Court of Appeal for Ontario

Date: 2019-10-07

Docket: C66131

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

Between

CG Acquisition Inc. Plaintiff (Appellant)

and

P1 Consulting Inc., Ontario Infrastructure and Lands Corporation and Liquor Control Board of Ontario Defendants (Respondents in Appeal)

Counsel

Harvin D. Pitch and Adam Brunswick, for the appellant

Marc McLaren-Caux and Gerald Stobo, for the respondent P1 Consulting Inc.

Robin D. Linley, Erin Hoult and Justin Manoryk, for the respondent Liquor Control Board of Ontario

Heard: September 17, 2019

On appeal from: the order of Justice T. McEwen of the Superior Court of Justice, dated October 11, 2018, with reasons reported at 2018 ONSC 4089.

Reasons for Decision

[1] This is an appeal from an order allowing the respondents' motion for summary judgment and dismissing the appellant's action. The appellant accepts that this was a proper case for summary judgment. The appellant also accepts the facts as found by the motion judge. The appellant argues, however, that on a proper application of the applicable legal principles to those facts, it was entitled to judgment on its damages claim.

[2] Given the narrowly focused argument put forward by counsel in oral submissions, it is unnecessary to provide a detailed account of the evidence. The narrative and arguments advanced on the motion are fully and clearly set out in the reasons of the motion judge.

[3] The appellant ("CG") is a real estate development company. The respondent, Ontario Infrastructure and Lands Corporation, provides services in support of various government efforts to modernize and maximize the value of its real estate and infrastructure holdings. The Liquor Control Board of Ontario is a public agency. Together, the two respondents ("Sponsors") decided to redevelop a large piece of property on the Toronto waterfront. The respondent, P1 Consulting Inc. ("P1"), was retained by the Sponsors to serve as a fairness monitor during the process that would eventually lead to the sale and redevelopment of that property.

[4] The Sponsors issued a request for proposals ("RFP") in September 2014. The RFP contained detailed specifications and requirements. The Sponsors also met with potential participants in the proposals and provided additional information to them.

[5] The process had two stages. At the first stage, proposals would be submitted by interested parties. Three proposals would be selected from those submitted. At the second stage, one of the three remaining proposals would be accepted.

[6] CG filed a proposal in response to the RFP. The Sponsors ultimately disqualified that proposal from further consideration on the basis that it listed an "ineligible person" as one of CG's advisors on the project. CG asked the Sponsors to reconsider the disqualification and offered, in affidavits, an explanation for wrongly identifying an "ineligible person" as an advisor on the project. The Sponsors considered the request, but declined to set aside the disqualification.

[7] The appellant's oral argument targets only the Sponsors' decision to not rescind the disqualification of the appellant's proposal. The appellant accepts that it was open to the Sponsors under the terms of the RFP to disqualify the appellant's proposal. The appellant does not allege any unfairness in the initial disqualification. The appellant also accepts that there was no obligation on the Sponsors to reconsider that disqualification.

[8] The appellant does argue, however, that once the Sponsors undertook a reconsideration of the disqualification, they owed a duty of fairness to the appellant in the reconsideration of the decision to disqualify. The appellant submits that the freestanding duty of fairness arises out of the appellant's reasonable expectations based on the totality of the circumstances, which include the terms of the RFP, representations made by the Sponsors in the pre-proposal phase of the process, the involvement of a fairness monitor, and various government procurement policies and directives in respect of RFPs issued by government agencies. Counsel describes this duty of fairness as "akin" to the procedural duty of fairness recognized in the context of judicial review of actions by government agencies. The appellant submits, however, that in this context, a breach of the duty of fairness gives rise to a remedy in damages.

