SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: C 124-12
DATE: 2012-11-22

RE: Regional Sewer and Watermain Ltd., Plaintiff

AND:
The Regional Municipality of Waterloo, Defendant

BEFORE: The Honourable Madam Justice D.L. Chappel

COUNSEL:
Anthony T. Keller, Counsel, for the Plaintiff
Richard A.F. Brooks, Counsel, for the Defendant

HEARD: November 14, 2012

ENDORSEMENT

[ 1 ] These are my Reasons in connection with a Motion brought jointly by both parties for directions regarding the order in which two Motions brought in this proceeding should be heard. The Plaintiff has brought a Motion for production of various documents for inspection, for an order requiring the Defendant to serve a further and better affidavit of documents, and an order for cross examination on the Defendant’s affidavit of documents. The Defendant has brought a Cross Motion pursuant to Rule 20 of the Rules of Civil Procedure for an order dismissing the Plaintiff’s action, or in the alternative, an order for cross examination on the Plaintiff’s affidavit of documents, the service of a further and better affidavit of documents, and disclosure and production for inspection of certain documents relevant to the Plaintiff’s alleged damages.

[ 2 ] By way of background, the Plaintiff is a general contractor which installs underground services under roads and subdivisions. The dispute between the parties in this case relates to the Plaintiff’s bid for Regional Municipality of Waterloo Contract 2010-031, Region of Waterloo International Airport Leased Land Development Area Four- LL4 Site Servicing. The Defendant invited bids through a tender for this contract (“the tender”) in or about October, 2010. The terms and conditions of the tender included that the bids would be received until 12:00 noon on Wednesday November 3, 2010, that bids which were incomplete may be disqualified, and that bidders must list each proposed subcontractor.

[ 3 ] The Plaintiff submitted a bid in response to the tender. It had the lowest tender price, but it listed “TBA” for all subcontractors and suppliers. The Plaintiff submitted an email to the Defendant on November 4, 2010, after the tender had closed, in which it listed all subcontractors and suppliers that it intended to use. Another bidder, E & E Seegmiller, had the second lowest tender price, but it had properly listed all subcontractors and suppliers in compliance with the terms and conditions of the tender. The Defendant determined that the Plaintiff’s bid was non-compliant, advised the Plaintiff of this decision by correspondence on November 10, 2010, and awarded the tender to E & E See miller on November 24, 2010.

[ 4 ] The Plaintiff commenced the action herein on February 1, 2012, claiming damages in the amount of $1,000,000.00 and further consequential damages arising from the Defendant’s refusal to accept tenders from the Plaintiff in respect of Regional Municipality of Waterloo work. It also seeks a declaration that the Defendant violated its duty of fairness to the Plaintiff. The Plaintiff alleges that it has tendered and won contracts from the Defendant on numerous occasions during the past twenty five years, and that prior to the tender which is the subject of this litigation, the Defendant never disqualified it under any of its bids. It further alleges that it and all tendering general contractors have for years engaged in the practice of noting “TBA” or “Own Forces” on the list of subcontractors for the Defendant’s tenders, in order to avoid pressure from subcontractors to charge artificially high prices, and that the Defendant has awarded contracts to the Plaintiff and other general contractors completing the form in this manner for many years.

[ 5 ] The Motion which the Plaintiff has brought seeks an order, inter alia, for production of various tender documents submitted by general contractors to the Defendant since 1992 for “heavy civil” work. The Defendant states that such a production order would involve gathering and photocopying tens of thousands of pages. The Defendant responded by bringing its Motion for Summary Judgment pursuant to Rule 20 of the Rules of Civil Procedure.

[ 6 ] The Defendant argued that although the Summary Judgment Motion has been brought pursuant to Rule 20, the case essentially turns on the determination of a question of law. Counsel for the Defendant submitted that the legal issue is whether the Defendant’s historical practice of overlooking non-compliance with tender terms mandating the listing of proposed subcontractors and suppliers can provide a foundation for the Plaintiff’s claim in this case, despite the explicit terms of the tender that is the subject of this proceeding which required such a listing. The Defendant’s position is that the Motions should be scheduled for a hearing on the same day, and that its Summary Judgment Motion should proceed first. Its position is that the legal issue outlined above should be determined before the Plaintiff’s motion is dealt with, since a determination of this issue in the Defendant’s favour would essentially resolve the case without the necessity of the Defendant having to comply with what it expects would be a very burdensome production order.

