COURT FILE NO.: C-1079A-09
DATE: 2012-03-15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Moorefield Excavating Ltd.
Plaintiff
– and –
The Corporation of the Municipality of Arran-Elderslie
Defendant
M. A. van Bodegom, for the Plaintiff/Respondent
Ross C. McLean, for the Defendant
– and –
Genivar Consultants LP
Third Party
M. Gosia Bawolska, for the Third Party/Moving Party
HEARD: March 14, 2012
The honourable Mr. justice D. A. Broad
[1] The Plaintiff Moorefield Excavating Ltd. (“Moorefield”) brought action against the Municipality of Arran-Elderslie (“Municipality”) for damages arising from alleged breaches by the Municipality in the tender process in respect of a contract for replacement of a water main in the municipality. The Municipality has issued a Third Party Claim against its consultant on the project Genivar Consultants LP (“Genivar”) for indemnity in respect of Moorefield’s claim. As part of its consulting services Genivar prepared the tender documentation and supervised and conducted the tendering process, including the opening of the tenders. Genivar has defended both the Third Party Claim and the Main Action.
[2] Moorefield’s action is founded on a discrepancy in the tender documents with respect to the closing time for tenders. The Request for Tenders and the Information for Tenderers each set out a closing time of 1:00 p.m. on the closing date, whereas the original Form of Tender and the revised Form of Tender which was attached to Addendum No. 2 each set out a closing time of 2:00 p.m.
[3] Genivar has brought a motion for summary judgment to dismiss the main action on the basis that there is no triable issue with respect to the Plaintiff’s claim against the Municipality. Counsel for Genivar, Ms. Bawolska, has advised that the issue of liability between Genivar and the Municipality has been resolved, the Municipality is content to live with the disposition on the question of liability on the motion and accordingly, the Municipality would not be participating in the argument of the Motion. The parties are agreed that the documentary record is sufficient for the Court to have a full appreciation of the issues in order to make a determination of the question of liability on a summary basis, and are agreed that the Court has jurisdiction to make the determination in favour of either the moving party or the responding party on the question of liability in the context of Genivar’s Motion for Summary Judgment.
[4] Although Genivar sought, in its Notice of Motion, as alternative relief, a declaration that the Plaintiff is entitled to damages limited to the costs of preparing the tender, Ms. Bawolska submitted that it was not necessary for the Court to make a determination of that issue on the basis of the current record.
[5] Moorefield claims in the action that, on a correct interpretation of the closing documents, the closing time for tenders was 1:00 p.m. and that on that basis, it was the lowest compliant bidder among the bids submitted by the closing time. It argues that the Municipality breached its obligations to it by awarding the contract to a competing bidder which had submitted its bid after 1:00 p.m.
[6] Although Genivar acknowledges that Moorefield was the lowest compliant bidder among those who submitted tenders prior to 1:00 p.m., it argues that the discrepancy in the closing time for tenders was resolved by the issuance of Addendum No. 2 which, inter alia, replaced the initial Form of Tender with a new Form of Tender and accordingly, the correct closing time for tenders was 2:00 p.m. and not 1:00 p.m. Genivar states that the Municipality was therefore at liberty to accept bids after 1:00 p.m. and prior to 2:00 p.m. and to award the contract to the lowest bidder overall, including a bidder which had submitted its bid after 1:00 p.m.
Issues
[7] The issues on the motion are:
i. On a correct interpretation of the tender documents was the closing time for tenders 1:00 p.m. or 2:00 p.m., and in particular, what was the effect, if any, of Addendum No. 2 on that determination?
ii. What was the effect, if any, of the Municipality opening the initial four tenders, including that of the Moorefield, prior to acceptance of the two tenders submitted after 1:00 p.m.?
iii. What was the effect, if any, of the Municipality communicating to Moorefield, prior to acceptance of the additional two bidders, that it was the low bidder?
iv. By awarding the contact to a competing bidder which submitted its bid after 1:00 p.m., did the Municipality breach a legal duty to Moorefield?
Discussion
[8] Genivar acknowledges that the original tender documents contained a discrepancy in the closing time for tenders and that, but for the issuance of Addendum No. 2, the discrepancy would have been resolved in favour of the closing time specified in the Information for Tenderers, namely 1:00 p.m. , by the application of the Order of Precedence set out in GC 2.02.01 of the General Conditions ( the “Order of Precedence”) which provided that “in the event of any inconsistency or conflict in the contents of the following documents, such documents shall take precedence and govern in the following descending order,” followed by a hierarchical listing of various documents. In the hierarchy “(g) Instructions to Tenderers” ranks above “(h) Tender.” It is acknowledged that the reference to “Instructions to Tenderers” is equivalent to “Information for Tenderers.”
