COURT FILE NO.: 05-CV-30446
DATE: 2012/05/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HERVÉ POMERLEAU ONTARIO INC.
Plaintiff (Responding Party)
– and –
THE CORPORATION OF THE CITY OF OTTAWA
Defendant (Moving Party)
Marc C. Doucet and Ian McBride, for the Plaintiff (Responding Party)
Ronald F. Caza and Alyssa Tomkins, for the Defendant (Moving Party)
HEARD: April 12, 2012 (Ottawa)
REASONS FOR DECSION
beaudoin j.
Nature of the Motion
[1] The Defendant, the Corporation of the City of Ottawa (“City”) seeks summary judgment against the Plaintiff, Hervé Pomerleau Ontario Inc. (“Pomerleau Ontario”), dismissing Pomerleau’s claim as well as its costs of the action and of this motion.
[2] This action arises from a breach of tender claim by Pomerleau Ontario against the City. At the relevant time, a corporation wishing to contract with a municipality in Ontario could not have its head office in Quebec, as set out in the Fairness is a Two-Way Street Act (Construction Labour Mobility), 1999, S.O. 1999, c. 4 (the “Act”).
[3] The City claims that although Pomerleau Ontario (a corporation with its head office in Ontario) is listed as the bidder in answer to the City’s tender, the effective bidder is Pomerleau Inc., a corporation with its head office in Quebec. For that reason, the City argues that the action must be dismissed on account of Pomerleau Inc. being an ineligible bidder. Pomerleau Ontario seeks, by way of cross‑motion, a declaration that Pomerleau Ontario was the bidder on the R.O. Pickard Environmental Centre Digester Expansion Project (the “Project”) and that Pomerleau complied with the Act.
Background
[4] The tender in question was issued on October 25, 2004 by the City of Ottawa. After an extension, the final closing date was January 5, 2005. Supplementary Condition D-028 of the Agreement between Owner and Contractor, mandated compliance with the Act as follows:
D-028 Fairness is a Two‑Way Street
Proponents are hereby specifically advised that the Fairness is a Two‑Way Street Act (Construction Labour Mobility), 1999, S.O. 1999, c4 (the “Act”) came into effect on 22 May 1999. The Province of Quebec has been designated as a “designated jurisdiction” under the Act effective 9 March 2002.
In accordance with the provisions of the Act, the City of Ottawa is not permitted to award a contract for construction, architectural or engineering services as defined in the Act, to a person who is resident in a designated jurisdiction and all such persons are disqualified from [submitting] a tender or subcontracting to perform all or part of the work included in a tender. The successful Proponent will be required to:
(a) represent and acknowledge that neither the proponent nor any subcontractors are persons who are resident in a designated jurisdiction; and
(b) acknowledge that any material misrepresentation or breach of clause (a) will be grounds for termination of the Contract without any compensation or right to damages for the Proponent.
[5] Pomerleau Ontario was the low bidder upon closing and was required to provide additional information within 48 hours. After receiving Pomerleau Ontario’s tender, CH2M HILL, the City’s agent, believed that Pomerleau Ontario was a Quebec company and inquired whether Pomerleau complied with the Act.
[6] Pomerleau Ontario sent a fax dated January 7, 2005 to Mr. Goodman, a representative of the City, to show it complied with the Act. The transmission included the Articles of Amendment of 3989771 Canada Inc. which showed that Pomerleau Ontario was a duly incorporated federal company with its registered office situated in Ontario. The transmission also included a share register of Pomerleau Ontario which showed Francis Pomerleau (“Mr. Pomerleau”) and Pierre Pomerleau as the registered shareholders.
[7] Upon being provided with the information, Mr. Goodman indicated to Francis Pomerleau that he was satisfied that Pomerleau Ontario complied with the legislation. There were no further requests from the City regarding Pomerleau’s compliance with the legislation. Ultimately, the City took the position that Pomerleau Ontario’s tender was not responsive because of the sub‑trades it had proposed. The City awarded the contract to the second lowest bidder, Doran Contractors Limited (“Doran”).
