Court File and Parties

COURT FILE NO.: 14-62031 DATE: 20190702 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

LOUIS FACCHINI Plaintiff – and – THE ATTORNEY GENERAL OF CANADA – and – PAUL PICHÉ Defendants

Counsel: William J. Sammon and Amanda Estabrooks, Lawyers for the Plaintiff Mathew Johnson, Jennifer Bond and Mary Roberts, Lawyers for the Defendants

HEARD: February 4 - 8, 11, 12, 14, 15, 19 - 22, 25, and 26, 2019, with additional written submissions received by March 9, 2019, and subsequently by June 19, 2019

Roger J.

Reasons for Decision

Introduction

[1] The plaintiff sues for damages totalling approximately two million dollars ($1,925,497), alleging negligent misrepresentation, negligence, and defamation.

[2] The plaintiff is a real property consultant.

[3] The defendant, Paul Piché, was employed by the defendant Public Works and Government Services Canada (PWGSC), now known as Public Service and Procurement Canada (PSPC), as a contract manager.

[4] In April 2007, Mr. Facchini bid on a Request for Standing Offer of PWGSC (the 2007 RFSO); it was Mr. Facchini’s first time bidding on a standing offer. The technical part of Mr. Facchini’s bid was similar to the bid of a competitor. In fact, the technical part of Mr. Facchini’s bid was prepared by that competitor. Mr. Facchini testified that he understood that this was allowed because the 2007 RFSO permitted the same consultants to appear on all bids; therefore, he said he thought that he could ask any of his consultants to help him with the technical part of his bid even if that same consultant was also a bidder, making them both a team member and a competitor. The similarities between Mr. Facchini’s bid and the bid of this competitor were observed and questioned by employees of PWGSC during the bid evaluation process, but the similarities were deemed not to be a concern. Years later, Mr. Facchini was investigated and subsequently charged with bid-rigging by the Competition Bureau (these charges were later stayed). Mr. Facchini claims that the cloud of suspicion resulting from this caused him to lose work and income; that but for the alleged negligent misrepresentation and negligence, he would have realized the full potential of the RFSOs.

[5] The plaintiff essentially alleges in his amended statement of claim:

a) that Mr. Piché, on behalf of PWGSC, made negligent misrepresentations when, in answers to questions posed, Mr. Piché represented that bidders could obtain technical assistance from consultants named in their respective bid while omitting to clarify that such technical assistance could not be obtained from a consultant if that consultant was also a bidder;

b) that Mr. Piché, on behalf of PWGSC, was negligent when:

i) during the Competition Bureau’s investigation, Mr. Piché accused the plaintiff of bid-rigging without fully disclosing the extent of his knowledge of the similarities observed during the evaluation process;

ii) Mr. Piché accused the plaintiff of bid-rigging during the Competition Bureau’s investigation without reviewing the two bids in their entirety and the financial information;

iii) in preparing answers to the questions posed, Mr. Piché failed to advise prospective bidders that any assistance obtained on the technical side could not be obtained from a consultant of this bidder if that consultant was also a competing bidder.

c) that statements made by Mr. Piché to investigators from the Competition Bureau (that bids presented by the plaintiff were rigged or the result of collusion) were defamatory, made maliciously, and led the Competition Bureau to charge the plaintiff with bid-rigging and to incorporate these defamatory statements in a subsequent news release.

[6] Additional background information is required to understand the above.

[7] As a starting point, for the period from 2001 to 2007, call-ups by the federal government for real property advisory services were all sent to a third party called Corporate Research Group (CRG). CRG was then entitled, pursuant to standing offers, to a right of first refusal on proposed call-ups, and the evidence indicates that CRG never refused any call-ups issued pursuant to the 2004 Request for Standing Offer. CRG employed few people, but had access to a large number of consultants (over 300); it selected and dispatched individual consultants from their roster best suited to complete the advisory services required by specific call-ups of the federal government. As a result, during this period it was difficult for a consultant in this area to work on projects of the federal government unless that consultant was associated with CRG.

[8] During the period from 2001 to 2007, the plaintiff, Mr. Facchini, was one of the many consultants available to CRG. As a CRG consultant, Mr. Facchini provided real property advisory services to PWGSC. It is not disputed, and in any event, the evidence indicates that Mr. Facchini developed an excellent reputation in his industry as an expert in his area.

[9] The above arrangements with CRG created a monopoly, which caused frustration within the real property advisory industry because requests for real property advisory services from the federal government were then all sent to CRG. The federal government realized this, and wanting to spread this work amongst more participants, it considered alternative methods to effectively engage such services.

[10] PWGSC eventually decided to proceed with a workload distribution model under which federal government call-ups would be distributed to the top three ranked firms on a 50%, 30%, and 20% basis (50% of the business to the top ranked firm, 30% to the second ranked firm, and 20% to the third ranked firm). CRG pushed back because it would lose at least 50% of the work, but PWGSC held firm and this new work distribution model was implemented in 2007.

[11] On February 15, 2007, PWGSC issued the 2007 RFSO which included five separate work packages. Work Package 3 was for real estate advisory services. The 2007 RFSO covered a two-year period from May 24, 2007 to May 23, 2009, with two one-year option periods. It had a closing date of April 3, 2007.

[12] Once the 2007 RFSO was posted on the MERX online system (on February 16, 2007), PWGSC received questions from prospective bidders in relation to the posting, including from CRG (on March 12) and from Mr. Facchini (on March 14—asking if he could be a consultant for more than one bidder—Mr. Facchini was then not considering being a bidder/offeror). On March 22, 2007, PWGSC posted a summary of the questions posed and their answers on MERX (these answers were largely prepared by Mr. Piché). Relevant to this action, PWGSC posted:

a) Q: Resources: The request for standing offers makes no mention/provision for exclusivity of resources and would therefore appear to indicate that individual consultants and firms can appear on more than one team, or indeed on all submissions?

A: PWGSC has not introduced limitative provisions in the RFSO for the exclusivity of the proposed consultants.

b) Q: Lead consultant vs. sub-consultant: Can a firm or individual bid on a work package as a lead consultant then appear again as a sub-consultant on another or other bids for the same work package?

A: Consultant can bid as an offeror on a work package and, as individual consultant, be named a proposed consultant in the same work package submitted by other offeror. Each offeror’s proposal will be evaluated based on its own merit using the evaluation criteria stipulated in the RFSO.

c) Q: Multiple bids: Can individual consultants appear as sub-consultants on more than one bid under the same work package?

A: Yes.

[13] It is not disputed that these questions and answers essentially mean: (1) that it was permissible for a bidder/offeror to have the same consultants as another bidder/offeror; (2) that it was permissible for a bidder/offeror to also appear as a consultant on other bids; and (3) that it was permissible for a bidder/offeror to appear as a consultant on more than one bid.

[14] Both Mr. Facchini and CRG bid as bidder/offeror on Work Package 3 (CRG bid on all five work packages). All of the consultants listed on Mr. Facchini’s bid also appeared in CRG’s bid (CRG’s bid contained many more consultants), and Mr. Facchini, who is the lead consultant in his bid, is also a consultant in CRG’s bid.

[15] Mr. Facchini had a long standing relationship with CRG (as one of their consultants from 2001 to 2007). Mr. Facchini testified that he decided to be a bidder on the 2007 RFSO only when a principal of CRG (Mr. Knowlton) approached him on April 2, 2007, the day before the bid closed, and suggested that Mr. Facchini should bid because CRG’s consultants were worried that they could lose 50% of their business. However, Mr. Facchini did not have a roster or stable of consultants, and did not have the time to prepare the technical portion of his bid (consultants and technical portion). Mr. Knowlton offered to do this for him; in fact, Mr. Knowlton wrote Mr. Facchini’s technical bid. As a result, the technical proposal contained in the bid of Mr. Facchini and of CRG are quite similar. Mr. Knowlton is one of the 22 consultants listed in the bid of Mr. Facchini (Mr. Facchini is the lead consultant). Mr. Knowlton is the lead consultant in the bid of CRG (Mr. Facchini is a primary consultant in the bid of CRG, one of 52 consultants listed in CRG’s bid).

[16] Mr. Facchini said that he understood from the answers of PWGSC to the questions posed that he could use some of the same consultants as CRG, and that CRG could provide to Mr. Facchini what he used for his technical bid because Mr. Knowlton was also one of Mr. Facchini’s consultants, and Mr. Knowlton was the most qualified person to do this. Mr. Facchini testified that he did not understand that this could cause a problem, and explained that curriculum vitaes (CVs) and the approach and methodology section of the technical bid were boiler-plate (that he was aware of them from his time as a CRG consultant).

[17] As a result, Mr. Facchini only prepared his CV, his information, and the financial portion of the bid; the rest was prepared by Mr. Knowlton and only glanced over very quickly by Mr. Facchini just prior to submitting the bid before the closing time of 2 p.m. on April 3, 2007. At his examination for discovery, Mr. Facchini said that he had not even seen the technical part of the bid; that it had been prepared by Mr. Knowlton and was in a sealed envelope—at trial, as indicated above, he said that he took a quick cursory review. In any event, the technical portion of Mr. Facchini’s bid was prepared by one of his consultants, Mr. Knowlton. However, as a principal of CRG, Mr. Knowlton was also a competitor of Mr. Facchini. As indicated, Mr. Facchini testified that he understood that this was acceptable because of the answers to the questions posed (outlined above). This was Mr. Facchini’s first time submitting a bid as a bidder/offeror. Mr. Facchini was also a consultant under CRG’s bid.

