Michelle A. Wright

The applicant, 2708266 Ontario Inc. o/a Nelli Construction, sought damages after the respondent, the City of Toronto, improperly failed to award it "Contract B" following a Request for Tender (RFT) process.

The court previously found the City liable for failing to award the contract.

This endorsement addresses the effect of a broad limitation of liability clause (LL Clause) in the RFT.

Applying the three-pronged Tercon test, the court found the LL Clause applied to the circumstances, including post-bid conduct, and was broad enough to preclude liability for damages beyond the costs of preparing the bid.

The court also determined there was no explicit finding of a breach of the duty of good faith as per Wastech, and that public policy did not override the enforcement of the LL Clause.

Consequently, the City was not liable for damages beyond the bid preparation costs, though costs from the initial application were still payable to the applicant.

The applicant submitted the lowest bid for a municipal sewer and watermain project.

The City initially found the bid compliant but later disqualified it, concluding the applicant lacked the requisite corporate experience because its personnel's experience was gained at a different company.

The City then cancelled and reissued the tender.

The court found the applicant's bid was compliant, a Contract A was formed, and the City breached the contract by arbitrarily interpreting the experience requirements and cancelling the tender without a valid basis.

The court requested further submissions on the enforceability of a limitation of liability clause.