Date: 19991126
Docket: T-967-76
OTTAWA, ONTARIO, NOVEMBER 26, 1999
| BEFORE: TREMBLAY-LAMER J. |
Between:
ROGER GAUTHIER INC.,
Plaintiff,
- and -
HER MAJESTY THE QUEEN,
Defendant,
- and -
BELCOURT CONSTRUCTION COMPANY,
Mis-en-cause.
O R D E R
The plaintiff's action in tort is allowed with costs. In accordance with the directive issued by Hugessen J. on April 2, 1998, a re-hearing will be held to allow the parties to make submissions on the alleged damages.
| |
Danièle Tremblay-Lamer
JUDGE
|
Certified true translation
Bernard Olivier, LL. B.
Date: 19991126
Docket: T-967-76
Between:
ROGER GAUTHIER INC.,
Plaintiff,
- and -
HER MAJESTY THE QUEEN,
Defendant,
- and -
BELCOURT CONSTRUCTION COMPANY,
Mis-en-cause.
REASONS FOR ORDER
TREMBLAY-LAMER J.
[1] This is an action in tort against the Crown brought pursuant to ss. 3(1)(a) and 8 of the Act respecting the Liability of the Crown for Torts and Civil Salvage1 to determine the latter's liability for the damages alleged by the plaintiff to have resulted from the rejection of a public tender.
FACTS
[2] In 1974 the Department of Public Works, following the preparation of a project with a customer department, the Post Office Department, made a leasing/construction call for tenders to build a postal station at Cartierville on Montréal Island, the postal station to be known as postal station R. The call for tenders notice was published in the newspapers of April 23 and 30, 1974 and May 7, 1974.
[3] The call for tenders sought bids for a building with an area of approximately 9,780 sq. ft., with three alternative leasing arrangements, leases for 10, 15 or 20 years, for the future site of the postal station. The deadline for submitting bids was set at June 5, 1974.
[4] On June 5, 1974 two bids had been received, one by the plaintiff and the other by the mis-en-cause Belcourt Construction Company (hereinafter "Belcourt").
[5] The plaintiff submitted2 a leasing offer for a building having a total area of 14,108 sq. ft., containing the following leasing provisions:
| (a) lease for a period of ten years at an annual rental of $197,512, at a rate of $14.00 a sq. ft.; |
| (b) lease for a period of fifteen years at an annual rental of $188,356, at a rate of $13.40 a sq. ft.; |
| (c) lease for a period of twenty years at an annual rental of $177,480, at a rate of $12.58 a sq. ft.; |
[6] In Belcourt's case, it submitted3 a two-story building with a surface area of 8,780 sq. ft. on the ground floor and 1,000 sq. ft. on the second floor, making a total area of 9,780 sq. ft. The leasing provisions were the following:
| (a) lease for a period of ten years at an annual rental of $135,000, at a rate of $13.80 a sq. ft.; |
| (b) lease for a period of fifteen years at an annual rental of $128,000, at a rate of $13.08 a sq. ft.; |
| (c) lease for a period of twenty years at an annual rental of $125,000, at a rate of $12.78 a sq. ft. |
[7] On March 19, 1975 the Department of Public Works accepted Belcourt's bid. The plaintiff was informed that its bid had been rejected and its security deposit was returned on June 13, 1975.
PARTIES' ARGUMENT
Plaintiff's arguments
(1) Requirements of specifications regarding building
[8] The plaintiff submitted that the fact that the defendant requested the construction/leasing of a one-story building contrary to zoning by-law 4239 applicable at the time (which required that there be two stories) indicated the latter's bad faith. This bad faith was all the more obvious as the defendant had some years before attempted to acquire the site proposed by the plaintiff on the ground that the latter corresponded to the customer department's requirements.
(2) Existence of a predetermined list of contractors
[9] The plaintiff maintained that the existence of a list to be used in informing certain contractors that there was a call for tenders before the latter was published is contrary to the rules of fairness and natural justice.
(3) Information received before call for tenders published
[10] The plaintiff argued that it was unfairly disqualified in the call for tenders procedure. The defendant failed to recognize the fact that its bid was based on information provided by a representative of the customer department, Mr. Laliberté, who had in fact encouraged it to propose the site previously sought by the department in question.
(4) Non-compliance of Belcourt's bid
[11] In the plaintiff's submission Belcourt obtained the contract on the basis of a bid that did not comply with the essential requirements contained in the specifications, and the defendant accordingly did not have the necessary discretion to make unilateral changes to the bid accepted. It should have allowed other bidders to correct errors in their bids or issued a new call for tenders to ensure the fairness of the procedure.
(5) Purchase option and right of ownership
[12] According to the requirements contained in the specifications, bidders had to establish their right of ownership and accompany their tender with a resolution by the bidding company. In the event that these requirements were not met, the defendant was not authorized to consider such bids.
[13] Articles 4 and 5 of Chapter A1 of the specifications were not observed by Belcourt, which failed to provide proof of the existence of a second purchase option following the six-month extension of the deadline obtained on the purchase offer for the suggested site.
(6) Cost of leasing/construction
[14] In the plaintiff's opinion, an essential part of Belcourt's offer was renegotiated after the bids were closed, namely the cost of leasing per square foot.
