DISCIPLINE

PAUL BAINS, P.ENG. and
BAINS ENGINEERING CORP.

Editor's Note: APEGGA Council requires that The PEGG publish Discipline Committee decisions. Following are the details of a committee decision of May 30, 2003, involving the above.

SUMMARY
Engineers’ Duties to Third Parties

A complaint brought against Mr. Paul Bains, P.Eng., and Bains Engineering Corporation (the engineers) resulted in findings of unprofessional conduct and a violation of APEGGA’s Code of Ethics Rules #4 and #10. The matter was with respect to issuing a report to a client evaluating a third party’s technology.

This case raises important issues of policy – in very real terms, what duty does a professional engineer owe to a stranger? Is a professional engineer who is asked to complete a superficial review giving his client what his client asks for while in the process potentially hurting a third party, subject to sanction?

These where some of the difficult questions on which the Discipline Committee panel had to render a decision following a discipline hearing. Having heard from the Investigative Committee and the engineers, the Discipline Committee panel found that the engineers issued a report, albeit a superficial letter report, without have done the following:

a. discussing the third party’s process, nor the means of the process to control or achieve the desired outcome;
b. supporting the conclusions in the report by coherent technical or economic analysis;
c. conducting a complete investigation of an unfamiliar product;
d. contacting the third party to advise they had been retained to review their process or to seek clarification.

The Discipline Committee panel noted that an engineer’s primary duty is to the public. Secondly, there is also a high degree of duty and a significant responsibility to the client and finally a limited duty to a third party.

The panel’s position was that professional engineers do not owe third parties much, but they must conduct their businesses with integrity and openness so that third parties are not misled and so that they can make informed business decisions.

In this case, the engineers had a duty to inform the third party of the review and either disclosing they would be relying solely on a competitor’s assessment of the process or offering the third party an opportunity to reply to the competitor’s comments. Instead, the third party was “blindsided.”

Accordingly, the Discipline Committee panel ordered that the engineers be reprimanded for unprofessional conduct, that they pay part of the costs of the hearing, and that the decision and a summary of the case be published in The PEGG.

BACKGROUND

On March 27, 2002, the Discipline Committee received a request for a discipline hearing from Stewart McIntosh, P.Eng., on behalf of APEGGA’s Investigative Committee. The Discipline Committee responded and requested that the Investigative Committee provide specifics of the matters to be heard. On May 3, 2002, the Investigative Committee submitted the charges it would be presenting at the hearing. The Discipline Committee then asked the parties to provide their available dates for a hearing.

On July 15, 2002, the Discipline Committee issued a formal notice of hearing and served copies on Mr. Bains and Bains Engineering Corporation and on the Investigative Committee. At the same time, the Discipline Committee, according to its standard process for disclosure of documents, requested that the parties provide, to the panel and to each other, copies of documents on which they intend to rely at the hearing. All submissions were provided to the panel on Oct. 1, 2002.

THE HEARING

The hearing took place at the Association’s offices at 1600, 734 7th Ave. S.W., Calgary, Alberta, on Oct. 9, 2002. Barry Massing represented APEGGA’s Investigative Committee. Mr. Bains represented himself and Bains Engineering Corporation. The hearing was not completed in a day and was reconvened on Oct. 24, 2002. The panel and Mr. Bains appeared in the APEGGA office in Calgary as set forth above. Mr. Massing and Dwayne Chomyn, one of the panel’s counsel, appeared by way of videoconference from APEGGA’s offices in Edmonton.

THE CHARGES

The matters to be decided in this case, as brought forward by the Investigative Committee, were:

1. That on or about Dec. 11, 2000, Bains Engineering Corporation and Paul Bains, P.Eng., issued and delivered a report to a client evaluating ZeoTec Limited water softening equipment for the Neil Crawford Centre, which was completed and prepared for in the following circumstances:

a) There was no discussion in the report of the ZeoTec Limited process, nor the means of the process to control or achieve the desired chemistry;

b) Bains Engineering Corporation was not aware of ZeoTec Limited’s intended approach to corrosion control;

c) The conclusions in the report were not supported by coherent technical analysis;

d) The report reflects an incomplete investigation of an unfamiliar product;

e) Bains Engineering Corporation did not contact ZeoTec Limited to seek clarification, nor verify its findings, either of which could have removed Bains Engineering Corporation’s misunderstanding of the ZeoTec Limited proposal;

f) The report relies almost solely on the commentary from a competitor of ZeoTec Limited, without independent verification of the commentary, nor an opportunity for ZeoTec Limited to rebut that commentary;

2. That the conduct of Bains Engineering Corporation and Paul Bains, P.Eng., in this respect, constitutes unskilled practice of the profession and unprofessional conduct and constitutes a violation of APEGGA Code of Ethics Rules #1, #2, #4 and #10.

