Date:
20130715
Docket:
A-373-11
Citation: 2013 FCA 183
CORAM: SHARLOW
J.A.
DAWSON J.A.
TRUDEL
J.A.
BETWEEN:
TPG
TECHNOLOGY CONSULTING LTD.
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
REASONS
FOR JUDGMENT
SHARLOW J.A.
[1]
In
2008, the appellant TPG Technology Consulting Ltd. commenced an action against
the federal government for damages relating to a procurement of engineering and
technical support services. In 2010, the Crown moved for summary dismissal of
the claim. The Crown’s motion was granted by a judge of the Federal Court (2011
FC 1054). TPG now appeals to this Court, fundamentally on the basis that the
judge misapplied the test for summary judgment. For the following reasons, I
agree with TPG and I would allow this appeal.
Summary
judgment in the Federal Court
[2]
In
the Federal Court, summary judgment is governed by Rules 213 to 215 of the Federal
Courts Rules, SOR/98-106, which are fully set out in the appendix to these
reasons.
[3]
Summary
judgment is a tool for balancing two competing considerations in the management
of court resources in the resolution of civil disputes. One consideration is
that a trial is expensive in terms of time and money, not only for the
litigants but also for the courts which are publicly funded. The competing
consideration is that the sound resolution of a legal dispute is more likely to
emerge from a trial than a summary proceeding where there are important factual
disputes that cannot be resolved without determining questions of credibility
and the inferences to be drawn from conflicting evidence. Generally, a judge
who hears and observes witnesses giving evidence orally in chief and under cross-examination
is in a better position to assess credibility and to draw inferences than a
judge who must depend solely on affidavits and documentary evidence. Summary
judgment recognizes that the expenditure of the resources required for a trial
is warranted only if there is a genuine issue for trial.
[4]
The
burden on a plaintiff responding to a motion for summary dismissal of a claim
is not, and is not intended to be, as onerous as the plaintiff’s burden in a
trial. It is an evidentiary burden only. The question for the judge on a
summary judgment motion is whether the plaintiff has met the “evidentiary
burden to put forward evidence showing that there is a genuine issue for trial”
(per Justice Sexton, writing for this Court in MacNeil Estate v. Canada
(Department of Indian and Northern Affairs), [2004] 3 F.C.R. 3, 2004 FCA
50, at paragraph 25, citing what was then Rule 215 and is now Rule 214).
Factual
background
[5]
TPG’s
claim against the Crown for damages relates to a 2006 request for proposals for
a contract with the Crown for engineering and technical services. The proposed
contract was intended to replace an existing contract expiring in December of
2007. The estimated value of the new contract was approximately $428 million.
The contract in place in 2006 was held by TPG which had, since 1999, supplied
the required services through numerous subcontractors (referred to as
“resources” in the terminology used in the request for proposals). Three bids
for the contract were accepted as compliant. One was from TPG. Another was from
TPG’s competitor, CGI Information Systems and Management Consultants. In 2007,
the contract was awarded to CGI. The TPG bid proposed the lowest price, but the
CGI bid was successful because it was awarded more points on the technical evaluation.
[6]
In
2008, TPG commenced this action for damages for breach of contract, inducing
breach of contract by TPG’s subcontractors, intentional interference with TPG’s
economic interests, and negligence. The claims relate primarily to allegations
relating to the evaluation of the bids. In March of 2010, the Crown filed a
motion for summary judgment dismissing the action. It appears that by the time
the motion was heard in March of 2011, the matter had proceeded to the point
where examinations for discovery were substantially complete.
[7]
After
reviewing a large body of documentary evidence and considering submissions made
in a lengthy hearing, the judge granted the motion for summary dismissal. I
summarize as follows what appear to me to be the three key conclusions that led
the judge to decide as he did:
(a) TPG
asserts a claim for breach of contract based on an allegation of bias in the
bid evaluation process, and an allegation that the evaluations were
inexplicably changed at some point to the disadvantage of TPG. Those claims are
supported by no evidence that is sufficiently probative to warrant a trial.
(b) TPG’s
claim for breach of contract is also based on allegations of certain acts by
federal government officials in relation to the transition from TPG to CGI. The
transition occurred after the contract was awarded to CGI. As a matter of law,
events that occur during the transition cannot form the basis of a claim by TPG
for breach of contract because, according to Double N Earthmovers Ltd. v.
Edmonton (City), 2007 SCC 3, [2007] 1 S.C.R. 116, all contractual obligations
that the federal government owed to TPG were discharged once the contract was
awarded to CGI.
(c) The
claims in tort (for inducing breach of contract, for unlawful interference with
economic interests, and for negligence) are based on the allegation that
federal government officials participated with CGI in leading TPG’s
subcontractors to breach their contracts with TPG in order to work for CGI
after it won the bid. There is no evidence that is capable of supporting that
allegation.
Analysis
[8]
In
my respectful view, the judge misapplied the summary judgment rule. I reach
that conclusion for a number of reasons, as explained below.