[8] This litigation was commenced on March 8, 2005. The Statement of Defence was provided on April 25, 2005 and no issue was taken with respect to Pomerleau Ontario’s compliance with the Act. Discoveries took place and case conferences were convened and it was not until August 11, 2009 that counsel for the City took the position that Pomerleau Ontario was not compliant with the legislation. The City did not amend its Defence until two years later. This motion followed.
The Position of the City
[9] The City of Ottawa submits summary judgment should be granted in its favour for the following reasons:
It was a condition of eligibility that any bidder comply with the Act;
The actual bidder was Pomerleau Inc., an ineligible bidder pursuant to the Act;
The fact that the City failed to identify this as a reason for disqualification at the time the bid was rejected is not relevant; and
This is a proper case for summary judgment to issue.
Fairness is a Two‑Way Street Act
[10] The Fairness is a Two‑Way Street Act, since repealed, was Ontario’s response to what it viewed as a highly restrictive construction industry in Quebec. The preamble to the legislation provided:
Preamble
Ontario contractors, workers in the construction industry and aggregate haulers experience barriers to working and doing business in other jurisdictions because of unfair, discriminatory or restrictive practices in those other jurisdictions while contractors, workers in the construction industry and aggregate haulers from those other jurisdictions are able to work in Ontario without similar barriers.
The unemployment rate in the construction industry in Ontario is higher than the overall unemployment rate in Ontario. There are areas in Ontario where there is unequal access to business and job opportunities between jurisdictions, creating a potential for violence and social disruption, and where regional economic development is an important objective.
It is recognized that employment opportunities in those areas for Ontario residents would be enhanced and more equal access to business and job opportunities would be created by introducing measures aimed at restricting access to those taking advantage of Ontario's policy of free mobility.
[11] In terms of its operation, the Act restricted the ability of a “person resident in a designated jurisdiction” to engage in construction work in Ontario. The only designated jurisdiction was Quebec.
[12] A “person resident in a designated jurisdiction” was defined under s. 1(1) of Act as follows:
"person resident in a designated jurisdiction" means,
(a) in the case of an individual or a sole proprietor, a person who is ordinarily resident in that jurisdiction,
(b) in the case of a corporation,
(i) a person whose head office or registered office is located in that jurisdiction, or
(ii) a person controlled directly or indirectly by a person described in subclause (i), and
(c) in the case of a partnership, a partnership that includes at least one partner who is resident in that jurisdiction under clause (a) or (b); ("personne qui réside dans un territoire désigné")
[13] It is not disputed that the head office of Hervé Pomerleau Ontario Inc. is in Ottawa and that consequently, it does not fall within subclause 1(1)(b)(i) of the definition. Pomerleau Inc., on the other hand, clearly would, since its head office is in Quebec.
[14] Under s. 2 of the Act, persons in a designated jurisdiction are precluded from entering into or submitting bids for construction contracts without first registering with the Jobs Protection Office. More importantly, s. 7(3) provides that contractors required to be registered under s. 2 cannot be awarded construction contracts by a municipality. Section 10 of the Act requires construction workers residing in a designated jurisdiction who will be doing construction work to register with the Jobs Protection Office.
[15] The City maintains that Pomerleau Inc. is the actual bidder and therefore ineligible. In this regard, it relies principally on the following facts. In Statement A of its bid, a proposed Contractor was also required to list its experience. All of the projects listed by Pomerleau Ontario were clearly completed outside of Ontario by Pomerleau Inc. Moreover, a majority of the projects listed pre‑dated the incorporation of the Ontario entity of December 21, 2001. This was confirmed by Francis Pomerleau, the president of Pomerleau Ontario at his examination for discovery. Mr. Pomerleau also stated that he considered the experience of Pomerleau Inc. as that of Pomerleau Ontario. Francis Pomerleau is vice‑president of Pomerleau Inc. He and his brother, Pierre, own 50 % of the shares of each company.
[16] The employees listed in Statement B of its bid were employees of Pomerleau Inc. and this was again confirmed by Francis Pomerleau. He stated that Pomerleau Ontario has no employees unless they win a project, in which case those employees are hired from Pomerleau Inc. Pomerleau Ontario has no resources of its own. They are all those of Pomerleau Inc. Counsel for the City also notes that Francis Pomerleau signed the tender documents as vice-president of Pomerleau Inc.