FINDINGS AND REASONS

This has been a very difficult case for us.

Firstly, we think that this case raises very important issues of policy. It asks us to consider in very real terms what duty a professional engineer owes to a "stranger."

To put this into perspective, it is necessary to begin by briefly and very generally outlining what this case is about. In the fall of 2000, Siemens Building Technologies ("Siemens") was responsible for maintaining and modifying the heating, ventilating and air conditioning (HVAC) system at the Neil Crawford Centre in Edmonton, Alberta. Bains Engineering Corporation was asked to undertake a review of some sort of ZeoTec Limited's ("ZeoTec") process and technology. Although there is a dispute as to exactly what Bains Engineering Corporation was asked to do, we are satisfied that Siemens was seeking a technical and economic review of ZeoTec's process and technology as applied to HVAC Systems.

Now there is no doubt in our minds that the review completed by Bains Engineering Corporation was very superficial and was not completed with adequate knowledge and understanding of ZeoTec's process and technology. Bains Engineering Corporation maintains that its client, Siemens, was looking for what we might call a "quick look" or a "gut assessment" of ZeoTec's process and technology and nothing more. What is more, Bains Engineering Corporation maintains that its client, Siemens, is happy with its work and did not want to pay for anything more than it received. It is true that there is no evidence that Siemens ever complained about the product that it received from Bains Engineering Corporation or that it wanted anything more than it received. But at the same time, ZeoTec complains that it lost some business as a result of this review and that it was not treated fairly.

This presents a dilemma. If a professional engineer is asked to complete a superficial review, gives his client what his client asks for, but in the process potentially hurts a third party, is he subject to sanction? We think that this is an important question that has significant implications for our profession.

Secondly, this case also raises difficult and troublesome factual challenges. The factual circumstances were difficult because the engineering concepts do not fall within the specialties and interests of either the Investigative Committee panel chair or any of the Discipline Committee panel members. As such, the Discipline Committee panel took great care to review the documents and transcripts to ensure that it absolutely understood the concepts and principles being discussed and applied. This was a time-consuming challenge and we are satisfied that we understand the evidence.

But the testimony was also troublesome because it was inconsistent. Not only did the evidence of the complainant, Mr. Humphrys, differ from the evidence of Mr. Bains and his associate, Mr. Simmons, but we have also concluded that Mr. Bains's evidence and Mr. Simmons's evidence was not consistent between the two of them. At times, it was internally contradictory as well. To put it another way, Mr. Bains and Mr. Simmons would say one thing at one time and a different and contradictory thing at another.

Here are some examples to illustrate our point. Mr. Simmons testified that there were no telephone conversations with Siemens about ZeoTec or the validity of the ZeoTec system. At another time, Mr. Simmons testified that he did have such telephone discussions with Siemens.

Mr. Bains, for example, in his initial statement to Mr. Feilden of the Investigative Committee, said that his mandate was to do a technical and economic evaluation of the ZeoTec system and a Lakos filter. At times, Mr. Bains seemed to put forward this position in front of us. He also testified, in contradiction to the above, that the terms and conditions of the evaluation of the proposals were to review the economic implications of the system. Mr. Simmons's evidence on this exact point is all over the place and, suffice it to say, is inconsistent and contradictory.

Without going into a complete review of every inconsistency and every contradiction, regretfully we have concluded that neither Mr. Bains nor Mr. Simmons were careful with respect to their testimony and their evidence, and it must be viewed with caution. We appreciate that the case is important and our words about Mr. Bains and Mr. Simmons are strong ones. It is because of this that we undertook a thorough and time-consuming analysis of the evidence before reaching our decision, and we hope this will explain the delay in releasing the decision.

A. The Duty Owed to Third Parties

The Notice of Hearing alleges that the conduct of Bains Engineering Corporation and Paul Bains constituted unskilled practice of the profession and unprofessional conduct and that it constituted a violation of APEGGA's Code of Ethics Rules #1, #2, #4 and #10. It is worthwhile to set out those rules:

1. Professional engineers, geologists and geophysicists shall have proper regard in all their work for the safety and welfare of all persons and for the physical environment affected by their work.

2. Professional engineers, geologists and geophysicists shall undertake only work that they are competent to perform by virtue of training and experience and shall express opinions on engineering, geological or geophysical matters only on the basis of adequate knowledge and honest conviction.

4. Professional engineers, geologists and geophysicists shall act for their clients or employers as faithful agents or trustees and shall always act independently and with fairness and justice to all parties.

10. Professional engineers, geologists and geophysicists shall conduct
themselves toward other professional engineers, geologists and
geophysicists and toward employees and others with fairness and
good faith.

