Monit International Inc. v. Canada, 2004 FC 75

                                                                                                                                  Date: 20040120

                                                                                                                               Docket: T-878-93

Citation: 2004 FC 75

Ottawa, Ontario, Tuesday, January 20, 2004

PRESENT: THE HONOURABLE MR. JUSTICE BEAUDRY

BETWEEN:

MONIT INTERNATIONAL INC.

Plaintiff

and

HER MAJESTY THE QUEEN

Defendant

                                    REASONS FOR JUDGMENT AND JUDGMENT

A.         INTRODUCTION

1                     Monit International Inc. (Monit) is claiming $106 million in damages from the defendant. From 1974 to 1996, the International Civil Aviation Organization (ICAO), a United Nations agency, was a tenant in the plaintiff's building situated at 1000 Sherbrooke Street West in Montréal. Monit alleges that in 1992, in the course of negotiations to extend the rental through a short-term lease, and two calls for tender they made with a view to signing a long-term lease, the representatives of Public Works Canada (PWC) breached their duties of collaboration, information, equity, good faith, diligence or commercial fair play towards the plaintiff.

2                     Canada, as a host country for the ICAO, is responsible for finding accommodation for the organization. The Department of Foreign Affairs (DFA), the government's representative, instructs PWC to make recommendations.

3                     In December 1991, realizing that the 20-year lease executed with PWC was to expire in 1994, Monit made a proposal with the intention of executing another long-term lease. PWC rejected this proposal but asked and agreed that the lease be extended to 1996.

4                     In May 1992, PWC published a call for tenders to execute a long-term lease with a lessor. Monit submitted an offer. PWC subsequently decided to cancel this call for tenders and made a second one in September 1992. Monit made a second submission, which was rejected. In the end, the Westcliff company was retained to construct a building at 999 Université Street in Montréal. ICAO's head office is now located at that address.

5                     On April 26, 2001, upon consent of the parties, Prothonotary Morneau made an order stating that the damages would be determined once liability had been established:

[translation] The Court orders that the issue of the damages purportedly suffered by the plaintiff in this proceeding be addressed by way of a reference to a judge or another person designated by the Associate Chief Justice once the issue of liability has been determined following a trial, costs in the cause to follow.

6                     The trial lasted 48 days, including a tour of the premises. Twenty-three witnesses were heard and the parties filed 1,189 exhibits totalling about 25,000 pages.

7                     To facilitate the reading of these reasons, an index can be found in Schedule 1.

B.         ISSUES

8                     The parties jointly formulated three issues. The plaintiff proposed a further 16, either ancillary or complementary, while the defendant submitted six additional ones, including one main issue and five underlying ones.

9                     In my analysis, I discuss three distinct periods:

(a)         the period preceding the first call for tenders;

(b)         the first call for tenders;

(c)         the second call for tenders.

10                 In my opinion, the issues in dispute are the following:

(a)         during the period preceding the first call for tenders, and during the first call for tenders and the second call for tenders, did the government and its representatives have a duty of fairness, good faith or diligence to the plaintiff?

(b)         if so, did the government and its representatives breach this duty of fairness, good faith or diligence to the plaintiff?

(c)         if so, did the government, in doing so, incur liability to the plaintiff?

(d)         did the defendant or any of its departments or representatives conspire to ensure that the ICAO would not remain in the Monit building?

(e)         during the period preceding the first call for tenders, did the defendant make misrepresentations to Monit concerning its intentions to renew the leases on a long-term basis or did the defendant breach its duty to act in good faith?

(f)          did Monit know, or should it have known very early in the process, that PWC would consider more than one option and that consequently the long-term renewal of the leases was not guaranteed in any way?

(g)         during the period of the first call for tenders, was the proposal made by Monit carefully, equitably and impartially evaluated by the defendant?

(h)         during the period of the second call for tenders, was Monit's proposal carefully, equitably and impartially evaluated by the defendant?

(i)          during the period of the second call for tenders, did the defendant act in accordance with its duty of good faith towards everyone?

11                 The answers to these questions are found in the conclusion of the decision (see paragraph [353] at page 90).

C.         FACTUAL CONTEXT

(1)         GENERAL

(a)         History of the building

12                 In 1974, the owners of 1000 Sherbrooke Street West executed a 20-year lease with the ICAO. Two five-year renewal options were provided at the end of this lease. In 1983, the plaintiff purchased the building.

(b)         Who is Monit?

13                 Monit, a renowned family-owned company, has been operating for fifty years or so and owns a number of prestigious buildings in Montréal. The ICAO is its biggest tenant.

(c)         Picard Report

14                 The Picard Report, published in 1986, recommended that the City of Montréal acquire an international presence by creating a Cité internationale. Accordingly, the Société du centre de conférences internationales de Montréal (SCCIM) was founded. In 1990, the federal government, the provincial government, the City of Montréal and the private sector agreed to fund some studies with a view to developing a proposal for an International Conference Centre (exhibit 987). As a result of this project, it was expected that the ICAO could be offered new premises at the end of the lease in 1994.

(2)         CHRONOLOGY OF DISCUSSIONS AND CALLS FOR TENDERS BETWEEN MONIT AND PWC

(a)         In 1991

15                 In April 1991, Monit announced to the Canadian government that it was prepared to begin negotiating a long-term lease to continue to house the ICAO when its lease ended. In May 1991, Monit's president, Barry Kotler, met with the PWC representative, Avrum Miller. In a letter by Mr. Miller confirming the particulars of the meeting, he indicated that Monit wished to negotiate a long-term lease but did not seem prepared to sell its building. Notwithstanding, Mr. Miller asked Monit to provide him with some approximate prices, without prejudice, for the purchase of its building in November 1992 and November 1994. Mr. Miller eventually confirmed that Mr. Kotler was not in favour of a short-term extension of the lease ending in 1994 (exhibit 173).

16                 The minutes of a meeting held at Monit's offices on November 29, 1991 (exhibit 995) reveal that its architect presented a report to PWC for renovating the building and meeting the ICAO's long-term requirements. The minutes report that Mr. Miller took the opportunity to explain the major scenarios that were being contemplated at this time by PWC:

(a)         leasing from Monit from 1994 to 2029;

(b)         purchasing the Monit building and renovating the premises;

(c)         publishing a call for tenders to lease a new building from another lessor;

(d)         the construction by the government of a building meeting the ICAO's needs.

17                 He mentioned as well that PWC had received no fewer than four unsolicited proposals regarding the relocation of the ICAO.

18                 On December 12, 1991 (exhibit 279), Mr. Miller, referring to a letter sent on December 2, 1991, asked Mr. Kotler to provide him with a financial proposal for a 35-year lease no later than December 16, failing which PWC would make its own estimates that could prove to be higher than Monit's, and thereby put it at a disadvantage.

