Date: 20040608
Dockets: A-372-03
A-433-03
Citation: 2004 FCA 222
CORAM: STONE J.A.
LÉTOURNEAU J.A.
EVANS J.A.
A-372-03
BETWEEN:
READY JOHN INC.
Applicant
and
DEPARTMENT OF PUBLIC WORKS AND
GOVERNMENT SERVICES CANADA
Respondent
A-433-03
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
READY JOHN INC.
Respondent
Heard at Halifax, Nova Scotia, on April 26, 2004.
Judgment delivered at Ottawa, Ontario, on June 8, 2004.
REASONS FOR JUDGMENT BY: EVANS J.A.
CONCURRED IN BY: STONE J.A.
LÉTOURNEAU J.A.
Date: 20040608
Dockets: A-372-03
A-433-03
Citation: 2004 FCA 222
CORAM: STONE J.A.
LÉTOURNEAU J.A.
EVANS J.A.
A-372-03
BETWEEN:
READY JOHN INC.
Applicant
and
DEPARTMENT OF PUBLIC WORKS AND
GOVERNMENT SERVICES CANADA
Respondent
A-433-03
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
READY JOHN INC.
Respondent
REASONS FOR JUDGMENT
EVANS J.A.
A. INTRODUCTION
[1] These applications for judicial review arise from the award of a contract to supply chemical toilets and hand wash stations to the Department of National Defence ("DND"). The principal issue to be decided is whether the Canadian International Trade Tribunal committed a reviewable error when it held that the contractor had complied with a requirement of the procurement that the contractor have a minimum of 250 chemical toilets in its possession. More particularly, was it patently unreasonable for the Tribunal to conclude that the contractor was in possession of the requisite number of toilets by virtue of an agreement to lease them from a supplier?
[2] In March 2003, Public Works and Government Services Canada ("PWGSC") awarded a standing offer to Plaggenborg's Ltd. to supply and service chemical portable toilets and hand wash stations to the Canadian Forces Base Gagetown, Oromocto, New Brunswick. They were to be supplied on an "on demand" basis over a two year period, starting April 1, 2003.
[3] Ready John Inc., the only other compliant bidder and the holder of previous standing offers to supply chemical toilets to CFB Gagetown, complained to the Tribunal that the award of the contract was invalid because Plaggenborg's bid did not comply with the following mandatory requirement in the Specification for the proposed procurement.
14.1.1 Requirements - Established Quantities
Number of toilets: the contractor is to have in their possession a minimum of 250 units. Toilets will be inspected prior to award.
[4] Ready John complained to the Tribunal under subsection 30.1(11) of theCanadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47, and maintained that Plaggenborg was not in possession of the toilets as required by paragraph 14.1.1, since, when the contract was awarded, Plaggenborg neither owned, nor had in its inventory, the requisite number of toilets.
[5] The Tribunal concluded pursuant to subsection 30.14(1) that the "requirements prescribed in respect of the designated contract" had been "observed". Accordingly, it dismissed the complaint, on the ground that Plaggenborg was in possession of the requisite number of units because it could "control the allocation of units to this procurement." The Tribunal based its conclusion on Plaggenborg's contract to lease toilets from a supplier as required, and on the fact that the supplier had sufficient toilets available to it to meet Plaggenborg's demands.
[6] Despite its dismissal of Plaggenborg's complaint, the Tribunal refused to award the Crown its costs, because of the lack of clarity in paragraph 14.1.1, and because evidence of Plaggenborg's ability to comply was obtained only after the contract was awarded.
[7] Ready John has made an application for judicial review (Court File No. A-372-03) to set aside for patent unreasonableness the Tribunal's dismissal of its complaint. The Attorney General has also made an application for judicial review (Court File No. A-433-03), alleging that the Tribunal's decision not to award costs to the Crown, the winning party, is patently unreasonable.
[8] Having concluded that the Tribunal's decision to dismiss Ready John's complaint should be set aside, I would dismiss the Attorney General's application for judicial review of the decision not to award the Crown its costs.
