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Southern Alberta Opium Feasibility Study - $6000/HA vs. $2000/HA Wheat April 26, 2008

Posted by infinitystudies in Agriculture, Health, International, Medicine, Opium, Places, Research, alberta, lethbridge.
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This project was untertaken by John Martin, Ian Ouerkerk, Curtis Goodman, Kyle Mesic, and James Bishop. Together we make up Suits Associates International* and we are going to investigate the relevant issues surrounding opium production in Southern Alberta - specifically in the Lethbridge area. We feel will be of great interest to you as investors::

What kind of money are we looking at for the people in the area?

Right now there is a group of twenty southern Alberta farmers and businessmen on side with the idea of commercially growing poppies in southern Alberta. The most prominent spokesperon is Glen Metzler, a Lethbridge businessman.

He and other sources have said poppies will pay more per acre than any other crop we’ve grown, perfect for a struggling farming industry – how much can farmers expect to make?

As much as $6000 per hectare! While wheat farming generates about $825 per acre*.

Metzler and his associates (which I’ll come back to in a moment) have teamed up under the title of API labs and plan to begin producing medicinal poppies in our area in the near future. Their plans include a $40 million pharmaceutical plant near Lethbridge, resulting in 150 new jobs in the Lethbridge area and $300 million injected annually into the local economy.

Click on the PowerPoint link for the full presentation:

southern-alberta-opium-production-feasibility-study

(more…)

National Culture: Canadian Subsidiary, France Headquarters - Obstacles to Commerce April 21, 2008

Posted by infinitystudies in Business, Culture, International, Management.
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Hofstede Analysis

To accurately define culture there are three key aspects to understand - the pervasive shared beliefs, norms, and values which guide everyday life. An important distinction to make is the fact that culture does not exist - instead it is constructed by humans, as a tool to identify and explain behaviour (Hofstede, 2002). It is generally understood that business culture is largely influenced by national culture. These organization-specific (or professional) cultures are often discovered or created as members deal with internal and external problems. As the business world continues to adapt to a truly globalized marketplace it is important for organizations to recognize the subtle differences among national cultures and how this impacts operations. The firm Sodexo requires an astute understanding from managers of cultural difference - especially considering they operate in over 80 countries worldwide. The complexity of business interactions can be minimized with better understanding of the “acceptable ways to conduct business in a society” (Cullen/Parboteeah, 2005).

Geert Hofstede has led the way in developing accurate models for measuring and comparing the subtleties of national culture. Originally Hofstede published a report after extensive participant-based research at IBM in the 1980s. His most recent work, released in 2001, added great clarification and empirical evidence to his five dimensions of national culture: Power Distance, Uncertainty Avoidance, Individualism, Masculinity, and Long-term Orientation. These dimensions have now been researched in seventy different countries - and have come to be accepted in the international business community as reliable measures of national culture.

Understanding of these five dimensions will give business managers the knowledge to have meaningful and effective interactions between cultures. In the case of Sodexo, where the corporate headquarters are located in France with subsidiaries across the world, their success has largely been in the way they leverage their market penetration experience in various cultural contexts. A thorough examination of the cultural differences between the subsidiary host country, Canada, and the corporate headquarters demonstrates potential issues, and how this may impact manager effectiveness. The following provides a brief overview of Hofstede’s five dimensions and how this pertains to Sodexo.

Power distance (PDI) refers to the distribution of power among a group within society. It is generally understood that inequality naturally exists in society, across nations however these differences become much more noticeable. According to Hofstede’s study the world PDI average is 55 - this represents a distinct inequality in power distribution. Examining the impacts of PDI across the operating environments of Sodexo - from corporate headquarters to the subsidiary the differences are apparent. Compared to the world average France has a high PDI (70), representative of inequalities that are generally accepted among the population. Canada’s PDI is 39, which demonstrates greater equality within society and according to Hofstede promotes cooperation and creates a more stable cultural environment.

The second measure of national culture according to Hofstede is Individualism (IDV), which assesses the affinity for members to integrate into groups. Both Canada and France rank relatively high with a tendency towards individualism, (ranking 80 and 71 respectively). This represents relatively loose bonds between individuals, who are primarily concerned with immediate family and themselves. According to Hofstede countries with high IDV rankings tend to value personal achievement and are much more self-reliant. The world average IDV ranking is 40, which signifies a collectivist-attitude, with high value placed on group cohesiveness and loyalty. The similarities between Canada and France do not indicate cultural hurdles to overcome.

Masculinity (MAS) is another cultural dimension which varies significantly across nations. Essentially this measure examines the difference in gender attitudes, where masculinity reflects an assertive and competitive nature, opposite to this is femininity which is represented by modest and caring values. Hofstede’s research suggests two common characteristics of this measure: (a) women’s values differ less among societies than men’s values; (b) men’s values from one country to another contain [polar differences] from very assertive and competitive (masculine) on one side, to modest and caring on the other (feminine) (Hofstede, Geert Hofstede Cultural Dimensions, 2008). Applying the concept of masculinity to Canada and France the raw scores indicate similarities to the world average (48 ) - which suggests a balance of assertiveness and modesty.