(b)         Monit's proposal of December 19, 1991

19                 On December 19, 1991 (exhibit 288), Monit sent its proposal, which amounted to $143,998,295. This represented the discounted net value of a 35-year lease (exhibit 287). During a telephone conversation the next day, Mr. Miller told Mr. Kotler that this proposal was too high and asked him to review his figures (exhibit 997). Monit then sent another letter, dated December 19, with a price this time of $134,871,007 (exhibit 287). At page 8 of this letter, Mr. Kotler explained that this proposal was only a business proposition, sent for analytical purposes only, and that it was not binding on Monit. An internal memorandum from Monit, dated January 21, 1992, referred to a conversation with Mr. Miller during which he said he had no instructions to negotiate a long-term lease with Monit and that he could not, therefore, make any offer binding on the government (exhibit 999).

(c)         Letter of February 12, 1992 - Request for extension of a short-term lease (exhibit 340)

20                 On behalf of his client, Mr. Miller asked Monit to extend the lease from November 1, 1994 to April 30, 1996 and to include two additional renewal options of six months each while retaining the two five-year options already provided in the original lease. Mr. Miller notified Monit that should it refuse, PWC would continue to look at other long-term solutions for the ICAO.

21                 On February 27, 1992, Mr. Kotler acquiesced in PWC's request and gave it until June 30 to confirm its acceptance of the lease extension. In his letter, he again stated that Monit preferred to execute a long-term agreement and that it was prepared to begin the renovations forthwith (exhibit 355). On April 7, 1992, the newspaper La Presse published an article entitled "[translation] ICAO might move to WTC" (World Trade Centre of Montreal, a building belonging to another promoter) (exhibit 385).

(d)         First call for tenders - June 1992

22                 In May, PWC announced in the newspapers that it was seeking bids for leases with a duration of 20 to 35 years for the purpose of relocating the ICAO on or before May 1, 1996. The proposals were to be received no later than June 15, 1992.

(e)         Proposals received

23                 As of the date provided, PWC had received 14 proposals from nine different promoters. Among these was Monit's bid for a lease from November 1, 1994 (exhibit 443). The proposals were evaluated from June 15 to 26, 1992, and a report was presented to the ICAO. On June 29, PWC agreed on behalf of the government to an extension of the lease for 18 months and the two six-month renewal options with Monit (exhibit 480).

(f)         Monit proposal not considered

24                 On July 7, 1992 (exhibit 489), Mr. Miller wrote to Mr. Kotler to inform him that the Monit proposal of June 15, 1992 would not be considered. Two reasons were cited. First, it had been decided to remain in its building until April 30, 1996, and Monit had only made a proposal for a lease commencing November 1, 1994. Second, it was a question of costs: the less onerous proposals were those in which the lease commenced May 1, 1996.

(g)         Second call for tenders - September 1992

25                 During the summer, PWC decided to cancel the first call for tenders because all of the proposals had been disqualified and Monit's had not been adopted. It was then decided to make a second call for tenders. This time, only those who had made proposals on June 15, 1992 were invited to participate.

26                 The new process was set in motion. A mandatory tour of the Monit building was organized for all the participants and some individual meetings were scheduled to inform each of them of the strengths and weaknesses of their initial proposal. This second call for tenders included some new categories of requirements and divided the process into two phases. To pass the technical phase, the participants had to obtain a minimum of 70% in each of the categories. Those who passed the first phase could then go on to the second phase, the financial one. Some questions and answers were prepared to help each participant clearly understand the estimate. Some addenda were sent to correct, clarify or revoke certain provisions.

27                 After receiving the proposals, including Monit's, PWC sent some requests for clarification to the proponents. Each submitted its replies no later than December 31, 1992. The proposals were evaluated during the first two weeks of January 1993.

28                 Of the ten proposals received, three passed the first phase. The promoters who were entitled to present a financial proposal were Pomerleau for one site, and Westcliff for two sites.

29                 On March 24, 1993 (exhibit 773), Monit received a letter from PWC informing it that its proposal was disqualified. It had failed to obtain 70% in the following categories: architecture, security, engineering and functionality.

30                 On April 19, 1993, Monit decided to commence this suit for damages. Nevertheless, the company's president wrote to the Minister of Public Works on the 29th and proposed to him a 35-year lease on the same terms and conditions as those provided in the lease ending in 1994. He also undertook to spend 15 million dollars to renovate his building to meet the ICAO requirements (exhibit 804). He sent a letter to all MPs, ministers and the Canadian prime minister explaining the situation.

31                 On May 5, 1993, the Minister of Public Works replied to Monit's president that he would not intervene in the process. The proponents who had passed the first phase had submitted financial proposals and PWC was now evaluating them (exhibit 812).

32                 PWC subsequently chose the proposal that it considered best, the one from the Westcliff firm. Recommendations along these lines were made to the ICAO Board and Assembly, which accepted them, and Treasury Board approved the transaction. A contract was accordingly awarded to Westcliff for the construction of a new building for the ICAO.

33                 On March 29, 1994, PWC exercised one of the six-month renewal options provided in the original lease extension contract executed with Monit.

D.         PARTIES' SUBMISSIONS

(1)         THE PLAINTIFF

34                 The plaintiff agrees that it must prove a fault, damages and a causal relationship. On the facts, PWC committed a number of faults in relation to Monit between 1990 and 1992. One should bear in mind that the ICAO was occupying 85% of its building in 1991 and 1992. During those years, the recession was ravaging the Montréal area, and the building rental industry in particular. PWC was not unaware that a move by the ICAO would have disastrous financial consequences for Monit. An excellent relationship had been established over the years between the ICAO and Monit through the "leases management" committee. Monit had indicated clearly to PWC that it was anticipating confidential negotiations in good faith. PWC had been doing business with Monit for a very long time, so there were some contractual undertakings.

(a)         The law

(i)          Legal context

(A)        Applicable law - Resort to provincial law

35                 The general rule, which is consequent on the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 provisions incorporating laws between subject and subject, is that in tort actions against the federal Crown, provincial actions governing actions between subject and subject apply (Paul Lordon, Crown Law (Toronto: Butterworths, 1991), at p. 369).

36                 "Unless indicated otherwise, ... no document other than the Civil Code shall serve as ordinary law, in private law, in the federal legislation applicable to Quebec." (St-Hilaire v. Canada (Attorney General), [2001] 4 F.C. 289 (C.A.), at paragraph 39. This principle is also found in the Federal Law-Civil Law Harmonization Act, No. 1, S.C. 2001, c. 4.

(B)        Transitional law

37                 Because the facts in this litigation occurred prior to 1994, it is the Civil Code of Lower Canada (C.C.L.C.) that applies. The previous jurisprudence in such matters was codified with the coming into force of the Civil Code of Québec (C.C.Q.) in 1994.

(C)        Nature of the proceeding

38                 Irrespective of whether the liability is in contract or in tort, the duties and obligations are the same ([1981] 1 S.C.R. 578">Wabasso Ltd. v. National Drying Machinery Co., [1981] 1 S.C.R. 578, at page 590.

(D)        Value of common law precedents

39                 Citing cases and authorities, the plaintiff argues that not all common law concepts apply in the Quebec civil law (Wabasso, supra).

