Maystar General Contractors Inc. v. Newmarket (Town), 2009 ONCA 675
COURT OF APPEAL FOR ONTARIO
Feldman, Gillese and Rouleau JJ.A.
BETWEEN:
Maystar General Contractors Inc.
Applicant (Respondent)
and
The Corporation of the Town of Newmarket
Respondent (Appellant)
Counsel
L.J. O’Connor and Michael R. Swartz, for the appellant
Matthew R. Alter and Daniel A. Boan, for the respondent
Heard: March 24, 2009
On appeal from the judgment of Justice Laurence A. Pattillo of the Superior Court of Justice dated May 6, 2008.
Feldman J.A.:
OVERVIEW
1The Town of Newmarket accepted a tender that contained a discrepancy in the bid price. The respondent contractor would otherwise have been the lowest bidder. The respondent commenced an application against the Town, arguing that the bid that was accepted was non-compliant, the Town improperly amended that bid and it had therefore breached its Contract A with the respondent, according to the principles set out in Ontario v. Ron Engineering & Construction (Eastern) Ltd., 1981 17 (SCC), [1981] 1 S.C.R. 111. By judgment dated May 6, 2008, Pattillo J. allowed the application and granted a declaration that the Town breached its obligations to the respondent. For the following reasons, I would dismiss the Town’s appeal.
FACTS
2On July 29, 2005, the Town of Newmarket issued a Tender Notice for the construction of a new recreational facility known as the Stickwood Walker Recreation Facility (the “Project”) and invited four pre-qualified contractors, including the respondent, Maystar General Contractors Inc., and the ultimately successful bidder, Bondfield Construction Company, to bid on the project.
3On September 15, 2005, the Town publicly opened the Bids and in compliance with the Instructions to Bidders, read out and recorded the Unofficial Total Bid Price (the figure for “total cost of the work” (the Stipulated Price plus GST)) from each bid. Mr. Gordon Sears, the Town's Manager of Purchasing and Office Services, announced that the unofficial result was that Maystar was the lowest compliant bidder as its total bid price of $35,524,000.00 was the lowest. Bondfield's total bid price was $35,874,960.00, the third highest. Mr. Sears told the bidders that the Town's consultants would review each bid for compliance and accuracy.
4Following the opening ceremony, Town staff met to discuss the bids. At the meeting, Mr. Kohlmeier, the project architect and a Town consultant, noticed a discrepancy in Bondfield’s bid. Bondfield’s Bid Form contained the following line items:
1.1 …Stipulated Price of "Thirty-three million Five Hundred twenty-eight " ($33,000,528.00) Dollars
in lawful money of Canada, included in which are all Provincial Sales and Excise taxes, customs duties, freight, exchange, and all other charges, except Goods and Services Tax (GST).
1.1.1: …Goods and Services Tax (GST): "Two million Three Hundred Forty-six Thousand Nine Hundred sixty" ($2,346,960.00) Dollars
1.1.2: The total cost of the work (Stipulated Price + GST) is: "Thirty-five million eight hundred Seventy-four Thousand nine hundred sixty." ($ 35,874,960.00) Dollars
5Mr. Kohlmeier pointed out that the GST amount shown in article 1.1.1 was not 7% of $33,000,528.00, the Stipulated Price stated in line 1.1, but 7% of a transposed figure that is not shown: $33,528,000.00. Line item 1.1.2 represented the sum of $33,528,000.00 plus the G.S.T. value in line item 1.1.1 of $2,346,960.00. Mr. Kohlmeier concluded that Bondfield had made arithmetic or clerical errors in its bid form and recommended that the Bondfield bid be considered on the basis that the Stipulated Price was correct and represented the lowest bid price.
6On Friday, September 16, 2005, Mr. Kohlmeier sent an email to Mr. Sears, where he recalculated the G.S.T. using the Stipulated Price as stated and totalled the two amounts to $35,310,564.96. He confirmed his opinion that based on the Stipulated Price of $33,000,528.00, the Bondfield bid should be accepted. The Town’s Project manager, Ms. Karvonen, wrote a letter dated that same day to the Director of Parks, Recreation and Culture suggesting that the Town request written confirmation from Bondfield that their bid in line 1.1 was correct. On Saturday, September 17, Mr. Sears received an e-mail from Ms. Karvonen recommending that the Town accept the Bondfield bid.
