ENCON Group Inc.

500-1400 Blair Place

Ottawa, Ontario K1J 9B8
Telephone 613-786-2000
Facsimile 613-786-2001
Toll Free 800-267-6684
www.encon.ca

Claims Examples
Structural Engineers
1. Design of Residence

The insured structural engineer was retained by an owner of a property to provide structural
engineering design for the construction of a new residence. The residence was sold five years
after construction was completed. The new owners started an action against the structural
engineer and the previous home owner alleging that the condition of a pre-existing retaining
wall had deteriorated as a result of the construction of the residence and claimed damages in
the amount of $100,000.

Our investigation revealed that the insured structural engineers scope of services was limited
to the structure itself and did not include any geotechnical services. Therefore, the obligation
to ensure no damage occurred to the retaining wall was outside the insured structural
engineers responsibilities.

ENCON negotiated a settlement, and incurred $15,000 in defence costs.

2. Under-design of Steel Beams

The insured structural engineer was retained by the owner to provide structural engineering
design services for the construction of a community centre. During construction, deflections
were observed in the roof decking. The owner advised they would be claiming $500,000 for
remedial costs and delay-related damages.

The investigation revealed that the engineer faced complete exposure for the under-design of
the steel beams, which were in danger of immediate collapse. Damages were assessed in
excess of the engineers policy limits. Construction was halted and a remedial design was
implemented. ENCON negotiated a settlement within the engineers policy limits while
avoiding litigation. ENCON incurred $25,000 in defence costs and legal costs.

3. Excavation Under Existing Building

An engineer was retained by the property owner to provide structural engineering services
for the renovation of a building. The engineer verbally provided two options to excavate the
basement of the building.

The owner of the adjoining building alleged that the common wall had settled due to the
excavation work and sued for $500,000. ENCONs investigation revealed that the engineers
client had proceeded with excavation based on a sketch provided by the engineer, which was
intended for excavating a test location only.

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 The owner of the adjoining building sued the engineers client, the engineer and the
contractor. ENCON negotiated a settlement where the contribution made on behalf of the
engineer represented the least of the three parties. Defence costs were approximately
$125,000. This multiple party, complex litigation lasted three years before settlement was
achieved.

4. Temporary Shoring

An engineer was retained by the property owner to provide structural engineering services in
relation to the temporary shoring for the partial demolition and reconstruction of a terraced
building. The owners of the adjoining building alleged that the work performed affected the
structural integrity of their building and sued the engineers client. The engineers client
subsequently sued the engineer.

ENCON was successful in having the action dismissed against the engineer by arguing that
there was no direct causal link between the engineers temporary shoring design and the
damages being claimed by the owners of the adjoining building.

5. Negligent Design

The insured structural engineer was retained by the design-build contractor to provide design
services for the addition and renovation to a commercial building. Subsequent to the new
construction being completed, a portion of the buildings roof collapsed under snow load.
The insured, along with the design-build contractor, the truss manufacturer and installer,
were sued by the owner alleging negligent design, construction and reckless disregard. The
allegations of the claim specifically criticized the insureds design in that it omitted to
include lateral bracing of the roof trusses.

ENCONs expert was able to discredit the other expert theories which determined that the
failure was caused by buckling and compression of the structural roof members. Although
not able to definitively prove his theory, ENCONs expert concluded that the failure was
more likely caused by a combination of manufacturing defects which in turn caused a tension
failure, and therefore the lack of lateral bracing was not the triggering event. Based on this
hypothesis, primary exposure for liability fell to the truss manufacturer, with secondary
exposure to the design-build contractor, installer and the insured. The plaintiffs $2 million
claim was settled out-of-court to which ENCON contributed on behalf of the insured. An
additional $85,000 was incurred in defence costs.

6. Calculation Error Contributes to Faulty Design

The insured was retained by a developer to provide structural design and field review
services for the construction of a multi-unit residence. During a pre-purchase inspection of
the property by an independent structural engineering firm, calculation errors with respect to
the column design and transfer beam strength were discovered. Additionally, there were slab
failures in target areas of the structure. The developer sued the insured for damages in the
amount of $2 million to effect repairs, which included upgrades to the structural columns,
remediation for punching shear and reinforcing of the deficient slabs.