40                 The plaintiff asks that I distance myself from the judgment in Martel Buildings Ltd. v. Canada, [2000] 2 S.C.R. 860, since it involved an Ontario case. For example, the duty to negotiate in good faith does not appear to be recognized in that case, while it has long been recognized in the Quebec civilian doctrine (B. Lefebvre, La bonne foi dans la formation du contrat (Éditions Yvon Blais, 1998), at pages 114 and 117). Furthermore, N. Rafferty criticizes the Supreme Court's approach on this issue in "Developments in Contract and Tort Law: the 2000-2001 Term", (2001), 15 S.C.L.R. (2d) 173, at page 196.

41                 Another example has to do with the right to compensation for purely economic loss, a concept unknown to the common law. The Quebec civil law has consistently held that this type of harm ought to be compensated, the plaintiff argues (D. Jutras, "Civil Law and Pure Economic Loss: What are we missing?" (1986-87) 12 Can. Bus. L.J. 295).

42                 In short, the common law principles that are incompatible with the civil law in this important judgment of the Supreme Court should not apply here.

(E)        Burden of proof

43                 The burden of proof is on the plaintiff, on a balance of probabilities. However, the plaintiff may use presumptions of fact or of law to alleviate its burden.

44                 The Quebec courts favour the rule that a party cannot profit from its refusal to provide evidence that is within its knowledge. "[translation] In civil matters, where the objective is the search for the truth, a party may not profit from its refusal to provide elements within its reach that are necessary to resolve the litigation." (Kahn v. Toronto-Dominion Bank, [1997] R.R.A. 50, at pages 56 and 57 (Que. C.A.))

(b)         Wrongful conduct prior to the calls for tenders

(i)          Good faith

(A)        Crown liability

45                 In contractual matters, the civil law rules govern relations between the Crown and individuals. Good faith, a universal principle, applies to both natural persons and corporate bodies.

(B)        General comments

46                 The Supreme Court has sanctioned the duty to act in good faith (Houle v. Canadian National Bank, [1990] 3 S.C.R. 122, at page 145).

47                 The duty to act in good faith may be breached notwithstanding a lack of evidence of malice or malicious intention (G.D.G. Environnement Ltée v. Zoecon Canada inc., J.E. 93-1255 (S.C.); J.-L. Baudouin and P.-G. Jobin, Les obligations, 5th ed. (Éditions Yvon Blais, 1998), at page 111).

48                 This duty of good faith is expressed in such standards of conduct as loyalty, collaboration and sharing of information (Lefebvre, supra, at pages 91 and 166).

(C)        Good faith in negotiations

49                 Good faith should inspire all legal acts at all times. (Lefebvre and Baudouin, supra).

(ii)         Breakdown in talks: source of liability

(A)        Principle

50                 The parties are no longer third parties when they enter into negotiations. Certain obligations arise in such situations: breaches of these obligations are sources of liability. The duty to negotiate in good faith is recognized by the Quebec courts (Hôtel de l'aéroport de Mirabel inc. v. Aéroports de Montréal, [2002] R.J.Q. 1721 (S.C.), upheld by (2003) J.E. 2003-1606 (C.A.)).

51                 Once a partner has been led to believe that an agreement will be reached, negotiations should not be broken off without justification (Cie France Film inc. v. Imax Corp., J.E. 2002-5 (C.A.)).

(B)        Particular context of the lease

52                 The plaintiff argues that the law has evolved. Initially, the emphasis was placed on the freedom to contract. Some decisions now rule against a party to a lease who, in good faith, refuses to negotiate its renewal. "[translation] In Quebec civil law, however, it is necessary to negotiate... agreements in uberrima fide." (Hôtel de l'aéroport de Mirabel inc., supra).

(C)        Unacceptable conduct

53                 The duty to negotiate in good faith prohibits a party from becoming involved in a process of negotiations either knowing that it will lead nowhere or for other purposes. While, as a general rule, good faith does not require that parallel negotiations be disclosed, there are however some extremely important exceptions, including the necessity to inform a co-contractor who believes the negotiations are unique or who asks a question in this regard (Lefebvre, supra, at pages 144 and 145).

54                 To determine whether a breakdown is unreasonable, certain factual items should be analyzed: the length of the negotiations, the nature of the documentation exchanged, and the capacity of the parties. The existence of prior business relations plays a preponderant role, as this increases the degree of trust (Lefebvre, supra, at pages 117 and 118).

(D)        Nature of the liability

55                 The failure to negotiate attracts extracontractual liability. Irrespective of whether the proceeding is in contract or in tort, the duties and obligations are the same.

(iii)        Breach of the obligation to inform

(A)        General comments

56                 The victim of a breach of an obligation to inform may choose the remedy it prefers: it may proceed by way of an action in nullity or by an action in damages (Giovest inc. v. Place Brossard inc., [2000] R.D.I. 192 at page 196 (Que. C.A.)). There is an obligation to inform in commercial lease matters (Gestion Solvic ltée v. Amusement Daniel inc., J.E. 96-298 at page 11 (S.C.)).

(B)        Parameters of the obligation to inform

57                 The tests in relation to the obligation to inform were laid down by the Supreme Court in Bank of Montreal v. Bail Ltée, [1992] 2 S.C.R. 554 at page 586: knowledge of the information, whether actual or presumed, by the party which owes the obligation to inform; the fact that the information in question is of decisive importance; and the fact that it is impossible for the party to whom the duty to inform is owed to inform itself, or that the creditor is legitimately relying on the debtor of the obligation.

58                 This obligation may be lessened by the obligation a party has to inform itself. However, the information must be accessible. The expertise of the parties may also be a consideration.

59                 The duty to inform oneself may also be ousted by the trust that has been established between the parties.

60                 It has been held that this trust may be increased by the fact that one is negotiating with the government (Grandmont et Fils Ltée v. Québec (Procureur général), [1996] R.J.Q. 1290 (S.C.)). The plaintiff alleges that PWC was in a privileged position and should have disclosed to Monit the possibility that the ICAO would move to other accommodations, as it was hard for Monit to agree in full knowledge to the short-term renewal of the original lease.

(iv)        Appropriation of confidential information

61                 Because there is an obligation to inform, it is common for the parties to exchange information that may often be of a private or confidential nature. Two types of wrongful conduct may then arise: on the one hand, where a party is negotiating only for the purpose of obtaining private information; on the other hand, where a party uses such information ill-advisedly or to benefit a third party (Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574).

(c)         Wrongful conduct during calls for tenders

(i)          Nature of the call for tenders

62                 The recourse to the call for tenders process demonstrates the government's desire to award contracts with transparency and impartiality (P. Issalys and D. Lemieux, L'action gouvernementale, 2nd ed. (Éditions Yvon Blais, 2002), at page 1016).

(ii)         Foundation: equality of bidders

63                 Inherent to this process is the principle of equality of bidders. Good faith must always be present, as a number of decisions of the Quebec Court of Appeal have held (Pavage L. Métivier inc. v. Beauport (Ville de), 2002 BE-960 (C.A.) at page 2 and Entreprises Bon Conseil ltée v. Hydro-Québec, REJB 2002-32248 at page 1 (C.A.)).