An important element for measuring national culture is the Uncertainty Avoidance Index (UAI). Simply put UAI represents the level of comfort in unstructured situations - which represents deviation from the “norm”. Cultures that seek to avoid uncertainty will often utilize strict laws and rules, or even a religious belief in absolute Truth. This characterizes France’s culture, with a raw score of 80 and a tendency towards codification and a rule based society. On the other end of the spectrum, there are cultures which embrace change, uncertainty, and are relativistic in nature. Canada ranks relatively low in UAI, with a score of 43, which represents a higher tolerance towards different beliefs, thoughts, and values - and little codification of rules and minor concern for controlling outcomes. The differing scores for both countries represent a call to attention for regional managers, who must understand the differing thought-process of Canadian employees towards the future.

The final dimension of Hofstede’s analysis of national culture is that of Long-Term Orientation (LTO). This fifth element was recently added by Hofstede in an attempt to incorporate more Eastern attitudes, and is based on Confucian principles. “Values associated with LTO are thrift and perseverance; values associated with short-term orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’” (Hofstede, Geert Hofstede Cultural Dimensions, 2008). Since this element of Hofstede’s analysis was recently added no data exists for France: this makes accurate analysis difficult. The world average was 44, and Canada ranked relatively low at 20.

Overall, we should expect smooth operations from Sodexo’s headquarters to the Canadian subsidiary. France ranks with a high Power Distance Index compared to Canada (70-39), this allows for hierarchal relations to exist between firm operations. In terms of Individualism both countries rank relatively equal (71-80) which emphasizes personal motivation and success; the same is true of masculinity which represents similar attitudes towards gender roles. An interesting difference was in the Uncertainty Avoidance Index - which ranked France high (80-43), meaning issues could arise in the future over rules and the importance of central planning. Since no data exists for France on Long-Term Orientation it is difficult to compare the two countries, we do know Canada ranks low (20) which is on par with countries such as Norway and the United Kingdom.

World Average - Hofestede 5 Dimensions of National Culture

France - Hofestede 5 Dimensions of National Culture

Canada - Hofestede 5 Dimensions of National Culture

———

This was written by Curtis Goodman in April 2008.

–/

References:

Cullen/Parboteeah. (2005). Culture and Multinational Management. In Multinational Management: A Strategic Approach (3rd ed., pp. 42-77). Thomson Nelson.

Datamoniter. (2008). Sodexho Alliance SWOT analysis. Business Source Complete.

Hofstede, G. (2002). Dimensions do Not Exist: A Reply to Brendan McSweeney. Human Relations , 55 (11).

Hofstede, G. (2008, 03 25). Geert Hofstede Cultural Dimensions. Retrieved from http://www.geert-hofstede.com/geert_hofstede_resources.shtml

Highway Trash - Visually Stimulating? April 18, 2008

Posted by infinitystudies in Environment, Places.
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Lethbridge Dirty Secret

As one drives down the #3 Highway, passing through the majestic Lethbridge coulees, they cannot help but notice the blatant environmental discrepancy. Here lay a private dump, protected by grandfather clauses - which permit the continued use regardless of current laws. The daily commuter cannot help but notice this mounting pile which fill an area once eroded by the wind and water. Although there are some limitations on what can be dumped at this location, it still presents a visual concern… but is this a bad thing? Should those living in our disposable society be subjected to the evidence of our wastefulness? Does this motivate individual action - or does it allow complacency to set in among the population?

A Short Review of: E=MC2 by David Bodanis April 16, 2008

Posted by infinitystudies in Biography, Book Review, Einstein, Energy, Physics, nuclear.
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e=mc2

A Biography of the World’s Most Famous Equation

Author: David Bodanis

I am always weary when I pick up books with pull-quotes of previous popular critics - like the John Polanyi’s from the Globe and Mail “Exhilarating. E=mc2 is to be treasured.” I cannot help but wonder if the book will live up to such blatant marketing-ploys promising instant enlightenment. The author David Bodanis, an academic at Oxford is able to deliver on those claims. His concise account surrounding the development of popular science’s biggest breakthrough of the 20th century; the preface details his muse of the book as Cameron Diaz - whom queried as to the meaning of e=mc2 in a television interview.

“It got me thinking. Everyone knows that e=mc2 is really important, but they don’t know what it means, and that’s frustrating, because the equation is so short that you’d think it would be understandable.”