7Mr. Sears met with the Town’s solicitor on Monday, September 19, 2005. They agreed to review the Bondfield bid discrepancy separately and discuss it later on. Mr. Sears’ initial inclination was to award the contract to Maystar, based on the British Columbia Court of Appeal decision in Vachon Construction Ltd. v. Cariboo (Regional District), [1996] B.C.J. No. 1409, which he considered to be a very similar case. He prepared a draft memo that day recommending that the Town accept Maystar’s bid and stating that the Bondfield bid price was uncertain. After meeting with his Director and the Town solicitor later that day, he decided not to circulate the memo.
8At that meeting, Susan Plamondon, the solicitor, brought to Mr. Sears' attention the Ontario Court of Appeal decision in Bradscot (MCL) Ltd. v. Hamilton-Wentworth Catholic District School Board (1999), 1999 2733 (ON CA), 42 O.R. (3d) 723 (C.A.). Based on the Bradscot case, Mr. Sears changed his view. At that meeting, the Town staff agreed to recommend to Town Council that it accept the Bondfield bid.
9Following that meeting, at approximately 6:30 p.m., Mr. Sears picked up a voice-mail message that had been left at 6:09 p.m. by John Aquino, Vice-President of Bondfield. The message was:
Hi Gord. My name is John Aquino. I am calling from Bondfield Construction. I was calling about the Stickwood Project. Last week we were really surprised at the numbers read at the tender opening and we went back to our bid and documentation and I would like to talk to you about because our bid is lower than what was read out on the bid opening. It's Monday the 19th of September. It's just before 6 o'clock. You can reach me at my office 667-8422 or my cell 258-0850. I am going to try you again tomorrow and I am going to follow up with a letter to yourself and the architect as well. Take care. Bye bye.
10Bondfield faxed a letter (the “Bondfield letter”) the next morning, September 20, indicating that an addition error had occurred following last minute changes to the base price "which were not carried over to the GST calculation" and that the combined price was also wrong. The letter asked the Town to evaluate the tender based on the Stipulated Price, which made it a lower bid than that of Maystar.
11Corrected “Unofficial Tender Results” were circulated to all bidders on September 20, 2005. The results showed separate line items for “Total Bid Amount” as read out at the opening ceremony on September 15; the “Sub Total Bid” amounts exclusive of G.S.T. and the G.S.T. amounts. A second chart showed “corrected” and “Revised” G.S.T. and Total Bid Amounts for Bondfield, indicating that its bid was now the lowest. The document indicated that "these figures have been corrected by the Town of Newmarket Purchasing staff." Bondfield's Total Bid Amount was reduced from $35,874,960.00 to $35,310,564.96.
12Maystar immediately objected to the corrected tender results. Mr. Sears met with Mr. Maio of Maystar that afternoon, telling him that Bondfield had made an arithmetic error and that the Town had only notionally corrected the G.S.T. amount on the Bondfield bid.
13The Town convened a special meeting the next day, September 21, 2005. That morning, Maystar sent a letter through its solicitors (the “Maystar letter”) objecting to the Town’s correction and its proposed acceptance of Bondfield’s bid.
14The meeting agenda included a copy of a report dated September 20, 2005 by the Town’s Chief Administrative Officer and the Town’s Parks, Recreation and Culture Department (the “Report”) which recommended the acceptance of Bondfield’s bid for the corrected amount. A copy of the Bondfield letter was attached to the Report, as well as a letter from Mr. Kohlmeier explaining the basis of Bondfield's error. An addendum to the meeting agenda attached a Deputation Request Form from Maystar and a copy of the Maystar letter.
15At the meeting, Town Council considered the Report and heard a deputation from Maystar. They then recessed and held an in-camera session. When the meeting resumed, Town Council passed a motion adopting the Report and approving the awarding of the contract to Bondfield at the Stipulated Price of $33,000,528.00.
