The respondent leased a building to the federal government.
When the lease was expiring, the parties engaged in negotiations for a renewal but failed to reach an agreement.
The government then issued a call for tenders, which the respondent bid on but lost to a competitor.
The respondent sued in tort, alleging negligence in the conduct of the negotiations and in the preparation and evaluation of the tender.
The Supreme Court of Canada held that the tort of negligence does not extend to pure economic loss arising from commercial negotiations, citing policy reasons against imposing a duty of care in arm's-length bargaining.
The Court also found no liability in the tendering process, concluding that while an implied contractual duty to treat all bidders fairly exists, the minor breach in this case did not cause the respondent's loss.