With this as his mission, Bodanis recreates the era through numerous stories of scientists working in their respective fields - piecing together the breakthroughs; the book offers great clarity to the subject. Demonstrating the practical applications of the equation in daily devices such as - televisions, smoke alarms, PET scanners; through the abstract notions of forming stars and distant black holes; and most importantly the creation of the world’s most deadly weapon - the Atomic Bomb. It is difficult to imagine that only a short 100 years ago our world was a wholly-different place, by far a simpler time in history. Bodanis provides a narrative of the time – introducing each character and their relation to one another, and the context of their role, which ultimately led to Albert Einstein’s major contribution to theoretical physics. Exploring the lives of:

The first half of the book is dedicated to developing the main character – Albert Einstein, and his intellectual tools – E, =, M, C, and the important exponent 2. The reader is presented with the reality of Einstein’s early career in a patent office, a struggling academic trying to maintain a young family. Nevertheless Bodanis meticulously lays out the basics of Einstein’s Theory of Relativity. Developing each of the symbols into meaningful entities that together changed humanity – for Energy is equal to the Mass of a substance multiplied by the Speed of light Squared. After reading this fully explanatory section it becomes glaringly obvious just how simple the equation really is, the transitions between chapters gives a clever account of the importance of each symbol. By the fourth chapter he finally lets it out:

The Victorians had thought they found all possible sources of energy there were: chemical energy, heat energy, magnetic energy, and the rest. But by 1905 Einstein could say… there is another place you can look where you’ll find more. His equation was like a telescope to lead there, but the hiding place wasn’t far… it was hidden away in solid matter itself.

What I found particularly useful of this book was the attention given to the historical context of the time. The development of the theory of relativity resulted in the division of the world’s military might – resulting in a scientific gold-rush of sorts, where funding billowed into national defense programs. These programs competed on an international scale, largely resulting in the Cold War between the United States and the Soviet Union which contributed to the increase of nuclear-weapon stockpiles. The history behind Einstein’s German descent adds an interesting twist to the story – as World War II spurred such defense initiatives as: Los Alamos National Laboratory (LANL), Chalk River (CRNL), European Organization for Nuclear Research (CERN), and government sponsored Manhattan project. As the world empires attempted to out-discover their enemies, they were also contributing to the world’s deadliest weapon. The book details conspiracy, espionage, and sabotage attempts on both sides – and the highly secretive government involvement. This background information provides the reader a rich experience of the events leading to the momentous and deadly results of the first nuclear attacks – over Hiroshima and Nagasaki, Japan.

These worldly consequences of such human-weapons are compared to the larger application of the equation. Bodanis dedicates the last segment of the book to an understanding of how e=mc2 contributes in the daily functioning of our universe – ultimately controlling everything “from how the first stars ignited, to how the life will end.” It is amazing to think the equation provides the simplest account of how the Sun produces it’s seemingly endless supply – and it holds the potential for the future of human civilization. The discussion shifts towards the daily importance of the equation, on everything from medical equipment to nuclear-power generation. It was particularly interesting how Bodanis explored the gender issues in the scientific community – which proved to be a hindrance in the equations evolution. But no such discussion could be complete without the abstract theoretical impact of e=mc2, where the current state of order rarely experiences “mass and energy… transforming into each other” as in the distant past; and how the equation permits the existence of Black Holes in the Universe. Overall Bodanis is successful in delivering on his promise of a biography on the world’s most famous equation.

The entire book proves to be a useful and enjoyable read. Complete with illustrations, photos, notes, further reading suggestions, and a comprehensive additional notes section – the book provides an excellent resource for those curious of modern science and Albert Einstein. The tone of the book is accessible to almost any reader, and will no doubt stimulate curiosity through an entertaining depiction of the time. I would highly recommend this book to any person interested in the subject – or even a high school physics teacher looking for inspiration to the classroom!

–/

This review was written by Curtis Goodman on April 15th, 2008.

For more information:

www.davidbodanis.com

http://books.google.ca/books?id=0m0AAAAACAAJ&dq=David+Bodanis&hl=en&prev=http://www.google.ca/search?hl=en&q=david+bodanis&btnG=Search&sa=X&oi=print&ct=result&cd=3&cad=author-navigational

Protected: La Paz, Bolivia- Area Picture April 15, 2008

Posted by infinitystudies in International, Places.
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Malthus - Applied to Human Energy Consumption March 28, 2008

Posted by infinitystudies in Energy, International, Population.
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Interested in energy?

Why not join the movement,

“because it is not about payin’ - its more about wasting energy…”

April 1st, 2008 the Movement Begins Continues..

What I find interesting about the energy markets can be simply explained in pictures:

The first observation is of the human aptitude to consume energy, which assures future energy market demand

Historical Human Energy Consumption

The second observation is the fact that the Earth is fully capable of sustaining present and future demand:

Earth Energy Potential

(estimated energy naturally produced by Earth and Sun)

Although investment will be needed - it seems the Earth’s potential is not being utilized.. some say it is because such technologies have longer “pay-back periods” - or slower returns on investment compared to what is currently offered:

Current Means of Energy Production 2008

What surprises me, is also that which amounts to global conflict - is the way in which humans seek to meet their energy demand, currently exploiting non-renewable resources at an unprecedented rate, through the easiest means possible - not necessarily the most profitable..

Energy Return on Investment by Type

What concerns me, is the impacts of cycle inefficiencies have on the Earth’s system- just think a decent solar panel has a conversion efficiency of ~20%, natural gas powered turbines are ~40% effective… those numbers seemingly different should be viewed with caution.. Let us not forget the macro-costs of pursuing non-renewable energy production.