APPLICATION JUDGE
Price Uncertainty
16The application judge held that Bondfield’s bid price was uncertain. He relied on Vachon Construction Ltd. v. Cariboo (Regional District), [1996] B.C.J. No. 1409 (C.A.) for the proposition that price is an essential element of a bid and that an offer that is uncertain as to price cannot form the basis of a binding contractual relationship. In his view, Bondfield committed two errors, one in respect of the G.S.T. amount and the other in respect of the total bid price, making it impossible from a review of the bid form to tell where its error lay. The uncertainty in price was confirmed by the response of the Town’s consultants and of Mr. Sears after their respective reviews of the bid, which reflected different opinions as to which line item in the bid was accurate.
17In reaching this conclusion, the application judge distinguished Bradscot. At paras. 41-43, he summarized that decision as follows:
Bradscot involved an application by an unsuccessful contractor for a declaration that the School Board was in breach of its contract to the contractor by accepting a non-compliant bid from another contractor. One of the issues in the case was whether the bid price of the contractor whose tender was accepted was uncertain. The Tender Form in Bradscot provided that the contractor set out its stipulated price in Section 2. In Section 3, which was entitled “Tender Amount Summary and GST”, there was an initial line for the stipulated price, a line beneath it for GST and another line for the total which was called the Overall Stipulated Sum Tender Amount. The tender in issue set forth in words and numbers in Section 2 a stipulated price of $17,720,000.00. In Section 3, the stipulated price was set forth in numbers as $17,200,000.00 and the GST was set forth as $1,240,000.00 (7% of 17,720,000.00). The Overall Stipulated Sum Tender Amount was $18,460,400.00.
On the initial application ([1998] O.J. No. 2308), Somers J. held, notwithstanding the error in Section 3, the tender price of the contractor was not uncertain. The learned Judge stated that Section 3 of the Tender Form appeared to be a superfluous paragraph being little more than a summary of the contract price to which GST is applied. He held that it was clear on its face that what occurred was a clerical error. It was the stipulated price in Section 2 of the Bid Form that governed and that price, listed in both words and numbers, was not uncertain.
The Court of Appeal upheld the decision of Somers J. and dismissed the applicant’s appeal. In respect of the issue of whether the price in the impugned tender was uncertain, Laskin J.A., who wrote the decision for the Court, concurred with Somers J.’s analysis of the Tender Form and termed Section 3, if not superfluous, at least subordinate.
18In the application judge’s view, the evidence here, unlike in Bradscot, did not support a finding that the provisions for G.S.T. and Total Price were superfluous or subordinate; rather, they were an operative part of the bid. Unlike in Bradscot, the bid form contained no separate summary section repeating the stipulated price. Further, the Instructions to Bidders contained references to the Total Bid Price, and other provisions in the Instructions referred to and incorporated the Total Bid Price. Finally, the application judge noted that in Bradscot, unlike in this case, no figures – official or unofficial – were read out at the tender opening.
19The application judge found that the nature of Bondfield's error was similar to the error considered by this court in Ottawa (City) Non-Profit Housing Corp. v. Canvar Construction (1991) Inc. (2000), 2000 2004 (ON CA), 3 C.L.R. (3d) 55 (C.A.). In that case, the tender price and the 5% bid bond did not match. Consequently, it was unclear whether the intended bid price was the tender price as shown or what the price was if the 5% bid bond was accurate. The application judge concluded that in Canvar and in the case before him, because the bid price was unclear, the bid was non-compliant and incapable of being accepted.
20The application judge held that given the uncertainty in the price, the provisions in the Instructions did not allow the Town to rectify Bondfield’s bid. He held that the error could not be corrected by a matter of simple arithmetic recalculation or extension. He noted that the Instructions provided that amendments to bids shall not be considered or accepted. Given this provision, the Town’s consideration of the Bondfield letter constituted an impermissible clarification and amendment which was prohibited by the bid terms and which constituted a breach of the Town’s duty of fairness to Maystar under Contract A. The application judge held that the “only conclusion which can be drawn is that the Council considered the letter in reaching its decision.”