[17] Marc Doucette, counsel for Pomerleau, explicitly stated as follows:
Hervé Pomerleau Ontario Inc. was created to ensure that Pomerleau could continue to work in Ontario during [the time the Act was in force]. But from the perspective of internal management of the different companies, it was really treated as a group. The practical reality on a daily basis is that they were looked at as a group.
Legal Principles
[18] The purpose of the Fairness is a Two‑Way Street Act was considered by our Ontario Court of Appeal in R. v. Regulvar Canada Inc.[^1] as follows:
[22] The Act does not in any way prevent individual Quebecers from holding shares in a corporation, the head office of which is in Ontario. The legislation is not meant to prevent Quebecers from doing business in Ontario, but rather to encourage them to relocate and do business in Ontario.
[19] The City submits that it is clear from that statement that what is required is more than a sham or a front: a company is required to be located and do business in Ontario.
[20] In assessing the eligibility of bidders, the City refers to the Supreme Court of Canada decision in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69 where Cromwell J. held at para. 39 that substance is to be emphasized over form. He stated that the fact that a party had submitted a bid in its own name did not render it eligible when it was in substance that of another bidder, more particularly a joint venture.
[21] In Tercon, participation in a Request for Proposal (“RFP”) process was limited to those who had participated earlier and had been qualified in the Request for Expressions of interest (“RFEI”) process. Brentwood Enterprises Ltd. (“Brentwood”), the company that was eventually awarded the contract, was one of the companies that qualified. Fearing it may not be able to complete the project on its own, Brentwood entered into a pre‑bidding agreement with Emil Anderson Construction Co. (“EAC”) that the work would be undertaken by a joint venture. EAC was not one of the participants in the RFEI process and was therefore not entitled to bid. Brentwood nevertheless submitted the tender in its own name, despite intending to carry out the work as an ineligible joint venture.
[22] Cromwell J. specifically rejected the argument that there was no need to look beyond the face of the bid to determine who was bidding. The province had argued that because the bid was in the name of an eligible bidder, it was compliant. Cromwell J. held that this would allow form to triumph over substance. The City maintains that the situation in Tercon is clearly analogous to the present case. Even though the name Hervé Pomerleau Ontario Inc. is on the bid, the evidence is clear that the bidder in substance is Pomerleau Inc., an ineligible bidder.
[23] The City relies on Pomerleau Ontario’s admissions that all of the projects listed in its Statement A were carried out by Pomerleau Inc., as opposed to Pomerleau Ontario and that many of the projects cited pre‑date the incorporation of the Ontario entity. The City also cites Mr. Pomerleau’s statement that he considered the experience of Pomerleau Inc. as being that of Pomerleau Ontario. The employees listed in Statement B were employees of Pomerleau Inc. Pomerleau Ontario has no resources of its own.
[24] At his discovery, Mr. Pomerleau said that it is the common practice of the Pomerleau group, and of most companies that provide tenders to public and private owners, to list the projects of other companies in the group, where these companies are able to utilize the resources and expertise of related companies. On this point, the City cites Tercon, where it was equally argued and accepted that it was common in the industry for contractors to agree to a joint venture on the basis of a pre‑bid agreement with the specifics of the joint venture to be worked out once the contract was awarded. That argument was rejected and was found to be insufficient to overcome the fact that the joint venture was simply not eligible to bid. The Court held that where the identity of the bidder is relevant, industry standard must yield to the specific requirements relating to eligibility set out in the tender.
[25] Further admissions were obtained at the examination for discovery of Michel Gielen (“Mr. Gielen”), Pomerleau Ontario’s chief estimator. Mr. Gielen stated that Pomerleau Inc. and Hervé Pomerleau Ontario Inc. were at the time “toute la même affaire”. In light of these comments, the City argues that, at best, Pomerleau Ontario was in a joint venture with the rest of the Pomerleau group. As was the case in Tercon, however, naming only the eligible member of a joint venture does not overcome eligibility requirements applying to all members.
[26] In its factum, the City argues that the question thus arises as to whether the Pomerleau group should be permitted to circumvent the Act by incorporating what has effectively been admitted to be a sham corporation. In argument, counsel for the City resiled from that position and was careful to emphasize the City is not alleging any fraud on the part of the Defendant. He repeated that the thrust of the City’s argument is that substance must be given priority over form; that the corporate entity of Hervé Pomerleau Ontario Inc. must be ignored and the actual bidder properly identified as Pomerleau Inc., ineligible bidder under the Act.