[9] Counsel for the appellant identifies the fundamental unfairness in the reconsideration process as the failure to adequately involve the fairness monitor, P1. He submits that the record shows that P1 wanted to be involved in the reconsideration process, but was virtually excluded from that process by the Sponsors.[1]

[10] The motion judge rejected the appellant's submission, both as a matter of law and on the evidence. He concluded that neither the Sponsors, nor P1 owed a duty of fairness to the appellant, either by way of a freestanding obligation, or as an aspect of the duty of care owed under the law of negligence. The motion judge went on to find that the Sponsors had acted reasonably in refusing to rescind the disqualification of the appellant's proposal, especially having regard to the need to ensure that the process was fair to all of the proponents who had submitted proposals.

[11] Without meaning to cast any doubt on the motion judge's legal analysis, we choose to dispose of the appeal on the factual basis. Assuming without deciding that the appellant was owed a duty of fairness, there was no unfairness to the appellant in the reconsideration process.

[12] The Sponsors advised CG on April 30, 2015 that their proposal had been disqualified. The Sponsors provided a detailed explanation for the disqualification.

[13] On May 6, 2015, appellant, through counsel, replied to the disqualification letter with a request that the Sponsors reconsider the disqualification. The letter included two affidavits explaining how the appellant had erroneously identified an "ineligible person" as a member of their proposal team.

[14] The Sponsors chose to reconsider the disqualification based on the material provided by the appellant. The material was circulated to senior management and to P1. The Sponsors met to discuss the request for reconsideration and sought legal advice from outside counsel. No one from P1 attended those meetings.

[15] On May 12, 2015, the Sponsors advised P1 that, based on their assessment and the legal opinion they had received, the Sponsors had decided they would not change the disqualification decision.

[16] P1 subsequently reviewed the Sponsors' decision to uphold the disqualification of the appellant. P1 indicated to the Sponsors that from a fairness perspective it concurred in the decision to maintain the disqualification. P1 did so only after receiving assurances that the Sponsors would take a consistent position moving forward in relation to other RFPs if the same issue arose again.

[17] In considering the appellant's submission that P1 was not sufficiently involved in the request for reconsideration, it is important to bear in mind that there was no relationship of any kind between P1 and the appellant. P1 contracted to provide fairness monitoring services to the Sponsors in accordance with the terms of an agreement. Under that agreement, P1 was to provide observations on fairness issues and an impartial opinion on the fairness of the procurement process. P1 had no decision-making power, no authority to provide legal or quasi legal advice, and no authority to evaluate in any way the merits of the various bids.

[18] We agree with the motion judge (para. 95) that the reconsideration process was neither inadequate nor unfair. The appellant got exactly what it asked for – a reconsideration of the disqualification of its proposal based on the information provided in the affidavits forwarded to the Sponsors by counsel for the appellant. On the advice of external legal counsel, and no doubt out of concern to maintain the overall integrity of the procurement process, the Sponsors determined that the explanation offered by the appellant did not warrant a rescinding of the disqualification.

[19] In our view, the fact that P1 did not opine on the fairness of the process in respect of the reconsideration of the disqualification before the Sponsors made their decision did not adversely affect the fairness of the process. The basis for the Sponsors' decision had nothing to do with the process, but rather turned on the Sponsors' assessment of the merits of the request for a reconsideration. In any event, P1 did agree with the Sponsors' decision after receiving assurances that should the same situation arise in the future, the Sponsors would deal with it in the same way.

[20] The appellant has failed to make out any unfairness in the reconsideration process. It follows that any claims based on that alleged unfairness must fail, regardless of the merits of the legal principles advanced by the appellant. As indicated above, we need not address those principles. We also need not address the motion judge's finding that the exclusion clause in the RFP also excludes any liability on behalf of the Sponsors or P1.

[21] The appeal is dismissed. The parties agree that the Sponsors should have their costs in the amount of $45,000, inclusive of disbursements and relevant taxes, and that P1 should have its costs in the amount of $30,000, inclusive of disbursements and relevant taxes.

Footnote

[1] It is difficult to understand how P1 could be said to have breached a duty of fairness when, on the appellant's own theory, P1 sought involvement in the reconsideration process, but was denied that opportunity by its client, the Sponsors.

"Doherty J.A."

"A. Harvison Young J.A."

"J.A. Thorburn J.A."