ACCEPTANCE OF A NON-COMPLIANT BID
21The appellant argued that in any event, para. 1.12.5 of the Instructions to Bidders allowed it to accept a non-compliant bid. That para. reads:
The Bidder acknowledges that the Owner may rely upon the criteria, which the Owner deems relevant, even though such criteria may not have been disclosed to the Bidder. By submitting a Bid, the Bidder acknowledges the Owner's rights under this Section and absolutely waives any right, or cause of action against the Owner and its consultants, by reason of the Owner's failure to accept the Bid submitted by the Bidder, whether such right or cause of action arises in contract, negligence, or otherwise.
22The application judge found, relying on the reasons of the Ontario Superior Court of Justice in Tectonic Infrastructure Inc. v. Middlesex Centre (Township), [2004] O.J. No. 4933 (S.C.J.) at paras. 140 – 144, that in the absence of clear and straightforward language in the tender documents, an owner cannot accept a non-compliant bid, and that such language was not present in the Town’s Instructions to Bidders. Accordingly, para. 1.12.5 did not allow the Town to accept Bondfield's non-compliant bid.
ISSUES
Did the application judge err in law by failing to apply the principles in Bradscot and by distinguishing that case on the facts?
Did the application judge err by failing to analyze and apply the terms of the tender documents and find that the Town was entitled to accept Bondfield's bid?
Did the application judge err by finding that a discrepancy in price automatically made the bid non-compliant?
Did the application judge err by failing to give effect to para. 1.12.5 of the Instructions to Bidders allowing the Town to accept any bid and preventing the respondent from suing the Town?
ANALYSIS
Issue 1: The applicability of the Bradscot decision
23The law governing the tender process for public construction contracts has been discussed and explained by the Supreme Court of Canada in a number of cases beginning with Ontario v. Ron Engineering & Construction (Eastern) Ltd., 1981 17 (SCC), [1981] 1 S.C.R. 111, and including M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 677 (SCC), [1999] 1 S.C.R. 619, Martel Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860 and Double N Earthmovers Ltd. v. Edmonton (City), 2007 SCC 3, [2007] 1 S.C.R. 116.
24Some basic principles for interpreting and applying the terms of tender documents have emerged from these cases. Ron Engineering established the two layers of contractual relations that arise in the tender process. When a contractor submits a tender that complies with the requirements set out by the owner in the tender documents, a contract arises, known as Contract A. The owner then enters into the construction contract, known as Contract B, with the Contract A contractor whose bid is the best bid in terms of price and other factors that the owner is entitled to take into account under the terms of the tender.
25The terms of Contract A are found in the express provisions of the tender requirements or can also be implied where the criteria for the implication of terms in a contract are met. In M.J.B. Enterprises, the Supreme Court found from the presumed intentions of the parties based on the express terms of the contract, that there was an implied term that the owner is obliged to accept only compliant bids. At para. 41, the court reasoned that it would not make sense for contractors to engage in the tendering process, which is expensive and time-consuming, if the owner could then "circumscribe this process and accept a non-compliant bid." In Double N Earthmovers, at paras. 109-110, the court clarified that the compliance required is “substantial compliance” with the tender documents and that substantial compliance requires compliance with all material conditions of a tender. In Martel, at para.88, the court found that in order to give business efficacy to the tendering process, it was necessary to imply a term that the owner must treat all bids fairly and equally.
26Applying these general principles to the Bondfield bid, the issue is whether that bid containing the price discrepancy among the amounts shown for the stipulated price, the GST and the total cost of the work, substantially complied with the tender requirements and was therefore capable of being accepted by the appellant Town.
27The application judge found that the price was uncertain and therefore that the bid was non-compliant and incapable of forming the basis of a contract. I agree. The stipulated price, set out in words and in numbers, was $33,000,528.00. However, the G.S.T. amount of $2,346,960.00 was not 7% of $33,000,528.00 but 7% of $33,528,000.00, a figure not shown in the document; and the total cost of the work was $35,874,960.00, which is the total of the GST of $2,346,960.00 plus $33,528,000.00. Because the G.S.T. and the total cost of the work both reflect a stipulated price that is different from the one shown, it is not possible to know which price Bondfield intended.