B. FACTUAL BACKGROUND
[9] For more than twenty years, Ready John held the standing offer to supply CFB Gagetown with chemical toilets and wash stations for use during field exercises by members of the Canadian Forces based at Gagetown ("the Gagetown Forces contract").
[10] Ready John had also held a similar standing offer to supply toilets and wash stations to the Base for use during military exercises by members of other Canadian Forces and of NATO units ("the outside Forces contract"). However, in 2002, Plaggenborg was awarded this contract. The propriety of the award is not in issue in these applications for judicial review.
[11] On January 14, 2003, PWGSC issued a notice of a proposed procurement on behalf of the DND for the supply of chemical toilets and four-person wash stations. On February 18, 2003, six days before the solicitation for the Gagetown Forces contract closed, Ready John wrote to PWGSC to express its concern that, if both contracts were awarded to the same company, the contractor must have 500 toilets "in its inventory".
[12] Plaggenborg was the low compliant bidder for the Gagetown Forces contract, which it was awarded on March 4, 2003. In a letter to PWGSC dated March 14, 2003, Ready John complained that Plaggenborg should not have been awarded the contract because it was not in compliance with paragraph 14.1.1. Instead of having "a minimum inventory of 500 chemical toilets", Plaggenborg had perhaps only 100, together with about another 200 in the inventory of Plaggenborg's "subcontractor", A-1 Portable Toilets Inc. ("A-1").
[13] An official of PWGSC replied on March 31, 2003, stating that a requirement of each standing offer was that the contractor must have a minimum of 250 units in its possession, and that the company that had been awarded both "has legal right to take possession of sufficient units to satisfy the requirements of both standing offers by virtue of an agreement between the company and a supplier of portable toilets."
[14] Before sending this letter, PWGSC had made enquiries to follow up on Ready John's complaint: in particular, it wanted assurance that Plaggenborg had enough toilets for both contracts. DND advised PWGSC that Plaggenborg had the amount of toilets required by the Gagetown Forces contract. It may be inferred from this somewhat cryptic reply that DND was of the view that it was irrelevant that Plaggenborg was also required to have 250 toilets for the outside Forces contract.
[15] DND also attached a letter from the manufacturer "confirming the availability of additional toilets required." The manufacturer's letter, dated February 25, 2003, confirmed that A-1, its consignment dealer, had access to approximately 300 units. In addition, the manufacturer stated, it had another 400 units available in a warehouse in another Province, "should they be needed by any of our customers at short notice." Finally, the letter noted that, starting in May, more toilets would be shipped to both locations.
[16] Despite this assurance, PWGSC wrote directly to Plaggenborg on March 25, 2003. The letter noted that the specifications of both the outside Forces contract and the Gagetown Forces contract required the contractor to have a minimum of 250 toilets in its possession. It asked Plaggenborg to confirm that it had "the legal right to take possession of sufficient units to satisfy the requirements of both standing offers" and to send a copy of its agreement to lease portable toilets from A-1.
[17] Plaggenborg replied by fax on the same day, sending a copy of the agreement to lease and a two-line letter from A-1, also dated March 25, 2003, confirming that, "under current lease arrangements", it had a minimum of 500 toilets at Plaggenborg's "disposal".
[18] The agreement referred to by A-1, and by PWGSC in its reply to Ready John's complaint, was contained in a document dated February 1, 2003, in which A-1 agreed to lease to Plaggenborg, at a specified unit cost per month, sufficient portable toilets that met government specifications as Plaggenborg may require from time to time. Like the Gagetown Forces standing offer itself, this agreement ran for two years, starting April 1, 2003.
[19] A copy of the leasing agreement, together with a similar agreement for the supply of toilets to enable Plaggenborg to perform the outside Forces' contract, had been shown to officials of DND on February 27, 2003, when they met representatives of Plaggenborg and A-1 at the latter's premises in order to verify Plaggenborg's compliance with paragraph 14.1.1.
[20] During the visit, DND officials were also shown a copy of a letter dated February 25, 2003, from the manufacturer of the toilets, confirming that A-1 had access to approximately 300 units. In addition, the manufacturer stated, it had another 400 units available at a location in another Province "should they be needed by any of our customers at short notice."