What is at issue, at least with respect to ZeoTec, is whether a professional engineer and Bains Engineering Corporation's position owe a duty to ZeoTec and, if so, what sort of a duty? The Investigative Committee points to the words all persons in Rule #1, all parties in Rule #4 and others in Rule #10, and says that Bains Engineering Corporation absolutely did owe something to ZeoTec.

The Investigative Committee says that Bains Engineering Corporation had a duty to fully and fairly review ZeoTec's process and technology and impartially report its finding to its client. It says that what in fact happened was Bains Engineering Corporation relied on a competitor's review of ZeoTec's process and technology, which was at best superficial and certainly could not be said to be either fair or impartial.

We do not completely agree with the Investigative Committee. We do not think that Bains Engineering Corporation had a duty to fully and fairly review ZeoTec's process and technology in the circumstances and impartially report its findings to its client.

An engineer's overriding duty, of course, is to serve the public. APEGGA has seen illustrations of this in other cases before it. For instance, in APEGGA v. Clayre, the discipline case addressed the professional responsibility that arises when a professional engineer's client's interests differ from those of a city's development department.

In that case, the city was demanding that the engineer's client, an alleged slum landlord, make repairs to a dilapidated house in Edmonton's inner city. The panel found that the professional engineer identified too closely with his client's interests and did not adequately serve the greater public interest. The Clayre case stands for the proposition that a client's interests are subservient to those of the state, particularly in matters concerning public safety and accountability.

But what do we make of this case? What happens when a client, like Simmons, says, in effect, I could make a completely uninformed guess on how to proceed in this case on my own, but I would like you to make the guess for me? What happens where the client says, in effect, I don't want to spend too much (if anything) on this problem, so guess for me because your instincts are probably better than mine given your experience and profession?

What is the engineer to do? Can the engineer accept the engagement on those terms?

The Investigative Committee, we would think, would say no. The Investigative Committee would say that the engineer has a duty to "fully and fairly review" ZeoTec's process and technology and "impartially" report its finding to its client. This is laudable, but we do not entirely agree with this position.

We think a professional engineer could accept such an engagement, but he would still owe some limited duty to a party in ZeoTec's position. We think that Bains Engineering Corporation relied virtually exclusively on a competitor's assessment of ZeoTec's process and technology and did not disclose this to either its client or to ZeoTec. What is more, it did not tell ZeoTec what it was doing and on what terms so ZeoTec could not make an informed decision as to whether or not to proceed and participate in the process.

We think that Bains Engineering Corporation's primary duty, of course, is to the public. It also has a high duty and a significant responsibility to its client, in this case, Siemens. We think an engineer can take on a project on the terms of the engagement here, but we think that it has to do so clearly and openly. It should confirm the nature of the engagement with the client and we think that it should have disclosed to ZeoTec what it was engaged to do and how it would complete the task.

We think that Bains Engineering Corporation had a duty to tell ZeoTec that it had been engaged to do a superficial review of their process and technology and a superficial economic analysis of the project and it should have disclosed that it would either be relying on a competitor's assessment of that product or it should have offered ZeoTec an opportunity to reply to the competitor's comments before essentially parroting them and passing them on to the client as fact.

ZeoTec, instead, was completely blindsided by this process. ZeoTec must have thought that Bains Engineering Corporation was undertaking a full, fair and impartial review of its product and process and that was not the case at all. We think that ZeoTec was blindsided and its reputation and business were probably hurt. If it had understood what Bains Engineering Corporation was doing, it could have chosen not to participate and place anything at risk.

This is not an onerous responsibility. We do not think that professional engineers owe third parties much. But engineers must conduct their business with integrity and openness so that third parties in ZeoTec's position are not misled and can make informed business decisions. This is where Bains Engineering Corporation failed its client, ZeoTec and the profession.

B. The Answers to the Specific Charges

1a. There was no discussion in the report of the ZeoTec Limited process, nor the means of the process to control or achieve the desired chemistry.

We have reviewed the letter from Bains Engineering Corporation dated Dec. 11, 2000, and we find it to be a report to a client. We do not accept that it was just a letter to put in a file and we do not accept either Mr. Bains’s or Mr. Simmons’s explanation of account for this letter. It was a report, a poorly drafted report and it did not do anything that either Mr. Bains or Mr. Simmons purported it to do.

There is no discussion in the report of ZeoTec Limited’s process, not the means of the process to control or achieve the desired chemistry. It is, in effect, a parroted letter of a competitor’s review of the ZeoTec Limited process.

1b. Bains Engineering Corporation was not aware of ZeoTec Limited’s intended approach to corrosion control.