[15] Belcourt's leasing offer for a period of twenty years, calculated by the square foot, was higher than the plaintiff's offer. It was renegotiated downward, from $12.78 to $11.75 a sq. ft. This was an unlawful use of the defendant's discretion, since the parties' rights were fixed when the deadline for filing the bids expired. Any renegotiation of the offer without consulting the other bidders resulted in a misuse of the defendant's discretionary authority. In such circumstances, in view of the rules of procedural fairness, it should have issued a new call for tenders as soon as it discovered discrepancies in Belcourt's bid.
(7) Successive alterations to proposed specifications
[16] The plaintiff maintained that as late as ten months after the date of the bid filing deadline Belcourt's call for tender documents and the plans submitted did not comply with the requirements of the specifications, neither at the date approval was given by the Treasury Board nor on the date the final contract was awarded, so that the contract should never have been awarded.
(8) Delay in return of security deposit
[17] The plaintiff did not receive its security deposit until 53 weeks after the date the bids closed (contrary to instructions that required that the deposit be returned within six months), and no explanation was offered in the interval. By acting in this way the defendant caused injury to the plaintiff, in that the latter did not have a chance to react to this refusal before the contract was awarded.
(9) Rules of procedural fairness and natural justice
[18] The plaintiff submitted that it had a legitimate right to believe that a procedure laid down in statutes and regulations would be observed by government institutions. The defendant accordingly had a duty to act fairly when a decision was likely to affect the rights and interests of taxpayers.
[19] The fact that it was disqualified as the result of representations made by the Post Office Department official necessarily resulted in an abuse of the defendant's discretionary authority.
[20] Citing the testimony of Mr. Bellemare, the project officer representing the Department of Public Works at the time, the plaintiff submitted that it had been the victim of systematic discrimination by the defendant and that there had been an agreement between Crown officials that it would never get any government contracts. This conduct was therefore a civil wrong which clearly demonstrated the abuses of right committed by the defendant's officials and their bad faith.
[21] As regards the application of the Treasury Board order dated May 29, 1964, to the extent that it was applicable, the Belcourt bid should have been rejected since it did not meet the specifications.
Defendant's arguments
(1) Privileged information obtained by plaintiff
[22] The defendant submitted that the plaintiff had been given special treatment by being provided with information on the call for tenders even before the latter appeared in the newspapers.
[23] Based on the information it obtained, the plaintiff was then in a position to submit a bid consistent with the specifications. However, its lack of experience, knowledge and expertise had prevented it from realizing the importance of filing a bid consistent with the specified requirements.
(2) Call for tenders procedure
[24] The defendant submitted that in 1974 there was no statute or regulation requiring the Crown to proceed by a call for tenders in leasing a building, whether existing or to be built. It was not until after 1975 that this requirement was imposed and the courts developed new rules of administrative law.
[25] However, these rules do not apply to the case at bar since they did not exist at that time. Accordingly, legitimate expectation and the duty to act fairly cannot be relied on as a basis for tortious liability, as provided in art. 1053 of the Civil Code of Lower Canada, and the latter creates no positive right.
[26] The evidence further showed that the Post Office Department had long required a leased area of about 9,780 sq. ft. The requirements of the call for tenders were the same whether a building to be constructed or an existing building was in question.
[27] As to the negotiation of a reduction in the rental proposed by Belcourt, there was no clause in the specifications preventing the latter from negotiating the amount of the rental with the lowest bidder. Moreover, the plaintiff suffered no injury since Belcourt was already the lowest bidder and the modifications did not change the order of bidders.
[28] The information sent by Department of Public Works officials to the Treasury Board so the latter could give its approval to the project reflected all the facts about the two bids received.
[29] As well, the Treasury Board's decision of November 21, 1974 was not communicated to representatives of the Department of Public Works in Montréal until March 7, 1975 because of approaches made by Mr. Roger Gauthier to political figures. Belcourt was not informed that it had obtained the contract until after March 19, 1975.
(3) Compliance with requirements contained in specifications
(i) Purchase option and right of ownership
[30] The option attached to Belcourt's bid was in keeping with the call for tenders, and even if it was irregular the discrepancy was only a minor one.
(ii) Plans
[31] Under article 9, Chapter A1 of the specifications only preliminary plans had to accompany the bid, not the final detailed plans.
[32] Accordingly, under article 7, Chapter B3 and article 27, Chapter C1 the specifications only required space of 9,780 sq. ft., summary sketches and specifications, a ten-vehicle parking area and a yard to allow the parking of a fifty-foot trailer truck. Further, on December 19, 1974 the Post Office Department confirmed that Belcourt's bid met the requirements laid down.
[33] The defendant accordingly submitted that the effect of the exchanges between Belcourt and the two departments involved, namely the Post Office Department and the Department of Public Works, was not to alter the nature and cost of the project approved by the Treasury Board.
[34] The adjustments made after the plans had been accepted had no effect on acceptance of the bid. The plans required in the call for tenders were summary and the latter were frequently completed at a later stage.
[35] As well, Postal Station R had been inspected and received the necessary authorization and approval from City of Montréal representatives.