The Fact that the City Did Not Identify the Lack of Compliance at the Time is Not Relevant
[27] The City acknowledged that it did not identify or cite the lack of compliance with the Act at the outset and submits that this is irrelevant to the issues. From a factual standpoint, the City says it can be inferred that it relied on Pomerleau Ontario’s representation that it was the bidder and that it complied with the Act, as no further action was taken in this regard.
[28] Moreover, the City was under no obligation to investigate the issue further. Such would have the effect of imposing a duty to investigate, a duty rejected by the majority of the Supreme Court of Canada in Double N Earthmovers Ltd. v. Edmonton (City), 2007 SCC 3, [2007] 1 S.C.R. 116. Even where such a duty was found to exist, the question further arises as to whether the City could somehow be estopped from raising the issue at this time.
[29] The principles of private law promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, i) by words or conduct, made a promise or assurance, ii) which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, iii) in reliance on the representation, iv) he acted on it or in some way changed his position.
[30] In the present case, the reliance is not at all clear. This is not a case where Pomerleau Ontario was awarded the bid, carried out the work and the City is now refusing to pay on the basis of a failure to comply with the Act. At most, Pomerleau Ontario has incurred legal costs in challenging the award of a contract it was never eligible to bid on, seeking profits for work it never carried out.
[31] More importantly, however, this is not a private law case. The City is a public body, subject to statutory requirements. As stated by the Supreme Court in Mount Sinai Hospital Centre v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281 at para. 47:
Public law estoppel clearly requires an appreciation of the legislative intent embodied in the power whose exercise is sought to be estopped. The legislation is paramount. Circumstances that might otherwise create an estoppel may have to yield to an overriding public interest expressed in the legislative text. As stated in St. Ann's Island Shooting and Fishing Club Ltd. v. The King, 1950 CanLII 28 (SCC), [1950] S.C.R. 211, per Rand J., at p. 220: "there can be no estoppel in the face of an express provision of a statute".
[32] In this case, s. 7(3) of the Act explicitly precludes municipalities from awarding contracts to a contractor who is resident in a designated jurisdiction. The legislation being paramount, estoppel cannot apply so as to preclude the City from relying on the breach now. Pomerleau Ontario’s bid was void ab initio pursuant to statute and cannot be cured by action or inaction on the part of the City.
Summary Judgment is Appropriate in the Present Case
[33] In Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1 at para. 50, the Court of Appeal stipulated that “the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?”
[34] The Court specified that the full appreciation test may be met in cases with limited contentious factual issues. On a motion for summary judgment, the Court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidence that the parties respectively will present at trial. In the present case, the facts relied upon have all been admitted or confirmed at examinations for discovery. There are no findings of credibility to be made. The case largely depends upon the inferences and conclusions to be drawn from uncontested evidence, making summary judgment particularly apposite.
[35] The amended rule seeks to avoid unnecessary trials. This is one such case. The narrow issue of eligibility pursuant to the Act is a complete defence to Pomerleau Ontario’s claim and determining that issue in the City’s favour avoids what would clearly be a protracted trial with many witnesses to make a determination on the issue of damages and other matters.
Pomerleau Ontario’s Position
[36] Pomerleau Ontario notes that the City is not disputing that it had its registered office in Ontario nor has the City made the argument or cited evidence that Pomerleau Ontario was directly or indirectly controlled by a corporation who had its registered office in Quebec.
[37] Pomerleau Ontario relies on the evidence of Francis Pomerleau who deposes in his affidavit that in 2001, namely two years after the Act was enacted, he moved to Ottawa to establish a Pomerleau presence in Eastern Ontario. Pomerleau Ontario was incorporated in December of 2001. Since that time, Pomerleau Ontario has had its registered office in the Province of Ontario and throughout its existence, it has had and continues to have projects it completes in the Province of Ontario. In December of 2004, during the bidding process for this project, Pomerleau Ontario moved from a location on Belfast Road in Ottawa to a new location on Catherine Street in Ottawa due to a shortage of space. After the Act was repealed, Pomerleau Ontario continued to keep its registered office in Ontario. In fact, Pomerleau Ontario needed to expand further, which it did by leasing the space at 343 Preston Street, Suite 200, Ottawa, Ontario in 2008. Pomerleau Ontario also established an office in the City of Toronto in 2011.
