SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-10-399013
DATE: 20120430

RE: ECL Carriers GP Inc., Plaintiff / Responding Party

AND:

City of Toronto, Defendant / Moving Party

BEFORE: Justice E. P. Belobaba

COUNSEL:
David A. Gourlay for City of Toronto / Moving Party

R.G. Slaght, Q.C., and Jon Laxer for ECL Carriers / Responding Party

HEARD: April 18, 2012

Summary judgment motion

[ 1 ] The Court of Appeal recently made clear that the purpose of the new summary judgment rule is to eliminate unnecessary trials, not to eliminate all trials. [1] The guiding consideration is whether the summary judgment process, in the circumstances of a given case, will provide an appropriate means for effecting a fair and just resolution of the dispute before the court. [2]

[ 2 ] In the circumstances of this case, a summary judgment process will not provide for a fair and just resolution of the dispute. The motion record is inadequate. Too many questions remain unanswered and recourse to the “mini-trial” power under Rule 20.04(2.2) is not appropriate. In my view, the interests of justice require a trial.

[ 3 ] The City of Toronto’s motion for summary judgment is dismissed.

Background

[ 4 ] ECL Carriers was one of three haulage companies that bid on the City of Toronto’s multi-million dollar contract to carry waste from the City’s seven transfer stations to a landfill site near London, Ontario. As it turned out, the ECL bid was the lowest by a significant margin. The City of Toronto rejected the bid as non-compliant and awarded the $130 million contract to the second highest bidder. ECL sued for its lost profits. The City asks that the action be summarily dismissed.

[ 5 ] The source of the dispute is of the City’s own making. It stems from the Addendum that was added to the initial Request for Quotation. The information provided in the initial RFQ was reasonably straightforward. The City was tendering a multi-year waste haulage contract. It wanted to get the lowest price for the transport of waste material from its seven transfer stations to the Green Lane Landfill in London, Ontario. It imposed a 32 tonne/load minimum and asked the bidders to fill out a pricing chart that enabled them to calculate the subtotals for each transfer station and then add these up for the grand total.

[ 6 ] However, in the Addendum, issued two weeks later, the City made several changes. The wording describing the 32 tonne stipulation was changed from “ tractor-trailers capable of carrying a minimum tonnage of 32 tonnes per load” to “ trailers that are capable of holding a minimum of 32 tonnes/load.” The bidders were also asked to specify “the minimum tonnage ... that can be loaded into any of the trailers provided.”

[ 7 ] The bidders were then required to use this number in calculating the “estimated quantity of loads” in the pricing chart that was again provided in the Addendum. By multiplying the estimated number of loads by the cost of hauling each load (the “general transport price per load”) the bidder could again complete the subtotals for each transfer station and then add them up for the grand total. The Addendum, in essence, allowed the bidders to calculate estimated load numbers using trailers that could hold more than the stipulated 32 tonne minimum. But the tonnage per load number used in the pricing calculation had to be the “minimum tonnage that can be loaded into any of [the bidder’s] trailers.”

[ 8 ] ECL says it received the Addendum and filled out the Revised Price Schedule page precisely as required. It honestly and correctly specified that the minimum tonnage that could be loaded into any of its trailers was 40.7 tonnes. [3] It then used this number, as it was required to do, in the calculation of estimated loads and completed the sub-totals and final tally accordingly.

[ 9 ] As an experienced carrier, ECL knew that it could not legally carry 40.7 tonne loads on the highway. The actual legal haulage weight, primarily a function of tractor-trailer axle configurations, was around 38 to 40.5 tonnes per load. The logistical details showing the actual number of loads per transfer station was set out in the Logistics Schedule which was appended as a required document. ECL knew that the City would double-check the Logistics Schedule to get the actual (legal) load numbers. In short, says ECL, it filled out the bid documents exactly as required and provided all of the necessary information for bid evaluation purposes. Nothing more was needed. ECL says its bid was fully compliant and should not have been rejected.

[ 10 ] The City rejected the bid as non-compliant because, in its view, ECL responded much too literally to the request that it specify that the minimum tonnage that can be loaded into any of its trailers. ECL should have known, says the City, that it was asking for the minimum tonnage that can be loaded and legally carried on the highway, not just loaded. ECL responds that this is not what was asked in the Addendum.

