, or delay consultants. When you feel out of your depth, do not feel uneasy in advising that something is beyond your expertise. If warranted, retain the appropriate consultant to assist you or recommend that your client engage them.
11. Keep a chronological log of all submissions and re-submissions to contractors. Delay claims continue to plague the construction industry and are a source of claims against architects. One of the common allegations levelled against architects in such situations, whether true or not, is that the architect and its consultants contributed to delay due to late response times. One way to defend against this is to create a record documenting your responses times showing that they were made in a timely fashion.
12. If you find things may be heading off the rails or when in doubt, feel free to contact Pro-Demnity’s Risk Services team for support and guidance. Our services are part of your annual professional liability premium, and we are here for you to help you to better manage risk in your firm.

While site review may at times appear to be a minefield of risks, it also happens to be a great opportunity for architects to showcase their diligence and professionalism toward bringing their projects to successful completion.

For more personalized architectural practice risk management guidance, you may request a complimentary and confidential meeting to Speak with an Expert, or Report a Claim.

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Our Contributor

A few months ago marked my first year since starting at Pro-Demnity as an in-house architect with our Risk Alliance Department. An important and exciting part of my new position has been providing architectural support to our claims and legal teams in their defense of claims against architects. This role gives me an opportunity to review a wide array of architectural documents linked to active claims.

I’d like to share some insights on how information (or lack thereof) in the architectural documents might help (or hinder) an architect’s defense when they are named in a claim or lawsuit. 

Here are 13 practical steps to implement right now to be better prepared for a claim. Even if one doesn’t transpire, you’ll have improved your risk management system for the better:

• Use industry-standard contracts for your agreements with clients (such as OAA 600) and consultants (such as OAA 900). I’ve noticed that the projects in many of our claims have used agreements established through fee proposal letters, emails, or client-authored or consultant-authored agreements.  Industry-standard contracts contain language beneficial to you and aligned with your professional liability policy terms.     

• Include as comprehensive specifications as you can into your project documents. Detailed specifications sometimes include requirements that could help with your defense in a claim, such as referenced standards, procedures, submittals, warranty requirements and general requirements. 

• Include details in your drawing set at an appropriate scale to show critical exterior envelope conditions such as window jamb, head and sill conditions, material transitions, and top and base of wall conditions. Many water infiltration claims involve the installation of membranes and flashings, which sometimes have not been detailed by the architect at scale where it is clear how they come together.  If in doubt, consider engaging an envelope consultant to aid in designing typical details applicable to your projects, or if do not feel your services include producing these details, make sure this point is clear in your agreement with the client.

• Many of our claims involve scope that was reviewed or supposed to be reviewed by third-party inspection agents. Check that you and your client concur on any third-party testing and inspection expectations for architectural scope, including what scope will be reviewed and the frequency.  Document this agreement in writing. Follow up prior to construction to check that third-party agreements are in place. Remember to maintain appropriate information exchange with the third-party agents during construction and review their reports as required to fulfil your own professional obligations on the project. Ask for and keep records of third-party submittal reviews and site reports.

• Ask for a copy of the construction contract. Even for projects not following a traditional design-bid-build delivery, the construction contract may still contain language regarding the ‘role of the consultant’ or other design requirements for the project. This is helpful information for you to be aware of.

• Be diligent on following up with the contractor for your project on required construction schedule submissions and check that these submissions are in the format and contain the information required by the contract documents. Raise and document any concerns early and often.  In the event you are named in a delay related claim, these records can prove helpful to your insurer.

• Consider requiring that the contractor develop a submittal schedule at the outset of construction. Advance planning of the number and timing of submittals during construction can aid the contractor to better manage the construction schedule, and having these records can also be valuable to your defense in delay-related claims.

• Monitor that all submittals that are required in the specifications and/or the submittal schedule are submitted. If a submittal is deemed unnecessary, consider removing the requirement for the submittal formally through a Supplemental Instruction. Keep records. In the event of a claim concerning a product or material which required a submittal that wasn’t provided, you might be questioned on why you, as the architect, didn’t highlight this omission. It is beneficial for your defense if you can account for any required shop drawings and submittals pertaining to the allegations in a claim. 

• Maintain and retain tracking logs of received and returned dates for submittals, Requests for Information (RFIs), and construction changes. This is not only helpful information for your insurer in the event of delay-related claims, but in the event of a claim the party who keeps the best records of this sort is the one who will likely be able to tell the most compelling narrative.