[18] By the end of May 2007, PWGSC awarded standing offers under the 2007 RFSO to the top three bidders (CRG was the top bidder for all five work packages), and the bid results for work package 3 were:

• CRG for 50% of the available work;
• Mr. Facchini (his firm was called First Porter) for 30% of the available work; and
• a third party corporation for 20% of the available work.

[19] In 2009, PWGSC exercised the first option year of the 2007 standing offers, but later did not exercise the second option year for any of the standing offers issued pursuant to the 2007 RFSO.

[20] Starting in 2008, the Special Investigative Directorate (SID) of PWGSC conducted an investigation surrounding the relationship between a senior employee of PWGSC (Mr. McGrath, the Assistant Deputy Minister of the Real Property Branch of PWGSC) and the principal of CRG (Mr. Card). In the course of this investigation, a SID investigator became sufficiently concerned about similarities between the 2007 bids of CRG and of Mr. Facchini (First Porter) on the 2007 RFSO to provide the bids to the Competition Bureau (probably in April or early summer 2009). The Competition Bureau began an investigation in September 2009.

[21] On June 22, 2010, Mr. Piché was interviewed and gave a statement to investigators with the Competition Bureau. In answer to questions from the investigators, he said that there was little apparent competition between the bids of CRG and of First Porter. He said that if it came to his attention that CRG had helped Mr. Facchini to prepare and submit First Porter’s bid, “cohesion”, “collusion” and “bid-rigging” would come to mind because it went against good contracting practices of submitting bids for your company, not on behalf of another company. The Competition Bureau also interviewed other employees of PWGSC, and reviewed countless documents relevant to its investigation.

[22] In July 2012, the Competition Bureau charged CRG with bid-rigging, and in July 2012, CRG pleaded guilty. CRG received the benefit of a leniency program (until November 2012 when the leniency exception was revoked), and was fined $125,000.

[23] Meanwhile, in December 2010, Mr. Facchini’s house was searched by investigators for the Competition Bureau, and on June 13, 2013, Mr. Facchini was charged with bid-rigging and fraud. Both charges against Mr. Facchini were stayed by Crown prosecutors on August 10, 2015. Mr. Facchini and his family were affected emotionally and financially by these charges.

[24] In addition to the 2007 RFSO (where he was ranked second for up to 30% of work package three), Mr. Facchini was also awarded other standing offers: Ontario Region Standing Offer of December 2011 (work package 3); Ontario Region Standing Offer of January 2012 (work package 5); and Western Region Standing Offer of August 2010 (work package 3). He also obtained contracts that did not proceed: NRCAN and Carling Campus.

[25] Mr. Facchini claims damages for the period from 2007 to the end of 2015, for the difference between the estimated value of the standing offers (and NRCAN and Carling Campus contracts), and his other income. He also seeks damages and punitive damages for defamation.

[26] Mr. Facchini argues that, after reviewing the 2007 RFSO and the answers to the questions posed, he was convinced that he could present his bid on the 2007 RFSO in the manner that he did, and that he lost income when PWGSC avoided him as a result of the investigation and bid-rigging and fraud charges.

[27] The defendants argue that Mr. Facchini should have known where the line was; that even if some cooperation amongst offerors was expected and permissible to PWGSC, it should have been clear to Mr. Facchini that any such cooperation could not occur to the extent observed between CRG and Mr. Facchini.

Issues

[28] In his statement of claim, Mr. Facchini seeks damages for negligent misrepresentation, negligence, and defamation. Key issues resulting from these claims and from the arguments of the parties include the following:

a) allegations that the defendants made negligent misrepresentations when they answered questions posed raise the following issues:

i) did the defendants owe a duty of care;

ii) did the defendants make an untrue, inaccurate, or misleading representation;

iii) did the defendants make the representation negligently;

iv) did the plaintiff reasonably rely on the misrepresentation; and

v) did the plaintiff suffer damages as a consequence of relying on the misrepresentation (Queen v. Cognos Inc., [1993] 1 S.C.R. 87, at pp. 111-112)?

b) allegations that the defendants were negligent when Mr. Piché accused the plaintiff of bid-rigging and when the defendants answered questions posed while omitting to advise prospective bidders that they could not obtain technical assistance from one of their consultants if that consultant was also a bidder raise the following issues:

i) did the defendants owe the plaintiff a duty of care;

ii) did the defendants breach the standard of care;

iii) did the plaintiff sustain damage; and

iv) was the damage caused, in fact and in law, by the defendants’ breach (see Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008] 2 S.C.R. 114 at para. 3; see also Bruce Feldthusen et al, Canadian Tort Law, 11th ed. (Canada: LexisNexis, 2018), at paras. 4.3 – 4.7 for a thorough analysis of these and other required elements including, relevant to this case, whether the plaintiff was contributory negligent)?

c) concerning defamation, the only issues are whether the statements of Mr. Piché to the Competition Bureau were made with malice, and, if so, what are appropriate damages. It is not disputed by the defendants that the statements of Mr. Piché to the Competition Bureau were defamatory (in the sense that they tended to lower the plaintiff’s reputation in the eye of a reasonable person) and that they were published or communicated to at least one person other than the plaintiff. As well, it is not disputed by the plaintiff that the defence of qualified privilege is available to the defendants (in that there was a duty to communicate the information complained of and a corresponding duty to receive it), unless the plaintiff can show that the statements were made with malice.

d) whether the claims for negligent misrepresentation and negligence are statute barred/brought outside the applicable limitation period.

Analysis

1. Duty of Care

[29] By way of summary, I found that the full proximity analysis recently described by the Supreme Court was required to decide whether the defendants owed a duty of care to the plaintiff. After conducting the required analysis, I found that the defendants did not owe the plaintiff a duty of care. My reasoning follows, first explaining why the full proximity analysis is required and then explaining why its application convinced me that a duty of care is not owed.

a) Full Proximity Analysis Required

[30] My analysis of the duty of care was complicated by the fact that it was not pleaded, and was not initially clearly articulated. It was not clear if the plaintiff was relying on a previously established or analogous category of cases (and if so, on which cases). When questioned on this topic, the plaintiff referred me to a statement in his opening statement of law that the “standard is that the representor must exercise such reasonable care as the circumstances require to ensure that the representations made are accurate and not misleading”, with reference made to Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165 and Cognos, neither of which is a government procurement case and both of which pre-date Livent.

[31] Indeed, the Supreme Court recently provided guidance when determining whether a duty of care exists, particularly in the context of claims for negligent misrepresentation (Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, [2017] 2 S.C.R. 855; see also Knight v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 57, 84-90 for an analysis of policy decisions, and 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2018 ONCA 407, 140 O.R. (3d) 481 and Lavender v. Miller Bernstein LLP, 2018 ONCA 729, 142 O.R. (3d) 401, for a recent application of Livent by the Ontario Court of Appeal; and also Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, [2018] S.C.R. 587, where the majority, after conducting the Anns/Cooper analysis, found no duty of care on the basis that personal injuries were not reasonably foreseeable).

[32] While a duty of care in procurement cases has generally been recognized to require that bidders be treated fairly and equally, and that information presented to bidders be accurate and not misleading, I was not referred to a similar case where a duty was recognized. Moreover, in the specific circumstances of this case, such a broadly stated, at large, description of the duty of care as that identified above by the plaintiff is unhelpful to the analysis of whether a duty of care exists, and if so, to what is its scope, because such an overly broad characterization says nothing of the proximate relationship between the parties. As indicated in Livent, “whether proximity exists between two parties at large, or whether it inheres only for particular purposes or in relation to particular actions, will depend upon the nature of the particular relationship at issue” (at para. 27).

[33] Considering the particular relationship, distinctive facts, and allegations of this case, proximity between these parties should not exist at large because this would result in considering any reliance by the plaintiff, even that which falls outside the scope of the defendants’ undertaking of responsibility. As indicated in Livent, “Any reliance on the part of the plaintiff which falls outside of the scope of defendant’s undertaking of responsibility – that is, of the purpose for which the representation was made or the service was undertaken – necessarily falls outside the scope of the proximate relationship and, therefore, of the defendant’s duty of care” (at para. 31).

[34] Consequently, here, it seems more appropriate to consider whether proximity exists between the parties in relation to the particular purposes of this case. In that regard, I was provided no information about the nature of the particular relationship where such a duty of care was found to exist in any earlier decision.

[35] Lastly, I note that any analogous category would have been decided prior to Livent (because I was provided no decision that was more recent), and I was provided no indication that any earlier finding of proximity in procurement cases was “grounded not merely upon the identity of the parties, but upon examination of the particular relationship at issue in each case. Otherwise, courts risk recognizing prima facie duties of care without any examination of pertinent second-stage residual policy considerations” (Livent at para. 28).