If humans intend on further exploitation of petroleum and fossil fuel resources, then we must also be willing to examine some of the bi-products.

NASA Pollution World Map

Perhaps the gases released through converting these natural resources into usable energy pose a serious threat to the integrity of homeostasis on the planet.

Maybe there is not enough conclusive evidence of this yet?

Perhaps humans have defied natural opportunities for rigid, predictable - and seemingly controllable systems.. just look at how conventional human structures are also responsible for global pollution:

Human Architecture - Global Impact

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 —

My logical conclusion would be to say… let us re-examine our current model of energy use…

 

Power System

 

 

 

 

 

 

 

 

 

 

Think of the infrastructure required to implement large scale projects —

Think of the consequences of large scale projects gone wrong:

Chernobyl Disaster - 1986

Consider the lasting results of one such disaster… what was human response?

World Nuclear Reactor Map

 

 

 

 

 

 

 

 

What can we make of this?

Consider the words of Thomas Malthus who wrote at the turn of the 17th century (1800s)

“The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.”

A stark comment written over 200 years ago, by a man who explained the concept of exponential population growth.

Scroll back up, look at the first photo - think of the global population.

What do we know?

Energy is useful in performing tasks for humans. There are more humans today than ever before, therefore there is also the greatest demand for energy than ever before. Much of our society depends on reliable sources of energy to get work done.

There are many potential sources for energy - humans have pursued Petroleum,Natural Gas, and Coal aggressively to meet the rising demands. These methods require immense alignment of international businesses - from extraction, processing, converting, transporting, to retailing. Every step requires value-adding - resulting in your monthly electric bill.

The consequences of pursuing such course of action truly remain unknown -

However it is generally understood that “for every action, there is an equal and opposite reaction”

World Grain Prices

but there is no one “reaction” that will occur…

the butterfly effect demonstrates the impact of a single action resulting large variations in long-term behaviour of a system

Energy dependent societies must realize their situation.

Question the status quo - what alternatives suit you?

positive thought and action will produce positive results… creativity will inspire the human race

Ideal Human Habitat

— /

 

Picture Sources:

www.livescience.com

www.treehugger.com

en.wikipedia.org

google.images

NASA

*see picture links for more information

Increasing Interdependence of US - Canadian Energy Grid March 18, 2008

Posted by infinitystudies in Energy, International, Places.
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Montana Alberta Tie Ltd
MATL

 

A significant step towards further Canadian and American market integration has been amounting as of recent - I am referring to the first inter-national merchant power transmission line. Expected to be complete in 2009, the estimated $140 million dollar endeavor seeks to build a 346km transmission line from Lethbridge, Alberta to Great Falls, Montana.

 

The intense and vast supply of wind along the proposed route provides excellent location advantages for the project. “The MATL line will enable the development of new wind energy projects by linking this renewable and emission-free source of power to consumers across North America.”* Already the MATL transmission line has been leased to wind energy projects in Montana with new projects expected to emerge upon completion. Montana-based McCormick Ranch Wind Park project is expected to produce 300 MegaWatts of power to feed the line. This $500 million dollar project is just one of the few - expected to total over $1 billion in future investments. Although in an impact study released by US federal and state regulators released in February 2008 stated: “while wind farms would be the first users, it is reasonably foreseeable that other shippers can own the right to ship electricity over the proposed line.”

projhighmap2.gif

This loophole in MATL service contract entertains the notion of upstream environmental implications. The recent controversy over the Alberta Energy Utilities Board (EUB) resulted in the fracturing of the system into two regulatory bodies; one for energy resources, the other responsible for utilities for the province. Prior to the media-strom Enmax proposed to build a $2.5B natural gas and coal facility South of Calgary, and Energy Alberta wanted to build Alberta’s first nuclear power-site. Since then Enmax plans to have one of three plants operational by 2009, and Energy Alberta has been acquired by Bruce Power (a Toronto company). Upon completion in 2017, these two projects alone stand to generate close to 5,000 Megawatts of power. This would be enough to power three million additional homes. Interestingly enough, if Alberta were to maintain 2.5% annual population growth straight through 2017 only an additional one million residents would require power.

The Calgary firm - Montana Alberta Tie Ltd. (MATL) is a wholly owned subsidiary, and the principle asset of Tonbridge Power Company (also Toronto-based). Tonbridge is a developer of power transmission lines. As of January 31, 2008 the project received conditional approval from the Alberta Energy Utilities Board (EUB); already having approval from the Canadian National Energy Board (April 2007) and the US Federal Energy Regulation Commission (July 2006).

