Court of Appeal for Ontario

Date: 2019-05-23 Docket: C66375

Judges: Doherty, Nordheimer and Harvison Young JJ.A.

Between

Reaction Distributing Inc. Plaintiff (Respondent)

and

The Corporation of the Township of Algonquin Highlands Defendant (Appellant)

Counsel

John Ewart, for the appellant John Montgomery, for the respondent

Heard: May 22, 2019

On appeal from: the judgments of Justice Bryan Shaughnessy of the Superior Court of Justice, dated December 7, 2018 with reasons reported at 2018 ONSC 7324

Reasons for Decision

[1] The defendant appeals from the trial judgment that awarded the respondent damages in the amount of $71,063.60. At the conclusion of the hearing, we dismissed the appeal with reasons to follow. We now provide those reasons.

[2] The respondent submitted a tender for work to be done for the appellant. The respondent submitted its tender in a three ring binder contained in a box. The box did not have the respondent's name or address on the outside of the box. It was one of the contractual requirements of the tender process that all tenders had to be submitted in a sealed envelope that had marked, on the outside, the company's name and return address.

[3] The appellant disqualified the respondent's tender as a consequence of this omission and awarded the contract for the work to the only other company that submitted a tender. The respondent sued the appellant for breach of contract. The trial judge found that the respondent's tender was in substantial compliance with the tender requirements. The trial judge found that the respondent's failure to include its name and return address was a mere irregularity. He thus found that the appellant's disqualification of the respondent's tender constituted a breach of contract. The trial judge found that the respondent had submitted the lowest bid for the work and would have been awarded the contract for the work if the appellant had evaluated the respondent's tender. Consequently, the trial judge awarded the respondent its lost profit from its failure to be awarded the contract for the work.

[4] While the terms of the tender process permitted the appellant to waive any non-compliance, the appellant says that that term did not require it to waive any non-compliance. It says that the respondent clearly did not comply with the requirement to have its name and return address on the outside of the tender and therefore it was entitled to disqualify the respondent's tender.

[5] The appellant raised three issues: (i) that the trial erred in finding a breach of contract in this situation; (ii) erred in finding that the appellant had not acted in good faith; and (iii) erred in finding that the respondent would have been awarded the contract for the work, if the appellant had considered its tender. At the hearing, the appellant chose not to pursue the third issue.

[6] We do not accept either of the other grounds advanced by the appellant. On the first issue, the law is that substantial compliance is the test to be applied in considering tender requirements: Double N Earthmovers Ltd. v. Edmonton (City), 2007 SCC 3, [2007] 1 S.C.R. 116. Consequently, and subject to the second issue, it was open to the trial judge to find that the respondent substantially complied with the tender requirements and thus the appellant's failure to consider the respondent's bid constituted a breach of contract.

[7] On the second issue, the trial judge found that the appellant had not treated the respondent fairly and equally in reaching its conclusion to disqualify the respondent's tender. The trial judge's finding, in this regard, is a factual one that is not to be interfered with absent palpable and overriding error, of which there is none here. We would note, on this point, that the appellant did not place any evidence before the trial judge as to the reasons why the appellant was not prepared to waive the non-compliance.