• Issue regular site review reports documenting what was reviewed and observed during site visits. In some claims, we’ve found that while architects have been on-site during construction, they have issued very few or no reports. Having a record of site review reports that demonstrate your involvement in visiting the site can help your defense team to establish your standard of care for project.  Include detailed observations and deficiencies (where applicable) on your site review reports.

• Take dated photos of what you have reviewed when on site and keep them as records.  Photos serve as documentation of what you looked at when you were on site and may help to establish your standard of care.  

• Refer to the wording on the Ontario Association of Architects (OAA) ‘Final General Review Report’ template for your final letters to municipalities. These letters are often submitted as evidence in claims, and we see some that lack clarity on the scope of review (i.e., Architectural), and the relevant performance standard (i.e., Ontario Association of Architects). 

• Finally, throughout the project be sure to keep your records up-to-date, and to name and file your documents and emails in a manner which will make it easy for future retrieval of information, such as by date, sender or recipient, and content. Clear naming conventions prevent information from getting overlooked, especially when a claim is dealing with hundreds or thousands of emails and documents.

Although I haven’t yet seen it all, I’ve seen enough in our claims files to suggest that implementing all, or even several, of the suggestions above, consistently across every project, will go a long way to better prepare for a future claim situation.

For more personalized architectural practice risk management advice, you may request a complimentary and confidential meeting to Speak with an Expert, or Report a Claim.

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Our Contributor

What are Tolling Agreements?

Tolling agreements are something architects may never have heard of, nor do they need to know anything about, to have a well-functioning practice. Or at least, they do not need to know anything about them right up to the day someone, usually a client, asks them to sign one, at which point the need to know becomes urgent.

So, what are tolling agreements? No, they have nothing to do with road or bridge tolls, nor do they have anything to do with tolling bells.[i] They involve a third, more archaic, definition of the word “toll”, which can be used as a verb as meaning to stop or abate the running of a time period.

Black’s Law Dictionary defines a tolling agreement as:

“An agreement between a potential plaintiff and a potential defendant by which the defendant agrees to extend the statutory limitations period on the plaintiff’s claim, usually so that both parties will have more time to resolve their dispute without litigation.”[ii]

This is accurate as a general definition, but more specifically, the tolling agreements architects will encounter in Ontario are concerned with extending the time to start a lawsuit beyond the times set out in Ontario’s Limitations Act.[iii]  Section 4 of the Act states that a lawsuit can only be commenced within two years of the claim being discovered. The inclusion of the term discovered means that often lawsuits are commenced far later than two years after a triggering event, but the general two-year rule can make this problematic, leading to the use of tolling agreements as a way to buy some extra time.[iv]

What to do when you are asked to sign a Tolling Agreement?

In most cases where an architect is asked to sign a tolling agreement, the request will come from their client. However, while this is the most frequent scenario, a tolling agreement could be presented by anyone who believes they may have a right to sue the architect, including subconsultants, contractors, or even end users of a project.

Once you have been asked to sign a tolling agreement, you should promptly notify Pro-Demnity. The mere fact that someone has asked you to sign it signals a potential claim, since the only purpose of the agreement is to preserve a right to sue you. Under your policy with Pro-Demnity, you have an obligation to immediately notify Pro-Demnity as soon as you become aware of a claim, and a failure to do so could jeopardise your coverage.

However, reporting the Agreement to Pro-Demnity should not be viewed merely as a way to preserve your coverage, but also as an opportunity to tap into the expertise of our claims, legal and risk management teams to assist you in assessing why you have been targeted with this request, and whether or not to sign the agreement.

In addition to notifying Pro-Demnity, you may also wish to inform your firm’s legal counsel of the request for a tolling agreement.

Will Pro-Demnity want me to sign the Tolling Agreement?

Pro-Demnity has a measured perspective on Tolling Agreements, and might recommend any of the following approaches, depending on your specific circumstances:

1. that you sign it as originally drafted;
2. that you reject it; or
3. that you try to negotiate better terms and then sign it.

Our guiding principal is that tolling agreements are worth signing when there is a possibility that they could help an architect avoid being sued altogether, but they are not worth signing when all they will do is confer a tactical advantage to a future opponent or extend the time an architect faces risk with no upside. These are complex judgment calls, which Pro-Demnity and the architect would explore together before agreeing on an approach.