This project is an interesting cross-border environmental endeavor. According to the report released by the EUB the initiative will secure another viable source of power for the Alberta market - which has seen relatively little development in recent years. However before the project can receive approval it “must conduct further discussions with affected landowners along the approved route to address the mitigation of specific impacts on individual landowners. MATL must report back to the EUB about this process by April 30, 2008.”According to the Lethbridge Herald, 16 landowners have filed appeals to the EUB - a date of June 12th is set to hear the case. The 300MW bi-directional line raises concern for some local area residents, electro-magnetic radiation (EMR) emitted by the line will disrupt the current way of life along the 346 kilometre stretch it will occupy between Lethbridge and Great Falls. Landowners have the chance to go through Approved Dispute Resolution (ADR) to have their objections raised - Certus Strategies has been called to the helm to lead the consultation process. In Montana it appears as no major concerns have been raised, rather support for the long-term economic impact of the project which promises:

  • increasing the reliability and stability of the existing power grids
  • enhancing inter-region import/export capabilities - provide access to wind resources in Montana
  • provide more competition and options to the marketplace
  • provide greater flexibility in scheduling generator maintenance
  • facilitate the optimal allocation of generation resources

Although the MATL project weighs heavily on government approval, there is little doubt the project will face much opposition and should commence construction in summer 2008, and be operational by 2009. It is promising to see the development of wind technology, especially in Southern Alberta. However this signifies yet another milestone towards further integration and consolidation with the US-market (or in other terms subjugation of the Canadian marketplace under a green veil).

 

What can we expect from all of this? It seems that the demand for energy continues to increase, and since deregulation in 2001 it has become quite profitable to meet that demand. But we must ask, what are the actual future electrical needs of Albertans? As it stands projects are being approved aimed to increase production to meet the demands of two million households (in addition to a generous expected population) by 2017. Will the MATL project deliver? One can only hope so, the potential for wind generation along this corridor should allow for the MATL project to become a global leader in environmentally-responsible energy development. But is this the intended purpose of this project? Will further integration of US-Canadian energy markets bring stability and increased competition to the marketplace? Maybe it would be wise to examine this from a macro-perspective… what are the demands of our Southern neighbors?

 

Written by Curtis Goodman
Why not increase your energy EFFICIENCY and limit your consumption – perhaps together we can avoid the further toxification of Alberta habitat.

——–

References:

“Americans Eager to See Power Line Ok’d” by Rick Swihart, Lethbridge Herald, March 17th 2008 Section A1

http://www.matl.ca/

http://tonbridgepower.com/index.aspx

http://www.policyresearch.gc.ca/doclib/Horizons_V9N4_e.pdf

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=0b3902e4-9267-4bba-8f5a-f4a4b7f8a77f

http://www.policyresearch.gc.ca/doclib/Horizons_V9N4_e.pdf

http://www.cwta.ca/CWTASite/english/whatsnew.html

http://www.joconl.com/article/id26304

http://windenergynews.blogspot.com/2007/02/proposed-wind-farm-near-cut-bank-may.html

http://www.auc.ab.ca/aucdocs/documents/decisions/2008/EUBU2008-6.pdf

http://www.greatfallstribune.com/apps/pbcs.dll/article?AID=/20080212/NEWS01/802120301/1002

http://commerce.mt.gov/energy/mtalberta.asp

*All websites visited March 17th, 2008

Concerns?

MATL@mt.gov

feedback@matl.ca

www.certus-strategies.com

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The Machine is Us March 16, 2008

Posted by infinitystudies in Internet.
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An interesting view of the changing context of language in our tech-society, from an Anthropological perspective…

I stumbled upon this at:

http://mediatedcultures.net/

Protected: Curriculum Vitae - March 2008 March 15, 2008

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Professional Liability - Canadian Overview March 15, 2008

Posted by infinitystudies in Management.
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Professional Negligence

 


Written by

Curtis Goodman

Darren Davies


Prepared for

UofL Management Law - 3010

November 22, 2007


Background Information

Professional liability and negligence should among the most significant matters concerning any professional today. Nearly all business transactions performed on a day-to-day basis will have some risk of professional liability. Be it the real estate agent offering advice to clients; accountants preparing financial statements; or the financial advisor’s market speculations – all professionals have a special relationship with the clients they serve. They offer services based on their specialized knowledge or skill – which are relied upon by the client as being the best solutions to their problems. Issues arise as a result of these services, where clients may be discontented over the quality of work performed – which may have resulted in economic hardship, or in some cases physical harm. As the business environment continues to globalize and increase in complexity, as does the need to understand the obligations and responsibilities of professionals. The fundamental areas of professional liability include: duty of care; standard of care; fiduciary duty; reasonable reliance; errors and omissions insurance; and how these fit within the legal framework of society.

Legal Context of Professional Liability

What Defines a Professional?

The contributions of professionals add great value to our society, but these individuals also have the ability to pose great detriment to society. So how do we define a professional? Legal definition classifies a person based on “such criteria as advanced and specialized training, and the continued use of intellect, discretion, and judgment, the majority of statutes merely present an open-ended list of job categories.”[1] In more general terms common professions include: accountants, architects and designers, bankers, lawyers, travel agents, and real-estate agents. By no means does this represent an exhaustive list of professions – but it does provide a clear context to distinguish the varying standards among professions. In some cases the standards may be formalized by professional organizations or they may be defined by legal precedent. Whether the professional is: under-trained; abusing their rights; being deceitful; or committing unfair practices – our society must have a channel to deal with these issues. There are three ways in which a professional can be held liable for their actions: under contract law; tort liability – negligence; fiduciary obligations and breach of trust.