[36] In any case, the plaintiff was treated fairly since its bid was considered on the same basis as the others, despite the fact that it received privileged information to which no other bidder had access.
(4) Burden of proof and civil liability
[37] According to Wilfrid Nadeau Inc. v. The Queen,4 it is for the plaintiff to show that the Crown's representatives were at fault in making the recommendations on which the Treasury Board based its decision. It will not suffice to show that the recommendations were false, incomplete or misleading: they must have led to the approval by the Treasury Board and without them the Treasury Board would have given preference to the plaintiff's offer.
[38] Additionally, the rules of law applicable to an action in tort against the Crown were those in effect at that time. Under s. 3 of the Act respecting Liability of the Crown for Torts and Civil Salvage,5 it is arts. 1053 et seq. of the Civil Code of Lower Canada which apply.
[39] In the case at bar the defendant argued that the Crown's officials committed no fault or negligence in the various stages of the call for tender approval process. The evidence was that Belcourt's bid was consistent with and met the requirements of the specifications.
[40] In any event, judicial review of administrative decisions and civil liability do not necessarily cover identical situations. As a result, not every situation gives rise to a remedy in damages.
[41] Finally, there is a distinction between Crown officials, namely employees of the Department of Public Works, and members of the Treasury Board, since the latter cannot be regarded as Crown officials. Treasury Board decisions based on all the relevant information cannot give rise to liability by the Crown. In order to create such liability the plaintiff must present evidence of the existence of wilful or deliberate fault. In the case at bar the defendant submitted that there was no evidence of such fault in the awarding of the contract to Belcourt by the members of the Treasury Board.
POINT AT ISSUE
| Based on the applicable law, did one or more Crown officials commit fault in applying the Treasury Board order dated May 29, 1964? |
LAW APPLICABLE IN 1974
General principles
[42] As indicated by the Supreme Court of Canada in R. v. Nord-Deutsche et al.,6 the rules of law applicable to an action in tort against the Crown in right of Canada are those in effect at the time the acts giving rise to the action were committed.
[43] In these circumstances, we need to look at the law applicable in 1974, the year in which the acts giving rise to the right occurred.
[44] It is worth noting that the legislative background was very different in administrative law from what it is today, especially as regards the concept of the "duty to act fairly", which was not developed until the late 1970s.7
[45] The action for damages brought by the plaintiff is thus based on ss. 3(1)(a) and 4(2) of the Act respecting Liability of the Crown for Torts and Civil Salvage,8 which read as follows:
| 3. (1) The Crown is liable in tort for the damages for which, if it were a private person of full age and capacity, it would be liable
| (a) in respect of a tort committed by a servant of the Crown, or ... |
4. (2) No proceedings lie against the Crown by virtue of paragraph 3(1)(a) in respect of any act or omission of a servant of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or his personal representative.
|
3. (1) La Couronne est responsable des dommages dont elle serait responsable, si elle était un particulier majeur et capable,
| (a) d'un délit civil commis par un préposé de la Couronne, ou ... |
4. (2) On ne peut pas exercer de recours contre la Couronne, en vertu de l'alinéa 3(1)a) à l'égard d'un acte ou d'une omission d'un préposé de la Couronne, sauf si, indépendamment de la présente loi, l'acte ou l'omission eût donné ouverture à une poursuite en responsabilité délictuelle contre ce préposé ou sa succession.
|
[46] For the definition of a tort, s. 2 indicated:9
| 2. In this Act
. . . . .
"tort" in respect of any matter arising in the Province of Quebec, means delict or quasi-delict.
|
2. Dans la présente loi :
. . . . .
« Délit civil » , relativement à toute matière surgissant dans la province de Québec, signifie un délit ou un quasi-délit
|
[47] We must therefore refer to the law applicable in the province of Quebec as set out in art. 1053 of the Civil Code of Lower Canada, which read as follows:
| Art. 1053. Every person capable of discerning right from wrong is responsible for the damage caused by his fault to another, whether by positive act, imprudence, neglect or want of skill.
|
Art. 1053. Toute personne capable de discerner le bien du mal, est responsable du dommage causé par sa faute à autrui, soit par son fait, soit par imprudence, négligence ou inhabilité.
|
[48] Accordingly, in order to make the Crown liable the plaintiff had (and still has to, despite the introduction of the new Civil Code of Quebec in 1994) first present evidence that a fault was committed by the Crown or one of its officials.
[49] In the case of a Crown official, the provisions applicable in delict or quasi-delict were different from those applicable in situations involving an ordinary litigant: there had to be two essential factors.
[50] First, in view of s. 4(2) of the Act respecting Liability of the Crown for Torts and Civil Salvage,10 for the Crown to be held liable the act or omission alleged as the basis for compensation must have created a cause of action in tort against the Crown official.
[51] Secondly, although Crown immunity was still the rule the Crown's liability was admitted when it was expressly stated in legislation adopted by the federal Parliament. Additionally, such legislation should be given a limiting interpretation.