[9] Genivar also acknowledges that, on the closing date, its representative, and the two representatives of the Municipality, all believed that the closing time was 1:00 p.m. and not 2:00 p.m. On this basis, the four bids which were received prior to 1:00 p.m. were opened shortly after 1:00 p.m., and indeed, one of the municipal representatives left the council chambers, where the initial opening had taken place, to telephone Moorefield to advise it that it was the low bidder.
[10] It was not until shortly after the initial four bids were opened and when two additional bidders arrived, taking the position that the closing time was 2:00 p.m., that the representatives of Genivar and the Municipality reviewed the tender documents and determined that the correct closing time was 2:00 p.m. and not 1:00 p.m. On that basis, the additional two bids were accepted and opened immediately, without waiting until 2:00 p.m., and the contract was awarded to one of the two new bidders, Harold Sutherland Construction, whose bid was some $56,000.00 lower than that of Moorefield. Genivar and the Municipality decided to open the additional two bids immediately, rather than waiting until 2:00 p.m., being the correct closing time on their interpretation, in the interest of promoting fairness among all of the bidders, and on the basis that bids had then been received from all parties invited to submit tenders
[11] Genivar and the Municipality determined that the closing time was 2:00 p.m. on the basis of the earlier issuance by Genivar of Addendum 2. It is noted that according to the Order of Precedence, “(b) Addenda” rank second highest, after only “(a) Agreement,” in the hierarchy for resolution of inconsistencies, and therefore rank higher than “(g) Instructions to Tenderers”.
[12] Addendum No. 2 comprised thirteen paragraphs over four pages of text, and addressed various issues, mainly dealing with revised specifications and requirements for the construction project. In addition, paragraph 1 listed the eligible bidders and, most importantly for the purposes of this action, at paragraph 12, instructed all tenderers to replace the initial Form of Tender “with the enclosed ‘Revised Form of Tender’, pages 1 to 13.”
[13] Genivar takes the position that the new revised Form of Tender which was “enclosed” with the Addendum (to use the wording of paragraph 12) formed part of Addendum 2. It argues that since the Revised Form of Tender stated that the tender closing date was “July 31, 2009 at 2:00 p.m.” it took priority over the Instructions to Tenderers (which stated the closing time to be 1:00 p.m.) by virtue of the Order of Precedence, which, as stated above, ranked “Addenda” higher than “Instructions to Tenderers” for the resolution of conflicts.
[14] Despite Ms. Bawolska’s very capable argument, for the following reasons, I do not accept that the revised Form of Tender formed part of Addendum No. 2, in such a way as to have the effect of resolving the conflict between the closing time in the Information for Tenderers and the Form of Tender in favour of a closing time of 2:00 p.m.
[15] I find that there is nothing in paragraph 12 of Addendum No. 2 which explicitly states that the Revised Form of Tender forms part of the Addendum. Indeed, it states that it is “enclosed” thereby connoting an independent existence and status. It does not say, for instance, that the revised Form of Notice is “attached hereto and forms a part hereof”. The four page Addendum is concluded with the logos, names and addresses of the Municipality and Genivar respectively, which would connote that the operative part of the Addendum ended with the last of the numbered paragraphs.
[16] Moreover, paragraphs 12 and 13 provide explicit statements of certain reasons for the replacement of the Form of Tender. For instance, at paragraph 12 it is stated: “note that some of the tender quantities have been revised to include change in the scope of work outlined in this Addendum,” and at Paragraph 13 the deletion of Item 10 on the Form of Tender is specifically noted. No mention is made of a change or clarification to the time of tender closing in the text of the Addendum. A contractor receiving Addenda 2 would be entitled to reasonably conclude that the reasons for the replacement Form of Tender were as explicitly stated.
[17] The lack of any intention that a change to, or clarification of, the time of closing for tenders was a reason or explanation for the substitution of the Form of Tender is borne out by the conduct of Genivar and the Municipality after issuance of the Addendum. They each continued to believe that the time of tender closing was 1:00 p.m. and acted on that belief.
