CITATION: Coco Paving (1990) Inc. v. Ontario (Transportation), 2009 ONCA 503
DATE: 20090619
DOCKET: C50509
COURT OF APPEAL FOR ONTARIO
Cronk, Gillese and Armstrong JJ.A.
BETWEEN
Coco Paving (1990) Inc.
Applicant (Respondent in Appeal)
and
Her Majesty the Queen in Right of Ontario as represented by the Minister of Transportation for Ontario, the Minister of Transportation, Ministry of Transportation and Phil Hutton
Respondents (Respondents in Appeal)
and
Bot Construction Limited, Bot Holdings Limited, Bot Construction (Canada) Limited, Clarkson Construction Company Limited, Bot Ventures Ltd., Bot Construction (Ontario) Limited, and Bot Management Services Ltd.
Intervenors (Appellants)
and
Ontario Road Builders’ Association
Intervenor
Christopher D. Bredt and Matthew R. Alter, for the appellants, the Bot Group
Ronald Carr and Henry Weilenmann, for the Crown respondents
David M. McNevin, for the respondent, Coco Paving (1990) Inc.
Duncan W. Glaholt, for the intervenor, Ontario Road Builders’ Association
Heard: June 18, 2009
On appeal from the judgment of Justice Mary Jo M. Nolan of the Superior Court of Justice, dated May 19, 2009.
By the Court:
I. Introduction
[1] This litigation concerns a call for tenders by Her Majesty the Queen in Right of Ontario as represented by the Minister of Transportation (the “MTO”) for a major contract to perform roadwork on Highway 402 in the vicinity of Sarnia, Ontario. By judgment dated May 19, 2009, the application judge granted a declaration that a late bid by the respondent, Coco Paving (1990) Inc. (“Coco”), was submitted in compliance with the terms prescribed by the MTO tender documents in respect of the contract. The judgment also provided that the Minister and the MTO “ought to accept” Coco’s bid and list it on the MTO bidders’ list for the contract.
[2] The appellants, the Bot Group, attack the judgment on several grounds. Of the grounds raised, it is necessary for the disposition of this appeal to address only the appellants’ contention that the application judge erred by misinterpreting the terms of the MTO tender documents and by concluding that Coco’s bid was compliant with the MTO’s bid submission requirements.
[3] For the following reasons, we conclude that the application judge misinterpreted the relevant provisions of the MTO tender documents. As a result of this interpretive error, her declarations that Coco’s bid was compliant and that it should be considered by the MTO and listed on the MTO’s bidders’ list are tainted and cannot stand.
II. Discussion
[4] We begin with this preliminary observation. The analysis of whether Coco’s bid was compliant must proceed in recognition of the fundamental tendering law principle that no contractual duties arise between the tender-calling authority and a bidder unless and until what is termed under tendering law as “Contract A” is formed. The formation of Contract A only occurs on the submission of a valid, that is, a compliant bid: see R. v. Ron Engineering & Construction (Eastern) Ltd., 1981 17 (SCC), [1981] 1 S.C.R. 111, at para. 16; M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 677 (SCC), [1999] 1 S.C.R. 619, at paras. 36 and 41. As recently observed by the British Columbia Court of Appeal in Hub Excavating Ltd. v. Orca Estates Ltd., 2009 BCSC 167, at paras. 39 and 40, “[t]here is no free-standing duty of fairness in the bidding process independent of [the] contractual duty [arising on the formation of Contract A.]”
[5] Thus, as a matter of tendering law, MTO owed Coco no contractual duty of fairness unless Coco submitted a compliant bid or the tender documents otherwise explicitly provided to the contrary. In contrast, the MTO did owe contractual duties to the compliant bidders. These duties obliged the MTO to act fairly in relation to the Bot Group and all other compliant bidders.
[6] In this case, under s. 4.4 of the MTO’s Instructions to Bidders, the MTO’s procedures for bid submissions required, in mandatory terms, that bidders complete “an on-line Summary Bid Submission Form”. These forms were available to prospective bidders through the MTO computer servers. Under this process, a candidate bidder downloaded a Summary Bid Submission Form to its own computer for the input of information. Upon completion of the document, the form was to be submitted and received by the MTO servers before “Tender Closing” in order to qualify as a compliant bid. The MTO’s Summary Bid Submission Form contained the following unambiguous warning: “This bid must be received by the MTO Servers (through the submit action) before tender opening at 03:00 PM on 29-Apr-2009 to be considered” (emphasis added).