[52] These rules applicable in questions of delict and quasi-delict by Crown officials were restated many times in decisions of the period. The late Noël J.A. indicated in Deslauriers-Drago v. The Queen:11
| It thus appears that when a claim is made against the Crown for damages resulting from the negligence of its servants in the performance of their duties, the claimant must conclusively establish that the servant himself could be held liable for the damages sustained and claimed if he were sued. [My emphasis.] |
| In the case at bar under s. 3(1)(a), therefore, the applicant must clearly establish that one or more of the respondent's servants was negligent in the performance of their duties and functions; that the injuries sustained by the applicant were the result of that negligence; and that the negligence of one or more servants is such that he or they could have been held personally liable if he or they had been sued. [My emphasis.] |
| The burden of proof on these facts is with the applicant and no presumption can shift this statutory duty. The provision imposing liability derives from a special federal statute, to which we referred earlier, and not from the Civil Code of Quebec. [My emphasis.] |
| Further, s. 4(2) of the Act confirms that the Crown's liability in such a case is vicarious liability, in accordance with the rule respondeat superior, not direct liability. For it to be held liable, as we said earlier, it must be shown that one or more of the Crown's servants could have been held liable if the claim had been brought against them. In a decision of the President of this Court dealing with s. 19(c) of the Exchequer Court Act, which laid down the conditions of Crown liability at the time, and the rules contained in which were subsequently reaffirmed by the new ss. 3(1)(a) and 4(2), it was stated in Magda v. The Queen, [1953] Ex.C.R. 22, at 31: |
| To engage the responsibility of the Crown to a suppliant under section 19(c) it must be shown that an officer or servant of the Crown, while acting within the scope of his duties or employment, was guilty of such negligence as to make himself personally liable to the suppliant, for the Crown's liability under section 19(c), if the term liability is a precise one to apply to the Crown, is only a vicarious one. Consequently, the suppliant must allege facts from which negligence on the part of an officer or servant of the Crown may be found, that is to say, facts showing that the officer or servant of the Crown owed a legal duty, whether imposed by statute or arising otherwise, to the suppliant to take care to avoid injury to him, that there was a breach of such duty while the officer or servant was acting within the scope of his duties or employment and that injury to the suppliant resulted therefrom: vide Lochgelly and Coal Co. v. McMullan; Hay or Bourhill v. Young; The King v. Anthony. |
| The rule that an act of negligence can only be regarded as fault giving rise to liability if it corresponds to a legal duty to act has been recognized by our courts in many situations, inter alia in [1927] S.C.R. 575">Canadian National Railways Co. v. Lepage, [1927] S.C.R. 575, at 578, per Rinfret J.: |
| It is a familiar principle that neglect may, in law, be considered a fault only if it corresponds with a duty to act. [My emphasis.] |
Crown officials' legal duty to act in concluding lease
[53] Adopted pursuant to the Financial Administration Act,12 the Government Contracts Regulations13 indicated the procedure to be followed by government authorities in concluding certain contracts between the Crown, acting through its duly authorized representatives, and litigants.
[54] In the action at bar, since the conclusion of a lease was in question, we must refer to the relevant sections, namely ss. 20 and 21 of the Regulations,14 which read as follows:
| 20. (1) A contracting authority, without the approval of the Treasury Board, may enter into a lease,
| (a) in the case of a lease required in connexion with the administration of the Department of Public Works, where |
| (i) the annual rate calculated on the basis of the amount to be paid under the lease does not exceed fifteen thousand dollars and the term thereof does not exceed five years, or |
| (ii) the annual rate calculated on the basis of the amount to be paid under the lease exceeds fifteen thousand dollars but the total amount to be paid under the lease does not exceed fifteen thousand dollars; or |
| (b) in any other case, where |
| (i) the annual rate calculated on the basis of the amount to be paid under the lease does not exceed five thousand dollars and the term thereof does not exceed five years, or |
| (ii) the annual rate calculated on the basis of the amount to be paid under the lease exceeds five thousand dollars but the total amount to be paid under the lease does not exceed fifteen thousand dollars and the term thereof does not exceed one year. |
|
|
| 20. (1) Une autorité contractante peut, sans l'agrément du Conseil du Trésor, conclure un bail,
| a)dans le cas d'un bail requis relativement à l'administration du ministère des Travaux publics, lorsque : |
| a)le taux annuel calculé en fonction du montant à payer en vertu du bail ne dépasse pas quinze mille dollars et la durée du bail ne dépasse pas cinq ans, ou |
| b)le taux annuel calculé en fonction du montant à payer en vertu du bail dépasse quinze mille dollars mais le montant total en vertu du bail ne dépasse pas quinze mille dollars, ou |
| b) en tout autre cas, lorsque |
| (i)le taux annuel calculé en fonction du montant à payer en vertu du bail ne dépasse pas cinq mille dollars et la durée du bail ne dépasse pas cinq ans, ou |
| ii)le taux annuel calculé en fonction du montant à payer en vertu du bail dépasse cinq mille dollars mais le montant total à payer en vertu du bail ne dépasse pas quinze mille dollars et la durée du bail ne dépasse pas un an. |
|
|
| (2) A contracting authority may, upon the termination of the term of a lease described in subparagraph (i) of paragraph (a) of subsection (1) or subparagraph (i) of paragraph (b) of subsection (1) of any premises, renew the lease or enter into a new lease of those premises, subject to the provisions set out in subsection (1) respecting the amount to be paid under the lease, but in no event, without the approval of the Treasury Board, may the contracting authority remain in continuous possession of the premises for longer than ten years except if each lease of the premises or each renewal of the lease is required in connection with the administration of the Department of Public Words and the amount to be paid under each such lease does not exceed five thousands [sic] dollars per annum.