Contract Law

Under contract law a professional is required to provide a reasonable level of performance. If sub-standard service were to result in economic losses, a professional may be liable under a breach of contract.[2] The level of service expected of a professional is usually set by professional organizations, usually in the form of acceptable conduct guidelines, fundamental principles, and standards. Although in the case of Kripps v. Touche Ross (1997) the courts narrowed the scope of the applicability of such standards.[3] Regardless, this aspect of contract law gives a basis to deal with economic losses arising from expectation shortcomings, making it “much better suited than tort law to deal with economic losses.”[4] In most cases contract liability is limited to the client in which the contract exists. Therefore third parties would have no claims as a result of sub-standard service. Professionals can use contractual agreements to their advantage, in-so-much as they can set limits, terms, and conditions. Under such contracts the professional has a foundation for a legal defense, which may defer potential litigation. These conditions of the contract will not protect the professional in their negligible actions under tort law however.

Tort Law – Negligence

Whenever wrongful conduct is involved the victim may be compensated for damages suffered. This is known as a tort and is defined as; a case where one person causes injury to another, harming his or her person, property, or reputation. If the actions of the professional were to fall below a minimum acceptable standard, then the right to sue for remedies arises. The two major focuses of torts are: intentional or deliberate acts; and unintentional or negligent acts. In the business world negligence is the most important area for tort liability. Negligence involves the unintentional careless conduct causing injury to another person or his property. Professional negligence under tort law must be distinguished between ordinary negligence. The major difference lies in the “reasonable reliance” the plaintiff has on the advice given. This is part of the four-part test to establish professional negligence: that a duty of care existed; that the professional breached that duty of care; causation exists; and that due to negligence calculable damages were incurred by the claimant.

Duty of Care

For professionals a primary question is to whom is a duty of cared owed to. In the past liability of professionals would only be owed to their clients based on the contracts they forged together and to their colleagues and clients based on fiduciary duty. When poor service is provided the liability would be held to the losses that the immediate party had suffered due to the breach in contract. In recent years courts have been willing to expand liability to include third parties.[5]

The courts establish if a duty of cared is owed with the reasonable foreseeability test. If it is concluded that it is reasonable foreseeable that the conduct in question would cause harm to the plaintiff, a duty of care exists. In the case of Donoghue versus v. Stevenson Lord Atkin, the presiding judge, made the following classic statement;

You must take reasonable care to avoid acts or omissions which you can reasonable foresee would be likely to injure your neighbor. Who, then in law is my neighbor? This seems to be – persons are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my minds to the acts or omissions which are called into question.[6]

 

If the reasonable foreseeable test is used exclusively to determine whether a duty of cared is owed or not. This test would allow for disgruntled investors to recuperate business losses by targeting professional accountants. Auditors would then be liable to all users of financial statements. This could cause serious problems as accountants would be very reluctant to audit financial statements due to their potential for liability.

The Ann’s case allowed courts to limit this indeterminate liability with a two-stage test to determine if a duty of care is owed.[7] The first stage is in determining that the two parties are in close enough proximity that the defendant would realize the potential for damages as a result of his actions. The second part looks deeper and provides exceptions to the reasonable foreseeability test. It asks if there is anyone reason that the duty should not be imposed, or whether it should be limited or damages reduced. This provides a certain amount of flex within the system, where judges are able to interpret the law based on the social context and allows for reduction in indeterminate liability. Jim Leitzel cautions the circular nature of this; “courts will protect the amount of reliance in which a reasonable person would engage, but a reasonable person would rely up to the extent the courts protect.”[8] Due to this the courts have devised a five part test in determining if a duty of care exists, if the majority of the conditions are met – then sufficient grounds for negligence exist.

1. The defendant had a direct or indirect financial interest in the transaction in respect of which the representation was made.

2. The defendant was a professional who possessed a special skill, judgment, or knowledge.

3. The advice was given in the normal operations of the defendants business.

4. The information or advice was given deliberately and not on a social occasion.

5. The information or advice was given in response to a specific inquiry or request.

This test also serves the court in determining if a reasonable level of reliance existed in the professional relationship. If the professional provides incorrect information, but has an understanding that the advice or information they offer will be used and relied upon in future actions, they can be held liable for those actions. However, the courts have made it clear that the person relying on the information must have certain levels of business acumen.[9] Meaning, the claimant must take the advice with a grain of salt –using their own business knowledge they should be able to evaluate the advice and it’s applicability to their case. If the defendant can demonstrate that the action or conduct of the plaintiff would have happened regardless of the defendants action then no liability exists. The second part in determining professional negligence is that a standard of care was violated.