28That was also the initial reaction of Mr. Sears. However, he changed his mind on the basis that the situation was the same as and was governed by the decision of this court in Bradscot. In Bradscot, the same contractor, Bondfield, submitted its bid with a discrepancy in the price figures set out in the bid form. In Bradscot, Bondfield's stipulated price was set out in words and figures in Section 2 of the form as $17,720,000.00. Section 3 of the form was titled "tender amount summary and G.S.T." The tender amount was stated to be "as above", but read $17,200,000.00. The G.S.T. was $1,240,000.00, which is 7% of $17,720,000.00. The overall stipulated sum tender amount was stated as $18,460,400.00, which is not a total of any of the relevant figures.
29This court held that Section 3 was only a summary section and was either superfluous or at least subordinate to Section 2, the stipulated price. There was no uncertainty because the stipulated price was clearly stated in Section 2.
30The application judge concluded that, in this case, unlike in Bradscot, the G.S.T. and total cost of work amounts were neither superfluous nor subordinate but were an important component of the tender. He came to this conclusion by comparing the tender bid forms in each case. In this case, the form contained no summary section; rather, s. 1.1 is the stipulated price including all taxes except G.S.T., s. 1.1.1 is the G.S.T., and s. 1.1.2 is the total cost of the work. Further, the Instructions to Bidders portion of the tender contains references to the "Total Bid Price". For example, article 1.9.1 provides that the unofficial total bid price would be read out at the bid opening. Article 1.7.1.1 provides that the bid security to be supplied was 10% of the total bid price excluding taxes, and 1.7.2.4 makes provision for contract security in certain percentages of the total bid price excluding taxes. These articles suggest that it is the stipulated price rather than the total bid price that is the superfluous figure.
31It is also important to compare the nature of the price discrepancies in the two cases. In this case, two of the three prices were consistent with each other: the G.S.T. and the total cost price. The stipulated price stood alone. In Bradscot, the stipulated price was consistent with the stated G.S.T. amount. Section 3 contained an obvious transcription error in the restatement of the stipulated price. This error was made more clear by the fact that the G.S.T. amount was accurately calculated on the stipulated price as shown in Section 2. The total price was not consistent with either those prices or with the inconsistent amount of the restated stipulated price.
32In Bradscot, therefore, because the stipulated price and the G.S.T. calculated on it were consistent, the clerical errors in the restatement and in the total bid price were clear. In this case, it is unclear whether Bondfield intended the stipulated price to be as stated, or to be what the stipulated price would be working back from the total cost of the work and G.S.T. calculation. As the application judge found, the nature of Bondfield's error is not similar to the Bradscot error but to the error made in the case of Ottawa (City) Non-Profit Housing Corp. v. Canvar Construction (1991) Inc. (2000), 3. C.L.R. (3d) 55 (Ont. C.A.).
33In Canvar, the tender contained a stipulated price of $2,289,000.00 with an enclosed bid bond of $149,450.00. The bid bond was stated to be for 5% of the tender price, as required. However, $149,450.00 is not 5% of the stipulated price but of the higher amount of $2,989,000.00. Canvar realized that it had made an error in setting out the stipulated price and sent a letter to the City asking it to adjust the tender price or withdraw its bid. The City instead purported to accept the favourably low bid based on the stipulated price, but the contractor refused to enter into the construction contract at that price. The Court of Appeal agreed with the position of the contractor. The tender form together with the bid bond showed there was a clear error on the face of the documents and it was unclear, based only on the documents, which amount was intended by the contractor to be the correct amount.
34The appellant also argues that the application judge erred by finding that in this case, unlike Bradscot, the Town corrected the Bondfield bid. The appellant says no correction other than a notional correction was made to the GST amount to correct a mathematical error and that this is allowed by the Instructions to Bidders, although no specific article is referenced. I agree with the application judge that the Town clearly corrected the Bondfield bid. It chose to view the stipulated price as the price intended by Bondfield rather than the total cost amount, then corrected the GST calculation and the total cost amount to conform with its choice.
35In contrast, the Town rejected a bid by Vanbots Construction Corporation as non-compliant, in part because Vanbots had failed to include its G.S.T. and total cost of work amounts in lines 1.1.1 and 1.1.2 of its bid form.