|
(2) Une autorité contractante peut, à l'expiration de la durée d'un bail prévu au sous-alinéa (i) de l'alinéa (a) du paragraphe (1) ou au sous-alinéa (i) de l'alinéa (b) du paragraphe (1) concernant tous les locaux, renouveler le bail ou conclure un nouveau bail concernant ces locaux, sous réserve des dispositions prévues au paragraphe (1) en ce qui concerne le montant à payer en vertu du bail, mais en aucun cas l'autorité contractante ne peut, sans l'agrément du Conseil du Trésor, rester en possession continue des locaux pour plus de dix ans sauf si chaque bail concernant les locaux ou chaque renouvellement du bail est requis relativement à l'administration du ministère des Travaux publics et si le montant à payer en vertu de chaque semblable bail ne dépasse pas cinq mille dollars par année.
|
| (3) In no event, without the approval of the Treasury Board, may the contracting authority, upon the termination of the term of a lease, described in subparagraph (ii) of paragraph (a) of subsection (1) or subparagraph (ii) of paragraph (b) of subsection (1) of any premises, renew the lease or enter into a new lease of those premises except if the aggregate of amounts payable for possession of the premises under each lease of the premises and each renewal thereof does not exceed fifteen thousand dollars
|
(3) En aucun cas, l'autorité contractante ne peut, sans l'agrément du Conseil du Trésor, renouveler un bail ou conclure un nouveau bail à l'égard des locaux, à l'expiration de la durée du bail, prévu au sous-alinéa (ii) de l'alinéa a) du paragraphe (1) au sous-alinéa (ii) de l'alinéa b) du paragraphe (1), concernant les locaux en question, sauf si l'ensemble des montants à payer pour la possession des locaux en vertu de chaque bail concernant les locaux et chaque renouvellement en l'espèce ne dépasse pas quinze mille dollars.
|
| 21. No contracting authority shall, without the approval of the Treasury Board, enter into a lease of premises intended to be used as living quarters for offices of servants of Her Majesty.
|
21. Aucune autorité contractante ne doit, sans l'agrément du Conseil du Trésor, conclure un bail concernant des locaux devant servir d'habitation à des fonctionnaires ou employés de Sa Majesté.
|
[55] In addition to these Regulations, the Treasury Board at that time also adopted, pursuant to the powers conferred by the 1952 Financial Administration Act,15 an order dealing with the rejection of tenders and the information to be supplied by bidders when the tenders were filed. That order reads as follows:
| Government Contracts - Rejection of Tenders and Information to be Provided at Public Opening of Tenders |
____________________________________________________________________________
| The Board at its meeting of May 21, 1964, decided that the procedure outlined below should be followed regarding (a) the rejection of tenders where bidders have not complied with the security requirements or where specifications have not been met, and (b) information to be given by departments at public opening of tenders. |
| (i) A tender submitted without security, where the furnishing of security is specified in the tender call, should be rejected at tender opening as it is not a tender. [My emphasis.] |
| (ii) A tender submitted with improper security is to be dealt with in the following manner. If the department considers the security to be such that the bid does not qualify as a tender and the tender which is recommended by the department [deletions omitted] would not otherwise require Board approval for entry into the contract, the disqualified tender is not considered a tender and Board approval is not required for entry into the contract. If, under a similar situation, the tender recommended by the department [deletions omitted] requires Board approval for entry into the contract, the submission to the Board should contain a list of bona fide tenders and a separate list showing the bids which the department considers should not be classified as tenders. As regards the latter list, if the bid is lower than the tender recommended by the department, an explanation should be given as to why in the judgment of the department, it is not considered to be a tender. |
| (iii) A tender which does not meet the specifications is to be dealt with in the same manner as a tender submitted with improper security as outlined in (ii) above. For the contracts which require Board approval, an explanation should accompany the list of bids which the department considers are not classified as tenders explaining in what respects the bid, in the judgment of the department, does not meet the specifications and is not acceptable. [My emphasis.] |
| (iv) At the public opening of tenders the general rule to be followed is that only the name and address of the bidder, the amount of the tender and an indication as to whether or not security has been furnished should be given. |
[56] This order is especially important as it directly affects the acceptance of any bid made pursuant to a call of tenders issued by government authorities, whether the call for tenders procedure was imposed by statutory regulation or was used freely by the authorities. It thus has the force of law and imposes a legal duty on Crown officials responsible for applying it in the course of their duties.
[57] In short, therefore, we can conclude from the wording of this order that failure to observe it by officials of the Crown amounted to regulatory fault giving rise to an action under the Act respecting Liability of the Crown for Torts and Civil Salvage, and hence in the case at bar an action in delict and quasi-delict under ss. 1053 et seq. of the Civil Code of Lower Canada.