[7] In addition to the warning contained in the MTO’s Summary Bid Submission Form, the first line of the MTO’s tender documents stipulated that “Tender Closing is 3:00:00 p.m. local (Toronto) time, April 22, 2009”. This date was later extended by the MTO to April 29, 2009. The terms “Tender Closing” and “Tender Opening” are both defined under s. 1.12 of the Instructions to Bidders as “the last date and time that the Ministry will receive bids” (emphasis added). Thus, to be eligible as a compliant bid, a bid had to be received by the MTO computer servers before 3:00:00 p.m. on April 29, 2009 (emphasis added).
[8] This did not occur in respect of Coco’s bid. There is no dispute that Coco’s bid was first received by the MTO via the MTO’s electronic bid submission system at 3:28:05 p.m. on April 29, 2009, the extended date for the receipt of bids. Another copy of the Coco bid was received by the MTO via facsimile transmission at 3:58 p.m. on April 29. Accordingly, since Coco’s bid was not received on or before 3:00 p.m. on April 29, its bid was non-compliant on its face.
[9] In granting the declaratory relief sought by Coco, the application judge made no mention of the provisions of the MTO Summary Bid Submission Form and the tender documents, above-quoted, in her reasons. In our view, on a plain reading of these provisions, the MTO’s tender process for the contract precluded the consideration by the MTO of bids received after Tender Closing.
[10] Importantly, and contrary to Coco’s contention, the MTO tender documents do not expressly provide for the MTO to receive and consider late bids. Nor do we think that such authority or discretion arises by necessary implication from the language of the tender documents.
[11] We recognize that s. 11.1 of the tender documents authorizes the MTO, in its discretion, to “waive formalities as the interests of the Ministry may require”. However, in the absence of clear language in s. 11.1 or elsewhere in the tender documents indicating that, in the discretion of the MTO, a late bid or a substantially non-compliant bid may be accepted, s. 11.1 cannot be construed so as to permit the acceptance of a bid that is submitted late. This is particularly so where – as here – other compliant bids were received and where an expansive interpretation of the discretion afforded under s. 11.1 would result in the displacement of an otherwise compliant and likely successful bid. To hold otherwise would sanction unfairness in, and distort the level playing field contemplated by, the MTO bidding process: see NAC Constructors Ltd. v. Alberta (Capital Region Wastewater Commission) (2005), 10 B.L.R. (4th) 252, (Alta Q.B.), at paras. 47-50, aff’d 2005 ABCA 401.
[12] Moreover, the timing of bid delivery is not a mere formality in the tendering process. As emphasized by the appellants, bid closing time is sacrosanct in the competitive public tendering process. As this court stated in Bradscot (MCL) Ltd. v. Hamilton-Wentworth Catholic District School Board (1999), 1999 2733 (ON CA), 116 O.A.C. 257, at para. 6:
The submission of a tender in compliance with tender instructions creates a unilateral contract between the general contractor and the owner. This unilateral contract imposes rights and obligations on the parties intended to protect and promote the integrity of the tender system. One obligation imposed on the owner is a duty of fairness to all tenderers. A duty of fairness is needed to prevent abuse and to ensure a level playing field. As Williams J.A. observed in Vachon Construction Ltd. v. Cariboo (Regional District), (sub nom. Bradscot (MCL) Ltd. v. Board of Education (Roman Catholic Separate) of Hamilton-Wentworth), 1999 2733 (ON CA), 116 OA.C. 257 44 C.L.R. (2d), 1, 42 O.R. (3d) 723:
On the other side, the tendering process is, and must always be, a carefully controlled process, since the opportunity for abuse or distortion is ever present. While that is not what happened in this case, the process must nonetheless be, and be seen to be fair to all bidders. For that reason, the process is often attacked for technical reasons and the law has accordingly applied strict rules for any alteration in the process by both bidder and owner.
A bid submitted after the tender deadline is invalid, and an owner that considers a late bid would breach its duty of fairness to the other tenderers. [Footnotes omitted; emphasis added.]
