COURT OF APPEAL FOR ONTARIO
CITATION: Weinmann Electric Ltd. v. Niagara (Regional Municipality), 2016 ONCA 990
DATE: 20161230
DOCKET: C60955
Doherty, Brown and Huscroft JJ.A.
BETWEEN
Weinmann Electric Ltd.
Plaintiff (Appellant)
and
The Regional Municipality of Niagara
Defendant (Respondent)
David Levangie, for the plaintiff (appellant)
Paul DeMelo and Alexandra DeGasperis, for the defendant (respondent)
Heard: December 22, 2016
On appeal from the judgment of Justice Joseph W. Quinn of the Superior Court of Justice, dated August 6, 2015.
ENDORSEMENT
[1] The appellant electrical contractor appeals from the decision of the trial judge dismissing its action against the respondent regional municipality alleging a failure to follow its bylaws governing contracting for the provision of goods and services. The consequence of the failure, according to the appellant, was that it was denied the opportunity to provide electrical work for the region for over 10 years.
[2] The procedure governing contracting is set out in a series of four consecutive bylaws. The bylaws established different and more onerous requirements that must be met as the value of the goods and services being purchased increased. Broadly speaking, department staff were authorized to issue a simple purchase order for procurements of less than $10,000, whereas purchases above that amount required the use of increasingly more formal quotation processes.
[3] The region maintained a list of pre-qualified contractors, who provided a fixed price for particular services for a two-year period. The list was open to all interested contractors. The appellant was on the list for much, but not all, of the relevant period.
[4] From 2006 onwards, the bylaws prohibited “contract-splitting” as follows:
No Contract for Goods and Services may be divided into two (2) or more parts to avoid the requirements of this By-law” (s. 34(b)).
[5] At trial, the appellant argued that the region breached its bylaws by contracting with a competitor, Regional Trenching, without following the competitive purchasing processes set out in the bylaws, and by a pervasive practice of contract-splitting. The appellant alleged that Regional Trenching wrongly obtained approximately $11 million in contracts from the region over a 10-year period.
[6] On appeal, the appellant argues that the trial judge erred in law in interpreting the bylaws and that the trial judge made palpable and overriding errors of fact in concluding that the region’s conduct did not violate the bylaws.
The interpretation of the bylaws
[7] The trial judge’s interpretation of the bylaws is a question of law that is subject to review for correctness. We are satisfied that the trial judge made no errors in interpreting the bylaws.
[8] The appellant submits that the prohibition on contract-splitting required the total project or annual requirement to be considered in applying the graduated procurement process. Given that the value of the work performed on an annual basis was approximately $750,000 per annum, it “defies logic” that the region was unable to determine that its project or annual requirements would exceed the $10,000 threshold.
[9] We note that this submission was not put before the trial judge. In any event, the difficulty with this submission is that it is based on a provision in the 2004 bylaw that was deleted from successor bylaws and replaced by the prohibition against contract-splitting in 2006. There is no basis for the old provision to modify the interpretation of the subsequent bylaws.
[10] Although the bylaws (since 2006) prohibit contract-splitting, they do not specify the scope of work that a contract must cover. On a reading of the plain language of the bylaws, the region is free to determine the scope of the work encompassed by any contract it enters into – it can define a contract’s scope of work to cover as little or as much of a particular project as it considers appropriate and consistent with the objectives of the bylaws.
[11] The various purposes, goals, and objectives of the bylaws cannot all be realized in respect of every contracting decision. The bylaws are designed “to offer a variety of Purchasing methods, and to use the most appropriate method depending on the particular circumstances of the acquisition”. As well, they seek “to maximize savings for taxpayers.” At the same time, the bylaws seek to “encourage competitive bidding” and, “to the extent possible, to ensure openness, accountability and transparency while protecting the best interests of the [region] and [its] taxpayers.”
[12] The trial judge concluded that the bylaws do not restrict the amount of work that may be procured from a single supplier and do not prevent the region from using a task-oriented approach in completing projects rather than a contract-based approach. The trial judge concluded, further, that the prohibition on contract-splitting applied only to contracts, not to tasks.
[13] We see no error in the trial judge’s interpretation. We are mindful of the concern that the prohibition on contract-splitting should not be circumvented by subterfuge, but the trial judge found no evidence of any wrongdoing on the part of the region. On the contrary, the trial judge found that the region’s task-oriented approach was both sensible and economic.
Did the trial judge make palpable and overriding errors?
[14] The trial judge carefully reviewed the evidence in a detailed and considered decision that addressed all 40 issues raised by the appellant. He found as follows:
- There was no evidence that the appellant was treated unfairly or differently than other bidders or those who were pre-qualified suppliers (and pre-qualified suppliers were not entitled to be provided with work in any event).
- There was no credible evidence that the region had engaged in contract-splitting to avoid the procurement regime set out in the bylaw.
- There was no evidence that the region’s invoicing was a sham designed to avoid compliance with the bylaw. On the contrary, Regional Trenching was reasonably priced, if not the least expensive contractor, was reliable, and did good work.
- There was no evidence that the region directed contracts to Regional Trenching or did anything improper in purchasing goods and services from Regional Trenching.
[15] The appellant invites the court to infer that its inability to obtain work from the region could be explained only by the region’s disregard and/or manipulation of the contracting bylaws. According to the appellant, the “sheer scale” of the monthly invoicing by Regional Trenching should remove any doubt that the region was not following the procurement process set out in the bylaws.
[16] However, in our view, there is no basis to draw this inference. The trial judge’s findings to the contrary are supported on the record that was before him, and they are fatal to the appeal.
Damages
[17] Even assuming that the appellant could succeed in establishing a violation of the bylaws, the appellant failed to establish any damages. The argument that it would have obtained contracts if competitions in accordance with the bylaw’s higher value purchases quotation procedures had been held is speculative. The trial judge concluded as follows:
There is no evidence that the plaintiff would or should have been successful in obtaining work from the defendant in the years it was on the pre-qualified list (and there certainly is no evidence that the plaintiff would or should have been successful in obtaining such work in the years it was not on the list).
[18] The appellant did not argue in its factum that the trial judge erred concerning damages. However, in oral argument, the appellant submitted that damages could be calculated based on its success rate in bidding for work against the same contractors and a profit margin suggested by its damages expert.
[19] The trial judge rejected this submission as irrelevant and not established by evidence in any event. Further, the trial judge concluded that the evidence of the damages expert was undermined by his failure to use financial information relating to the plaintiff, and the fact that his evidence was based on a single project for which he failed to obtain back-up information.
[20] The trial judge made no error in this regard. In short, the appellant simply failed to prove damages.
Disposition
[21] The appeal is dismissed.
[22] The respondent is entitled to costs on the appeal of $20,000, inclusive of taxes and disbursements.
“Doherty J.A.”
“David Brown J.A.”
“Grant Huscroft J.A.”