[58] As well, it is on the basis of this order that the Department of Public Works officials rejected the plaintiff's bid in connection with the project for the leasing of a building to create a postal station at Cartierville, on Montréal Island,16 on the ground that it did not comply with the security deposit requirement.
[59] The defendant submitted that the Crown could not be held liable since the necessary approvals had to be given by the Treasury Board, which cannot be regarded as a servant of the Crown. However, such an argument has not been accepted by the courts, which have found that the Crown could be held liable when an act of [sic] omission by the servant contributed to the Treasury Board approval. As Walsh J. indicated in Nadeau Inc. v. The Queen:17
| Plaintiff's present proceedings cannot therefore be based on the decision of the Treasury Board to award the contract to A. Plamondon & Fils Inc. rather than to itself but must rest on proving fault on the part of Crown servants as such in the recommendations made by them to the Treasury Board on which its decision was based, that not only were the recommendations made false, incomplete or misleading, but that it was as a result of such recommendations that Treasury Board gave its approval, and that but for such recommendations it would have instead have approved plaintiff's tender. This very evidently poses a heavy burden of proof on plaintiff, but in view of the decision of the Court of Appeal, proof of a nature which it is entitled to attempt to make. |
| Article 1053 of the Quebec Civil Code reads as follows: |
. . . . .
| This is not substantially different from common law rules of tort, and plaintiff emphasises that acts of "imprudence" or "neglect" can be sufficient to found an action in damages. Defendant made reference to sections 3(1)(a) and 4(2) of the Crown Liability Act which read respectively as follows: |
. . . . .
| and contended that since no specific allegation of fault was made against any individual Crown servant the present action could not lie against the Crown. I would not go this far in interpreting the limiting provisions of section 4(2) as it would appear to me that liability can still accrue to the Crown for a collective act or omission of a number of servants all of whose acts or omissions contributed, though perhaps in a small way, to the fault complained of which resulted in the recommendation to the Treasury Board which plaintiff complains of as being the cause or origin of the damages. Interpreted in this way there would be no apparent conflict between the provisions of the Crown Liability Act and Article 1053 of the Quebec Civil Code in its application to the facts of this case. |
[60] We indicated above that one of the essential requirements in the order was in fact the filing of security in the form of a sum of money. A second requirement stated that a bid which did not meet the conditions contained in the specifications was to be rejected.
[61] We conclude from the foregoing that in the initial stage officials who in the course of their duties have accepted a bid which is not in accordance with the requirements have committed fault making the Crown liable.
[62] It is interesting to note that over the years there have been few substantial changes in the call for tenders procedure. Quite recently the Supreme Court, in M.J.B. Enterprises Ltd. v. Construction de Défense (1951) Limitée et al.,18 emphasized the importance of complying with the conditions contained in the specifications. A failure to do this will invalidate the bid when it appears from the documents that the bidders must comply:19
| It is clear from the foregoing description of the Instructions to Tenderers and the Tender Form that the invitation for tenders may be characterized as an offer to consider a tender if that tender is valid. An invalid tender would be, as outlined in these documents, one that either was submitted too late, was not submitted on the required Tender Form, altered the Tender Form or did not provide the information requested, did not include the required bid security, had an imbalance in prices, did not comply with the Rules of Practice for sub-trades, or did not conform to the plans and specifications. |
. . . . .
| Therefore, according to the Instructions to Tenderers and the Tender Form, a contractor submitting a tender must submit a valid tender and, in submitting its tender, is not at liberty to negotiate over the terms of the tender documents. Given this, it is reasonable to infer that the respondent would only consider valid tenders. For the respondent to accept a non-compliant bid would be contrary to the express indication in the Instructions to Tenderers that any negotiation of an amendment would have to take place according to the provisions of paragraph 12(b). It is also contrary to the entire tenor of the Tender Form, which was the only form required to be submitted in addition to the bid security, and which does not allow for any modification of the plans and specifications in the tender documents. |
[63] In conclusion, I should observe that in connection with art. 1053 of the Civil Code of Lower Canada, when the requirements for fault had been met it was necessary to prove the existence of damage and of a causal link between the damage and the alleged fault.
[64] However, my jurisdiction in the case at bar is limited to determining the existence of fault. In accordance with the directive issued by Hugessen J. on April 2, 1998, if I come to the conclusion that fault was committed a re-hearing will be held to allow the parties to make representations regarding the damages alleged.
ANALYSIS OF EVIDENCE AND APPLICATION IN CASE AT BAR
- . Applicable stages in acceptance of offer
[65] The plaintiff called Mr. J.A. Laurendeau, an engineer, Regional Director of the Department of Public Works, who was responsible at the time for all Quebec operations. This testimony is especially relevant as it clearly explains the operation of the Department of Public Works and the decision-making process leading to the awarding of government contracts. I therefore accept the major evidentiary value of his testimony on this point. I reproduce a table submitted by the defendant that illustrates the various stages.20
0[66] Essentially, the call for tenders approval procedure may be broken down into five stages, namely:
(1) Stage one: planning and definition of customer's requirements
[67] The first stage is the development of a proposal based on an approved program. In the case at bar the customer department had obtained approval for a program to construct postal stations throughout Quebec. The program planning responsible for identifying and developing the program was done in close collaboration with the customer department.