[38] As for the reference to the other Pomerleau construction companies in his Statement A, Francis Pomerleau says he listed projects of other Pomerleau construction companies in the project tender as this was the capacity for work and experience of the people available to Pomerleau Ontario. Listing the projects of Pomerleau construction companies is, and it remains, the common practice of the Pomerleau group and Francis Pomerleau believes it is the common practice of most companies that provide tenders to public and private owners where these companies are able to utilize the resources and expertise of related companies.
[39] Pomerleau Ontario argues that the City appears to have recognized that a general contractor company cannot have, in‑house, all of the necessary technical capability for all types of projects at all times. The City appears to have recognized this by way of its acceptance of Doran’s documentation post‑tender which lists Doran’s supervisors under Statement B, individuals not employed by Doran, but rather by Doran’s proposed subcontractor, The Crom Corporation. In fact, CH2M HILL in a letter to the City, dated February 9, 2005 stated that they had “no hesitation of accepting the supervision staff proposed by Doran for this project” knowing that the supervisor listed was from The Crom Corporation.
Substance Over Form
[40] Pomerleau Ontario submits that the Tercon decision is completely inapplicable to the issue in this matter. The issue in Tercon related to the interpretation of provisions in the contract relating to eligibility to bid and not to the interpretation of a piece of legislation. Contrary to the assertion of the City, Tercon does not establish a general legal principle that when the Court assesses the eligibility of all bidders, the Court should assess the substance of the bidder rather than the form. In Tercon, the Court reviewed a specific section of the bid, namely s. 2.8 of a Request for Proposal, which related to the eligibility of the bidder and determined on the facts of the matter and interpretation of that particular contract that substance should be emphasized over form.
[41] The trial judge and the Court of Appeal agreed that a joint venture was not an eligible proponent as a result of s. 2.8(a) of the RFP. The Court made a finding that the bid was in fact, if not in form, submitted by a joint venture and the Province knew that the bid was submitted by a joint venture. The Court found that permitting the bid would provide the joint venture with a competitive advantage in the bidding process.
[42] Pomerleau cites I.M.P Group Ltd. v. Canada (Minister of Public Works & Government Services), [2006] FC 1223, where a RFP required the bidder to have minimum of five years of experience. The bid was awarded to a corporation called Cascade which had been incorporated less than five years from the date of the proposal but it had a sister company which had been incorporated since 1969. In awarding the contract to Cascade, the evaluators considered the experience of the sister company. The Federal Court made a finding that the evaluators were correct in considering the experience of the sister company when they awarded the contract.
Fairness is a Two Way Street Act
[43] In assessing the eligibility of Pomerleau Ontario to be awarded the contract for the project, there is no dispute that the contract required Pomerleau Ontario to comply the Act. Pomerleau Ontario relies on the Court of Appeal decision in Regulvar and argues that the evidence shows that Pomerleau Ontario has complied with all requirements of the Act at all times.
[44] In Regulvar, the issue was whether the Ontario corporation was indirectly controlled by a Quebec corporation. As in this case, there were common shareholders. The Court confirmed that the general approach to the determination of control is to examine the share register of the corporation to ascertain which shareholder, if any, possesses the ability to elect a majority of the directors. The Court concluded that the fact that a Quebec corporation owns a portion of shares in an Ontario corporation and that the directors and shareholders of a Quebec corporation are also directors and shareholders of an Ontario corporation does not mean that the Ontario corporation is indirectly controlled by the Quebec corporation as defined by the Act. Indirect control is not established under the Act if the sole director of an Ontario corporation is also a director and officer of the Quebec corporation.
Sham
[45] Although the City appears to have abandoned the “sham” argument, Pomerleau Ontario notes that the case law cited by the City in its factum has little relevance and applicability to this matter and emphasizes that, in this case, there was no deceit of any kind.