[21] Later the same day, February 27, 2003, DND reported to PWGSC that it had "conducted a site visit" and was satisfied that Plaggenborg had a "sufficient quantity of equipment to service both [standing offers]."
[22] Ready John filed its complaint with the Tribunal on April 9, 2003, and the Tribunal accepted it for inquiry on April 17. In accordance with its usual practice, the Tribunal concluded that an oral hearing was not necessary, since it could determine the complaint on the basis of the written record.
C. THE TRIBUNAL'S DECISION
[23] The Tribunal identified two issues for decision. First, when evaluating whether Plaggenborg's bid complied with paragraph 14.1.1, was PWGSC obliged to take into account the fact that Plaggenborg was already required by the outside Forces contract to have 250 toilets in its possession? If it was, Plaggenborg would have to be in possession of a total of 500 toilets in order for its bid to comply with paragraph 14.1.1 of the Specification for the Gagetown Forces contract. Second, did Plaggenborg's agreement to lease chemical toilets from A-1, and the manufacturer's assurance of the availability to A-1 of sufficient toilets, satisfy the "possession" requirement of paragraph 14.1.1?
[24] On the first issue, despite the view that it had expressed in the correspondence with DND and Plaggenborg, PWGSC took the position before the Tribunal that the fact that Plaggenborg also held the outside Forces contract was irrelevant to whether it had met paragraph 14.1.1 of the Specification for the Gagetown Forces contract. The Tribunal agreed, saying that the requirements of each procurement must be considered independently.
[25] On the second issue, the Tribunal held that Plaggenborg met the "possession" requirement of paragraph 14.1.1 by demonstrating that it was "able to control the allocation of units to this procurement in the event of an award of the contract." The Tribunal stated that, while the "possession" requirement would be met if the contractor owned the units, "other acceptable means consistent with the dictionary meanings of the word 'possession' exist and may include leasing arrangements or an accepted offer to purchase."
[26] Reviewing the evidence, the Tribunal concluded that the leasing agreement, and the confirmations from A-1 and the manufacturer that A-1 had access to a sufficient supply of chemical toilets, satisfied the requirement in paragraph 14.1.1 that the contractor must have a minimum of 250 units in its possession.
[27] Finally, for reasons that I have already indicated, the Tribunal refused to award costs to the Crown, even though it dismissed Ready John's complaint.
D. ISSUES AND ANALYSIS
1. Common ground
[28] First, the parties agree that the Tribunal's interpretation and application to the facts of paragraph 14.1.1 of the Specification are reviewable on a standard of patent unreasonableness: Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), [2002] 1 F.C. 292, 2001 FCA 241 at paras. 21-23; Seprotech Systems Inc. v. Peacock Inc. (2003), 300 N.R. 277, 2003 FCA 71 at paras. 12-24.
[29] The principal reasons for extending great judicial deference to decisions of the Tribunal on procurement matters are the relative expertise of the Tribunal and the Court in ensuring compliance with procurement documents when no question of general commercial law is in issue, and the need to minimise judicial intervention in the procurement process so that the Government can acquire supply without undue delay. Counsel for Ready John also says that whether Plaggenborg was in possession of the requisite number of toilets prescribed in paragraph 14.1.1 is more a question of its application to particular facts than of its interpretation, and that this is another factor indicative of judicial deference: Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748.
[30] In view of my conclusion that the Tribunal's decision cannot pass the test of patent unreasonableness, I have accepted the submissions of both counsel that this is indeed the applicable standard of review. However, I would note that, to the extent that the question in dispute in this application for judicial review involves the interpretation and application of the word "possession", a concept familiar in many legal contexts, a less deferential standard might have been appropriate. "Possession" is not a term of art peculiar to procurement, although even general legal concepts may take their colour from the specialist context in which they are used and their interpretation may, to an extent, therefore engage the Tribunal's expertise: Ivanhoe Inc. v. UFCW, Local 500, [2001] 2 S.C.R. 565, 2001 SCC 47">2001 SCC 47 at para. 26.
[31] Second, the parties agree that the requirements of paragraph 14.1.1 are mandatory. That is, the award of the contract was invalid if Plaggenborg did not have in its possession a minimum of 250 chemical toilets, and if neither PWGSC nor DND had inspected the toilets before the contract was awarded.