[ 11 ] This is obviously not the usual non-compliant bid case. Unlike cases such as Maystar [4] or Jarlian Construction [5] , relied on by the City, where explicit bid terms were breached, here there was literal compliance with the explicit bid terms. This case turns on the strength of the City’s argument that ECL should have known that when the City asked about the loading capacity of ECL’s trailers , it really was asking about the legal carrying capacity of ECL’s tractor-trailers . This case also turns on the strength of ECL’s submission that all of the required information was in the bid and the City could and did determine the actual loads and ECL’s total haulage price which, on any permutation, was significantly lower than the other two bidders. [6]

[ 12 ] The terms of the RFQ and Addendum made clear that tendering and bidding process in this case was to be interactive – the bidder could put questions to the City; the City could ask the bidder to clarify and explain any aspect of its bid. The bidders knew that the total bid price they quoted on the pricing pages was not necessarily the final price that would be charged to the City. The annual amount of waste that had to be hauled from each transfer station was, at best, an estimate. The actual tonnage might be higher or lower. The critical pricing number was the bidder’s ‘general transport price per load’ which when multiplied by the number of loads actually hauled would yield the actual final price. This was not a simple fixed-price tender but one that anticipated and required ongoing adjustments.

Analysis

[ 13 ] I have two concerns about deciding this matter summarily.

[ 14 ] My first concern relates to the record before me. I am not prepared on this record to find in favour of the City and rule that ECL’s bid was non-compliant. In my view, more evidence is needed, particularly in the following areas:

(i) More evidence is needed about the reasons why the RFQ language was changed and why new provisions were added to the Addendum. Derek Angove’s evidence on this point when he was cross-examined was unsatisfactory:

MR. LAXER: And the sentence before that, however, the one about, "Contractor to provide trailers that are capable of holding a minimum of 32 tonnes per load," was that supposed to be read exactly the same as, "Contractor is required to provide a tractor‑trailer capable of carrying a minimum tonnage"? […]

THE DEPONENT: It is ‑‑ it is the same meaning in relation to the answer to the question that was asked, yes.

MR. LAXER: Sorry, could you explain that?

A. There was a question ‑‑ there was a question that was asked about greater payloads. In response to the question, there were changes made to the revised price schedule. And these were the changes.

Q. Why did this sentence have to be changed to respond to that question?

A. I don't know.

Q. And you worked on the revision?

A. I did work on the revision.

Q. So you can't explain why they would have changed the wording of the sentence here?

A. I reviewed it with the lawyer.

(ii) There is conflicting evidence about the City’s waste density plans. ECL representative, Peter Vanderwyst, stated in his affidavit that the City plans to divert organic waste which will reduce the density of waste in Toronto. If the density of Toronto’s waste declines as a result of waste diversion, Toronto will require larger trailers in order to haul the same amount of waste. Accordingly, says ECL, the volume of the trailers is relevant to the amount of waste that can be loaded into the bidders’ trailers and this in turn is relevant to Toronto’s assessment of the bids. ECL argues that it was reasonable to assume that the City was interested in the physical capacity of the bidder’s trailers because it wanted the winning bidder to be capable of hauling the largest possible volume of waste.

Mr. Angove, however, states in his affidavit that the City has never indicated that the density of future waste would be reduced. This conflict in the evidence needs to be clarified.

(iii) The City’s senior buyer, Mary Ann Morgan, spoke with Mr. Vanderwyst at the August 20 post-bid meeting and equipment test. Vanderwyst told her that ECL’s equipment would be (legally) hauling around 40.5 tonnes. What did Ms. Morgan do with this information? Did she advise her colleagues? And if so, why didn’t the City use its power under Article 1.6 of the RFQ to obtain a “clarification” from ECL if it thought that the 40.7 “loaded” number on the pricing pages didn’t jibe with the 40.5 “hauling” number? Here again more evidence is needed.