[46] As for the City’s argument that Pomerleau Ontario is in fact a joint venture with Pomerleau Inc., the Defendant notes the following definition of a joint venture from Black’s Law Dictionary: 9th Edition at p. 915:
joint venture. (18c) A business undertaking by two or more persons engaged in a single defined project. The necessary elements are: (1) an express or implied agreement; (2) a common purpose that the group intends to carry out; (3) shared profits and losses; and (4) each member’s equal voice in controlling the project…
[47] Pomerleau Ontario replies that it is not enough to suggest that there is a joint venture between it and Pomerleau Inc. The City has offered no evidence that all four elements of a joint venture are present. These facts are quite distinct from Tercon, where the existence of the joint venture was not in dispute.
[48] Pomerleau Ontario submits it complied with the Act and, in fact, the legislation was successful in its objective. The Pomerleau group, which operates primarily out of Quebec, had Francis Pomerleau relocate to Ottawa to establish Pomerleau Ontario in 2001, some four years before the tender for the project in issue. Thereafter, Pomerleau Ontario operated continuously in Ontario up until the project, which is the subject of this litigation. Even after the Act was repealed in 2006, Pomerleau Ontario continued to expand into the Province of Ontario by opening an office in the City of Toronto.
[49] In this motion, the City is emphasizing substance over form. Pomerleau Ontario argues that the evidence and the law show that Pomerleau Ontario complied with the Act in form, substance and spirit and that this Court should declare that Pomerleau Ontario submitted the bid and was compliant with the Act.
Analysis and Conclusion
Is Summary Judgment Appropriate in this Case?
[50] In Combined Air Mechanical Services Inc. the Court of Appeal said this at paras. 40 and 41:
- The types of cases that are amenable to summary judgment:
[40] Speaking generally, and without attempting to be exhaustive, there are three types of cases that are amenable to summary judgment. The first two types of cases also existed under the former Rule 20, while the third class of case was added by the amended rule.
[41] The first type of case is where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment. Rule 20.04(2)(b) permits the parties to jointly move for summary judgment where they agree "to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment". We note, however, that the latter wording -- "the court is [page 18] satisfied" -- affirms that the court maintains its discretion to refuse summary judgment where the test for summary judgment is not met, notwithstanding the agreement of the parties.
[51] The Court of Appeal articulated this test at para. 50:
In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?
[52] In this case, the parties appear to have agreed that the narrow issue of whether or not Pomerleau Ontario is a corporation form a “designated jurisdiction” can be determined by way of summary judgment motion. In responding to the City’s motion for summary judgment by seeking a declaration in its cross‑motion, Pomerleau Ontario essentially concedes the point. I agree that summary judgment is appropriate in this instance and this issue does not require a trial. The facts are quite limited and are not seriously in dispute and the motion turns on the interpretation of the provisions of a now repealed statute.
[53] Both parties have focused on the preamble to The Fairness is a Two‑Way Street legislation and I agree that it is key and it was the focus of the Court of Appeal’s attention in Regulvar at paras. 1 to 3:
1 This dispute arises under the Fairness is a Two-Way Street Act (Construction Labour Mobility), 1999, S.O. 1999, c. 4 ("the Act"). In the words of the preamble, this provincial legislation was enacted for the purpose of enhancing "employment opportunities", and providing "more equal access to business and job opportunities", for "contractors, workers in the construction industry and aggregate haulers in Ontario". The legislation states that the latter "experience barriers to working and doing business in other jurisdictions because of unfair, discriminatory or restrictive practices", while their counterparts "from those other jurisdictions are able to work in Ontario without facing similar barriers." The Act is therefore designed to restrict the access of "those taking advantage of Ontario's policy of free mobility" to jobs in the construction industry, and to reduce the unemployment rate in the construction industry in Ontario. The Act restricts the ability of a "person resident in a designated jurisdiction" to engage in construction work in Ontario. The only designated jurisdiction is Quebec.
2 The head office of the respondent, Regulvar Canada Inc. ("Regulvar Ontario"), is located in Ontario. Regulvar Ontario is a firm engaged in the construction industry, and is closely related to Regulvar Inc. ("Regulvar Quebec"), a company whose head office is located in the province of Quebec. Thirty percent of the shares of Regulvar Ontario are held by Regulvar Quebec and all other shares of Regulvar Ontario are held by fourteen individuals who, for the most part, are either directors, officers or shareholders of Regulvar Quebec.
