Quebec case sets limits on collaboration between consulting engineers

A ruling by the Quebec Court of Appeal last year will send ripples among consulting engineering companies who enter into agreements with each other to share future work.
The Quebec case involved IMS Experts-Conseils and Consultants VFP, two engineering companies that provided complementary engineering projects and had chosen to enter into a partnership for all large projects.
IMS won a large “Magnola Project” commission and by agreement with VFP hired several of the latter company’s engineers to help with the work. However, in the following three years VFP did not reciprocate with contract opportunities to IMS as it had contracted to do. Consequently, IMS tried to sue VFP for the $300,000 profits it had made on the Magnola project.
The Quebec courts decided that the Engineers’ Code of Ethics — the engineers’ duty to provide protection to the public — overrode the financial obligations of the contractual arrangement between the two consulting firms.
Essentially the courts decided that such arrangements between two consulting companies were not in the public interest because they might lead to companies recommending each other to clients, regardless of whether the other company is the most qualified one to do the work. A company might recommend its partner company to a client simply from the fear that they would be penalized if they didn’t fulfil their contractual obligation to pass on commissions to each other.
In April 2007 the Court of Appeal agreed with the decision of the Quebec Superior Court that the penalty clause cited in the dispute between the two consulting firms was therefore null and void.
Attorney Brigitte Chretien of RSW wrote an article on the case in Info-Conseil, the newsletter of the Association of Consulting Engineers of Quebec (AICQ) newsletter in October 2007. She wrote: “In conclusion, although it could be advantageous for engineering firms to collaborate on certain projects, it is important to remember that such collaboration cannot involve any particular benefits in return for either firm.”
Canadian Consulting Engineer will publish a more extensive article on the case, written by Miller Thomson LLP, in its March-April 2008 issue.