[13] Strong public policy considerations underlie these controlling principles. Confi-dence in the integrity of government bidding processes is a matter of considerable public importance. The Ontario Road Builders’ Association, an intervenor in this proceeding, put it aptly in its factum when referencing the holding in Bradscot. The Association said:
The tendering process is, and must always be, a carefully controlled process, since the opportunity for abuse or distortion is ever present. Even in the absence of abuse or distortion, the process must nonetheless be and be seen to be fair to all bidders.
[A] bidder who submits its bid even a few minutes late has the potential to obtain a tremendous advantage over his competitors if it can obtain a last-minute lower bid from a subcontractor.
[14] The courts have therefore recognized that the timing of bid submissions in public tender processes is critical. Late bids can unfairly advantage the non-compliant bidder over the compliant bidders who met the bid submission requirements and erode the integrity of the bidding process.
[15] The application judge does not appear to have factored these important considerations into her analysis of the MTO’s tender documents. With respect, by failing to do so, the application judge erred.
[16] As we have said, Coco’s bid was received by the MTO after the bid deadline. In addition, Coco failed to meet the deadline prior to the expiry of Tender Closing established under the tender documents for requests for assistance due to computer failure or malfunction. Article 5 of the tender documents, which addresses computer system failure, provides:
5.1 In the event that the bidder’s computer system fails, the bidder must contact the Ministry’s Help Desk at: 1-877-246-4600, no later than 30 minutes prior to Tender Opening.
5.2 The Ministry will provide the bidder with a Summary Bid Submission Form. The bidder must complete the Summary Bid Submission Form in its entirety and immediately fax the form to a number given at the time of the phone call. No other form of bid will be accepted.
5.3 The Ministry will not accept bids received by facsimile after Tender Opening. The date and time stamped by the Ministry’s facsimile machine will be the official date and time stamp on the document.
5.4 In the event the Ministry’s computer system fails at the time of Tender Opening, the Ministry will immediately contact contractors that have an approved Tender Registration Form and provide direction for sub-mission of the Summary Bid Submission Form.
[17] Article 5 of the Instructions to Bidders thus provided for alternate bid submission procedures in the event of a computer system failure. In the event of such a failure, and where specific conditions were met, these alternate procedures allowed bidders to submit bids by fax. Where such failure was attributable to the bidder, s. 5.1 prescribed a window of 30 minutes prior to Tender Closing to trigger the alternate bid submission procedures. But even under the alternate procedures, if triggered, bids received by the MTO after Tender Closing could not be considered.
[18] The Bot Group argues that s. 5.1 of the tender documents applied in this case, with the result that Coco’s failure to contact the MTO help line prior to approximately 2:50 p.m. on April 29, 2009 was a further event of non-compliance with the MTO tender requirements. We disagree.
[19] It is common ground that the cause of Coco’s late bid submission was some type of computer ‘glitch’. Coco maintains that its bid was received late because of a malfunction in the MTO’s computer system. This claim is vigorously contested. The MTO led evidence before the application judge indicating that its computer servers were functioning properly at the relevant time. The Bot Group relies on this evidence to argue that Coco’s bid, when first submitted, simply became stuck in an “internet traffic jam”. The Bot Group emphasizes that other bidders were shown to have accessed the MTO computerized bidding system during the precise time interval when Coco claims that it was prevented, through no fault of its own, from doing so.
[20] The application judge considered it unnecessary to determine the origins of the computer difficulties experienced by Coco in submitting its bid. What is clear, however, is that if a bidder’s computer system failed, the MTO’s help desk had to be contacted at least 30 minutes before Tender Opening/Closing. On Coco’s own evidence, it was not until about 2:40 p.m. on April 29, 2009, at the earliest, that Coco first attempted to access the MTO computerized bidding system. Even accepting this evidence, the timing of this initial contact by Coco left little room for the MTO to reserve a dedicated fax line for receipt of Coco’s bid before Tender Closing.
[21] Coco relies on the fact that it contacted the MTO on April 28, 2009, the day prior to the day of Tender Closing, to request fax numbers from the MTO as a precaution against computer failure. But there is no suggestion that at the time of the April 28 contact, Coco was experiencing or reported a computer failure of any kind. Nor is there any evidence that Coco requested or received a Summary Bid Submission Form on April 28 as a result of its telephone call to the MTO on that day.