[32] Third, the parties agree that the following statement in Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services Canada) (2000), 260 N.R. 367 at para. 18 (F.C.A.), establishes the importance of compliance with mandatory requirements in procurement documents and the approach to be taken to their interpretation.
Like the Tribunal, this Court recognizes that ensuring compliance by potential suppliers with all mandatory requirements of solicitation documents is one of the cornerstones of the integrity of any tendering system.... I also accept that procuring entities must evaluate a bidder's conformance with mandatory requirements thoroughly and strictly. But this is not to suggest that mandatory requirements should be construed in an isolated and disjunctive manner. As was held in R.E.D. Electronics Inc., [1995] C.I.T.T. No. 44 at 5, they should "be interpreted as a whole with consideration of the overall purpose and objectives of the [Request for Proposal]".
Issue 1: Was it patently unreasonable for the Tribunal to conclude that the fact that Plaggenborg had been awarded the outside Forces contract was irrelevant to whether it satisfied paragraph 14.1.1?
[33] It was argued that the Tribunal erred in concluding that Plaggenborg only had to have a minimum of 250 toilets in its possession in order to qualify for the Gagetown Forces contract, even though it was also required to have 250 units in its possession under the outside Forces contract.
[34] The Tribunal held that, when PWGSC was evaluating the bids and determining whether paragraph 14.1.1 of the Specification for the Gagetown Forces contract was met, any obligations that the contractor might have under another contract should be disregarded.
[35] In my opinion, the Tribunal's interpretation of paragraph 14.1.1 could be characterized as unduly literal or mechanical, and insufficiently attentive to its underlying rationale. Nonetheless, in view of the language of the paragraph, the Tribunal's interpretation is not patently unreasonable.
Issue 2: Did PWGSC or DND satisfy the inspection requirement in paragraph 14.1.1?
[36] Paragraph 14.1.1 provides: "Toilets will be inspected prior to award." Counsel for Ready John argued that officials from neither PWGSC nor DND inspected the toilets as required by this provision and that, since inspection is a mandatory requirement, the award of the contract to Plaggenborg was invalid.
[37] The Tribunal did not deal explicitly with this issue, perhaps because it was not mentioned in Ready John's complaint and was only raised somewhat obliquely in its response to the Government Institution Report filed with the Tribunal by PWGSC in reply to the complaint. Nonetheless, the Tribunal noted that, before the contract was awarded, DND officials had met with representatives of Plaggenborg and A-1 at the latter's premises on February 27, 2003, for the purpose of verifying Plaggenborg's ability to comply with paragraph 14.1.1. The Tribunal also found that, at this meeting, Plaggenborg explained to the DND officials its leasing arrangement with A-1 and that, after the award of the contract, "a confidential letter from DND to PWGSC confirmed that Plaggenborg had the number of units required to meet the requirements of the procurement."
[38] This might have been a sufficient evidential basis for the Tribunal to have concluded that an inspection occurred for the purpose of paragraph 14.1.1. Counsel conceded that the inspection provision did not require that each and every unit be scrutinised for quantity and quality, nor that all 250 toilets had to be on the contractor's premises in order for the required number of units to be in its possession. Indeed, since the duty to inspect is contained in a paragraph of the specifications headed "Established Quantities", and with the introductory words, "Number of Toilets", I doubt whether the scope of the inspection required by paragraph 14.1.1 extended beyond an assessment of whether the numerical requirement was met.
[39] However, in view of my conclusion that the Tribunal erred in concluding that Plaggenborg satisfied the "possession" requirement, I need not decide if the decision should be set aside for a failure by PWGSC or DND to inspect in accordance with paragraph 14.1.1.
Issue 3: Was it patently unreasonable for the Tribunal to conclude that Plaggenborg had 250 chemical toilets "in their possession"?
(i) the meanings of "possession"
[40] The Tribunal made two observations about the meaning of possession in paragraph 14.1.1. First, for a contractor to have the requisite number of toilets in its possession, it "must be able to control the allocation to the procurement", even though it does not own them: ownership is not necessary for possession and "the dictionary meanings" of possession may be satisfied by other means, including "leasing arrangements or an accepted offer to purchase."