(iii)        Duty to act with fairness and transparency

64                 The courts rule against public agencies that do not disclose all relevant information (Voltelec Inc. v. Corp. de l'hôpital Saint-Charles Borromée Inc., J.E. 90-1490 at page 18 (S.C.), [1990] A.Q. No. 1448 (S.C.) (QL), upheld by [1995] A.Q. No. 314 (C.A) (QL). This duty to inform is especially important where there are previous relationships.

(iv)        Duty to accept a complying bid

65                 Notwithstanding the presence of a reserve clause (or "privilege clause"), the Supreme Court has held that the government has an obligation to contract with a compliant bidder (M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619). This principle applies in civil law (9071-8214 Québec inc. v. Roch Lessard 2000 inc., REJB 2001-25544 (Que. C.A.) at pages 2 and 3).

(v)         A bona fide fault brings about liability

66                 Ignorance, even in good faith, by the author of the rules pertaining to the call for proposals ought to be penalized (J. P. Doyon ltée v. Trois-Rivières (Ville de), J.E. 96-2014 (S.C.) at page 6 and Bau-Québec ltée v. Sainte-Julie (Ville de), [1999] R.J.Q. 2650 at page 2654 (C.A.).

(vi)        Initial call for tenders: the refusal to negotiate constitutes fault

67                 Following the initial call for tenders, all the proposals except Monit's were disqualified. A government guideline provided that in the event that only one proposal were to fulfill the requirements, the government should negotiate with that bidder (page 9, excerpts from exhibit 1185A, Policies and Guidelines).

68                 Although the guideline does not have the same force as the regulations, it is nonetheless a "rule of conduct". A breach of this rule is attributable to its author ((M. Tancelin, Des obligations: actes et responsabilités, Wilson & Lafleur, 1997 at page 316). The guideline must be taken into consideration in the assessment of what constitutes reasonable conduct. The plaintiff argues that when someone has relied on a guideline, that guideline may be set up against the authority. This concurs with the theory of reasonable expectation developed in administrative law. Moreover, in the case of calls for tenders, the courts have held that guidelines are relevant considerations (Yves Germain Construction inc. v. Hydro-Québec, J.E. 2000-1658 (C.A.)).

69                 The duty to negotiate is one such usage in similar matters, and failure to comply with this usage may constitute a fault (article 1457 C.C.Q. and article 1053 C.C.L.C.).

70                 The wholesale rejection of all bids must be allowed only on reasonable grounds. Although the existence of excessively high bids may constitute a reasonable ground, in this case Monit had not adopted a firm position since it had previously, on numerous occasions, demonstrated its intention to negotiate downwards the prices it had proposed.

71                 The courts penalize authorities who use calls for tenders to promote a particular solution or who determine the outcome of the competition from the outset of the process (The Queen v. Wilfrid Nadeau Inc., [1973] F.C. 1045, at page 1046 (C.A.)).

(vii)       Second call for tenders

(A)        Amendment of criteria

72                 As a rule, the courts refuse to interfere in the analysis of the criteria unless the evidence demonstrates an advantage to a particular bidder. The following are to be considered: (1) the factors used were not relevant to the objective of the procedure; (2) the factors used were not known to the bidders; (3) the evaluators acted in an unfair or discriminatory manner or in bad faith in their evaluation of the bids; (4) the result amounts to gross negligence or a miscarriage of justice (P. Giroux, C. Moffet, M.-C. Belleau and D. Lemieux, Contrats des organismes publics québécois, Publications CCH/FM (looseleaf), section 7-7701 at page 1193).

(B)        Amendment of contract

73                 Since what was involved was a contract with the government, the amendments to the contract had to keep within the limitations of the contractual authority (P. Lemieux, "Les récents développements en matière de contrats de l'administration" (1986) 16 R.D.U.S. 541 at page 570). The courts accept later amendments that are minor or incidental. However, there is no presumption that an amendment is minor. Fault in the attribution of the contract may be inferred where the rejected bidders' proposals that were considered non-compliant are replicated by the winning bidder (Tuyauterie Caribou Inc. v. Hôpital Louis-H. Lafontaine, J.E. 98-607 (S.C.) at page 6, upheld REJB 2001-25347 (C.A.)).

74                 Fault may also be inferred where the rejection of the bid is not accompanied by any explanation. The courts do not accept that administrative authorities alter the rules during the call for tenders or after the fact.

75                 The Quebec Court of Appeal ruled that a subsequent grant could not be awarded to the chosen bidder because no provision had been made for it in either the terms and conditions of the call for tenders or in the bid (Cité de St-Romuald d'Etchemin v. S.A.F. Construction Inc., [1974] C.A. 411 (Que. C.A.).

(2)         THE DEFENDANT

76                 Citing a number of paragraphs in the amended statement of claim, the defendant points to unjustified allegations of conspiracy, injustice and inequity raised by Monit. The defendant also notes that the plaintiff is complaining that the defendant hid some documents from it.

77                 According to the defendant, huge efforts were made to convey about 20,000 pages of documents to the plaintiff. Although the plaintiff availed itself of the Access to Information Act, R.S.C. 1985, c. A-1, it did not use any document in addition to those supplied.

78                 The defendant performed its obligations notwithstanding its right to confidentiality in regard to certain documents. Moreover, it waived its privilege regarding some documents.

79                 It pleads as well that a number of witnesses, some even from outside the country, were called to the witness stand to demonstrate that the harsh accusations against the defendant were unfounded.

80                 The burden of proof is on the plaintiff, and it has failed to discharge it and must suffer the consequences of the dismissal of its suit.

(a)         Applicable law

81                 The awarding of contracts by the Crown through calls for tender pertains to public and administrative law, and the common law jurisprudence applies here. The defendant cites a number of authorities, and in particular Madam Justice Thérèse Rousseau-Houle, Les contrats de construction en droit public et privé (Montréal: Wilson & Lafleur, 1982).

(b)         Obligations applicable prior to the calls for tenders process

82                 Good faith is presumed and a preponderance of evidence must be presented to rebut that presumption.

83                 A party has no obligation to enter into negotiations with another party and the defendant therefore had no obligation to negotiate with the plaintiff.

84                 A distinction must be made between the obligation to negotiate in good faith and the obligation to negotiate. There is no obligation to negotiate until the talks are securely under way (Lefebvre, supra, at pages 114 to 120).

85                 Discussions or negotiations with a view to renewing a lease cannot force the parties to execute a contract. In any event, the obligation to negotiate in good faith and not to break off negotiations unreasonably was complied with in this case. In support, the defendant cites a number of authors as well as the decision in Paul v. Vancouver International Airport Authority (2000), B.L.R. (3d) 135 (B.C.S.C.).