[ 7 ] Counsel for the Plaintiff emphasized that the Summary Judgment Motion brought by the Respondent is not framed as Motion to determine a question of law, which could have been dealt with pursuant to Rule 21 of the Rules of Civil Procedure. The Defendant acknowledges that the Summary Judgment Motion does not involve purely the question of law referred to above. The Plaintiff states that the documents in the Defendant’s possession which it seeks to obtain will either prove or disprove the allegations set out in the statement of claim regarding the Defendant’s past tender practices, and that if the allegations are proven, the Summary Judgment motion will likely fail. Counsel for the Plaintiff indicated that the Plaintiff’s case is founded on principles relating to a duty of fairness as well as the principle of estoppel.

[ 8 ] I agree with the Plaintiff’s position that its Motion should proceed to a hearing prior to the Summary Judgment Motion. In reaching this conclusion, I have taken into consideration the fact that the Summary Judgment motion is not framed as a Motion solely for the determination of a question of law. It is a more far-reaching Summary Judgment motion brought pursuant to Rule 20. Furthermore, I have serious questions as to whether the question of law as framed by counsel for the Defendant could actually be resolved in an evidentiary vacuum without a factual matrix regarding the Defendant’s past tender practices respecting the listing of subcontractors and suppliers. I have reviewed the cases which the Defendant has submitted in support of its position, specifically Santec Construction Managers Ltd. v. Windsor (Town), [2005] N.S.J. No. 267 (N.S.S.C.) and Tarmac Canada Inc. v. Hamilton-Wentworth (Regional Municipality), 1999 2692 (ON CA) , [1999] O.J. No. 3273 (C.A.), and they do not alleviate my concern that a factual background respecting the Defendant’s past tender practices would be necessary in order to answer the legal question which the Defendant has raised. The facts in those cases were distinguishable from the facts of this case, and in particular, neither case involved a claim based on estoppel founded on the Defendant’s historical business practices.

[ 9 ] Because of my concerns regarding the possible need for a factual matrix to determine the question of law raised by the Defendant, I find that it would be prejudicial to the Plaintiff to require it to respond to a motion for the determination of the point of law without having had the benefit of at least attempting to obtain disclosure of the material which it has requested. In my view, the most appropriate approach is for the Plaintiff’s Motion to proceed first, and for the Defendant to raise the legal issue described above in defence of that Motion if it chooses to do so. This approach will provide both parties with the opportunity to advance their respective positions in a more fulsome manner than is possible on a Motion for directions. If the Motions judge hearing the Plaintiff’s Motion accepts the Defendant’s position that the Defendant’s historical tender practices regarding the listing of subcontractors and suppliers is irrelevant because of the explicit terms of the tender that is the subject of this proceeding, the portion of the Defendant’s Summary Judgment Motion relating to the issue of law can in all likelihood be dealt with fairly succinctly by the same judge.

[ 10 ] For the foregoing reasons, I am making the following procedural directions in this matter:

a. The Plaintiff’s Motion dated September 4, 2012 (“the Plaintiff’s Motion”) shall proceed to a hearing before the Defendant’s Summary Judgment Motion dated September 19, 2012.

b. The parties shall arrange for a hearing of the Plaintiff’s Motion through the Trial Coordinator’s Office.

c. Facta and Books of Authorities are required in connection with the Plaintiff’s Motion. The Plaintiff’s Factum and Book of Authorities shall be served and filed with proof of service at least seven days before the hearing. The Defendant’s Factum and Book of Authorities shall be served and filed at least four days before the hearing.

d. The issue of scheduling of the Defendant’s Summary Judgment Motion shall be addressed following completion of the Plaintiff’s Motion.

e. Costs in connection with this Motion for Directions are reserved to the judge hearing the Plaintiff’s Motion.

The Honourable Madam Justice D.L. Chappel

Date: November 22, 2012