3 The issue in this case is whether Regulvar Ontario is a "person resident in a designated jurisdiction" within the meaning of the Act. The issue has arisen because the City of Ottawa has refused to give a construction contract to Regulvar Ontario on the ground that it is a "person resident in a designated jurisdiction".
[54] While the issue in that case was distinct; there is a similarity in that the appellant was also making an argument of substance over form; that the existence of a head office in Ontario was insufficient to meet the requirements of the Act. In rejecting Ontario’s argument that the legislation should be interpreted broadly, the Court of Appeal said this at para. 22:
The Act does not in any way prevent individual Quebecers from holding shares in a corporation, the head office of which is in Ontario. The legislation is not meant to prevent Quebecers from doing business in Ontario, but rather to encourage them to relocate and do business in Ontario. This company has effectively relocated to Ontario and is not controlled by a corporation in Quebec. This is sufficient to exempt it from the restrictions under the Act.
[55] The absence on control by a corporation in Quebec and “effective relocation” to Ontario was sufficient to allow Regulvar Ontario to avoid to restrictions under the Act. Francis Pomerleau is the president of Pomerleau Ontario. In his affidavit, he deposes as follows:
• the Pomerleau companies do business across Canada;
• Pomerleau Ontario was incorporated in December 2001;
• He and his brother Pierre Pomerleau are equal shareholders in Pomerleau Ontario and neither of them are parties to a shareholders agreement;
• Pomerleau Ontario has had its head office in Ontario since it was incorporated in 2001;
• At the time of bidding on the tender in 2004, Pomerleau Ontario moved from its location on Belfast Road to a new location on Catherine Street due to its shortage of space;
• After the Act was repealed, Pomerleau Ontario continued to keep its head office in Ontario;
• In 2008, Pomerleau Ontario expanded further by leasing space on Preston Street in the City of Ottawa;
• Pomerleau also established an office in Toronto in 2011;
• Pomerleau Ontario has never been required to register with the Jobs Protection Office established by the Act;
• At the time of the tender in 2005, Pomerleau Ontario had at least one project in Ontario, and as a result of many ongoing projects, Pomerleau Ontario would continuously hire employees and subcontractors to complete projects in Ontario. Some of these employees would be from the Pomerleau group of companies but they would take their instruction through Pomerleau Ontario.
[56] In my view, it is irrelevant the Francis Pomerleau and his brother Pierre are equal shareholders in both companies or that Pomerleau Ontario listed projects from Pomerleau Inc. in its statement of experience. When he was examined on this point, Francis Pomerleau pointed out that the Ontario company had by that time completed two projects in Ottawa in 2002: the Royal Ottawa Hospital and the Aviation Museum.
[57] The Act did not require a Quebec company seeking to comply with the legislation to abandon any assets or resources it may have held in another province, nor did it require companies that bid on projects to erase its history of completed projects prior to relocating to Ontario. Such an interpretation would have effectively blocked Quebec companies from bidding on any projects after relocating to Ontario.
[58] In my view, the legislation was prospective in nature and it invited Quebec companies to do business in Ontario. I agree with the City that the simple act of establishing a head office in Ontario was not enough. In this case, Pomerleau Ontario has effectively relocated to Ontario by not only establishing a corporate office in Ontario but by continuing to expand its operations in this province. Pomerleau Ontario is exempt from the restrictions of the Act. The City’s motion for summary judgment is dismissed.
[59] The successful Plaintiff may make brief submissions as to costs, not exceeding three pages within 20 days of the release of this decision. The Defendant can provide a response of a similar length within a further 20 days.
Mr. Justice Robert N. Beaudoin
Released: May 16, 2012
COURT FILE NO.: 05-CV-30446
DATE: 2012/05/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HERVÉ POMERLEAU ONTARIO INC.
Plaintiff (Responding Party)
– and –
THE CORPORATION OF THE CITY OF OTTAWA
Defendant (Moving Party)
REASONS FOR DECISION
Beaudoin J.
Released: May 16, 2012
[^1]: R. v. Regulvar, 70 O.R. (3d) 641, 2004 CanLII 6318 (ON CA) at para. 22.