86                 Presenting a bid in the context of a call for tenders constitutes a waiver or a plea in bar to any right that is claimed on the basis of previous relations (Affiliated F.M. Insurance Co. v. Symons General Insurance Co., [1990] R.J.Q. 2421 (C.A.); Gabias v. Mainville (1922), 33 B.R. 32 (Que. C.A.); Stevenson v. Brique Champlain Ltée, [1943] B.R. 196 (Que. C.A.); E.R. v. A.T., [2001] R.J.Q. 691 (S.C.); J.C. v. B.V., [2001] R.J.Q. 1051 (S.C.); Robichaud v. Panneton, [1989] R.J.Q. 1267 (S.C.)).

87                 The obligation to inform does not extend to information that the co-contractor has already or to which it may have access by applying due care and diligence. (J.L. Baudouin and P.G. Jobin, Les obligations, 5th ed. (Éditions Yvon Blais, 1998), at pages 314 and 315; Lefebvre, supra, at pages 171 to 175; Canada v. Covex, J.E. 98-198 (S.C.); Paul v. Vancouver International Airport Authority, supra; Hughes Land Co. v. Manitoba (Minister of Government Services (1991), 72 Man. R. (2d) 215 (Q.B.)).

(c)         Principles applicable to calls for tender

88                 The tendering document may give its author great discretion in the evaluation of the submissions, provided that it respects the duty to treat all bidders fairly and on an equal footing (Martel, supra).

89                 The tendering sponsor has some discretion in determining the compliance of the bids and it is not the court's job to substitute its evaluation for that of the evaluator, absent evidence of bad faith or a manifest lack of objectivity by the evaluator (Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services) (1995), 90 F.T.R. 214 (F.C.T.D.), upheld by [1995] 2 F.C. 694 (C.A.); Halifax Shipyard Ltd. v. Canada (Minister of Public Works and Government Services) (1996), 113 F.T.R. 58 (F.C.T.D.)).

90                 A tendering sponsor who negotiates with only one of the bidders violates the principle of equality of bidders (J. Pineau and S. Gaudet, Théorie des obligations, 5th ed. (Éditions Thémis, 2001), at page 76; G.P. Allard, "Les droits des autres soumissionnaires and la modification du contrat administratif" (1996), 10 R.J.E.U.L. at page 109; A. Langlois, L'adjudication des contrats municipaux par voie de soumissions, 2nd ed. (Éditions Thémis, 1994), at pages 173 to 175; P. Giroux, L. Moffet and D. Lemieux, Contrats des organismes publics québécois (Publ. C.C.H., No. 5-450)).

91                 A reserve clause under which neither the lowest bid nor any bid will necessarily be accepted means that the tendering sponsor is not bound to accept the lowest complying bid (Martel, supra; M.J.B. Entreprises v. Defence Construction, supra; Bau-Québec ltée v. Sainte-Julie (Ville de), supra).

92                 The tendering sponsor is not bound to allow a bidder to provide an explanation or to be heard (Lapointe v. A.M.A.R.C., [1992] R.J.Q. 1321 (S.C.); Northeast Marine Services v. Atlantic Pilotage Authority, [1995] 2 F.C. 132 (C.A.); Halifax Shipyard Ltd. v. Canada, supra; Cegeco Construction Ltée v. Ouimet, [1991] F.C.J. No. 1144 (F.C.T.D.) (QL)).

93                 The tendering sponsor may request clarifications in order to clear up any ambiguities (Gestion Complexe Cousineau (1989) Inc. v. Canada, supra; Assn. des pêcheurs propriétaires des Îles-de-la-Madeleine v. Canada, [1996] F.C.J. No. 113 (T.D.) (QL).

94                 A government guideline does not have force of law and cannot create rights in favour of third parties (M. Filion, "Le pouvoir discrétionnaire de l'administration exercé sous forme de normes administratives: les directives", (1979) 20 C. de D. 855 at pages 867, 889 and 892;            P. Garant, Droit administratif , volume 1, 4th ed. (Éditions Yvon Blais, 1996), at pages 395 and 396; R. Dussault and L. Borgeat, Administrative Law: A Treatise, vol. 1, 2nd ed. (Toronto: Carswell, 1985), at pages 329 to 340).

95                 The lowest bid may be rejected if its price is too high (Bernier Lecomte inc. v. Verdun (Ville de), J.E. 2002-1551 (S.C.)).

96                 With reasonable justification, a tendering sponsor may reject all bids and issue a second call for tenders. Such reasonable justifications may include the excessive price of the bids received, the need to correct some ambiguity in the tendering documents or an amendment in the terms of the call for tenders (Beauchesne v. Bécancour (Ville de), J.E. 84-631 (C.A.); Community Enterprises Limited v. La corporation de la Ville d'Acton Vale, [1970] C.A. 747 (Que. C.A.); J.R. Proulx et fils inc. v. Municipalité du village de Baie-Trinité, 98BE-526 (C.S. Qué.); Boless inc. v. Université du Québec to Hull, J.E. 92-1746 (S.C.); Centre Routier inc. v. St-Luc de Matane (Corp. municipale de la paroisse de), J.E. 92-513 (S.C.); Lepage v. Visitation-de-la-Bienheureuse-Vierge-Marie, J.E. 83-29 (S.C.); La Compagnie d'assurances du Québec v. La Ville de Charlesbourg, J.E. 83-568 (S.C.); Transport Déchex Inc. v. Saint-Hubert (Ville de), J.E. 82-855 (S.C.); Fontaine et Fils inc. v. Ville de Ste-Hyacinthe (1979), 11 M.P.L.R. 51; Glenview Corporation v. Canada (Ministre des Travaux publics) (1990), 34 F.T.R. 292 (F.C.T.D.)).

97                 The filing of a bid on a second call for tenders constitutes a waiver of any alleged claim based on the first call for tenders (Les Entreprises d'électricité Adamik Inc., v. Les Constructions Sicor Inc., (December 8, 1992), 500-05-000379-907 (S.C.); Lavigueur v. Municipalité de Ste-Clothilde de Chateauguay, (November 10, 1989), 760-05-000477-891 (S.C.); Jourdain v. Grand-mère (Corp. de la Ville de), J.E. 83-328 (S.C.); Tétreault et Frères Ltée v. Les Commissaires d'écoles pour la municipalité de la cité de Lachine, (February 26, 1969), 597, 470 (S.C.).

98                 The principal may make amendments to the contract. A fortiori, the principal may do so when a clause in the call for tenders so provides (P. Lemieux, Les contrats de l'administration fédérale, provinciale et municipale, R.D.U.S., 1981 at pages 280, 281 and 291; Rousseau-Houle, supra, at page 260; [1978] 1 S.C.R. 1107">Adricon Ltée v. Town of East Angus, [1978] 1 S.C.R. 1107; Whistler Service Park Ltd. v. Whistler (Resort Municipality), [1990] B.C.J. No. 1546 (B.C.S.C.) (QL).