[41] In order to decide whether the Tribunal's decision that Plaggenborg complied with paragraph 14.1.1 is so obviously unsupportable as to be patently unreasonable, it is first necessary to determine the meaning of possession in this context. For this purpose, I shall consider both the ordinary and legal meanings of possession, and the indications of its meaning provided by the context of the Specification.
(a) dictionary and general legal meanings
[42] The Tribunal was on firm ground when it concluded that a person may be in possession of something, even though they do not own it. The most pertinent definitions of possession in the New Shorter Oxford English Dictionary are: "the action or fact of holding or having something ... in one's control; actual holding ..." and, in law, "visible power or control over a thing".
[43] The French text of the Specification was not before the Court. However, a letter on PWGSC letterhead attached to the notice of proposed procurement which included the Specification, stated: "le fournisseur retenu droit posséder au minimum 250 toilettes chimiques ... " "Posséder" has very similar meanings to "possess". The English text of the letter, however, differed from paragraph 14.1.1 itself, in that it used the word, "available", not "possess".
[44] When used in legal contexts in connection with chattels, the core meaning of possession is the physical control of a thing and often, but not necessarily, exclusive control. Thus, Black's Law Dictionary, 7th ed. (St. Paul: West Group, 1999) defines "possession" as: "The fact of having property in one's power"; ... "The right under which one may exercise control over something to the exclusion of all others; the continuing exercise of a claim to the exclusive use of a material object."
[45] Whether a person is in possession of property may depend upon the kind of property over which possession is claimed and on the particular legal context in which the determination must be made. Thus, while physical control lies at the core of the meaning of possession, a person who has the practical means of controlling something and preventing others from interfering with it may have possession of it: see, for example, Morrison (Committee of) v. Cormier Vegetation Control Ltd. (1996), 32 C.I.T.T. 209 (B.C. C.A.) at 215 (delivery of keys to a car in a parking lot). In some contexts, a legal right to assume immediate control of something may also be sufficient for a person to be in possession of it: United States of America and Republic of France v. Dollfus Meig et Cie. S.A. and Bank of England, [1952] A.C. 582 at 605; Halsbury's Laws of England, 4th ed., vol. 35 (London: Butterworths, 1980) at para. 1211.
[46] Possession expresses a relationship between an individual and a particular piece of property, not generic goods of a given description. Thus, as applied to tangible personal property, it connotes control, often exclusive of others, or the legal right to assume control. Whether a person has sufficient control over a particular chattel to have it "in their possession" for the purpose of a legal rule is a question of mixed fact and law.
[47] In my opinion, the requirement of control makes possession a narrower concept than that of access or availability. Suppose, for example, that PWGSC had solicited bids to supply and service equipment that could normally be purchased at a hardware store, and required the contractor to have in its possession a specified number of units. The fact that the contractor could be confident of readily purchasing the requisite number of units, as and when required, would not mean that the units were in the possession of the contractor prior to their purchase.
(b) "Possession" for the purpose of paragraph 14.1.1
[48] The general purpose of paragraph 14.1.1 is to ensure that, when DND orders the delivery to CFB Gagetown of a specified number of chemical toilets, the contractor will be able to perform in accordance with the terms of the standing offer. Paragraph 13 of the Specification provides that the contractor will provide service "on demand when requested by the engineer"; the contractor will not refuse a call for service, which must be provided with "a minimum of delay". I interpret "service" as including the delivery of chemical toilets.
[49] The inspection requirement in paragraph 14.1.1 may also suggest that, before the contract is awarded, the contractor must be able to identify the toilets that it intends to use to fulfil its obligations under the standing order. How else can toilets be inspected? On the other hand, the Specification does not provide that the toilets be on the premises of the contractor at that time.