[36] For all of these reasons, the full proximity analysis described in Livent is required.

b) Proximity, Reasonable Foreseeability, and Residual Policy Considerations

[37] In Livent, the Court revisited the two-stage analysis for deciding whether a duty of care arises in Canadian negligence law, based on Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L.). The first part of the Anns test asks whether a prima facie duty of care exists between the parties. The second part asks whether there are any residual policy considerations that should negate or limit the scope of the duty, the class of persons to whom it is owed, or the damages to which a breach may give rise. In Hercules, the Supreme Court held that a prima facie duty of care exists at the first part of the test where there is proximity, which it said arises when: (1) the defendant should reasonably foresee that the plaintiff will rely on its representation; and (2) the plaintiff’s reliance would, in the circumstances of the case, be reasonable (at para. 41).

[38] The majority in Livent noted that the test for a sufficiently close relationship in Anns and Hercules resulted in a low threshold at the first stage of the test, opening the door to the possibility of indeterminate liability that was only limited or negated at the second stage of the test. The majority rejected this model, preferring the more stringent analysis in the first stage outlined in Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537. In Livent, at para. 22, the Supreme Court indicated that “it is the Anns/Cooper framework to which we must have reference in identifying a principled basis for imposing liability. And, properly applied, that framework will rarely, if ever, give rise to a prima facie duty of care that could result in indeterminate liability.”

[39] In Cooper, the Supreme Court revised the Anns test and indicated that something more was required at the first stage to establish a prima facie duty of care; that proximity was required in addition to reasonable foreseeability of harm (Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 at paras. 29-30; Livent at para. 23). It stated that proximity characterizes the type of relationship in which a duty of care may arise—that a close and direct relationship is necessary to ground a duty of care—the persons so closely and directly affected that the defendant ought reasonably to have had in contemplation as being so affected (Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 at para. 32). It explained that proximity extends to such close and direct relationships that the act complained of directly affects a person whom the defendant would know would be directly affected by his or her careless act. It added that determining whether a close and direct relationship exists may involve looking at expectations, representations, reliance, and any property or other interests involved (Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 at paras. 33-34).

[40] Following Livent, in determining whether a prima facie duty of care arises, a court must consider more than whether the defendant could reasonably foresee the plaintiff’s reliance and damages. It must firstly assess proximity: whether the parties have such a close and direct relationship that the imposition of a legal duty of care would be “just and fair having regard to that relationship”, and that proximity is not just a label or a result (see Livent at paras. 24-26, citing Cooper).

[41] The majority in Livent held that this reinvigorated approach to proximity does not imply the automatic rejection of all past decisions recognizing the existence of a duty of care in certain situations. If a previous case has already established the existence of the duty of care or an analogous duty on the part of a defendant, a court might not need to conduct this proximity assessment (see Livent at paras. 26-28). However, Livent explains that if “a party seeks to base a finding of proximity upon a previously established or analogous category, a court should be attentive to the particular factors which justified recognizing that prior category in order to determine whether the relationship at issue is, in fact, truly the same as or analogous to that which was previously recognized” (Livent at para. 28). This is required, it says, to ensure that a finding of proximity based on a previously established or analogous category sufficiently examined the particular relationship at issue to ensure that pertinent second-stage residual policy considerations were then sufficiently considered: “For a court to have previously recognized a proximate relationship, second-stage residual policy considerations must already have been taken into account” (Livent at para. 28).

[42] As a result, when determining whether a defendant owes a duty of care to a plaintiff, the following analysis must be followed:

a) Start by determining whether a previously established or analogous category exists.

b) If an analogous category appears to exist, consider the particular factors which justified recognizing that prior category to determine whether the relationship in your case is truly the same or analogous to the previously recognized relationship. Consider not only the identity of the parties, but also the particular relationship at issue (Livent at para. 28). Similarly, the Court of Appeal in Maple Leaf Foods warns us not to adopt “an overly broad characterization of an established category”, and to be cautious in finding proximity based upon a previously established or analogous category—such a finding “must be grounded not merely upon the identity of the parties, but upon examination of the particular relationship at issue in each case” (Maple Leaf Foods at paras. 50 and 51, citing Livent).

c) If after considering the above, a relationship falls within a previously established category, or is analogous to one,

then the requisite close and direct relationship is shown. So long, then, as a risk of reasonably foreseeable injury can also be shown — or has already been shown through an analogous precedent — the first stage of the Anns/Cooper framework is complete and a duty of care may be identified. In such circumstances, the second stage of the Anns/Cooper framework will seldom be engaged because any residual policy considerations will have already been taken into account when the proximate relationship was first identified (Livent at para. 26). [Citations omitted.]

d) Stage One – (i) Proximity:

If a previously established or analogous category is not identified, or if it was not recognized in a way that satisfies the more rigorous approach, then the court must conduct its own proximity analysis to determine whether there is a sufficiently “close and direct” relationship. The court conducts this proximity analysis by examining all relevant factors arising from the relationship between the plaintiff and the defendant, including: expectations, representations, reliance, and the property or other interests involved.

In cases of pure economic loss arising from negligent misrepresentation or performance of a service, the defendant’s undertaking and the plaintiff’s reliance are particularly relevant (Livent at paras. 29-30). Indeed, where a “defendant undertakes to provide a representation or service in circumstances that invite the plaintiff’s reasonable reliance, the defendant becomes obligated to take reasonable care. And, the plaintiff has a right to rely on the defendants undertaking to do so” (Livent at para. 30). However, an undertaking does not translate into an unlimited duty of care; and any “reliance on the part of the plaintiff which falls outside of the scope of the defendant’s undertaking of responsibility – that is, of the purpose for which the representation was made or the services was undertaken – necessarily falls outside the scope of the proximate relationship and, therefore, of the defendant’s duty of care” (Livent at para. 31).

Indeed, a defendant “cannot be liable for a risk of injury against which he did not undertake to protect” (Livent at para. 31; Maple Leaf Foods at para. 77). An assessment of all relevant factors arising from the relationship between parties in a proximity analysis “not only determines the existence of a relationship of proximity, but also delineates the scope of the rights and duties which flow from that relationship” (Livent at para. 31). These principled limits to the scope of such a duty “are essential to determining the type of injury that was a reasonably foreseeable consequence of the defendant’s negligence” (Livent at para. 31; Maple Leaf Foods at paras. 62 and 78).

e) Stage One – (ii) Reasonable Foreseeability:

If proximity is established, next assess reasonable foreseeability. That is, assess whether the injury to the plaintiff was a reasonably foreseeable consequence of the defendant’s negligence. An injury to the plaintiff will be reasonably foreseeable if: (1) the defendant should have reasonably foreseen that the plaintiff would rely on his or her representation; and (2) such reliance would, in the particular circumstances of the case, be reasonable. Both the reasonableness of the reliance and the reasonable foreseeability of the plaintiff’s reliance are determined by the relationship of proximity between the parties (Livent at para. 35):

[A] plaintiff has a right to rely on a defendant to act with reasonable care for the particular purpose of the defendant’s undertaking, and his or her reliance on the defendant for that purpose is therefore both reasonable and reasonably foreseeable. But a plaintiff has no right to rely on a defendant for any other purpose, because such reliance would fall outside the scope of the defendant’s undertaking. As such, any consequent injury could not have been reasonably foreseeable.

f) Whether: (1) the defendant knew the identity of the plaintiff or the class of plaintiffs who would rely on its representation; and (2) whether the reliance losses claimed by the plaintiff stem from the particular transaction in respect of which the statement at issue was made, are considered at the first stage of the Anns/Cooper framework. These factors arise from the relationship between the parties, and are therefore property accounted for under the proximity and reasonable foreseeability analysis (Livent at para. 39).

g) Stage Two – Residual Policy Considerations:

If proximity and reasonable foreseeability are established, then a prima facie duty of care is recognized at the first stage of the analysis. The final step is to consider stage two of the Anns/Cooper framework: whether there are “residual policy considerations” outside the relationship of the parties that may negate the imposition of a duty of care.

Residual policy considerations are concerned with the effect of recognizing a duty of care in a particular case on other legal obligations, the legal system, and society more generally (Livent at paras. 37-38). Relevant factors external to the relationship between the parties (factors relevant to the relationship between the parties should have been considered at stage one) include: (1) whether the law already provides a remedy; (2) whether recognition of the duty of care creates the specter of unlimited liability to an unlimited class; (3) whether there are other reasons of broad policy that suggest that the duty of care should not be recognized (Livent at para. 40, citing Cooper). This analysis really asks whether despite the proximate relationship between the parties, and despite the reasonably foreseeable quality of the plaintiff’s injury, it would nonetheless be better, for reasons relating to legal or doctrinal order, or reasons arising from other societal concerns, to insulate the defendant from liability and therefore not to recognize a duty of care in a given case. The Supreme Court tells us that this should be narrowly relied upon, and be applicable only “in rare cases – such as those concerning decisions of governmental policy or quasi-judicial bodies.” (Livent at paras. 40-41).

Imperial Tobacco Canada Ltd. provides guidance on what constitutes a policy decision that deserves to be immune from tort liability. It cautions against simply focusing on the exercise of government discretion, or in simply defining such decisions as those that are not operational; warning us that a definite test is likely unrealistic. Policy decisions, it says, are those made by legislators or officers whose responsibility required them to assess and balance public policy considerations such as social, economic, and political considerations; that the weighing of such considerations to arrive at a course of action is the proper role of government, not the courts. It concludes that government policy decisions that are “protected from suit are decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith” (Knight v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45 at paras. 87 and 90).

c) Analysis - Duty of Care

[43] Applying the above to the facts of this case, I concluded, at the proximity analysis, that the defendants did not owe a duty of care to the plaintiff.