36The appellant further argues that the application judge had no basis to find that the Town relied on Bondfield's oral and written after the fact correspondence in making its decision to award the contract to Bondfield and in distinguishing Bradscot on that basis. In Bradscot, Bondfield had also called the owner and stated that there was an error and that the stipulated price in Section 2 was the tender price. In that case, the call was made within 15 minutes of the close of tenders rather than 4 days later, and there was no reading out of the bids or statement of the unofficial lowest bid. As in this case, the call was followed up with a fax from Bondfield. In Bradscot, the trial court accepted the evidence of the owner's representatives that they were not influenced by the communication from Bondfield.
37The application judge based his conclusion that the Town did consider Bondfield's fax on the fact that the Town council had Bondfield's letter as part of the package of documents that was provided to it by staff in order to make its decision. Mr. Sears had testified that staff made their decision to recommend the Bondfield bid before he received the voice-mail message from Mr. Aquino of Bondfield. However, the issue was whether Town Council had considered the correspondence. The Town refused to answer any questions on this application regarding its in camera discussions prior to its decision. The application judge was clearly entitled to draw the inference from the fact that the Town Council had the Bondfield letter explaining its bid, that it considered the letter. The application judge made no error in holding that this constituted amending the bid by a facsimile letter after the fact, contrary to Article 1.6.4 of the Instructions to Bidders and constituted a breach of the duty to treat all bidders fairly and equally.
38The Town was in a difficult situation. It wanted to accept the lowest bid for this project in the best interests of its citizens. The Bondfield bid on one reading could have been the lowest bid. The Bradscot case appeared to be a very similar situation where the court allowed the owner to accept a bid that had a price discrepancy on its face. It no doubt believed it was acting in good faith. However, the Supreme Court has made it clear in the cases it has decided that the integrity of the tender process is essential in order to foster a fair and orderly bidding process where contractors will expend the time, effort and expense to bid, knowing they will be treated fairly and equally. A public owner cannot undermine that process by purporting to accept a bid with an uncertain price, or to encourage contractors to believe that they can communicate with owners after the fact to clarify or explain inconsistencies in their bids. In M.J.B. Enterprises, at para. 54, Iacobucci J. pointed out that good faith on the part of the owner is not a defence to a claim for breach of contract.
39In my view, the application judge made no error in his analysis of the Bradscot case and his conclusion that it was distinguishable on its facts from the circumstances here.
Issue 2: Did the terms of the tender documents allow the Town to accept Bondfield's bid?
40The appellant submits that certain articles in the Instructions to Bidders that formed part of Contract A with Maystar, allowed the Town to accept Bondfield's bid and that the application judge failed to consider the effect of these articles. The appellant relies on the following articles: 1.11.1.3, 1.11.2, 1.12.3.7, 1.12.3.8 and 1.12.5.
1.11.1.3 All arithmetic extension calculations are correct.
1.11.2 In any of the above circumstances where there are obvious or patent errors such as misplaced decimals, the Owner shall consider the intent of the Bidder.
1.12.3.7 Waive any informalities, requirements, discrepancies, errors, omissions, or any other defects or deficiencies in any Bid Form or Bid submission;
1.12.3.8 Accept or reject any unbalanced, irregular, or informal Bids;
1.12.5 The Bidder acknowledges that the Owner may rely upon the criteria, which the Owner deems relevant, even though such criteria may not have been disclosed to the Bidder. By submitting a Bid, the Bidder acknowledges the Owner’s rights under this Section and absolutely waives any right, or cause of action against the Owner and its consultants, by reason of the Owner’s failure to accept the Bid submitted by the Bidder, whether such right or cause of action arises in contract, negligence, or otherwise.
41These articles allowed the Town to check all arithmetic extensions to ensure they were correct, consider Bondfield's intent, waive any discrepancies, errors or other defects or deficiencies in the bid form or submission, determine whether a bid was substantially compliant, and accept an unbalanced, irregular or informal bid. The latter argument with respect to the effect of 1.12.5 is the subject of a separate ground of appeal.