Standard of Care

The standard of care expected from a professional is different from what is expected from a non professional. Professionals are implied to have certain skills and abilities and their conduct must live up to set standards. If the professional falls below this standard of care, then negligence can be established. The courts use a reasonable person test to determine this breach. The question is whether the defendant actions, in a given situation, breached a standard of care. If the defendant’s actions have fallen below what a reasonable person would do, then he will be negligent for the injury or loss.

The reasonable person test is then what would have been what would have a reasonable accountant or doctor would have done in a given situation. If an individual claims to be a Chartered Accountant (CA) then he better have the training and competencies to be a chartered accountant. This is especially true as the courts do not recognize inexperience as a negating factor in liability. It is expected that a new professional is more susceptible to making mistakes, however, these people have demonstrated their ability to be a member of this profession and as a result must live up to the standard and competencies of a reasonable person in their profession.

Causation and Damages

The final two elements in determining professional liability are causation and damage, and are not differentiated from ordinary negligence. The tort of negligence requires that calculable losses have occurred, either economically or physically. The courts must recognize these damages as being compensable, in so much as to return the plaintiff to their original state, prior to the negligible act. The conduct of the defendant must be proved to have caused the damages in question. The two tests for causation are the but for test and the remoteness test. “Plaintiffs must prove in court that but for the conduct in question no damages would have resulted.”[10] The remoteness test looks at the damages caused by the defendant’s actions. In recent years the courts have “become much stricter in the manner in which it will assess the loss to the claimant.”[11] According to Anu Massey the courts will award damages on the basis of two considerations:

First, to compensate the claimant for the loss of the opportunity to achieve a certain result had the negligence not occurred [general damages]… secondly, and losses that have been suffered of a monetary nature such as costs that have been incurred as a result of remedial action which had to be taken to put the position right [special damages].[12]

If a reasonable person, in similar circumstances, could not have anticipated the nature of the damages or injuries caused as a result of their conduct, then the courts will not impose a liability. Once the four conditions of negligence are met, and providing reasonable reliance existed, the courts can establish professional negligence exists. Another important area of professional liability is that of their fiduciary duty to put their client’s interests ahead of their own.

Fiduciary Duty

When a person comes to a professional seeking advice or services the professional has a fiduciary obligation to keep the act in the client’s best interest. This will include putting the clients interest before their own and avoiding situations where conflict of interest may arise. Business interests that may arise, as a result of the interactions with the client, should not be acted upon by the professional. This is true in circumstances which would pose no harm to the client, as a general rule the professional must remain independent of any business proceedings which may result. As well any information that becomes privy to the professional in the course of their services must not be used by the fiduciary to benefit their position. An implicit obligation to maintain confidentiality exists in all professional relationships. When a professional does not act in the best interest of the client it is a breach of trust and they may be held liable for any losses incurred. In the case of Hodgkinson v. Simms, a conflict of interest arose where the accountant promoted investment opportunities in which he was financially involved.[13] The courts found that in doing so the accountant breached his fiduciary duty and was therefore liable for the results. This exemplifies the court’s decision to extend fiduciary liability to include any situation where one person advises another and reliance is placed on that advice. Fiduciary liability is extremely important to professionals and poses as much risk as negligence if not taken seriously.

Liability Insurance

Liability insurance is now becoming a reality of doing business. Since professionals provide services which often their clients do not fully grasp, it is easy for errors in expectations to occur. According to the Duke Law Journal “professional liability insurance has become society’s chief agency for the distribution of the cost of malpractice by the medical profession.”[14] As such, professionals can take measures to protect themselves and their business from undue financial hardships associated with litigation. Professional liability insurance, also known as errors or omissions insurance usually protects from professional negligence or failure to perform duties. Essentially professional insurance can be broken down into two categories: primary coverage and extended coverage. “Primary layers are basic policies stating the risk and people covered, policy limits and period. Additional coverage or endorsements for special risks or events may be purchased at additional cost”[15] Most insurance policies will not cover fraud or breach of trust, which can become problematic in joint-ventures or partnership situations.[16]

Currently Canada lacks formalized definitions of what constitutes liability for many professions. This lack of standardization of professional responsibilities and requirements can lead to uncertainty in service expectations. What may be customary one day can be negligent grounds the next. During the 1990s James Thompson discussed an increasing trend in professional liability cases, citing the number of cases brought against accountants within a twenty year period was more than in the entire history of the profession.[17] As the number of liability claims increase, as do the premiums of insurance policies to protect from such litigation. This is especially true since the courts usually tend to treat the matter as expansive rather than limited. For this reason professionals need to be proactive in avoiding liability as an alternative to the costly insurance premiums.[18] This has become known as risk management, which is discussed in the following sections.

Implications

In our discussion of professional liability it is crucial to understand the effects in a greater context. Essentially this liability ensures confidence in the system, giving an appropriate course of remedial action when wrong-doing has occurred. The importance of this cannot be underestimated, as the effects of professional mal-practice can be devastating to the profession as well as society in general. The relationship society has with professionals is one based on trust and reliance which must be maintained especially as our dependence on these professionals increases. Whenever cases of professional liability come forth the faith people place in that professional slowly diminishes.