[44] I conducted this analysis as one for both defendants because Mr. Piché had no independent duty towards the plaintiff outside of his obligations as an employee of PWGSC.

[45] Essentially, I concluded that there was no applicable duty of care because, as indicated by the Supreme Court in Livent, “Rights, like duties, are, however, not limitless. Any reliance on the part of the plaintiff which falls outside of the scope of the defendant’s undertaking of responsibility – that is, of the purpose for which the representation was made or the service was undertaken – necessarily falls outside the scope of the proximate relationship, and therefore, of the defendant’s duty of care” (Livent at para. 31).

[46] As indicated above, I was not referred to a previously established or analogous category of cases by the plaintiff. The defendants, in their initial closing submissions, did not contest the existence of a duty of care; apparently relying on an older decision concerning the sufficiency of information disclosed by a city in its tender documents (Cardinal Construction Ltd. v. Brockville (Municipality) (1984), 25 M.P.L.R. 116 (Ont. H.C.)).

[47] However, upon reviewing the parties’ closing submissions, I had serious reservations as to whether Cardinal Construction was an analogous category because the identity of the parties and the particular relationship in Cardinal are different from those of this case. Moreover, Cardinal did not sufficiently consider proximity and/or second-stage residual policy considerations, as these were outlined only later in the Livent decision. I therefore asked for additional submissions, specifically asking the parties to address duty of care, and the particularly relevant decisions of the Supreme Court in Livent and Imperial Tobacco, and of the Court of Appeal in Maple Leaf Foods.

[48] In further written submissions, the defendants argued that the plaintiff’s reliance fell outside the scope of the defendants’ undertaking, or that the decision at issue was a policy decision. The plaintiff argued that when the defendants failed to define the limits of what technical information could be shared between consultants wearing different hats (as (1) part of a team and (2) competitors), it was reasonably foreseeable by the defendants that this could lead to a breach of the Competition Act, R.S.C. 1985, c. C-34, being alleged; that harm would be readily foreseeable, and that there is no issue of indeterminate liability because this case is only concerned with one class of plaintiffs—the bidders. On the topic of policy considerations, the plaintiff argued that the defendants did not lead sufficient evidence to establish that this was a policy decision, and, in any event, argued that this was an operational decision.

[49] I started the Anns/Cooper analysis by looking at proximity, and I started the proximity analysis by looking at relevant factors considering the evidence (see Livent at para. 29).

[50] The plaintiff was a bidder/offeror on the defendants’ 2007 RFSO. He and other potential bidders asked questions about the 2007 RFSO. These questions included: whether consultants could appear under different bidders/offerors (or under numerous teams); whether, if this happened, these consultants could be charged at different rates, depending on the bidder/offeror they worked for; whether the same consultants could appear on all submissions; whether a bidder/offeror could also be or appear as a consultant on other bids for the same work package; and whether an individual consultant or firm could appear as a consultant on more than one bid under the same work package?

[51] When asking these questions, bidders expected and relied on the defendants to provide answers that were accurate and not misleading. Indeed, it would have been apparent to the defendants that the plaintiff (like all bidders) would rely on this information to best prepare his bid—this was admitted by the defendants at their examinations for discovery and at trial. Similarly, it would have been apparent to the defendants that the plaintiff (like all bidders) had many interests at play when bidding or responding to the 2007 RFSO (including primarily financial interests, but also to some extent, reputational interests). As well, the defendants knew the identity of the plaintiff or of the class of plaintiffs (bidders) who would rely on their answers to the questions posed, and wanted to attract as many bidders as possible to bid on this work. On the facts of this case, it is difficult to determine whether the reliance losses claimed by the plaintiff stem from the answers of the defendants or from the plaintiff’s actions in preparing his bid until one considers the defendants’ undertaking and the plaintiff’s reliance—two factors described by the Supreme Court as determinative in the proximity analysis in cases of pure economic loss arising from negligent misrepresentation (Livent at paras. 30 and 39).

[52] The plaintiff argued that the scope of the defendant’s undertaking was to attract as many suppliers to bid as was possible, and that by structuring the 2007 RFSO as they did, allowing sub-consultants to appear on many bids while failing to define the limits of what technical information could be shared when consultants were wearing different hats (cooperator and competitor), the defendants created a situation where “collusion or bid-rigging could be alleged”. The defendants argued that the answers were clear and limited to their plain meaning; that their purpose was not to undermine pre-existing law regarding what was permissible while bidding (including under the Competition Act).

[53] I found that defining what bidders could or could not do under the Competition Act is not what the defendants undertook to provide.

[54] The scope of the defendants’ undertaking of responsibility, when answering questions posed or when making representations to bidders on the 2007 RFSO, was to ensure that answers given or representations made were accurate and not misleading considering the terms and conditions of the RFSO. Indeed, it was known that the answers were provided for purposes of assisting the bidders to prepare a responsive offer or bid. That was “the purpose for which the representation was made or the services was undertaken”.

[55] It is apparent from the plaintiff’s arguments and written submissions that he relied on the defendants’ answers not only for the purpose of preparing his best and most responsive offer (to the terms and conditions of the 2007 RFSO), but also for the additional purpose of ensuring that he would not act in a manner that “could lead to a situation where collusion or bid-rigging could be alleged.” Such reliance by the plaintiff that his actions would not breach the Competition Act falls outside the scope of the defendants’ undertaking of responsibility. As well, it follows from this analysis that the reliance losses claimed by the plaintiff do not stem from the answers provided by the defendants, but rather from the plaintiff’s haste in preparing his bid and by the plaintiff’s failure to seek legal advice concerning the legality of his bid being largely prepared by a competitor.

[56] As indicated by the Supreme Court in Livent, the proximity analysis

not only determines the existence of a relationship of proximity, but also delineates the scope of the rights and duties which flow from that relationship … it furnishes not only a “principled basis upon which to draw the line between those to whom the duty is owed and those to whom it is not” … but also a principled delineation of the scope of such duty, based upon the purpose for which the defendant undertakes responsibility. As we will explain, these principled limits are essential to determining the type of injury that was a reasonably foreseeable consequence of the defendant’s negligence (at para. 31).

[57] As a result, I agree with the defendants that the plaintiff’s reliance on the answers to the questions posed to support his stated belief that he could submit a technical offer that was prepared by a competitor—without making this known to PWGSC—was outside the scope of the purpose for which the representation was made, and therefore, that proximity has not been established.

[58] The position advocated for by the plaintiff would require that the duty of care generally recognized in procurement cases—to provide information to bidders (in this case answers) that is accurate and not misleading—include a duty of care on the defendants to advise the plaintiff/bidders of what his/their obligations are under the Competition Act.

[59] The defendants expected that CVs amongst competitors could be the same because they could use the same consultants. Mr. Gardner agreed that Mr. Facchini could share some of the technical information with his consultants and he agreed that it was normal for Mr. Facchini to have CRG people on his bid, that this was allowed and expected because CRG were almost the only entity with experience in this area. But this is not what happened here.

[60] Duties are not limitless. Absent facts to support such an implied undertaking of responsibility (essentially of providing legal advice about the Competition Act), I find, in the circumstances of this case, that such advice falls outside the scope of the proximate relationship between the parties, and therefore falls outside of the defendant’s duty of care.

[61] Any duty to provide accurate and non-misleading information, in the circumstances of this case, does not include a duty to provide legal advice, or a duty to advise the plaintiffs and bidders of the extent of their obligations under the Competition Act or other legislation. Such a duty would have broad consequences, and I can find no convincing evidence, express or implied, in support of such an undertaking by PWGSC. On the contrary, the standard instructions to the RFSO provide evidence contradicting such an undertaking, essentially: that if an offer is submitted by a joint venture, the offer must state that it is submitted as a joint venture and be signed by all members; that it is the offeror’s responsibility to obtain necessary clarification of the RFSO’s requirements before submitting an offer, and; that it is the offeror’s responsibility to prepare its offer in accordance with the instructions contained in the RFSO.

d) Conclusion – Duty of Care

[62] I therefore find that the defendants did not owe the plaintiff a duty of care.

2. Negligent Misrepresentation and Negligence

[63] If my analysis and conclusion on the duty of care are wrong, I would nonetheless have dismissed the plaintiff’s negligent misrepresentation and negligence claims because:

a) Negligent Misrepresentations: I would have found that the answers to the questions posed were not untrue, inaccurate, or misleading, and, in any event, that the plaintiff’s reliance was unreasonable; and

b) Negligence: I would have found that the defendants did not breach their standard of care, and, in any event, that any breach of the standard of care did not cause the plaintiff’s damages.

[64] While I agree with the plaintiff that the 2007 RFSO and the answers to the questions posed could be interpreted to allow bidders, like Mr. Facchini, to obtain and to share technical information from consultants listed on their bid, even if these consultants were also competitors, I find that any such reasonable interpretation was limited to what was reasonably necessary for purposes of that bidder preparing his or her bid. I therefore do not find that being allowed to obtain or to share information is determinative of liability, as is suggested by the plaintiff, because obtaining and sharing information for purposes of preparing a bid is not what occurred here.