The decision on whether to agree to or reject a tolling agreement, rests on an assessment of why it seems to have been requested. This will often fall into one of the following categories:

• A party to an ongoing project is worried about developing problems that might result in them needing to sue another party, but also believes these problems might get resolved before completion. They do not want to sue and ruin relationships since there is a possibility it all resolves, but do not want to lose their right to sue in case things do not work out.

Pro-Demnity often views tolling agreements in these situations favourably.

• A party who knows they definitely want to sue an architect about an ongoing project, wants to wait until a project is complete before starting a lawsuit.

Pro-Demnity is skeptical of these situations, but tolling may be appropriate if cooperation over the rest of the project could help limit the damages that would ultimately be claimed.

• A party knows they are going to sue an architect and others, but just wants more time to put together their case before doing so.

Pro-Demnity is not in favour of having architects execute tolling agreements in these situations.

• A lawsuit has already been started against someone, usually an owner, who believes the architect’s actions may be implicated, but thinks it is a frivolous case and would rather cooperate with the architect to defeat the case than to pull them into the ongoing litigation.

This may or may not be a case where a Tolling Agreement is appropriate, depending on whether Pro-Demnity agrees the case is frivolous and the architect might escape the lawsuit altogether.  If it looks like the architect will ultimately become involved, then we would rather defend them from the beginning than be late to the party.

• A proposed tolling agreement might come about due to nothing more than a box-ticking exercise for the lawyers of another party.  Sometimes, legal counsel get nervous at the idea of losing a right to sue even when they have no actual formed intention to sue.

Pro-Demnity is not in favour of having architects execute tolling agreements in these situations.

Even in the situations where a tolling agreement might make sense, it is important to consider how they are worded. One consideration is to always make certain that there is an end date, so that architects are not agreeing to be at risk indefinitely. These agreements can also be used to secure regular updates from the other party about the status of underlying lawsuits.

Four Tolling Agreements Dos and Don’ts:

• Do: treat it with urgency. The person sending it to you is probably worried that they are on the verge of losing a legal right and will keep pestering you until they get a response.

• Don’t: sign a tolling agreement without discussing it with Pro-Demnity as this could jeopardize your coverage.

• Do: continue to provide your professional services as an architect, if a project is ongoing, while considering the tolling agreement.

• Don’t: stress needlessly over being asked to sign one. Pro-Demnity’s claims, legal and risk management teams have many years of experience assisting architects to navigate exactly these types of situations.

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[i] Unless you have been retained to design a toll road or bridge, or a bell tower, in which case it might…

[ii] “Tolling Agreement”, Black’s Law Dictionary, 8^th edition: Thomson West, 2004.

[iii] Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[iv] For more on limitation periods, see the author’s previous article on the Ultimate Limitation Period.

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Our Contributor

Protecting and defending Ontario architects is our sole business: it is all we do. Serving all 1,584 architectural firms with offices in Ontario, Pro-Demnity works as your trusted ally through our Insurance Solutions and Risk Alliance offerings of Risk Education and Risk Services.

Our Insurance Solutions products are how we fight for you when you are facing an allegation of error, omission, or negligence. Beyond mandatory minimum liability insurance needs, Pro-Demnity offers additional annual liability limits and Spike-Up coverage to help meet your protection needs and the requirements of your clients. Over the coming years, we will be updating our coverage and pricing model to ensure we fairly, appropriately charge for the risk represented by different practices, while seeking flexibility to assist you in managing your coverage.

Our Risk Alliance offerings of Risk Education and Risk Services are how we protect practices by using the learning and understanding gained from our insurance solutions and share them with your practice to improve your present and future management of risk. From our COVID-19 updates over the past few years to our upcoming Integrated Project Delivery discussion at the 2023 OAA Conference, Pro-Demnity is committed to helping practices manage real-time risk in wise, efficient, and effective ways.

At a practical level, protecting practices also means ensuring we keep the organization strong, effective, and efficient in serving you. Remaining protective of our sustainable insurance operating model, Pro-Demnity’s financial performance was solid in 2022. The organization delivered a year-end Minimum Capital Test Ratio of 248% (2021: 238%), and a Combined Operating Ratio of 86% (2021: 102%). These, along with other Key Performance Indicators throughout the Annual Update, suggest two things. The first is that efforts to strengthen operations are having an impact in the right direction, and the second, that there is more to be done to improve services and bolster fiscal capacity to comfortably respond to potential losses in future years, particularly as we all contend with significantly fluctating contruction inflation.

The Board of Directors and Management are collectively responsible for steering the organization in its implementation of strategic priorities. Through Client Centricity, Strengthened Operations, Financial Strength & Growth, and our People & Culture, we are committed to increasing our value to you.