[50] Finally, I would note that Ready John informed the Tribunal that, when it held the two contracts for the supply of chemical toilets to CFB Gagetown, DND had required Ready John to have the minimum number of units "physically on site in its inventory for count and inspection purposes." Indeed, Ready John has invested in purchasing more than the minimum number of units to satisfy both standing offers. However, the evidential value of this to the interpretation of paragraph 14.1.1 is reduced by the fact that past practice is not determinative of present compliance and we do not have before us adequate evidence of the terms of the previous standing offers.
(ii) When must the requirement of "possession" be met?
[51] The Tribunal did not explicitly consider in its reasons when the contractor must have a minimum of 250 toilets in its possession. The terms of the Specification do not answer this question. Three possibilities occur to me, although there may well be others.
[52] First, the requirement must be met immediately prior to or on the award of the standing offer. This is supported by the second sentence of paragraph 14.1.1 which states that toilets will be inspected prior to the award, presumably in part at least to ensure that the contractor has enough.
[53] Second, the contractor must have a minimum of 250 toilets in its possession, both when the contract is awarded and for its duration. This is supported by the fact that, in referring to the "contractor", not "bidder", paragraph 14.1.1 appears to contemplate an obligation that continues after the award of the contract. In contrast to the temporal indeterminacy of the "possession" requirement, the second sentence in paragraph 14.1.1 specifies precisely the time at which toilets will be inspected, namely, prior to the award of the contract. Moreover, an interpretation of the Specification that only requires the contract holder to be in possession of the minimum number of units on the award of the contract would not effectively serve the purpose of paragraph 14.1.1, namely, ensuring that the contractor can meet requests for chemical toilets made over the life of the standing offer.
[54] Third, the nature of a two-year standing offer is such that not all 250 units will necessarily be required at the same time; consequently, there is little point in requiring a contractor to be in possession of the minimum number when the contract is awarded. It would be enough that, immediately prior to, or on the award of the contract, the contractor established that it would be able to take possession of at least 250 toilets at short notice, at any time during the life of the contract.
[55] However, this latter interpretation is difficult to square with the words of paragraph 14.1.1. Moreover, the fact that the Specification calls for a minimum of 250 units suggests that more than that may be needed on the Base at any one time in order to meet demand.
[56] On the question of timing, the Tribunal seems to have been of the view that Plaggenborg complied with paragraph 14.1.1 because it was in possession of the minimum number of toilets immediately prior to and, as it happened, soon after the contract was awarded. It was not unreasonable for the Tribunal to have concluded that these were the times at which a contractor had to be in possession of the prescribed number of units.
(iii) applying the "possession" requirement to the facts
[57] The Tribunal based its conclusion that Plaggenborg was in possession of a minimum of 250 units when the contract was awarded (in the sense that the contractor had the ability to "control the allocation of the units to the procurement") by virtue of Plaggenborg's agreement to lease toilets from its supplier, A-1, in such numbers as Plaggenborg might require from time to time. The Tribunal also relied on Plaggenborg's assurance that A-1 had "obtained a secure supply of units, which it could also use to meet its leasing obligations to Plaggenborg."
[58] The Tribunal does not expressly define the scope of the contractual obligations created by the agreement to lease. However, it seems to have thought that the agreement obliged A-1 to lease to Plaggenborg as many toilets as Plaggenborg needed. On this view, A-1 would be in breach of the agreement if it did not have enough to fill Plaggenborg's order. The Tribunal did not say that the leasing agreement related to any particular units to which A-1 had access or that it obligated A-1 to put them aside exclusively for the use of Plaggenborg. In contrast, the additional units that the manufacturer had in its warehouse in another Province were clearly not reserved for either Plaggenborg or A-1, since they were available for any of the manufacturer's customers at short notice.
(iv) conclusions
[59] The Tribunal equated "possession" with the de facto ability of Plaggenborg to ensure, at the time that the contract was awarded, that it was able to allocate sufficient units to the procurement. I take the Tribunal to have meant by this that Plaggenborg would be able to obtain for delivery, on demand and without delay, as many units as the Base required.
[60] Whether, for the purpose of paragraph 14.1.1, Plaggenborg had 250 toilets in its possession when the contract was awarded depends on the degree of control that Plaggenborg had over at least 250 units at that time. This involves deciding on which side of a notoriously imprecise line the facts fall, and is not a question on which the Court should be tempted to second guess the Tribunal. However, the public interest in maintaining the integrity and fairness of the procurement process means that the Court cannot abandon the field either.