[65] The information, questions, and answers to the questions posed, prepared by the defendants, did not say or infer that a competitor (albeit also a sub-consultant) could draft the technical portion of a bidder’s bid.

[66] The questions in issue and the answers to the questions posed relate to exclusivity of resources and to whether individual consultants and firms can appear on more than one bid (including the sharing of sub-consultants on multiple bids and to lead consultant’s also acting as sub-consultants on other bids). The questions in issue and the answers to the questions posed do not say or provide that a competitor may draft the technical part of a bidder’s bid.

[67] Here, Mr. Knowlton (a principal of CRG) prepared most of the plaintiff’s bid (Mr. Knowlton prepared all of the plaintiff’s technical offer). At best, for the plaintiff, Mr. Facchini, only glanced over very quickly the technical offer prepared entirely by Mr. Knowlton before incorporating his CV and financial portion of the bid, and submitting his bid prior to closing.

[68] The plaintiff did not have time, in one day, to contact any of the other consultants listed in his bid to obtain or to ask them to share information required for the preparation of his bid; he was approached by Mr. Knowlton to submit a bid on April 2, 2007, and bids closed at 2 p.m. on April 3, 2007. The extensive similarities and number of identical parts between the plaintiff’s technical bid and that of CRG go beyond any reasonable understanding of obtaining and sharing of technical information necessary for a bidder to prepare his or her bid. This is not a bidder obtaining and sharing technical information from sub-consultants to prepare his bid, but rather a bidder having most of his bid prepared by a competitor on the basis that this competitor is also a sub-consultant. This is not allowed by a reasonable interpretation of the information and answers to the questions posed.

[69] Indeed, the plaintiff did not ask Mr. Knowlton or any of the other 20 professionals listed in his technical offer for their respective CV or personal information for the plaintiff to insert in his bid. Rather, he had Mr. Knowlton prepare an entire and substantial part of his bid (the technical part of his bid), and only glanced over it very quickly before submitting his bid.

[70] The process was a competition. Being allowed to share and obtain technical information from potential sub-consultants, who were also competitors, sufficient to allow a bidder to prepare his or her bid in the context of a competition and formal bidding process cannot reasonably have been understood to encompass what the plaintiff allowed.

[71] As a result, I would have found that the defendants did not make an untrue, inaccurate, or misleading misrepresentation, and in any event, that the plaintiff did not reasonably rely on the alleged misrepresentation.

[72] Similarly with regards to negligence, I would have found that the answers were responsive to the questions posed, not in breach of the standard of care of a reasonable contract manager, and in any event, did not cause the plaintiff’s damages.

[73] The plaintiff did not provide evidence regarding what the standard of care of a government contract manager should be and did not provide evidence of what a reasonable contract manager should have done in similar circumstances. I adopted the “reasonable person” standard of care, or more specific to the facts of this case, that of the reasonably competent contract manager.

[74] The evidence indicates that Mr. Piché prepared the draft of these answers and circulated them to his colleagues, including to his director, for review. Minor comments and changes were made and the answers were then sent to the fairness monitor for review before being published. I have no evidence that this process was in breach of the standard of care of a reasonably competent contract manager.

[75] Regarding the content of the answers to the questions posed, I disagree with the plaintiff’s arguments that the defendants were negligent for omitting to advise prospective bidders that they could not obtain technical assistance from a sub-consultant if that sub-consultant was also a bidder. The questions in issue and the answers to the questions posed relate to exclusivity of resources and to whether individual consultants and firms can appear on more than one bid. As such, they do not say or provide that a competitor may draft the technical part of a bidder’s bid. Rather, and as indicated above, a reasonable interpretation of these answers is that the sharing of information was limited to what was necessary for purposes of a bidder preparing his or her bid, and the interpretation of the information and answers alleged by the plaintiff, that he could simply submit a technical bid prepared entirely by a sub-consultant who was also a competitor, was not reasonable.

[76] I do not accept the plaintiff’s arguments that Mr. Piché was trying to deflect and detract from his own negligence when he gave his statement to the Competition Bureau because, as indicated above, I do not find that Mr. Piché was negligent when he prepared the 2007 RFSO and the answers to the questions posed. Similarly, I do not find that Mr. Piché was negligent when he answered the questions of the Competition Bureau as he did. Mr. Piché testified that the investigator was asking the questions and seemed aware of the facts. Mr. Piché did not need to add that despite the observed similarities, the financial bids were not the same – this would have been apparent to the Competition Bureau and indeed was confirmed by the Competition Bureau’s investigator when he testified.

[77] As a result, I would not have found that Mr. Piché breached the standard of care of a reasonably competent contract manager.

[78] The evidence indicates that the Competition Bureau conducted its own investigation and arrived at its own conclusions, quite independently of what they were told by Mr. Piché during the June 2010 interview. As a result, applying the “but for” test, I would have found that any breach of the standard of care by Mr. Piché during his interview with the Competition Bureau did not in fact cause the plaintiff’s damages (that it is not a part of the cause of the plaintiff’s injury—see Athey v. Leonati, [1996] 3 S.C.R. 458, at paras. 13 – 17).

[79] The lead investigator with the Competition Bureau, responsible for the investigation that resulted in charges against Mr. Facchini, testified. He said that the Competition Bureau was approached by an investigator of the special investigative directorate of PWGSC during the summer of 2009, and that he started the Competition Bureau’s investigation in September 2009. He said that during the course of the multi-year investigation conducted by the Competition Bureau, they requested and reviewed countless documents from PWGSC and interviewed five employees of PWGSC. He described the similarities between the bids of Mr. Facchini and CRG, and how he was concerned with these similarities. He described how he reviewed all available relevant information and how he relayed his concerns to his superiors. He explained how the decision to lay charges against CRG (in July 2012) and later, against Mr. Facchini (in June 2013), were made by his superiors. It follows from his evidence that the comments made by Mr. Piché during his interview with the Competition Bureau had little impact on the Competition Bureau’s decision to lay charges against Mr. Facchini; they based their decision to charge Mr. Facchini on the evidence, not on the comments and opinions of one witness, i.e., Mr Piché.

[80] In any event, on legal causation, I would have found that any breach of the standard of care by the defendants did not cause the plaintiff’s damages in law and that Mr. Facchini’s damages are too remote to warrant recovery.

[81] In Frazer v. Haukioja, 2010 ONCA 249, 101 O.R. (3d) 528, at para. 39:

In undertaking the causation analysis, I note the importance of keeping the issues of factual causation, often referred to as the "but for" test, and legal causation, often referred to as remoteness, distinct. As noted in A. Linden and Feldthusen at 360 the failure to do so can be a source of much confusion:

Most of the difficulty in this area stems from an unfortunate blurring of two issues that should not be intermingled: (1) cause-in-fact, and (2) proximate cause or remoteness. If the cause-in-fact issue were kept separate from the proximate cause or remoteness issue, much of the confusion would vanish. ... Although one cannot totally and completely divorce the two issues, it can be said that cause-in-fact is fundamentally a question of fact, which can be treated relatively expeditiously in most tort litigation. Proximate cause or remoteness, on the other hand, cannot be handled so simply, because it deals with the limits of liability for negligent conduct, which...demands delicate value judgments and the drawing of fine lines. It is more a question of law and policy than fact.

[82] Factual causation is established using the “but for” test (more rarely, the “material contribution” test is used where it is impossible to prove causation by the “but for’ test, usually because there are multiple negligent defendants and the identity of the one which was a cause of the plaintiff’s harm is unclear: Frazer at para. 41 and more precisely and recently Clements (Litigation Guardian of) v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, at paras. 28-39).

[83] On the other hand, legal causation is informed by the general principle that the harm suffered must be reasonably foreseeable (Frazer v. Haukioja, 2010 ONCA 249, 101 O.R. (3d) 528 at para. 51). When assessing causation in law, it is important to keep separate the analysis of reasonable foreseeability at the duty of care stage from that of legal causation—remoteness of damages. Reasonable foreseeability at the duty of care analysis is concerned with the type of injury that is reasonably foreseeable as flowing from the defendant’s conduct, whereas reasonable foreseeability at the remoteness analysis is concerned with the reasonable foreseeability of the actual injuries suffered by the plaintiff: see Livent at para. 78 and Mustapha at para. 18.

[84] Applying the above, I would have found that the plaintiff’s loss was not reasonably foreseeable, and therefore, was too remote. It was not reasonably foreseeable that the plaintiff would have suffered the alleged losses of income because it was not reasonably foreseeable that a bidder would interpret the 2007 RFSO and the answers to the question posed as Mr. Facchini did—that a substantial portion of his or her bid could be prepared by a competitor (even if that competitor was also a team member). As such, the alleged losses are too unrelated to the alleged wrongful conduct of the defendants. Stated otherwise, the alleged losses of income would not occur to the mind of a reasonable person in the position of the defendants—that a bidder would interpret the 2007 RFSO and the answers to the question posed in the manner that Mr. Facchini did and therefore incur the alleged losses of income.

[85] The defendants pled, in the alternative, that the plaintiff was contributory negligent in preparing a bid arrived at by agreement with a competitor without advising PWGSC (although they did not argue this in their closing submissions).