We are sincerely thankful to you, our clients, for your confidence and trust in Pro-Demnity. Several stakeholders contribute to our success – our regulator (FSRA), our shareholder (OAA), our reinsurers (various syndicates at Lloyd’s), our auditors, actuaries and so forth – and we are fortunate for their support. We are, of course, nothing without the efforts of our employees: to all our employees, we appreciate your dedication and the care with which you are protecting practices.

Joanne McCallum, Chair, Board of Directors

Bruce H. Palmer, President and CEO

For the 2022 Financial Statements, please visit the OAA website.

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Rate increase of 5% and inflation adjustment of 4% in 2023.
The rate increase for the 2023 renewal year is 5%*, with an additional up to 4% inflation adjustment in anticipation of the future costs of raw materials required for repair, remediation or reconstruction when claims occur. Assuming no change in average fees, most firms will experience an up to 9% premium increase upon renewal inclusive of both the rate increase and inflation adjustment. We understand that rate increases affect your business costs and compound the other, many rising cost inputs. Pro-Demnity is not immune from either general economic and social factors, or from the very specific factors facing architectural errors and omissions claims. We are committed to doing our part to help slow the growth in Pro-Demnity’s costs.

*^{_{Premium = rate x 3-year revenue average. For example, if 3-year average revenue increases by 5% and the rate increases by 5%, the premium increase will be 10.25%, all else being equal.}}

Imagine this simple scenario: you’re meeting a potential new client for the first time to discuss an exciting project. What’s at the forefront of your mind? Probably doing what it takes to secure the work. The terms of your contract with this new client may be less of a concern, while the potential for this new project to devolve into you being sued would not be on your mind at all.

However, the decisions you make at this very early stage in drafting an architectural contract are going to be essential in any litigation that may ensue, which often could be just years in the future from that initial meeting, or commenced years after a project is complete.

This article highlights the OAA standard form contracts. It will explain which clauses are particularly helpful in litigation, and discuss some best practices which, if implemented, will help protect you if a lawsuit does occur without having to fret about it years before the risk materializes.

What is your contract?

The most basic definition of contract is any agreement to provide something to another party who is to provide some sort of consideration in return. There is always a contract in every situation where a client pays for services from a professional, even when it might not be apparent. 

This is one reason why it is important to be intentional about your choice of contract – you do not want to later be held to people’s memories of a verbal agreement, or a few lines of email detailing a fee arrangement, as containing the basic terms of your contract. 

In fact, if you do not have a solidly written contract, a court may decide to apply its own contractual terms to your relationship, what are known as “implied terms” of a contract.

That does not mean any written contract will do. A contract suggested by your client might include a lot of legal boilerplates that do not apply to architectural services.

OAA Standard Form Contract

The OAA publishes standard form contract templates on their website, free for use by architects.[i]  The latest edition date from 2021 is available in the OAA Contract Suite.

The short form OAA 800 is ideal for smaller projects with a construction budget of six or low seven figures, while the long form OAA 600 is best suited for larger projects.  These are the gold standard, and what Pro-Demnity prefers architects to use in each case.

Why we recommend OAA Standard Form Contracts

Firstly, standard form contracts can be beneficial to all parties for:

• creating greater certainty in their interpretation, as the same wording becomes familiar to parties, lawyers and even mediators and courts who see it with frequency; and
• helping avoid the need (and expense) to hire a lawyer to help draft the contract, while providing the peace of mind that the contract is sound.

The OAA contracts have the additional benefit of being designed to be specifically applicable to architectural assignments. They set out the duties an architect undertakes, as well as the responsibilities of the client, in clear language.  They also include provisions that help protect you in the event of a lawsuit.

Specifically, Section GC 9.6 of the OAA 600-2021 and Section GC 5.2 of the OAA 800-2021 set out a list of situations for which an architect will not be held responsible. This can be helpful evidence of the reasonable expectations of the parties and standard to which an architect can be held in litigation, and as counsel, I will typically specifically cite them in my written defence of architects in lawsuits where the OAA contract has been used.

As just one example of the helpful language contained in those sections, in many lawsuits the parties misrepresent the architect as having control over certain aspects of a project’s physical construction, while Section GC 9.6.3 of the OAA 600-2021 specifically states that;

The Architect shall not […] have control, charge, or supervision, or responsibility for construction means, methods, techniques, schedules, sequences, or procedures, for temporary works, or for safety precautions and programs required in connection with the Work.