(iv) The City’s inspection report of August 25 verified that a minimum of 40.7 tonnes could indeed be loaded into the ECL trailer. According to the “notes” portion of the report, ECL advised the inspector that the actual weight of the waste that would be loaded and carried was 40.62 tonnes “just below the minimum specified tonnage of 40.7 presented by the bidder in the Addendum ...” What did the inspector do with this information? Why didn’t the City use its power under Article 1.6 of the RFQ to obtain a “clarification” from ECL when it learned that 40.62 tonnes would actually be carried? And, by the way, how is this number reconciled with the 40.5 number provided by ECL to Ms. Morgan? [7]

(v) There is an undated document in the material that shows that the City recalculated ECL’s total bid price using 38.5 tonnes per load. The adjusted bid price was still the lowest bid by far. This document appears to support ECL’s submission that all of the required information was provided in its bid and that the City was capable of doing the required calculation. When was this calculation done and by whom? Was this recalculation done routinely with all bids received or was it unique to the ECL bid? Why didn’t the City use its power under Article 1.6 of the RFQ to obtain a “clarification” from ECL about the contents of this recalculation?

(vi) At the bottom of this undated document is the following note:

NOTE: The schedule has been revised to re-calculate cost based on revised minimum/maximum load weight per ECL should Legal advise ECL bid is compliant.

It appears from this that City staff was prepared to proceed with the ECL bid (having done the calculation at 38.5 tonnes) if Legal advised that the ECL bid was compliant. In other words, it appears that the decision to reject the bid as non-compliant was not based on the need for recalculation (which City staff was easily able to do) but on ECL’s use of the 40.7 tonnage number in the pricing chart, even though this was the number that literally and correctly answered the City’s “how much can you load” question. Here again, more evidence is needed to explain what happened here and why.

[ 15 ] Rule 20.04(2.2) provides for an oral hearing as part of the summary judgment procedure. In my view, recourse to a “mini-trial” would not be appropriate. The evidentiary gaps are broad-ranging and will require more than one or two witnesses. The Court of Appeal noted in Combined Air that “the discretion to order oral evidence pursuant to Rule 20.04(2.2) is circumscribed and cannot be used to convert a summary judgment motion into a trial.” [8] The court’s power to direct the calling of oral evidence is not intended to permit the parties to supplement the motion record. [9] The Court of Appeal put it this way:

A party who moves for summary judgment must be in a position to present a case capable of being decided on the paper record before the court. To suggest that further evidence is required amounts to an admission that the case is not appropriate, at first impression, for summary judgment. [10]

[ 16 ] In any event, a full appreciation of the evidence and issues required to make dispositive findings is not attainable on the record before me and cannot be achieved in a summary judgment motion brought by either side. [11]

[ 17 ] My second concern is more fundamental. The aim of the civil justice system is to provide a just result in disputed matters through a fair process. [12] The amended summary judgment rule recognizes that while there is a role for an expanded summary judgment procedure, a trial is essential in certain circumstances if the “interest of justice” is to be served.

[ 18 ] In my view, even if the record was more complete, the interest of justice in this case would require a trial. This is a case where there was literal compliance with the bid terms and yet the bid was rejected as non-compliant. ECL did not breach any express term. It never said that it intended to carry illegal loads. Indeed, quite the opposite. ECL told the City what it could legally carry and provided logistical details clearly showing the number of loads it planned to haul. The City had all the information it needed to determine the cost of the ECL bid and apparently did so. The City could easily and properly have asked ECL for clarification but chose not to do so.

[ 19 ] On the other hand, there is also merit in the City’s position. It was evident from both the RFQ and the Addendum that the City was interested in getting the best quote for hauling waste from its seven transfer stations. Why, asks the City, would it care about the volumetric capacity of the bidder’s trailers? Wasn’t it obvious that the City was asking for the minimum tonnage that could be legally carried? Indeed, what was ECL thinking when it used the “how much can be loaded” number in the pricing chart to estimate the number of loads per transfer station when this obviously had to mean loads that could be legally carried? ECL made a mistake and misread the Addendum, argues the City. Its bid was non-compliant. (Not so, replies ECL. We did exactly what was asked of us. We complied precisely.)

[ 20 ] The City’s submissions may or may not prevail but basic fairness requires that ECL have its day in court. This is not the kind of dispute that, in my view, should be resolved summarily. A trial is needed in the interest of justice.

Disposition

[ 21 ] The City of Toronto motion for summary judgment is dismissed.

[ 22 ] If the parties are unable to agree on costs, I would be pleased to receive a brief costs submission from ECL within 14 days, and a responding costs submission from the City of Toronto within 10 days thereafter.

[ 23 ] I am obliged to counsel for their assistance and co-operation.

Belobaba J.
Date: April 30, 2012