(2) Stage two: preparation of call for tenders document
[68] Stage two began with the work of a project development officer (the witness Bellemare in the case at bar), who had the responsibility of developing the program approved by the customer department and who had to put on paper a mandate subsequently passed on to the real estate services who were responsible for doing the research and obtaining bids for completion of the project.
[69] The mandate in question refers to the definition of the customer department's requirements, namely the cost of the project, the perimeter within which the premises are to be located, the required size in square feet, the number of parking spaces necessary and the specific requirements regarding traffic around the future site, outside yards and the method of purchase.
[70] The real estate and leasing officer was responsible for preparing the specifications. When these documents were ready and had been approved by the customer department, they could then go ahead with the call for tenders.
[71] After the deadline for filing bids, the tenders received could then be publicly opened.
(3) Stage three: detailed analysis of tenders
[72] When the bids had been opened they were subjected to detailed analysis and technical analysis. At this stage only valid bids, meeting the financial requirements for the filing of security, were passed on to the various persons responsible for examining and comparing the tenders received. Among other things the site proposed was analysed to determine whether the bidder was the owner or had control of the site and whether the customer department's requirements had been met.
[73] A report was submitted to the strategy committee which indicated whether the bid received met the requirements. It also gave information on scheduling and the resulting costs.
| (4) Stage four: recommendation to strategy committee and Treasury Board approval |
[74] The strategy committee subsequently sent its recommendation to the Department of Public Works in Ottawa, which then had to submit the recommended project to the Treasury Board for approval.
[75] When the project had been approved the Treasury Board contacted the Department of Public Works directly, and through the Assistant Deputy Minister for Real Estate the Department had to notify regional offices, and in particular the staff responsible for the project, of Treasury Board approval.
[76] In the case at bar the person responsible for the project then had to send the contractor selected an award letter. It was also at this stage that action was taken to prepare the lease, clarify the customer department's requirements and initiate discussions of the contractor's plans and specifications.
(5) Stage five: implementation of project
[77] The matter then went to the office of the project administrators, namely the study and construction group which was to oversee construction of the project, compliance with scheduling, the obtaining of permits and review of the work to determine acceptance.
[78] Finally, after the final acceptance was given delivery of the premises was then completed.
B. Rejection of plaintiff's offer
[79] The plaintiff was not awarded the project on the ground that the surface area of the building it was proposing did not meet the required area: the required area was 9,780 sq. ft., while the area offered by the latter was 14,108 sq. ft. This being so, the annual leasing rate offered by the plaintiff was thus higher than the other leasing proposal. The evidence was that the other requirements contained in the specifications were met.
[80] It is important to note that the requirements as to area in the call for tenders were the same whether the building was one to be constructed or was an existing building.
[81] The proposal thus did not meet one of the essential conditions laid down, namely the area, and it was properly rejected.
[82] Nonetheless, in view of the issue before the Court, I must also determine whether Belcourt's proposal met the requirements of the call for tenders.
C. Awarding of leasing contract to Belcourt
[83] After reviewing the decision-making procedure in a call for tenders, we saw that determining whether the proposal was consistent with the specifications was done at the stage of the detailed technical analysis of the tenders. This is what Mr. Laurendeau explained in his testimony:21
| Q. Right. What specifically did they do in the way of analysis? |
| A. Well, specifically, the bidder had to be in compliance -- he must have made no qualification in his call . . . in his bid documents. [My emphasis.] |
| Q. In concrete terms, plans, sites, what happened? |
| A. Well, I -- the site was analysed -- we checked whether the bidder was really the owner or at least had control of the site he had. We checked whether the building offered and the land met the customer's requirements. There is a name that is not shown here -- but it was also done together with the customer's representative. [My emphasis.] |
[84] A careful review of the minutes of the meetings of the building committee, consisting of representatives of the customer department, namely the Post Office Department, the Department of Public Works and Belcourt, and of the correspondence between these various entities entered in evidence, indicates that Belcourt's bid also did not meet the requirements of the specifications, primarily as to the net area required.
[85] The minutes dated June 12, 197522 clearly indicate that Belcourt's proposal did not meet the required area since it lacked 300 sq. ft. on the second floor and 900 sq. ft on the work floor. Further, the representative of the Post Office Department, Mr. Laliberté, told the Belcourt architects that where the area was concerned only the requirements contained in the bid specifications had to be met.
[86] In the minutes dated July 3, 1975,23 it was once again mentioned that the required area had never been met, so much so that there was some discussion at that meeting of possibly cancelling the contract awarded to Belcourt.
[87] Also, the telex from Germain Comeau,24 the Department of Public Works architect, dated July 4, 1975 confirmed that the areas had never been met and repeated that the areas were governed by the bid document. Additionally, it clearly mentioned the possibility of taking action if the obligations contained in the bid documents were not performed.
[88] In the case of the plans, it can be seen that significant changes were made to ensure that the latter complied with the specifications, and this was done even after Treasury Board approval was given, namely on November 21, 1974.25 As indicated by the memorandum dated April 11, 1975 from the Regional Director for Quebec,26 it appears that on April 1, 1975 the revised plans proposed by Belcourt had still not been approved by the Post Office Department, to say nothing of the fact that the mechanical plans had not yet been submitted.