While this may seem common sense to an architect, setting it out in the contract helps make it clear to a judge or jury at trial, who does not have your specialized knowledge, and may otherwise be mislead by your opponent into misinterpreting your duty as an architect.

Some of the other provisions of the OAA contracts which could protect you in the event of litigation include those:

• restricting damages awards that can be recovered in lawsuits to be no greater than the value of the liability coverage you carry (OAA 800 GC 9.3);

• ensuring an architect is never held responsible for any consequential losses of the client such as lost business or personal income (OAA 600 GC 9.12 & OAA 800 GC 5.2.10);

• clearly setting out the scope of General Review (in the definitions section of OAA 600 and OAA 800);

• making the client responsible for the consultants they hire (OAA 600 GC 5.3.7, 5.3.12 & OAA 800 GC 2.1.2); and

• making the client responsible for problems that result from changes in the architectural design made by others (OAA 600 GC 9.9 & OAA 800 GC 4.4).

Seven best practices to follow regarding architectural contracts

1. No matter how well your discussions with a client may be going at the outset of a project, always insist on having a SIGNED written formal contract before doing any paid work on the project.

   Architects may wish to implement a tickler system, administrative reminder when opening a file for billing, or some other catch safe to ensure a contract has been obtained in every case.

2. Present an OAA 600 or 800 to the client as your preferred choice of contract, as part of your proactive client management strategy. Start off on a good, solid footing with your client by always working within a framework tailor-made for you by your professional association and supported by your professional liability insurer.
3. If you are using an OAA 600 or 800, make sure to fill it out in a clear and detailed manner. Your description of the project should be precise, and you should make sure not to leave any sections blank, writing N/A if necessary.
4. Negotiate any non-standard terms carefully. We are aware of certain institutional clients that will agree to use an OAA contract only if certain terms are amended or struck out. Often this is done by way of a separate Schedule to the contract, making it more difficult to interpret.  We have seen situations where protective clauses are not struck out, but reworded to reverse their intent; for example to specifically state an architect will be held liable for the work of all other consultants. Be careful in these situations, as it could affect your coverage under Pro-Demnity’s policy.*
5. When in doubt about the terms of a non-standard contract, work with your firm’s lawyer, or retain a lawyer to assist you.
6. If there is a point in the project where you and the client agree to extend your scope of services, or you are retained for a subsequent phase of a project, this calls for a fresh contract setting out the new scope.  Do not delay – get this signed by the client before continuing your work.
7. Keep a signed copy of all contracts for all projects in your records indefinitely. Remember that a lawsuit may not come until 15 years after a project is complete, or possibly later. For more information on the latest date a lawsuit could be commenced, read Limitation Periods: Is an architect ever free from Litigation?

As the architect, use of an OAA contract mitigates known risks for you and your firm and reinforces your professionalism with the client.

*Afterword: 

Pro-Demnity is familiar with cases where each of the following different types of architectural contracts have been used: 

Verbal Contracts

This is where you agree to do some work for a client in a conversation, without ever setting terms such as the scope of the work or the cost to be charged in writing. There still is a contract, but if an issue arises, it is very difficult to determine the terms. Pro-Demnity recommends you always put your contract in writing and avoid this situation.

Accepted Fee Proposals

An architect sets out their proposed pricing for working on a project, whether in a form as simple as an email, or as a letter. The owner agrees to proceed by reply email. The architect then goes ahead and works on the project without ever getting a formal contract signed. In this case, the fee proposal and any correspondence from the client accepting it, are what form the terms of the contract. While this is better than a verbal contract, it is still not ideal. Unfortunately, Pro-Demnity sees this situation more frequently than we’d like.

Standard Form Contract

This includes the OAA 600 and 800, as well as the RAIC architectural form contracts.  As discussed in the body of this article, Pro-Demnity recommends using the OAA contracts.

Custom Formal Written Contract

Some architects, and more frequently clients, prefer to use a non-standard form of contract. These can range from the simple to the very incredibly long and complex. Be careful when negotiating such a contract to ensure you understand the implications of it on your work, your uninsured or insured liability, and your Pro-Demnity coverage with respect to any future claims. If you agree to a term that would negatively affect your defence in a claim, that could violate your policy.

_{[i] The RAIC also publishes standard-form architectural contracts.  However, the writer recommends the OAA contracts be preferred by Ontario architectural practices.}

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_{First published November 1, 2021}