(d)         Causal relation

99                 A bidder who disputes the award of the contract must prove on a balance of probabilities that it would have obtained the contract if the tendering sponsor had not committed a fault (Toitures Quatre-Saisons inc. v. Casiloc Inc., J.E. 2003-1195 (S.C.); Bernier Lecomte inc. v. Ville de Verdun, supra; Hypertec Systèmes inc. v. Commission scolaire de La Capitale, J.E. 2001-1446 (S.C.); Chauffage Moderne (1977) inc. v. Réfrigération Noël Inc., (May 8, 1995), 150-05-000175-929 (S.C.); 142710 Canada Inc. v. Construction Canvar inc., J.E. 93-517 (S.C.); Bilodeau Électrique Ltée v. Santerre Électrique inc., (October 26, 1989), 655-05-000035-873 (S.C.); Acier D.C.L. Inc. v. Construction D. Leblanc Inc., (January 22, 1987), 700-02-001968-859 (P.C.).

(e)         Evidence

100             The Crown's privileges under the Canada Evidence Act, R.S.C., c. C-5, have their rationale (J.-C. Royer, La preuve civile, 2nd ed. (Éditions Yvon Blais, 1995), at Nos. 1066 to 1098; J. Sopinka, The Law of Evidence in Canada, 2nd ed. (Butterworths, 1999), at Nos. 15.10 and 15.11; Goguen v. Gibson, [1983] 2 F.C. 463 (C.A.); Kevork v. Canada, [1984] 2 F.C. 753 (T.D.)).

(f)         Defendant's submissions concerning the conspiracy alleged by Monit

(i)          General context

(A)        Canadian government

101             It is necessary to bear in mind the reality of government, i.e. the complexity of the numerous government departments that often leads to decisions that must be weighed in light of each department's mission.

(B)        ICAO

102             The ICAO is an independent agency that does not report to any particular state authority. Canada handles its accommodation and a number of government departments, including PWC and DFA, participate in this task.

(C)        Search for options by DFA and its agent, PWC

103             Relying on the testimony of Messrs. Noble, Duguay, Miller and Kotler, and on certain exhibits that were filed, the defendant argues that it acted with professionalism and integrity, and that both it and its representatives are above reproach.

(g)         Calls for tenders

(i)          First call for tenders issued May 5, 1992

104             The defendant explains why PWC decided to proceed with a call for tenders.

105             The defendant draws attention to the Martel judgment, supra, in support of its argument that PWC did not need to consider its previous relationship with Monit.

106             The defendant argues that Monit understood very well the requirements of the call for tenders and was well aware that from a security standpoint, its building had some architectural problems.

107             The defendant considers its representatives kept to the specifications. The reservations of rights in that document are similar to those at issue in Martel, supra. The financial analysis by Will Young, an external consultant, for Avrum Miller shows that the proposals with a lease that would begin on May 1, 1996, were the most advantageous to PWC. Since Monit had submitted only a proposal for November 1994, PWC was justified in not considering it, in spite of the fact that it was technically in compliance. Furthermore, PWC had no obligation to negotiate with the plaintiff.

108             Given that none of the proposals was acceptable, PWC rightly terminated the call for tenders process and issued a new one in order to obtain some improved proposals.

109             The defendant argues that technical conformity was not a condition of qualification. The passing mark in each category was 70%. Some passing marks for security were given by default since most of the proposals did not qualify prior to the addition of a standardization factor. Nor should the marks awarded on the first call for tenders be compared with those awarded on the second, the defendant says.

(ii)         Second call for tenders issued September 17, 1992

110             Only those bidders who had made proposals on the first call for tenders were invited to participate in the second call for tenders.

111             The fact that Monit participated in the process on the second call for tenders and filed a bid on November 15, 1992, the defendant argues, amounts to an implied waiver of all the rights it might have held following the first call for tenders. The defendant pleads estoppel or a plea in bar.

112             The purpose of the individual meeting between Monit and PWC on September 29 was to help it get through the first phase and go on to the financial stage. The two sets of minutes of this meeting, PWC's and Monit's, confirm that Monit did not obtain a go-ahead to the second stage, as Monit's vice-president, Mr. Cuccioletta, claims. Exhaustive discussions were held on security matters, enabling Monit to prepare its bid adequately. The interpretation of certain remarks by Claude Bernard during this meeting do not confirm the plaintiff's allegations in any way. The construction schedule was also discussed during this meeting.

113             PWC was entitled to proceed with a second call for tenders. Therefore, it had no obligation to meet or discuss with Monit before the latter's elimination.

114             The defendant describes in detail the relevant provisions of the specifications and the applicable legal principles. It reviews the methodology that its expert Cogerec used to analyze the evaluations and concludes that Macogep (the plaintiff's expert) ultimately adhered to the same method except for a few adjusted criteria. Like the PWC evaluators, the defendant submits that the plaintiff failed in the architecture, engineering, security and functionality categories.

115             On January 12, 1992, all the PWC evaluators met to award the final marks to each of the proposals. This process was necessary in order to compare them and protect the principle of relativity among the proposals. The defendant argues that no evidence of discrimination or bad faith has been shown and Monit has no reason to challenge the conclusions of this meeting.

116             The ICAO wished to ensure that the suggested Canadian proposal would be the best one for it, so it hired an independent consultant to conduct an analysis of the proposals and asked the consultant to make some recommendations to it.

117             The defendant argues that the decision to award a contract to Westcliff was the best one and that some subsequent work performed and paid for by the Canadian government did not in any way alter the contract to the benefit of Westcliff. The principle of equality among the bidders was implemented.

118             According to the defendant, even if it were admitted, for purposes of discussion only, that Monit had qualified at the first stage of the second call for tenders, one has to ask oneself whether Monit was in a position to demonstrate on a balance of probabilities that its proposal, and not those of the other three bidders, should have been retained. The ICAO had a right of veto, and there were certain reservations about the usefulness of remaining in the Monit building. PWC's financial evaluation of the Monit proposal, which it had performed during the first call for tenders, amounted to $211 million, substantially in excess of the $152.3 million authorized by Treasury Board. The plaintiff failed to demonstrate that its price would have been lower than Westcliff's on the second call for tenders.

E.          ANALYSIS

(1)         PRELIMINARY REMARKS

119             The plaintiff called the following individuals:

-            Barry Kotler, President of Monit

-            Pierre Cuccioletta, Vice-president of Monit

-            Richard Hylands, Vice-president of Westcliff

-           Stéphane Auger, security consultant with CSP

-           Louis-Yves Lebeau, President and expert, Macogep

-           Denis Côté, representative of Macogep

-           Charles Aboukhaled, Vice-president of Macogep

-           Paul Riedstra, representative of the Scotia Bank

120             The defendant called the following individuals:

-           John Noble, former Director General, DFA

-           Gilles Duguay, former Canadian representative to the ICAO

-           Ruth Archibald, former chief to Minister Barbara McDougall

-           Jacques Yves Therrien, former Assistant Deputy Minister, Federal Office of Regional Development - Quebec (FORD-Q)

-           Guy Coulombe, former Director General of the SCCIM

-           Jacques Bélec, former special advisor to John Noble

-           Avrum Miller, former project manager at PWC

-           Will Young, former external consultant to Avrum Miller

-           Claude Bernard, architect, PWC

-           Donald Byrne and Daniel Desjardins, security, RCMP;

-           Daniel Choinière, mechanical engineer, PWC

-           Pierre Martin, former consultant to the ICAO

-           Nessim Habashi, President of Cogerec, expert for the defendant

-           Louis Plante, former official at PWC.