The stakeholders implicated through professional liability can be far-reaching. For example, audited financial statements are a cornerstone of many investments and when the courts decide that CAs have acted negligent there are many consequences. Resulting litigation and the financial burdens they impose may bring job loss for the business as they struggle to deal with these proceedings. For the professional who is held accountable the resulting damage to their credibility is irreversible. Accounting firms may also be less likely to accept new clients as a result of the potential liability. Alternatively investor confidence may be weakened, as they become hesitant to invest in business based solely on the audited financial statements. This is especially true if there is no legal entitlement to compensation based on their third-party status. The result of professional negligence is evident among the clients affected. Although courts try to provide adequate compensation, there is no clear way to calculate the potential losses incurred. The consequential hardships of professional negligence are far-reaching, and preventative efforts should be sought.

The next question that needs to be asked is what can professionals do to protect themselves? Liability insurance does help protect professionals from losses incurred from lawsuits, but a more a proactive response is needed. Risk management is part of preemptive steps a professional or firm will take to avoid litigation proceedings. Three strategies of risk management according to Thompson are: stressing quality control; submitting to regular peer review; and participating in continuing professional education courses.[19] Above all, professionals should always avoid promising more than can be delivered. In essence professionals must manage client expectations, ensuring open communication channels, and developing a contractual agreement.[20] In larger corporations it has become commonplace to employ an insurance and risk management consultant. This person can be an invaluable addition to the organization, as they actively correct internal weaknesses. These liaisons cannot guarantee employee competence on all levels. It is therefore important for organizations to hire qualified and well-trained individuals. Most professionals are members of a self-governing body, which impose strict standards and rules, and also enforce that members meet the requirements of the profession. These organizations act as a watch-dog, reprimanding individuals who fall below the standard. Professional bodies also defend against all unjustified lawsuits against their members, even in circumstance where it is cheaper to settle out of court. This will deter future unjustified lawsuits against members of that organization. Even when risk avoidance is used, negligent lawsuits may arise. It cannot be stressed enough that whenever entering into this type of relationship it is important to have written documentation of services to be provided, and clearly outline the obligations and responsibilities. These documents will be invaluable in mounting a defense for the professional, and may reduce the scope of liability.

Overall, professionals are important members of our society. It is important that professional organizations ensure their membership meets the necessary standards to evade the threat of liability. As we have outlined professional negligence and liability can be rooted in three main areas: contract law; tort law; and breach of fiduciary duty. Professionals can take preemptive steps to limit the threat of potential litigation. Risk management, on-going education and training, and peer-review are strategies to limit this liability. As the business world becomes more globalized and interconnected the issue of professional negligence and liability will continue to expand into the future.

 

Bibliography

Anns v. Merton, London Borough Council, 2 AII E.R. 492 H.L. (1977).

Busch, J. T. (2004). Risk Managment. Contract , 46 (8), 128.

Donoghue v. Stevenson, 562 H.L. (1932).

Feinman, J. M. (2000). Professional Liability to Third Parties. American Bar Association.

Haig v. Bamford, 466 S.C.R. 1 (1977).

Hodgkinson v. Simms, 3 S.C.R. 377 (British Columbia Court of Appeal 1994).

Kripps v. Touche Ross, 6 W.W.R. 421 (B.C.C.A.) [1997], 102 B.C.A.C. 238.

Leitzel, J. (1989). Reliance and Contract Breach. Law and Contemporary Problems , 52 (1), 87-105.

Massey, A. (2007). The Courts Approach to ASsessing Loss in Professional Negligence Cases. Credit Control , 28 (1), 8 - 11.

Professional Negligence. (Jan. 1973). University of Pennsylvania Law Review , 121, 627 - 690.

Thompson, James H. (1991). Professional Liability Insurance: Go Bare or Not? Journal of Accountancy , 172 (1), 111-118.

Yates, R. A. (2008). Business Law (8th Edition). Toronto, ON: Pearson Canada.

[1] <!–[if supportFields]> CITATION Pro73 \l 1033 <![endif]–>(Professional Negligence, Jan. 1973)<!–[if supportFields]><![endif]–>

[2] <!–[if supportFields]> CITATION Yat08 \l 1033 <![endif]–>(Yates, 200 8) <!–[if supportFields]><![endif]–>

[3] Kripps v. Touche Ross, (1997)

A case in which accountants did not fully disclose information, as they were not required to by the GAAP at the time – the courts found their accounting statements misled investors, resulting in economic losses.

[4] Feinman, 2000

[5] Yates, 2008

[6] Donoghue v. Stevenson, (1932)

[7] Anns v. Merton, London Borough Council, (1977)

[8] Leitzel, 1989

[9] Yates, 2008

[10] Ibid.

[11] Massey, 2007

[12] Massey, 2007

[13] Hodgkinson v. Simms, (1994)

[14] Risk Control, 1960

[15] James H. Thompson, 1991

[16] Yates, 2008

[17] James H. Thompson, 1991

[18] Ibid.

[19] James H. Thompson, 1991

[20] Busch, 2004

 

 

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