[89] According to the letter from the architect and project administrator Germain Comeau dated May 28, 1975,27 no plans had yet been approved.
[90] A letter from Mr. Laliberté to Berthier D'Ambroise, project administrator, dated June 20, 197528 indicates that Belcourt's plans had to be extensively modified, especially regarding the proposed areas.
[91] A telex from Berthier D'Ambroise, project administrator, dated August 22, 197529 indicated that the original plans of March 14, 1975 were cancelled.
[92] A letter to the project administrator Berthier D'Ambroise, dated June 16, 1975,30 indicates that Belcourt acknowledged that its plans dated April 16, 1975 were rejected at the meeting held on June 12, 1975.
[93] A letter to Berthier D'Ambroise, project administrator, from Belcourt on June 20, 197531 confirmed that no plan had yet been approved.
[94] This analysis of the evidence leads the Court to conclude that the surface area required in the specifications was never met, the plans were constantly changed and they were not in keeping with the specifications at the time the project was approved.
[95] I also noted other discrepancies, specifically regarding the size of the yard, the filing of an amended purchase option after a deadline extension was obtained and the fact that the town zoning by-law did not allow a building with only one story; however, considering the importance of the points raised above, there is no need for me to deal with these problems at greater length.
[96] For all these reasons, I conclude that the Crown officials did not perform their obligations to reject any bid that was not in keeping with the requirements contained in the specifications: since this duty was a legal one, as it was imposed by an order adopted pursuant to a regulatory power, it follows that the officials committed fault which could make the Crown liable.
[97] My jurisdiction in the case at bar is limited to this conclusion. However, as we saw earlier, since the existence of fault is only one of the components of tortious liability mentioned in art. 1053 of the Civil Code of Lower Canada, damage must still be proved and there must be a connection between the damage and the alleged fault.
[98] For these reasons, the plaintiff's action in tort is allowed with costs. In accordance with the directive issued by Hugessen J. on April 2, 1998, a re-hearing will be held to allow the parties to make submissions on the alleged damages.
| |
Danièle Tremblay-Lamer
JUDGE
|
OTTAWA, ONTARIO
November 26, 1999
Certified true translation
Bernard Olivier, LL. B.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
| STYLE OF CAUSE: Roger Gauthier Inc. - and - |
Her Majesty the Queen - and -
Belcourt Construction Company
PLACE OF HEARING: Montréal, Quebec
| DATE OF HEARING: June 7, 8, 9, 10, 14, 15, 16, 17, 18 and 23, 1999 |
REASONS FOR ORDER BY: TREMBLAY-LAMER J.
DATED: November 26, 1999
APPEARANCES:
| Irwin I. Liebman FOR THE PLAINTIFF |
Eric Kirshner
| Claude Joyal FOR THE DEFENDANT |
Michel Pépin
SOLICITORS OF RECORD:
Liebman & Associés FOR THE PLAINTIFF
Montréal, Quebec
Morris Rosenberg FOR THE DEFENDANT
Deputy Attorney General of Canada
Ottawa, Ontario
__________________
1 R.S.C. 1970, c. C-38.
2 Exhibit P-36(b).
3 Exhibit P-38(e).
4 [1977] 1 F.C. 541 (F.C.T.D.).
5 Supra, note 1.
6 [1971] S.C.R. 849">[1971] S.C.R. 849.
7 See [1979] 1 S.C.R. 311">Nicholson v. Haldimand-Norfolk Regional Police Commissioners, [1979] 1 S.C.R. 311 and [1980] 1 S.C.R. 602">Martineau v. Matsqui Institution, [1980] 1 S.C.R. 602.
8 Supra, note 1.
9 Supra, note 1.
10 Supra, note 1.
11 [1963] Ex. C.R. 289, at 296 et seq. See to the same effect Perreault v. Canada, [1948] Ex. C.R. 416, Magda v. Canada, [1953] Ex. C.R. 22, Laberge v. Canada, [1954] Ex. C.R. 369 and Meredith v. Canada, [1955] Ex. C.R. 156.
12 R.S.C. 1952, c. 116.
13 SOR/64-390.
14 Government Contracts Regulations, September 23, 1964, SOR/64-390.
15 R.S.C. 1952, c. 116, ss. 5(1), 7 and 39.
16 See case T-1124-76, Roger Gauthier Inc. v. Her Majesty the Queen et al.
17 Supra, note 5, at 544-45.
18 M.J.B. Enterprises Ltd. v. Construction de Défense (1951) Limitée et al., [1999] 1 S.C.R. at 641.
19 Idem, at 639 et seq.
20 Exhibit D-6.
21 Testimony of Joseph Alfred Laurendeau, at p. 54 of transcript of hearing held on June 10, 1999, in case T-1124-76, heard jointly with the case at bar.
22 Exhibit P-75.
23 Exhibit P-76.
24 Exhibit P-79.
25 Exhibit D-45.
26 Exhibit P-76.
27 Exhibit P-72.
28 Exhibit P-87.
29 Exhibit P-91.
30 Exhibit P-84.
31 Exhibit P-85(a).
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