121             As I mentioned previously, I will analyze three periods for the purpose of answering the questions in dispute:

(a)         the period preceding the first call for tenders;

(b)         the first call for tenders; and

(c)         the second call for tenders.

But first, I must determine the applicable principles of law.

(2)         APPLICABLE LAW

122             The defendant submits that the awarding of contracts by the Crown through calls for tenders pertains to public and administrative law, and the common law jurisprudence applies. The plaintiff does not completely disagree with the application of the common law jurisprudence in this case, but it expresses some qualification. It cites Rousseau-Houle, supra, at page 27:

[translation]

Originating in the English law, therefore, the principles of our public administrative law are drawn primarily from the Common Law.... In Canada, under subsection 13 of section 92 of the British North America Act, the provinces have exclusive jurisdiction over property and civil rights, and are thereby alone empowered to regulate contracts. Accordingly, any civil or administrative contract must be governed in Quebec by the private law of the province.

This provincial private law is undeniably indigenous to us: it is therefore the law that must fundamentally govern contracts of the Government....

[Emphasis added]

123             The courts have expressed certain reservations about importing common law principles where the civil law provides some rules (2002 SCC 85">Prud'homme v. Prud'homme, 2002 SCC 85, (2002) 221 D.L.R. (4th) 115 at paragraphs 54, 59 and 63).

124             The plaintiff urges me therefore to analyze the Martel judgment, supra, with some distance. The defendant acknowledges the principle of bona fide negotiation and thinks it has complied with this principle in all of its transactions with Monit.

125             In view of the jurisprudence and authorities that were cited, I will adopt as a guide the proposition advanced by the defendant while bearing in mind the clarifications made by the plaintiff.

(3)         PERIOD PRIOR TO THE FIRST CALL FOR TENDERS

(a)         Access to information requests, privileges invoked under the Canada Evidence Act

126             In its written submissions, Monit alleges that the defendant concealed some documents from it. Monit therefore had to resort to the Access to Information Act to obtain the information it needed in order to present its evidence. Even at the end of the trial, it had still not received all of the requested documents to which it was entitled. The defendant cited privileges under sections 37, 38 and 39 of the Canada Evidence Act, which complicated the plaintiff's task.

127             Monit says it wanted to call Thomas Paradis to testify since he was working for PWC at the time of the events. However, the ICAO invoked immunity in regard to Mr. Paradis, since he had subsequently become its employee. Monit argues that this immunity was raised on the initiative of a lawyer for DFA.

128             The plaintiff did not make any request to me to challenge the Crown's privileges and immunity cited in regard to Mr. Paradis. I am therefore unable to criticize the defendant in this regard. Also, I do not have any jurisdiction at this point to hear the plaintiff's grievances about the Commission d'accès à l'information, which, it says, has not yet replied to its requests.

129             However, I should add that both the plaintiff and the defendant made substantial efforts throughout the trial to assist the Court in the quest for the truth.

(b)         SCCIM

130             The FORD-Q worked with the SCCIM for the purpose of developing the Cité internationale. This agency reported for some time to the Department of Industry, Trade and Commerce, which was then headed by the Minister Benoit Bouchard, and then the Department of Health when Mr. Bouchard was transferred there.

131             Guy Coulombe acted as director general of the SCCIM and Jean-Yves Therrien, the Assistant Deputy Minister, handled the FORD-Q.

132             A number of entities were interested in the SCCIM, including the ICAO, the DFA, the Department of Transport, PWC, the government of Quebec, the City of Montreal and the private sector.

133             The geographical parameters of the Cité internationale extend along its North-South axis from René-Lévesque Boulevard to Notre-Dame Street and along its East-West axis from Saint-Urbain Street to Université Street. According to Mr. Coulombe, to guarantee the future of the Cité internationale, it was essential that the ICAO move within its perimeter. The SCCIM therefore began to analyze some sites within this designated location.

134             At the time, the ICAO included about 190 countries and housed 33 permanent delegations. The federal Department of Transport, which was responsible for the appointment of the Canadian delegate, designated Gilles Duguay as its representative. The DFA paid 100% of the ICAO's rent although the ICAO repaid 25% to the Consolidated Revenue Fund.

135             The ICAO's precarious financial situation meant that the DFA had to find the ICAO the most economical accommodation possible while satisfying its requirements.

136             As early as 1989, the DFA had identified a number of possible options to accommodate the ICAO at the end of its lease in October 1994:

(a)         to remain in the Monit building and renew the lease;

(b)         to execute a lease with another promoter in another building;

(c)         to purchase the Monit building;

(d)         to purchase another building;

(e)         to construct a new building; or

(f)          to participate in the SCCIM project.

137             This is what is indicated by exhibit 82 and the testimony of Mr. Noble, the former Director General, Internal Program, International Organizations, at the DFA. He testified clearly, precisely and without hesitation. His memory of the events is infallible and his knowledge of the file impeccable. The Court accepts that his ultimate goal was to analyze all of the options in order to identify the best one for the ICAO. Moreover, Mr. Noble viewed the SCCIM as a promoter like the others. His testimony in this regard is corroborated by Guy Coulombe and Gilles Duguay.

138             A number of steps were taken both by the SCCIM and by the FORD-Q to include the ICAO in the development of the Cité internationale. For example, other agencies would be able to use the conference centre that would be built there. However, according to the testimony of Messrs. Noble and Duguay, the DFA did not want to have the SCCIM project imposed on the ICAO unless it was the best project for it.

139             Because of its real estate expertise, PWC was instructed by the DFA to analyze all of the options for accommodating the ICAO at the end of the lease in 1994. Avrum Miller, Project Manager at PWC, was designated to make recommendations. While PWC conducted its own analysis, the SCCIM did the same. Both sides exchanged information. Mr. Miller's questions about the critical progression proposed by the SCCIM demonstrates that the SCCIM and PWC were proceeding within the framework of their respective mandates.

140             The plaintiff claims that, because more than one government department was involved directly or indirectly with the SCCIM, the defendant wanted to exclude the Monit project. It also alleges that the defendant discriminated against it by supplying confidential information about Monit to the SCCIM.

141             I can readily imagine that the various departments wanted to collaborate on the SCCIM project and that the government of the day wanted to implement the Picard report by creating a Cité internationale in Montréal. However, I am not persuaded that Monit was left high and dry. The occupation of Monit's building by the ICAO as an option subsisted until the very end, i.e. until the first call for tenders was issued.

142             The figures sent to the SCCIM by PWC in early 1992 are estimates made by PWC on the basis of a business proposition advanced by Monit (exhibit 322, at page 4). Monit itself had access to these estimates in the fall of 1991 (exhibit 1156).

143             The financial data concerning the Monit lease is not confidential and, as we shall see later, the Monit proposal of December 19, 1991 is not either (exhibit 287, conclusion).