[22] In the end, in the absence of a finding by the application judge as to the cause of the computer difficulties experienced by Coco, we are not satisfied that s. 5.1 of the tender documents is engaged in this case.
[23] That said, we agree with the Bot Group’s submission that, unlike other bidders, Coco took a calculated risk in deciding to delay accessing the MTO electronic bidding system until after 2:30 p.m. on April 29, 2009. It was open to Coco, as it was to the other bidders, to submit its first bid well in advance of Tender Closing and to update it thereafter. Unlike the other bidders, Coco chose not to avail itself of this opportunity.
[24] Relying on s. 22(1) of the Electronic Commerce Act, 2000, S.O. 2000, c. 17, Coco argues that its bid is presumed by operation of law to have been sent to the MTO when the bid entered an “information system” outside Coco’s control. The effect of this presumption, Coco says, is that its bid was “sent” to the MTO at 2:50 p.m. on April 29, 2009 – before Tender Closing. We do not accept this submission.
[25] As we have said, there is no evidence before us, nor any finding by the application judge, as to the origins of the computer difficulties experienced by Coco. Nor is there evidence of what happened to the bid that Coco attempted to send on-line before 3:00 p.m. It may simply have been lost or stalled in ‘cyberspace’. In any event, on this record, it is speculative to conclude that Coco’s bid entered MTO’s information system before 3:00 p.m. Under the tender requirements, which repeatedly emphasized the time of the MTO’s receipt of a bid, this was critical. Merely ‘sending’ a bid does not establish receipt by the MTO.
[26] Finally, with respect, we do not agree with the application judge’s holding that s. 4.6 of the MTO Instructions to Bidders operates to overcome the difficulties presented by the late submission of Coco’s bid. That provision reads:
4.6 Upon submitting an on-line Summary Bid Submission Form, bidders will receive an on-line receipt notifying that the Ministry has successfully received the Summary Bid Submission Form. Bidders not receiving an on-line receipt must contact the Ministry’s Help Desk at 1-877-246-4600.
[27] Nothing in s. 4.6 relieves against the timing of Tender Closing established under the tender documents. Nor does s. 4.6 create an exception to the stipulation that a bidder’s Summary Bid Submission Form had to be received by the MTO before Tender Opening/Closing at 3:00 p.m. on April 29, 2009.
[28] Moreover, contrary to the application judge’s view, the general language of s. 4.6 is not concerned with alternate bid submission procedures. That matter is dealt with in the specific language of s. 5 of the Instructions to Bidders.
[29] Section 4.6 is merely directed at ensuring that a bidder who submitted an on-line Summary Bid Submission Form and did not receive confirmation of receipt of that form from the MTO had the means to obtain such confirmation (an MTO receipt) by contacting the MTO’s help desk. Although we agree with the application judge’s implicit suggestion that the language of s. 4.6 would benefit from clarification, especially concerning its interplay with Article 5 of the tender documents, there is nothing in s. 4.6 to support the conclusion that it is intended to override the specific provisions of the tender documents relating to the deadline and process for the MTO’s receipt of bid submissions.
[30] Finally, we note that s. 4.6 of the Instructions to Bidders forms part of Article 4.0, entitled “Electronic Bid Submission Procedures”. Section 4.6 must be read in the context of Article 4.0 as a whole. Article 4.0 in fact reiterates that bids had to be received by the MTO prior to Tender Opening. Section 4.5 reads in part:
Bidders can submit a revised on-line Summary Bid Sub-mission Form up until Tender Opening. The Ministry will only consider the last Summary Bid Submission Form received prior to Tender Opening. [Emphasis added.]
III. Disposition
[31] On a plain reading of the tender documents as a whole, we conclude that Coco’s bid was not compliant with the terms prescribed by the MTO for bid submissions. In holding to the contrary, the application judge misinterpreted the tender documents and erred in law.
[32] For the reasons given, the appeal is allowed, the judgment of the application judge is set aside and, in its stead, judgment is granted dismissing Coco’s application. The parties shall submit their brief written submissions regarding costs to the Registrar of this court by the close of business on Tuesday, June 23, 2009.
RELEASED:
“JUN 19 2009” “E.A. Cronk J.A.”
“EAC” “E.E. Gillese J.A.”
“Robert P. Armstrong J.A.”