The principal
claim – damages for breach of contract
[9]
The
judge’s description of TPG’s claim for damages for breach of contract in
relation to the bid evaluation process refers to allegations of bias and
inexplicable changes to the evaluations. However, that is not a complete
description. The complaint in substance is that the bids were not fairly
evaluated. Although the Crown adduced considerable evidence in an attempt to
establish the integrity of the evaluation process, that evidence did not
squarely answer all questions about the fairness of the bid evaluations.
[10]
I
will illustrate this point by one example: the documents that refer to the
evaluation of the bids in respect of sections 3.3.3 and 3.3.5 of the request
for proposals. Those provisions deal with performance and service level
metrics. TPG alleges, and the Crown does not deny, that the scoring of those
provisions was of critical importance in the final ranking of the bids. If they
were unfairly evaluated, it is probable that the entire bid was unfairly
evaluated.
[11]
The
record discloses some evidence of confusion on the part of the evaluation team
about the meaning of sections 3.3.3 and 3.3.5 and how they ought to be scored,
which indicates a controversy about their correct interpretation. It is not
denied that there was some confusion in that regard in the course of the
evaluation process.
[12]
More
importantly, however, there is evidence that could support the allegation of
TPG that the final scoring of those items is not reasonably justifiable. I
refer to the report of James Over, who provided the following opinion in
support of TPG’s opposition to the Crown’s summary judgment motion (Appeal
Book, Tab 93):
The issues that arise from the
actual scoring results of sections 3.3.3 and 3.3.5 of the RFP, include:
• CGI had 100
(87%) of 115 items accepted in section 3.3.3 and all 50 items submitted in
section 3.3.5 were accepted, this appears to be a remarkable performance to
achieve a 90% overall acceptance rate while the next best performance was a
mere 53.5%.
• Meanwhile
TPG, the incumbent service provider for the previous 7 years, who has been
collecting most of the proposed metrics and measurements, which were available
to ITSB [the federal government] achieves an unbelievably low 16.7% overall
acceptance rate.
• With such
an unbelievable variance between CGI’s evaluation performance and TPG’s results
it should be apparent that the above two situations (3.3.3 and 3.3.5) would
certainly require substantial documented justification on how the evaluation
process could credibly arrive at the consensus results above. This has not been
provided.
[13]
The
Crown referred this Court to no document in the record that addresses the
criticisms stated by Mr. Over in this report. That is not to say that his
criticisms are well founded, or that they cannot be answered. However, applying
the correct legal test for summary judgment, the only reasonable conclusion, in
my view, is that there is sufficient evidence to establish the existence of a
genuine issue for trial on the allegation of an unfair bid evaluation.
Whether
Double N bars the claim for damages for breach of contract
[14]
The
judge concluded that the principle in the Double N case bars the claim
of TPG for breach of contract to the extent it is based on events that occurred
during the transition from TPG to CGI. In my respectful view, that conclusion
is based on a misapprehension of TPG’s claim. Before explaining why I reached
that conclusion, I will set out the analytical framework applied in Double N
(that is, the Contract A/Contract B framework developed in the jurisprudence on
contract bids), and I will summarize the Double N decision.
[15]
A
request for the tender of bids for a contract (which, in the case of a
procurement by the federal government, is a request for proposals) is an offer
by the requesting party to consider the bids tendered and to enter into a
contract with the party whose bid is accepted. A bidder accepts that offer by
tendering a compliant bid. This gives rise to a completed contract – Contract A
– the terms of which are governed by the documents comprising the request for
the tender of bids. The submission of a compliant bid is also an offer to the
requesting party to enter into another contract, Contract B. When a compliant
bid is accepted, the tender documents and the bid documents are the terms of
Contract B.
[16]
The
issue in Double N was whether an unsuccessful bidder for a contract with
the City of Edmonton was entitled to damages for breach of Contract A when the
City, having called for tenders for equipment that was “1980 or newer”,
permitted the winning bidder to supply an item of equipment that was
manufactured in 1979.
[17]
The
Supreme Court of Canada held, by a majority of 5 to 4, that (1) the winning bid
was compliant even though its description of the equipment was ambiguous as to
the date of manufacture, and (2) the City did not breach any contractual
obligation under Contract A when it permitted the winning bidder, after
Contract B was in place, to supply equipment manufactured prior to 1980. The
obligation of the City under Contract A was to evaluate all compliant bids
fairly and then to enter into Contract B on the terms set out in the tender
documents. Once that was done, Contract A was fully performed and the City had
no further obligations under it. Contract B is a separate contract to which
unsuccessful bidders are not privy.