42In my view, the application judge did not fail to consider the effect of the specific provisions of the tender documents, many of which he set out in his reasons. He concluded that the discrepancy and consequent uncertainty in the bid price submitted by Bondfield constituted a fundamental error that was not able to be unilaterally corrected or waived using any of the provisions of the Instructions to Bidders. It required an amendment of the bid making all of the prices consistent with the stipulated price. That amendment was in accordance with Bondfield's post-tender correspondence that identified its error and explained its intent. Article 1.6.4 prohibits acceptance or consideration of any such amendments.
Issue 3: Did the application judge err by finding that a discrepancy in price necessarily rendered the bid non-compliant?
43The appellant submits that the application judge erred by treating a price discrepancy as an automatic non-compliant bid and that the discrepancy in the presentation of the price figures by Bondfield in its bid did not materially affect the price itself, and gave Bondfield no unfair advantage within the tender process.
44There is no merit in this submission. The application judge addressed the appellant's main argument that this case was governed by Bradscot, where a price discrepancy was found not to be material. The application judge came to a different conclusion in this case for reasons already discussed. The reason the price was materially affected in this case, unlike in Bradscot, was because there was uncertainty as to which price was the intended bid price until the correction was made. That after the fact correction gave Bondfield an unfair advantage over other bidders and was not compliant with the terms of the tender documents.
Issue 4: Was the Town entitled to accept a non-compliant bid based on articles 1.12.3.7, 1.12.3.8 and 1.12.5?
45I repeat these articles here for ease of reference:
1.12.3.2 The owner hereby reserves the right, privilege, entitlement and absolute discretion and for any reason whatsoever to: …
.7 Waive any informalities, requirements, discrepancies, errors, omissions, or any other defects or deficiencies in any Bid Form or Bid submission.
.8 Accept or reject any unbalanced, irregular or informal Bids…
1.12.5 The Bidder acknowledges that the Owner may rely upon the criteria, which the Owner deems relevant, even though such criteria may not have been disclosed to the Bidder. By submitting a Bid, the Bidder acknowledges the Owner’s rights under this Section and absolutely waives any right, or cause of action against the Owner and its consultants, by reason of the Owner’s failure to accept the Bid submitted by the Bidder, whether such right or cause of action arises in contract, negligence, or otherwise.
46The appellant says that Bondfield's bid fits the description in article 1.12.3.8 and that it was entitled to accept such a bid. In other words, even if Bondfield's bid was non-compliant, this article allowed the Town to accept it without any breach of its Contract A with Maystar. The application judge rejected this submission on the basis that the language of these articles does not clearly state that the Town could accept a non-compliant bid.
47In the British Columbia Court of Appeal decision in Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways) 2007 BCCA 592, [2008] 2 W.W.R. 410, the court found that a broadly worded clause in a request for proposals had the effect of allowing the owner to accept a non-compliant bid. The clause in that case read as follows:
Except as expressly and specifically permitted in these Instructions to Proponents, no Proponent shall have any claim for any compensation of any kind whatsoever, as a result of participating in this RFP, and by submitting a proposal each proponent shall be deemed to have agreed that it has no claim.
48The court acknowledged that the effect of this interpretation was to thwart the public interest in an orderly and fair bidding process. However, it had to give effect to the clear language accepted by the parties. The court suggested that the public policy could be furthered not by the intervention of the courts but by contractors refusing to bid where such clauses govern. An appeal from this decision has been argued in the Supreme Court of Canada and is under reserve in that court.
49In my view, the language of the articles referred to in the Instructions to Tenderers in this case is distinguishable from the very broad language in the Tercon document. The waiver of the right to sue set out in article 1.12.5 is prefaced by an acknowledgement of the Owner’s rights listed in s. 1.12. It is not clear, therefore, that the waiver was meant to have the effect of prohibiting an action by Maystar where a non-compliant bid was accepted by the Town. As noted earlier, articles 1.12.3.7 and .8 do not specifically allow the owner to accept a non-compliant bid. I would not give effect to this ground of appeal.
CONCLUSION
50I would dismiss the appeal with costs fixed in the amount of $30,000 inclusive of disbursements and G.S.T.
RELEASED:
“SEP 24 2009” “K. Feldman J.A.”
“KNF” “I agree E.E. Gillese J.A.”
“I agree Paul Rouleau J.A.”