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 The expert engineer retained to review the insureds design opined that there were
calculation errors, that the structural deficiencies related solely to the design and, therefore,
the insured was entirely responsible. Given the clear liability exposure, ENCON moved
quickly to settle this claim on behalf of the insured; a further $25,000 was spent on defence
costs.

7. Failure to Prepare Field Notes to Reflect Site Instructions

The insured structural engineer was retained as a project manager by a municipality to

provide drawings, specifications and contract administration for the replacement of several
roofs on municipal buildings. During the replacement of one roof, the roofing contractor
allowed tar to penetrate the buildings interior, damaging the office equipment stored there.
The municipality held back payment to the contractor and the contractor sued for fees. The
municipality counterclaimed against the contractor and the insured for $200,000 in cleanup
costs and repairs.

The insured reported the matter to ENCON when the counterclaim named the insured, along
with the contractor, as a responsible party for the damage to the buildings interior. The
contractor alleged that the insured had agreed that the contractor could use the sprinkle
mop method. Prior to the commencement of the roofing work, the insured met with the
contractor and stated that sprinkle mopping was not an approved method of application
given the poor condition of the roof boards. However, the insureds field notes from that
days meeting did not reflect this specific instruction to the contractor. A negotiated
resolution was ultimately reached with the municipality. The contractor paid the majority of
the claim, with ENCON contributing to the settlement on behalf of the insured. Defence costs
totalled $25,000.

8. Design Error

The insured provided structural engineering services to a manufacturer of steel frame homes.
The manufacturer was subcontracted by the general contractor to supply and erect light
gauge structural steel framing elements forming part of a retirement home. The insured,
along with the manufacturer, the architect and the general contractor, were served with a
Statement of Claim from the owner/operator of the retirement home, alleging structural
deficiencies, non-compliance with building code, improper load transfer, inspection and
construction-related failures. Total damages sought were in the amount of $1.2 million. The
claim was initiated after an independent firm, retained by the owner to review the buildings
structural design and construction, concluded there were substantial errors and omissions in
the design and construction of the structural steel framing on the project. Upon investigation,
ENCON-appointed experts were successful in reducing the sustainable value of the claim to
be between $460,000 and $580,000. This matter was eventually heard at a pre-trial, during
which the judge allocated responsibility across the insured, the architect and the contractor
with the insured picking up 45 per cent of the damages. A settlement was negotiated among
the parties to which ENCON contributed on behalf of the insured. ENCON also paid defence
costs totalling $90,000.

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9. Alleged Design Error

The insured was retained by the owner to prepare structural engineering plans for a cold
storage facility. He did not have a supervisory mandate as this was to be part of the
architects role. Years later, heavy winds caused the collapse of some thermal insulation
panels, which comprised much of the exterior wall. As this caused extensive damage, the
owner was indemnified by their property insurer for an amount of $323,000. The owners
insurer (plaintiff) then filed an action to recover those costs against the insured, the
architect, the contractors insurer and the manufacturer of the thermal insulation panels. The
allegations included failure to prepare adequate plans and specifications, failure to adequately
supervise the construction, faulty manufacturing of the thermal insulation panels and faulty
installation of the panels. This was essentially a building envelope issue, and the insured was
not expected to face much exposure to the damages. In fact, the focus was initially on the
architect who was responsible for the method of attachment of the paneling. Over the course
of investigation and examination for discovery, it was determined that the cause of collapse
was related to installation and not design. The action against the insured and the architect was
discontinued, and the manufacturer settled with the plaintiff. It is not known if the
manufacturer pursued the contractor for recovery. The total defence costs incurred by
ENCON in this matter were $20,000.

10. Negligent Design

The insured structural engineer was retained by a building owner for the design of a ten-story
building, which included two underground parking levels, an attached low-rise building and a
bus station. The main structure was constructed of reinforced concrete supported by a
concrete raft foundation. Following completion of the design, the contractor requested that
the wall and floor thickness in the building be reduced in an attempt to lower the cost of the
building. The insured engineer redesigned the project with the revised thickness, but failed to
revise the design factors for earthquake loading. As a result, the building was under-
designed. The plaintiff building owner sued the insured engineer, claiming $350,000 for
negligent design and the cost of remedial work to the building. Given the insureds clear
liability exposure, this matter was settled; defence costs totalled $60,000.

These Claims Examples are for illustrative purposes only. Please remember that only the insurance policy can give
actual terms, coverage, amounts, conditions and exclusions.
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