While Mr. Bains and Mr. Simmons testified that they were aware of ZeoTec Limited’s intended approach to corrosion control, they rejected it, without analysis, on the basis that ZeoTec would not have the opportunity to do corrosion control.

1c. The conclusion in the report were not supported by coherent technical analysis.

The conclusions in the report were not supported coherent technical analysis. They were also not supported by coherent economic analysis. The letter purports to be a technical review but Mr. Bains testified that at the end of the day he did not accept ZeoTec’s system because of the economic implications of it. Mr. Bain’s and Mr. Simmons’s evidence on this was completely inconsistent and contradictory.

The panel believes that the mandate was to do a technical and economic evaluation of the ZeoTec system. We are prepared to accept for purposes of the hearing that it was supposed to be a superficial analysis, but we think it should have been disclosed to ZeoTec.

1d. The report reflects an incomplete investigation of an unfamiliar product.

Even Mr. Simmons agrees that the investigation was incomplete and that he was not familiar with the product. As Mr. Simmons stated in his evidence, “if you do consider it a report, I would say you are quite right in saying it is very flimsy.” We do find it to be a report. We are not so troubled the fact that it is indeed flimsy, but we are troubled by the fact that none of this was disclosed properly to ZeoTec.

1e. Bains Engineering Corporation did not contact ZeoTec Limited to seek clarification, nor verify its findings, either of which could have removed Bains Engineering Corporation’s misunderstanding of the ZeoTec Limited proposal.

Here lies the problem as we have said above. ZeoTec was not dealt with fairly or adequately. ZeoTec suffered as a result of their treatment.

1f. The report relies almost solely on the commentary from a competitor of ZeoTec Limited without independent verification of the commentary, nor an opportunity for ZeoTec Limited to rebut that commentary.

The report does rely almost exclusively on the commentary from a competitor of ZeoTec without any independent verification of that commentary nor an opportunity for ZeoTec to rebut that commentary nor even disclosure to ZeoTec that such and outcome may occur.

As we said, Bains Engineering Corporation did not necessarily need to contact ZeoTec or provide ZeoTec with an opportunity to rebut the commentary, but ZeoTec should have been able to enter this process with open eyes knowing what was going to occur so that it could make an informed decision as to whether to participate in the proceedings. We think it would have been better to allow ZeoTec the opportunity to rebut the commentary, but that would only have been one way to satisfy our concerns.

We wish to reiterate that we do not think that we are asking professional engineers to do much in this respect, simply to treat the public fairly and honestly.

2. That the conduct of Bains Engineering Corporation and Paul Bains, P.Eng., in this respect, constitutes unskilled practice of the profession and unprofessional conduct and constitutes a violation of APEGGA Code of Ethics Rules #1, #2, #4 and #10.

Regarding the Code of Ethics, we find that there has been no violation of Rule #1. We think that this clause is aimed at the safety and welfare of people but we think that stretching the word welfare to catch this circumstance would be too broad.

We do not find that there has been any violation of Rule #2.

We find there has been a violation of Rule #4. While we do not think that this imposes an onerous obligation toward third parties, we do not think that Bains Engineering Corporation acted independently and it certainly did not treat ZeoTec fairly.

We find that here has been a violation of Rule #10. We do not think that Bains Engineering Corporation treated ZeoTec fairly.

For the above reasons, the panel finds that the conduct of Paul Bains, P.Eng., and Bains Engineering Corporation constitutes unprofessional conduct but that it does not constitute unskilled practice.

THE ORDERS

On March 25, 2003, the Panel’s findings and reasons were issued to Mr. Bains and Bains Engineering and the Investigative Committee. In its letter, the panel indicated that it would receive submissions in writing from the parties in the matter of the orders to be made.

The Investigative Committee presented a submission dated March 31, 2003, summarizing its cost and recommending sanctions. Mr. Bains and Bains Engineering did not make a submission.

On April 23, 2003, the panel requested the Director of Professional Practice (the director) for information on the costs associated with the hearing. The director wrote to the parties on April 23, 2003, indicating the costs that his office had determined and noting that he would provide a copy of that letter to the panel on April 30, 2003, along with any comments either party wished to make. Neither party submitted a response.

Pursuant to the panel’s findings and the submission made by the Investigative Committee, the panel makes the following orders:

1. That Bains Engineering Corporation and Paul Bains be reprimanded for unprofessional conduct.

2. That Bains Engineering Corporation and Paul Bains pay $2,397 to the Association (APEGGA), being part of the costs of the hearing.

3. That the permit to practice of the Bains Engineering Corporation and the registration of Paul Bains as a professional engineer be suspended if order 2 is not satisfied within 60 days of this decision being served on them, and that these suspensions remain in effect until order 2 is satisfied.

4. That this decision and a summary of this case be published in The PEGG.