[18] I find that the revised Form of Tender did not form part of Addendum No. 2 for the purposes of elevating it on the hierarchy of documents in the Order of Precedence above the Instructions to Tenderers. Addenda are issued by owners and consultants to correct, revise and clarify items in the tender documents prior to the submission and opening of submitted tenders, as part of the tender process, and in doing so, they may make reference to other tender documents, such as drawings or specifications, or they may attach revised documents. I find that it is in keeping with the purpose and intent of the Order of Precedence that the various documents listed in the hierarchy retain their status as independent documents for the purpose of resolving conflicts. Otherwise the potential for lack of clarity and confusion would be enhanced. To give an example, if a document in the list, such as a “contract drawing” or a “standard specification” ceased to exist, as such, for the purpose of the Order of Precedence, but became part of an Addendum by virtue of being attached to it, how would a conflict between a statement or provision in the wording of the Addendum and the attached document be resolved? It would promote the ready application of the Order of Precedence to permit the various listed documents to retain their status as such, notwithstanding that they may be referred to, or attached to, an Addendum.
[19] I find that rather than correcting the pre-existing discrepancy between the stated closing times in the tender documents, Addendum No. 2 had the effect of permitting it to persist. Had it been the intention of Genivar to resolve the discrepancy, it could easily have done so explicitly in the text of the Addendum. The discrepancy which remained, after the issuance of Addendum No. 2, was resolved by the Order of Precedence in favour of a 1:00 p.m. closing time, pursuant to precedence of the Instructions to Tenderers over the Form of Tender, whether revised or not.
[20] Given my finding on the effect of Addendum No. 2, it is not necessary to make a finding with respect to the effect of the Municipality opening the initial four tenders, including that of the Moorefield, prior to acceptance of the two tenders submitted after 1:00 p.m. or the communication made by the Municipality to Moorefield thereafter. However, in the event that I am wrong with respect to the effect of Addendum No. 2, I find that the Municipality, by opening the initial four tenders shortly after 1:00 p.m., committed itself to the 1:00 p.m. closing time and was thereby estopped from thereafter accepting additional tenders and awarding the contract to one of the subsequent bidders. This result is driven by the critical nature of the timing of bid submissions in the context of the need to maintain the integrity of the public tender process. See in this regard Coco Paving (1990) Inc. V. (Ontario) Minister of Transportation [2009] O.J. No. 2547, 2009 ONCA 503, at paras. 12-14 and Bradscot (MCL) Ltd. V. Hamilton-Wentworth Catholic School Board 1999 CanLII 2733 (ON CA), [1999] O.J. No. 69, 42 O.R. (3d) 723, p. 3.
[21] Although Genivar’s Factum raised the issue of rectification, Ms. Bawolska did not press it in argument. I find that the remedy of rectification has no application to the facts in this case, as the required elements for the remedy are not present, and in particular, the existence of a prior oral contract whose terms were definite and ascertainable. See Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. 2002 SCC 19, [2002 1 S.C.R. 678 para 31.
[22] On this basis of the foregoing, I find that the Municipality breached Contract A (on the Ron Engineering analysis) with Moorefield, by accepting bids from competing contractors after the 1:00 p.m. closing time. Having found that the correct closing time was 1:00 p.m., it is not necessary for me to make a finding as to whether the Municipality breached a duty to Moorefield by opening the two late bids prior to 2:00 p.m.
[23] Although I am able to make a finding on the question of liability on the basis of this Motion for Summary Judgment, I am not satisfied that I can have, on the record before me, a full appreciation of the issues relating to the basis for, and quantum of, Moorefield’s damages relating for the breach by the Municipality in order to make a finding on those issues. See Combined Air Mechanical Sertvices Inc. v. Flesch, 2011 ONCA 764.
Disposition
[24] On the basis of the forgoing, the Motion of Genivar for Summary Judgment to dismiss the Plaintiff’s claim is dismissed, and it is declared that:
a) The terms of the tender documents provided for a 1:00 p.m. closing time;
b) The Municipality breached its contractual obligations to Moorefield by accepting a bid submitted after the 1:00 p.m. closing time;
c) But for the breach of contract, Moorefield’s bid would have been accepted.
[25] The action shall proceed to trial on the issues of the basis for determination of Moorefield’s damages and the quantification of those damages.
[26] Counsel may make written submissions with respect to costs, Moorefield’s submissions to be made within 21 days, and Genivar’s within 35 days, of the release of these Reasons.
D. A. Broad J.
Released: March 15, 2012
Moorefield Excavating Ltd.
Plaintiff
– and –
The Corporation of the Municipality of Arran-Elderslie
Defendant
– and –
The Corporation of the Municipality of Arran-Elderslie
Third Party
Reasons for Judgment
D. A. Broad J.
Released: March 15, 2012