[18]
Under
the Contract A/Contract B analytical framework, Contract A is breached if a non‑compliant
bid is accepted. Therefore, a claim for damages based on an allegation that a
non‑compliant bid was accepted is not barred by the principle in Double
N. As I understand the argument of TPG, that is the nature of the claim
asserted in this case. Specifically, TPG is alleging that the Crown breached
the provision in the request for proposals to the effect that the successful
bidder would be deemed to have certified that each of its proposed resources
(the individuals who would actually do the contracted work) was either an
employee of the bidder, an individual who had consented to be named as a
resource, or an individual whose employer had so consented.
[19]
According
to TPG’s interpretation of the relevant provisions in the request for
proposals, a bid is non-compliant unless, when the bid is submitted, each of
the bidder’s proposed resources is either an employee of the bidder, an
individual who had consented to be named as a resource, or an individual whose
employer had so consented. This necessarily implies, in TPG’s submission, that
a bid is non-compliant if the bidder proposes to rely on incumbent resources
(that is, the resources of TPG) for whom consents do not exist and cannot be
obtained. The Crown does not agree with that interpretation of the provision.
[20]
The
Court was referred to a number of provisions in the request for proposals and
related documents that are said to assist in defining the bidder’s obligation
to establish that if awarded the contract it will have the resources to perform
the services required by the contract. However, in my view the contractual
documents are ambiguous on that point, and therefore the merits of TPG’s proposed
interpretation cannot be determined in the absence of a full evidentiary
record. That is sufficient to establish the existence of a trial issue on a
fundamental aspect of TPG’s claim.
[21]
At
the hearing of the appeal, the Crown argued that the statement of claim does
not include an allegation of a breach of Contract A. In response to the Crown’s
objection, TPG referred the Court to paragraph 71 of the relevant pleadings,
the Amended Amended Statement of Claim. Paragraph 71 is not a model of clear
pleading, but in my view it is a sufficient answer to the Crown’s argument. It
reads as follows:
71. Notwithstanding the above terms of contract A,
the [Crown] knew in September 2006, as a result of its review of the bids, that
CGI’s bid was premised on recruiting many or most of [TPG’s] subcontractors,
rather than offering CGI’s own resources to provide the required services. For
this reason, even before the [Crown] awarded the [contract] to CGI, the [Crown]
had concerns about the risk involved in an award to CGI. The risk identified by
the [Crown] was that CGI might not be able to recruit the incumbent resources
because the incumbent resources were known to be under contract to [TPG] at the
time. The [Crown] nonetheless proceeded to award the [contract] to CGI.
[22]
As
I understand paragraph 71, read in the context of the other allegations, TPG is
alleging that the Crown knew when the contract was awarded to CGI that (a) CGI
had made its bid on the premise that if it was awarded the contract, it planned
to recruit TPG’s incumbent resources, and (b) CGI might not be able to recruit
incumbent resources. This is reasonably consistent with the argument of TPG
that the Crown knew, or had the means of knowing, that the CGI bid was
non-complaint when submitted because CGI had not obtained the consents
necessary to recruit TPG’s incumbent resources.
[23]
In
the circumstances of this case, it seems to me arguable that it makes no
difference that some of the evidence upon which TPG relies to prove the breach
of Contract A relates to events that occurred during the transition phase. TPG
is relying on CGI’s post-award recruitment of incumbent resources to establish
that the bid of CGI was not compliant when submitted. In my view, Double N
does not necessarily bar a claim for breach of Contract A merely because the
breach is proved in part by evidence of events that occurred after the contract
was awarded.
[24]
I
conclude that the Crown’s summary judgment motion should have been dismissed in
relation to TPG’s claim for breach of Contract A.
Other
claims for damages in contract and tort
[25]
As
indicated above, TPG alleges that CGI recruited TPG’s subcontractors after CGI
was awarded the contract. That is the basis of TPG’s claim for damages against
the Crown for inducing breach of the contracts between TPG and its incumbent
resources.
[26]
Based
on the material to which the Crown was referred in argument, this appears to be
a relatively weak claim. If the claim for breach of Contract A succeeds, then
CGI’s recruitment of TPG’s incumbent resources may not increase TPG’s claim for
damages. On the other hand, if the claim for breach of Contract A fails, there
may be nothing left of the claim for inducing breach of contract. However,
since the factual foundation of both claims is the same and will involve the
same evidence, there is no practical reason at this stage not to let both
claims continue to trial.
[27]
The
claims in tort appear to be substantially weaker than the claims in contract,
but they too are based largely on the same factual allegations. If the record
as it now stands represents all of the evidence adduced at trial, these claims
are unlikely to succeed. However, given that they are inextricably linked to
the claims in contract, I see no practical reason at this stage not to permit
them to continue to trial if TPG is so advised.
Conclusion
[28]
For
these reasons, I would allow the appeal with costs and set aside the judgment
of the Federal Court. Making the order that should have been made by the
Federal Court, I would dismiss the Crown’s motion for summary judgment and
dismissal of the action, with costs payable in any event of the cause.
“K. Sharlow”
“I
agree
Eleanor R. Dawson J.A.”
“I
agree
Johanne Trudel J.A.”
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