[86] The evidence indicates that the plaintiff was approached by CRG, decided to submit a bid, and prepared a winning bid all within one day. Further, the evidence indicates that the plaintiff did not ask any question to the defendants whether his bid could be prepared as it was and did not seek any legal or other assistance to ensure that his bid was legally prepared. It should have been obvious to the plaintiff that he was taking a risk in acting with such haste that his bid, largely prepared by a competitor, was not legally prepared. Applying the “but for” test for factual causation, I would have found that it was rather the plaintiff’s haste in preparing his bid and in failing to seek legal or any advice (about the legality of his bid largely prepared by a competitor) that caused the plaintiff’s damages, not the answers to the questions posed prepared by the defendants. As well, legal causation is more readily applicable to the conduct of Mr. Facchini—it was reasonably foreseeable that he would sustain losses of income if he submitted a bid largely prepared by a competitor without first obtaining any advice or taking any step to ascertain whether this was legal or not, or in breach of some regulation or government directive.

[87] As a result, if negligence of the defendants had been established, I would have apportioned the liability of the defendants at no more than 30% (attributing at least 70% to the plaintiff for his contributory negligence in failing to take any step to ascertain if he could act as he did).

[88] The defendants argue, for misrepresentation and negligence, that Mr. Facchini was aware of relevant facts by July 31, 2012, and that these claims are therefore out of time because this action was only started on September 18, 2014.

[89] Section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. provides that the basic limitation period is two years from the day on which the claim was discovered. Section 5(1) of the Limitations Act has codified the common law principle of discoverability. As explained by the Court of Appeal for Ontario in Safai v. Bruce N. Huntley Contracting Ltd., 2010 ONCA 545, 322 D.L.R. (4th) 1, at para. 14:

The discoverability rule has been developed and discussed in a number of cases in this court, other provincial appellate courts and the Supreme Court of Canada since the mid-1980s. There is a clear and concise articulation of the rule by Dubin J.A. in Consumers Glass Co. v. Foundation Co. of Canada (1985), 51 O.R. (2d) 385 at p. 398:

In my opinion, in cases which are based on a breach of duty to take care, the cause of action does not arise, and time does not begin to run for the purposes of the Limitations Act, until such time as the plaintiff discovers or ought reasonably to have discovered the facts with respect to which the remedy is being sought, whether the issue arises in contract or in tort.

[90] Considering my earlier findings, suffice to say that I would not have accepted the defendants’ arguments that the plaintiff’s claims for negligent misrepresentation and negligence are statute barred because I would have accepted the plaintiff’s evidence and arguments that it is only when the plaintiff obtained disclosure from the Crown, in relation to the criminal charges, in or about January 2014, that he realized the involvement of Mr. Piché. The action was started on September 18, 2014, well within two years of the plaintiff discovering Mr. Piché’s involvement (and the facts upon which he seeks remedy).

3. Defamation/Malice

[91] As a result of the admissions made by the parties, the issues relevant to defamation are limited to whether the statements of Mr. Piché to the Competition Bureau were made with malice, and if so, what are appropriate damages.

[92] On June 22, 2010, during an interview conducted by investigators of the Competition Bureau, Mr. Piché gave a statement which included the following:

Investigator: So for the record another time, I don’t want to put words in your mouth – but after seeing what you’re seeing here – would you agree with the statement saying that there seemed to have no competition here between those two?

Mr. Piché: Oh, that’s obvious now. Now that, with the documents that I’m looking at now, very little competition is happening because it’s like all being in the same bed, for lack of a better describer.

(…. and later during the interview)

Investigator: Now, what would be your reaction if it came to your attention that CRG, in fact, helped Louis Facchini and First Porter to prepare and submit First Porter’s proposal? Do you see any issues with that?

Mr. Piché: From my limited knowledge of bid-rigging, that would automatically come to mind.

Investigator: What do you mean? Can you elaborate?

Piché: Well, that’s a good one. What’s the word? Cohesion?

Investigator: Yeah.

Piché: It would – it goes against all good contracting practices. I mean, you just don’t do something like that. You’re submitting bids in response to a tender on an RFSO for your company, not on behalf of another company. I mean, you’re in a competition here against one another, not working together. I would have raised it right away with senior management that there was collusion. What’s the word, collusion, is that?

[93] The plaintiff alleges that Mr. Piché’s statements that “… they are all in the same bed…”; “… bid rigging [that] would automatically come to mind…”; and, that CRG and Facchini had “colluded” on the bid, were made maliciously in an effort by Mr. Piché to obstruct and justify his negligence in how he structured the 2007 RFSO, how he answered the questions posed, and when he related information to the Competition Bureau’s investigators about an alleged unsolicited statement of work by Mr. Card – that he gave this statement to protect himself vis-à-vis his superiors for these alleged errors.

[94] It is admitted that Mr. Piché’s statements to the Competition Bureau were defamatory and covered by the defence of qualified privilege: there was a duty on Mr. Piché to give a statement to the Competition Bureau and the Competition Bureau had a corresponding interest or duty to receive it. As a result, conditional immunity attaches to the communication unless the plaintiff can prove that the statements were made with malice; malice defeats the defence of qualified privilege.

[95] Evidence of malice may be extrinsic (evidence of surrounding circumstances) or intrinsic (from the wording itself). Malice refers to either a lack of an honest belief in the truth of the libelous statement, or to use of the privileged occasion for an improper purpose (Korach v. Moore (1991), 1 O.R. (3d) 275 (C.A.), at pp. 282-283). Malice is not limited to spite or ill will. Malice includes any indirect motive or ulterior purpose, and can be established if the plaintiff can prove that the defendant was not acting honestly when he published the comment – it depends on the circumstances of the case (Simpson v. Mair, 2008 SCC 40, [2008] 2 S.C.R. 420, at paras. 100-107).

[96] Mr. Piché worked as a contract manager in the real property branch of PWGSC (he retired in 2011). He did not know Mr. Facchini, other than through limited business related dealings. He had many business dealing with CRG.

[97] Mr. Piché was a strong proponent of the workload distribution model instituted in 2007 (the 50%, 30%, and 20% model described earlier, and implemented in part as a response to industry pushback seeking some of this work). He was involved in drafting the 2007 RFSO.

[98] Mr. Piché’s acting ADM in 2007, Mr. McGrath, voiced opposition to the 2007 workload distribution model (possibly from pressure by Mr. Card as this work distribution model could limit CRG’s business by at least 50%). Mr. Piché grew frustrated with this late opposition to the proposed workload distribution model and even asked to be removed from the 2007 RFSO if interference continued. However, Mr. Piché and most everyone else disagreed with Mr. McGrath and Mr. Séguin about this and the workload distribution model went ahead.

[99] Mr. Piché also prepared the answers to the questions posed. He testified that he wanted consultants to be able to appear on more than one team or on more than one submission because the government did not wish to limit the resources at their disposal: they wanted access to as many consultants as possible. As well, Mr. Piché was involved in gathering the individual who formed the evaluation committee for the 2007 RFSO, and he was involved in the preparation of the evaluation grid used by the evaluation committee (Mr. Piché was not part of the evaluation committee).

[100] During the evaluation process of the bids for the 2007 RFSO, Mr. Piché received an email from two evaluators. They were questioning the fact that the bid of First Porter introduced all the same professionals included in the CRG list of professionals, and that there were identical sections and other similitudes in the content of both proposals. Mr. Piché testified that he probably spoke with these two evaluators about this. Mr. Piché did not remember looking at the two bids at that time because he did not have to since he was not on the evaluation committee, he said. During his cross-examination, he admitted that if he had wanted to he could have seen the bids, including during the one evaluation meeting. He explained that bids are to be evaluated as submitted, are not to be compared with other bids, and that each bid is to be evaluated on its own merits (not by comparison to other bids). As a result, he answered this email by directing the evaluators to evaluate the proposals as submitted, and he made reference to one of the answers to the questions posed that “PWGSC has not introduced limitative provisions in the RFSO for the exclusivity of the proposed consultants”.

[101] Mr. Piché explained, during his cross-examination, that he prepared the memo of April 28, 2009, because he was aware of suspicions about the relationship between Mr. Card and Mr. McGrath, and that this request of work was suspicious. Mr. Piché also explained that the Competition Bureau’s investigators had done their homework prior to their interview with him, and that they were asking the questions. He said that he was provided with the two submissions during the interview and asked to compare sections. He explained that he answered as he did during the interview because he was asked to compare the two bids and they were practically identical. He said that he had not noticed the similarities before because if he had he would have raised this. He also explained that he answered as he did because answering these questions was part of his job, that he faced no disciplinary action, and that he retired voluntarily in 2011. He was not successfully cross-examined on the plaintiff’s allegations of malice.

[102] When I assess the evidence, I conclude that the plaintiff has not established, on a balance of probabilities, that Mr. Piché was not acting honestly when he made his statement to the Competition Bureau. There is no convincing evidence, on a balance of probabilities, that Mr. Piché was trying to deflect from his alleged negligence, or that he was motivated by an indirect motive or ulterior purpose.