[61] Patent unreasonableness is agreed by counsel to be the standard of review for determining whether the Tribunal made a reviewable error in its interpretation and application of paragraph 14.1.1. This is a very difficult standard for an applicant to satisfy: it requires that it must be immediately obvious to the reviewing Court that the Tribunal's decision cannot be rationally supported in light of the applicable statutory provision and the evidence. Nonetheless, I have come to the conclusion that, assuming patent unreasonableness to be the appropriate standard of review, the Tribunal's decision in this case is not rationally supportable and that, in my respectful opinion, the defect in its reasoning is sufficiently obvious and immediate as to make the decision patently unreasonable.
[62] First, the Tribunal misdirected the inquiry when it equated "possession" in the context paragraph 14.1.1 with an ability on the part of the contractor to "control the allocation of units to this procurement". This is an unduly amorphous formulation of what is required for possession. It does not focus on Plaggenborg's relationship with respect to particular goods and fails to address the key question: did Plaggenborg have 250 chemical toilets in its de facto control when the contract was awarded, or did it have the legal right to assume such control?
[63] Second, the Tribunal based its conclusion that Plaggenborg was in possession of the requisite number of units on the contract between Plaggenborg and A-1. The Tribunal seems to have been of the view that, since possession could be acquired as a result of "leasing arrangements", and since Plaggenborg had a contract with A-1 to lease toilets, it was well on its way to proving that it was in possession of toilets which, when ordered, would be delivered without delay.
[64] The error in this reasoning is that it equates the lease of a particular chattel with an agreement to lease at some future date an unspecified number of goods of a generic description.
[65] A lessee may be found to be in possession of leased goods for the purpose of, for example, being able to recover the goods if they were wrongfully taken, or detained, by a third party or even, during the term of the lease, by their owner. In contrast, Plaggenborg's contract did not give it the legal right to take from A-1 the number of toilets required to meet a demand by Gagetown. The only remedy for non-performance by A-1 was an action by Plaggenborg to recover damages for breach of contract. In entering into the contract to lease, Plaggenborg was both attempting to ensure that it would be able to deliver the number of units that Gagetown ordered and, in effect, purchasing from A-1 protection against possible financial liability in the event that it could not obtain sufficient toilets to meet an order.
[66] Third, the Tribunal also based its decision on the evidence that, having secured a reliable source of supply, A-1 would in fact be able to perform its contract to lease units to Plaggenborg. However, this alone cannot satisfy the requirement that the contractor must have at least 250 toilets in its possession when the contract is awarded.
[67] The Specification does not stipulate that the contractor must simply be able to acquire sufficient units at short notice. Suppose, for example, that a contractor established that unlimited quantities of chemical toilets were always available for hire from a plumbing depot. In my opinion, this would not support a conclusion that the contractor was therefore in possession of them before they had been purchased. While the purpose of paragraph 14.1.1 is to ensure a reliable and prompt supply of toilets, the particular manner in which the Specification sought to achieve it (that is, through the requirement of possession) cannot be ignored.
E. CONCLUSIONS
[68] For these reasons, I would allow Ready John's application for judicial review with costs, set aside the Tribunal's decision dismissing the complaint, and remit the matter to the Tribunal for redetermination in accordance with these reasons.
[69] Since I have concluded that the Tribunal erred in dismissing the complaint, its refusal to award the Crown its costs cannot be impugned. Accordingly, I would dismiss the Crown's application for judicial review, with costs.
"John M. Evans"
J.A.
"I agree
A.J. Stone J.A."
"I agree
Gilles Létourneau J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKETS: A-372-03 & A-433-03
STYLE OF CAUSE: Ready John Inc. v. Department of Public Works and Government Services Canada
Attorney General of Canada v. Ready John Inc.
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: April 26, 2004
REASONS FOR JUDGMENT BY: Evans J.A.
CONCURRED IN BY: Stone and Létourneau JJ.A.
DATED: June 8, 2004
APPEARANCES:
SOLICITORS OF RECORD:
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