[103] I found Mr. Piché credible when he explained that he answered as he did during the interview because he was shown the two bids and they were practically identical. I accept Mr. Piché’s evidence that he did not think that he had done anything wrong (in fact, I agree and find that he did not do anything wrong, contrary to the plaintiff’s allegations), that he harboured no ill will towards the plaintiff, and that he was only doing his job when he answered as he did. The evidence supports Mr. Piché’s recollection that he was not aware of the full extent of the similarities between the two bids during the bidding process. When one compares the two bids, one can see why Mr. Piché answered as he did; as explained above, this was not what he had allowed. He had agreed that information and CVs could be shared in order for a bid to be prepared; he had not agreed that an entire section could be drafted by a competitor. As such, his answers to the Competition Bureau reflect the extent of the observed similarities between the bids and Mr. Piché’s understanding, which understanding, as indicated, I find in the circumstances reasonable. Malice has therefore not been established.

4. Duty of Good Faith

[104] In his closing submissions, the plaintiff alleges a duty of good faith and seeks resulting damages. The plaintiff relies on two Supreme Court decisions: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, and Martel Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860. However, the findings and principles stated in these decisions are not applicable to the causes of action pleaded in the plaintiff’s statement of claim.

[105] The plaintiff argues in his closing submissions that, although not pleaded, the statement of claim puts in question improper purpose and dishonesty that could amount to a breach of the duty of good faith. In his closing submissions, he argues various alleged acts of bad faith and seeks damages for the defendants’ breach of this duty calculated on the basis of what Mr. Facchini’s economic position would have been had the defendants acted in good faith. However, the plaintiff does not convincingly explain how the principles stated in Bhasin and Martel could be applicable to the causes of action pleaded in his statement of claim.

[106] Bhasin is a contract case and the comments of the Supreme Court in that decision about the duty of good faith are grounded in the principles of contract law. This is apparent throughout this decision (see for example paras. 42-58, which fairly consistently reference good faith and some form of contract performance; para. 59 which mentions “good faith performance of contracts”; para. 63 which mentions good faith in the context of contractual performance; and paras. 65, 66, 70, 72, 73 and 80, all of which mention either contract or contractual performance when mentioning the principle of good faith). Similarly, the Supreme Court in Martel dealt with an implied term in the tendering process—however, in this case, the question of whether the defendants fairly considered the plaintiff’s bid is not an issue raised by the plaintiff’s statement of claim nor was it an issue raised at trial.

[107] I disagree with the plaintiff’s interpretation of the decision in Bhasin, and rather read that decision to be applicable to cases of breach of contract. The plaintiff did not plead a claim of breach of contract, and none of the plaintiff’s claims relate to the performance of any contractual obligations owed by the defendants under any of the standing offers or contracts. I therefore agree with the defendants that there is no basis for the plaintiff to now advance this argument.

5. Damages

a) Negligent Misrepresentation and Negligence

[108] The plaintiff’s damage theory is premised on seeking the full value of the standing offers and contracts. However, that theory is flawed because but for the alleged misrepresentation and negligence the plaintiff would not have bid on the 2007 RFSO, and the plaintiff presented no evidence to establish what his financial circumstances would otherwise have been for the period from 2007 to 2015. Alternatively, the plaintiff’s damage theory fails to account for the timeline relevant to the Competition Bureau’s investigation and for the terms and circumstances applicable to the standing offers. I will only briefly comment upon these considering my finding on damages.

[109] In cases of breach of contract, which this case is not, the general principle is for the successful plaintiff to be placed, as far as can be done with money, in the same position that he or she would have been if the contract had been performed. In negligence, damages are those that will put the plaintiff in the position that he or she would have been in but for the negligence or misrepresentation, and what that position would have been is a matter that the plaintiff must establish on a balance of probabilities (see Rainbow Industrial Caterers Ltd. v. Canadian National Railway, 1991 SCC 27, [1991] 3 S.C.R. 3, at paras. 20-22).

[110] If I had found in favour of the plaintiff on the required elements of negligent misrepresentation and negligence, I would have found that the plaintiff did not suffer damages as a consequence of relying on the misrepresentations and negligence of Mr. Piché because the plaintiff presented no evidence to establish what his financial circumstances would have been but for the alleged representations and negligence. Although there is evidence that the plaintiff earned $130,000 in each 2005 and 2006 (somewhat contradicted by Exhibits 21 and 22), there is no evidence of what the plaintiff would have earned if he had not bid and obtained the 2007 RFSO (because that was not the plaintiff’s damage theory).

[111] I arrive at the above because I find that if one accepts the plaintiff’s arguments that the misrepresentations and negligence of Mr. Piché induced the plaintiff to bid, then if the misrepresentations and negligence had not occurred the plaintiff would not have bid on the 2007 RFSO (and would not have been charged). It follows that the plaintiff would also not have won the 2007 standing offer, and therefore that he would not have been in a position to bid on and win the other standing offers and contracts. As a result, awarding the plaintiff damages on the basis of the standing offers and contract is in this case not supported by the evidence.

[112] Consequently, if I had found misrepresentations and negligence, I would have found that the plaintiff did not prove damages relating from his allegations of misrepresentation and negligence.

[113] Considering what would have been my conclusion on damages if I had found for the plaintiff on liability, stated above, I only add that the plaintiff’s damage theory also fails to account for the timeline of the Competition Bureau’s investigation and for the terms applicable to the standing offers. I make the following brief comments in that regard.

[114] Mr. Facchini argues that the standing offers and contracts were not exercised or were set aside for political reasons and claims as damages the full value of the standing offers and contracts, including all possible extensions, for the period from 2007 to 2015. He provided a report and testimony from a local actuary, Mr. Martel.

[115] However, Mr. Facchini’s theory of damage (and as a result the evidence of Mr. Martel) is unreasonable because it claims losses during a period of time which predates the Competition Bureau’s investigation, and it assumes that but for the negligence Mr. Facchini would have received 100% of the value of all standing offers and contracts irrespective of the circumstances and applicable contractual terms.

[116] Regarding firstly the timeline of the investigation and its potential impact, the SID investigation did not start before 2008 and at that time that investigation did not at all involve Mr. Facchini. It is only in the spring – summer of 2009 that part of the SID investigation included CRG and Mr. Facchini. The Competition Bureau was approached by SID investigators in May 2009, and the Competition Bureau started their investigation in September 2009. By then, there is no evidence of any impact on Mr. Facchini’s contractual relationship with the defendants. Indeed, when Mr. Facchini testified, he provided no information regarding how he could have been affected in 2007, 2008, and 2009, considering the date when the investigation started. Why he claims damages for those years is not supported by the evidence.

[117] The investigation conducted by the Competition Bureau involved their reviewing documents and interviewing witnesses during 2010. Mr. Piché was interviewed in June 2010. In December 2010, Mr. Facchini’s house was searched by the competition Bureau. CRG was charged and pled guilty in July 2012, and Mr. Facchini was charged in June 2013.

[118] Mr. Facchini testified that the 2007 RFSO (work package 3) was extended for only one of the two possible one-year extensions. Nonetheless, it was extended in March 2009 for the period of May 2009 to May 2010. As well, in May 2009, Mr. Facchini received a call-up under work package 3. In August 2010, Mr. Facchini was awarded the Western standing offer. In December 2011, Mr. Facchini was awarded the Ontario standing offer. He was also successful on work package 5 in January 2012.

[119] A Globe and Mail article describing the allegations against CRG and Mr. Facchini was published on January 12, 2011.

[120] Ms. Young was acting regional director of procurement responsible for Ontario with the defendants. On January 13, 2011, she received a copy of a Toronto Sun article dated January 13, 2011 as part of the usual emails that she received to keep abreast of what was going on in the industry. That article indicated that the Competition Bureau was investigating firms over suspicion of bid-rigging on contracts with Public Works and it also named CRG, First Porter, and Mr. Facchini.

[121] CRG was granted a leniency marker on November 7, 2011, under the Competition Bureau’s leniency program, on the basis that it would admit culpability and provide full cooperation. CRG cooperated with the competition Bureau.

[122] On December 22, 2011, an email was sent to employees of the defendant advising that the Competition Bureau was investigating possible bid-rigging between CRG and First Porter.

[123] Ms. Young testified that she received this email informing her that the Competition Bureau had started an investigation of possible bid-rigging relating to CRG and First Porter. It advised PWGSC contract officers to closely scrutinize proposals submitted by either CRG or First Porter. Contract officers were instructed to continue any ongoing contracts with these firms, including any amendments or extensions, to continue to respect standing offer arrangements with these firms, and to continue to award new contracts or other instruments to these firms. Ms. Young explained that before awarding a contract or awarding some other instrument to either of these firms, contract officers were instructed to verify the firm status in VIM, and inform his or her director (for information purposes not for additional approval). For existing contracts and standing offers, Ms. Young explained that the memo informed contract officers to increase scrutiny, verify all call-ups, verify with the client that the work has been completed correctly, verify the invoices, inform his or her director before extending the period or increasing the value of the contract and inform his or her director before amending the contract.

[124] Considering all of the evidence, I would not have accepted that Mr. Facchini suffered damage as a result of the alleged misrepresentation or negligence for any of 2007, 2008, 2009, and 2010. Assuming the plaintiff’s damage theory, I would have found that, at the earliest, any loss of income resulting from the investigation did not start before January 2011. I would have started in January 2011 (and not January 2012) despite the December 2011 email and other evidence because I have little confidence that the defendants, despite their best efforts and through no fault of their lawyers, were able to locate and therefore to disclose all documents relevant to damages.

[125] Without going into too many details, considering my findings, a senior government employee testified that it was her practice to destroy emails after two years without keeping a paper or other copy, and documents that should have been identified earlier were produced just prior to trial (and some during trial). As well, senior government employees sent and received an email asking that communication on sensitive issues relevant to CRG and Mr. Facchini be kept to a minimum.

[126] The evidence in this case indicates that the defendant, the Attorney General of Canada, needs to pursue better efforts towards developing effective systems to preserve and allow its lawyers to retrieve information and documents relevant to legal actions involving Canada. The size of the defendant cannot act as a shield and limit its ability to meet its legal obligations to disclose relevant information—considering any loss of income resulting from the investigation to have commenced on January 1, 2011, would avoid this result.

[127] Regarding relevant and applicable terms, the standing offers all provide that they are not a contract and that there is no guarantee of any work. The applicable general conditions make clear that a standing offer is not a contract and that a standing offer does not oblige or commit Canada. Further, only a call-up against a standing offer forms a contract and then only for the services which have been called up. As well, applicable terms provide that there is no obligation to renew or extend a standing offer (no obligation to exercise any of the option year) and that a standing offer may be set aside by Canada at any time.

[128] The applicable general conditions provide that “the issuance of a standing offer and call-up authority does not oblige or commit Canada to procure or contract for any goods, services or both listed in the standing offer.” They provide that a standing offer may be set aside by Canada at any time (Mr. Gardner, a senior director of the procurement group of PWGSC, testified that this could be without notice). They provide further that Canada’s liability is limited to that which arises from call-ups (only for those goods, services, or both, which have been called-up). Mr. Gardner confirmed that there is no guarantee of work in a standing offer. He explained that the standing offers show an estimate based on the information that the government has available to provide an idea to the industry about what kind of income might be available. He described the standing offer as a best estimate based on available information and past usage.

[129] Mr. Facchini testified that he understood all of the above. Yet, his theory of damage is disconnected from these terms and from the reality of circumstances unconnected to the investigation and charges by the Competition Bureau. Assuming as he did that but for the negligence he could have realized 100% of the standing offers, Mr. Facchini presented no evidence to establish the expected value of the call-ups, other than to claim all of what was potentially available.

[130] The standing offers contained terms, outlined above, that would have limited damages, yet that is not factored into the plaintiff’s damage theory (see minimal performance principle in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at paras. 11-18). If one assumes Mr. Facchini’s damage theory, I would have applied the minimal performance principle to this tort action because damages assuming the plaintiff’s theory cannot be divorced from the terms of the standing offers. As a result, no additional extension would have been allowed.

[131] Moreover, even assuming the plaintiff’s damage theory, not all diminution of expected income would have been caused by the investigation; some would have been caused by external or other factors, including the economy and the government adopting a different work allocation model. For example, in 2011 and 2012, the federal government was trying to transition to other procurement tools (the government wanted to transition to TSPS – “Tasks and Solutions Professional Services” – as their standing offers expired after May 2012), but Mr. Facchini presented no evidence about its possible impact on his loss of income.

[132] The only evidence to assess the above was presented by Mr. Pittman, an accountant called by the defendants to offer his opinion on damages. Mr. Pittman provided convincing evidence that Mr. Facchini’s assumption that the standing offers would have been fully utilized did not reflect the declining trend in the number of call-ups that were actually made on standing offers. In June 2010, KPMG Forensic Inc. issued a report summarizing its finding from a review and analysis of the use of real property standing offers. Using the data generated by the KPMG report, Mr. Pittman testified that the monthly use of call-ups went down prior to the alleged events. Further, Mr. Pittman testified, using these historical usages and assuming a continuing frequency in call-ups, that the total value of all call-ups for the full four year term of the 2007 RFSO would have been approximately 60% of the RFSO (or, stated differently, that 40% of the RFSO would not have been called-up or used irrespective of the alleged events). Although imperfect, this would then have been the best evidence to assess the plaintiff’s damages on the RFSOs.

[133] Consequently, I would have agreed with Mr. Pittman that the plaintiff’s assumption that the standing offers would have been fully utilized does not reflect the declining trend and is speculative. As a result, if one assumes Mr. Facchini’s damage theory, I would have found that 40% of the RFSOs would nonetheless not have been called-up. I therefore would have calculated damages on the RFSOs by calculating the difference between the total value of the actual call-ups and 60% of the applicable RFSO, not allowing any additional extension, over the period from January 2011 to 2015 (reducing that amount by 70% to reflect the plaintiff’s contributory negligence).

[134] Regarding the Carling Campus contract, Mr. Therien, then, a director of real property at the National Research Council, testified that in 2013 they needed a refresh of the financial analysis of the Carling Campus. Mr. Facchini, who had conducted the initial study, won the bid to conduct the refresh analysis. However, they had to wait for the integrity check to be completed (the approval of the ADM was then required because of these events) which they never received. Mr. Therien estimated the value of this contract at about $40,000. This was confirmed by Mr. Pichette, a procurement officer with the defendant, who testified that Mr. Facchini was successful on this bid, but never actually received the contract because the defendant kept waiting for the ADM approval required under the integrity check, and therefore, it never proceeded. Consequently, if one assumes Mr. Facchini’s damage theory, I would have awarded Mr. Facchini damages for the loss of the Carling Campus contract in the amount of $40,000 (less 70% for Mr. Facchini’s contributory negligence).

[135] Regarding the Parliamentary Precinct contract, Mr. Pichette clearly established that this contract was in fact awarded to Mr. Facchini in 2014 and that ADM approval was obtained on May 16, 2014, as per the integrity check then required. This contradicts the evidence of Mr. Facchini, who testified that he did not receive this contract (when in fact he clearly did and was paid $23,052). Despite the fact that documents irrefutably proving the above were found very late by the defendants, Mr. Facchini should have known which contract he did not receive, and should have known that he had been paid $23,052 for this contract. This, added to Mr. Facchini initially erroneously claiming HST, and his unclear evidence about his daily hourly rates, mark-up, and 2005 and 2006 income undermines my assessment of the reliability of Mr. Facchini’s damage evidence. This also contradicts the evidence of Mr. Temple, one of Mr. Facchini’s witnesses. Mr. Temple testified that because of the alleged events his firm received the Parliamentary Precinct contract instead of Mr. Facchini (largely based on hearsay evidence from Mr. Knowlton). This was obviously inaccurate, severely undermining the reliability of Mr. Temple’s evidence. As well, this shows that the integrity process was being followed and it contradicts Mr. Facchini’s allegations that he was systematically refused, reinforcing my conclusion that 40% of the RFSO would nonetheless not have been called-up.

[136] Regarding the NRCAN contract, only Mr. Facchini and Mr. Temple testified about this, and both their evidence was in part based on hearsay. Considering that and the above finding relating to the reliability of their evidence, the lack of evidence that the security clearance was related to the issues raised in this action, and that no independent evidence was provided about what the value of the contract and about what percentage Mr. Facchini would have received (as a sub-consultant), I would have found that Mr. Facchini did not prove these damages.

b) Defamation

[137] General damages are presumed from a finding of liability for defamation. These are nonetheless compensatory and are assessed considering all the evidence, including the plaintiff’s conduct, position and standing, nature and seriousness of the statements, mode and extent of the publication, apology, and other circumstances. Further, a defendant is generally not liable for damages caused by the repetition of another’s defamatory remarks.

[138] If I had found defamation, I would have found that the repetition of Mr. Piché’s defamatory remarks, including those made by the Competition Bureau and by the media, are too remote to be compensable. Indeed, any repetition of Mr. Piché’s remarks was made as the probable consequence not of the original publication by Mr. Piché but of the charges laid by the Competition Bureau. As a result, I would have assessed these general damages at no more than $35,000.

[139] The plaintiff also seeks punitive damages for defamation. These may be awarded in defamation cases in order to punish the defendant and deter others from acting as such in circumstances where general and aggravated damages would not be sufficient to achieve that goal. The plaintiff did not seek aggravated damages. Considering the above and the circumstances of this case, I would not have awarded punitive damages.

[140] Finally, the plaintiff seeks special damages for loss of income for defamation exceeding $1.5 million. I would have found these damages too remote and not compensable. Indeed, if the plaintiff suffered any loss of income then I would have found that these were caused not by the defamatory remarks of Mr. Piché but by the charges laid by the Competition Bureau.

Conclusion

[141] This action is dismissed.

[142] If the parties are unable to agree on costs within 30 days from the date of these reasons, they shall provide to my assistant (by letter addressed to me) written submissions not exceeding five pages, plus relevant documents: by the defendants within 45 days from the date of these reasons, by the plaintiff within 55 days from the date of these reasons, and any reply by the defendants limited to two pages within 60 days from the date of these reasons for decision. If written submissions on costs are not received by the end of September 2019, I will assume that the parties have reached an agreement on costs.

[143] As an aside, the defendant’s prior computerized system for internally verifying the credentials of consultants (the VIM system), although now apparently rarely used by governmental officials, still indicates for Mr. Facchini that he is charged and under investigation. This is obviously outdated and consideration should be given by the defendant to removing or correcting any such outdated references from their computer systems.

Released: July 2, 2019 Pierre Roger J.