144             Monit claims that it was not informed of the SCCIM activities and the Cité internationale project until the fall of 1991. While not questioning the testimony of its president, I find it a bit curious that his company did not get wind of this before that time since, from 1989 on, there had been ample discussion of it in the newspapers (exhibits 71, 72, 77, 987 and 990). Furthermore, the recession was raging in Montréal, the vacancy rate in commercial buildings was very high and the Montreal International Conference Centre was a sizable project that was probably the biggest in Montréal in many years. Monit's architect, Dimitri Dimakopoulos, had even participated, in 1990, in the architectural competition for the Cité internationale. The ICAO was Monit's largest tenant. I have some difficulty believing that no one at Monit had been informed earlier.

(c)         Monit's intention to negotiate a long-term lease

145             It is clear that, from April 1991 on, Monit wanted to negotiate a long-term lease for the purpose of accommodating the ICAO effective November 1, 1994 (exhibit 167).

146             On May 23, 1991, Mr. Miller replied to Monit's president that it was premature to discuss a long-term lease (exhibit 173). On June 18, 1991, he again wrote to Mr. Kotler to inform him that PWC was studying the ICAO's future requirements and that it would be some time before the federal government determined the most appropriate strategy for housing the agency. He notified Mr. Kotler that, with the government's contract regulations, it would be hard to negotiate a long-term contract with Monit. Even if this option was selected, it would then be necessary to proceed by way of a public call for tenders (exhibit 183).

147             It is true that in his message of May 23, Mr. Miller, summarizing a conversation on the 21st of that month, confirmed that he had asked Mr. Kotler for an approximate price for the purchase of his building as of November 1, 1992 and as of November 1, 1994, without prejudice to Monit. Mr. Miller repeated this request in his letter of June 18, 1991, adding that this information might be useful to PWC in its study of a strategy for accommodating the ICAO at the end of the lease.

148             In regard to the applicable law in negotiations, I subscribe to the plaintiff's argument that negotiations must be conducted in good faith, informed by the principles of loyalty and disclosure, and not be broken off without cause.

149             I must therefore determine whether PWC negotiated with the plaintiff during the period from May 1991 to the issuing of the first call for tenders. If not, the principles of loyalty, disclosure and no interruption without cause do not apply.

150             Having carefully read the documents covering this period and heard the testimony of Mr. Kotler and Mr. Miller in particular, I have come to the conclusion that PWC did not negotiate with Monit. The Court finds in favour of the defendant on this issue.

151             Monit claims that exhibit 191 (dated July 10, 1991) and exhibit 226 (dated October 17, 1991) authorized Mr. Miller to negotiate a long-term lease with the plaintiff. I do not agree. The first document states "to investigate short and long term extensions to the lease for the building at 1000 Sherbrooke West", while the second states that "External Affairs and International Trade Canada has in fact designated Mr. Miller as the responsible contact person for future accommodation of ICAO, including all aspects of renewal after the termination of the current lease" (emphasis added). Neither of these documents discloses any specific instruction clearly authorizing Mr. Miller to negotiate with Monit or with anyone.

152             At a meeting in Monit's offices on November 29, 1991, Mr. Miller stated that four options were still being studied and asked Monit to send him a proposal that would enable him to make some comparisons (exhibit 995 prepared by Monit's representatives).

153             On December 2, he confirmed his request in writing (exhibit 267). On December 19, 1991 (exhibit 287), Monit delivered its proposal and indicated that it did not bind the company and would serve for purposes of comparison only.

154             A DFA memo dated January 16, 1992 (exhibit 304, at page 2) states that Monit's non-negotiated estimated price is $163 million.

155             An excerpt from a memo dated January 21, 1992 drafted by a Monit employee states clearly that Mr. Miller had told him in a previous conversation that he had no mandate to negotiate a long-term lease with Monit and that he could not make an offer to the plaintiff on behalf of the government.

156             In his testimony, Mr. Kotler maintained that Mr. Miller was negotiating a long-term lease with him. On cross-examination, he stated that Mr. Miller established an order of priority among the four options referred to at their meeting in November 1991; the first was to lease from Monit, the second was to purchase its building. Mr. Kotler did not take the other options seriously because he thought they were bargaining tactics. Mr. Miller denies Mr. Kotler's testimony on this. Mr. Noble confirmed in his testimony that there was never any question of priorities in regard to the options.

157             In my opinion, the words used in the relevant documents are clear and unambiguous. They are indeed confirmed by the testimony of Mr. Miller and Mr. Noble.

158             Finally, Monit argues that its business relations with the government for many years constituted a close relationship with it, and PWC had a duty to negotiate with it. In Martel, supra, the Supreme Court considered this question and refused to recognize any such obligation.

(d)         Request for an 18 month renewal option at the end of the lease: swindle, conspiracy

159             On February 12, 1992 (exhibit 340), after informing Katy Watkins at Monit that the December 19 proposal would not be accepted, Mr. Miller asked Monit to give him an 18 month renewal option upon the expiration of the lease in October 1994.

160             Monit alleges that there was a swindle, a conspiracy, that the dice were loaded in advance: the federal government had decided to house the ICAO in the Cité internationale. Furthermore, Monit had been forced to make some major renovations to its building, leading it to believe that the ICAO would be housed in their building, when the ultimate purpose was to ensure that the ICAO headquarters would remain in Montréal.

161             The joint admission of the parties, filed June 11, 2003 (exhibit 1162), provides:

[translation] The defendant admits that, at one point in February/March 1992, some work was performed on a draft submission to Treasury Board for the purpose of obtaining its approval for two (2) things involving the ICAO headquarters in Montréal:

(1)            the issuing of a call for proposals limited to the perimeter of the Cité internationale, and

(2)            the negotiation of a short-term (18 months) extension of the lease with Monit to allow a call for proposals to be held.

162             A memo dated January 1992 by Jacques Bélec (exhibit 304), a special advisor to Mr. Noble, confirms that no decision had been so far taken and that Mr. Noble was still looking for the least costly bid for the ICAO. Gilles Duguay, for his part, insisted that a real choice be presented to the ICAO before going to Cabinet. Three options were available at that point: the renovated Monit building; a vacant building with a conference centre in the Cité internationale; or a new building with a conference centre in the Cité internationale (exhibit 326). In February, a consensus appears to have developed in favour of the Cité internationale, but no decision was made at that time.

163             In March, the project proposed by the SCCIM was scrapped because the City of Montréal decided it would not grant an exemption from property taxes.

164             PWC then recommended that a call for tenders be issued, but without requiring that the site be solely within the perimeter of the Cité internationale.

165             Here is what I conclude from these documents and the testimony of Messrs. Coulombe (SCCIM), Therrien (FORD-Q), Noble and Bélec (DFA), Duguay (ICAO) and Miller (PWC):

(a)         the SCCIM, together with the FORD-Q, was trying to incorporate the ICAO within the Cité internationale;

(b)         the DFA wanted to ensure that the best and least expensive option would be chosen for the ICAO;

(c)         the ICAO representative wanted the Organization to be consulted before a final decision was made; and

(d)         PWC wanted adequate consultation with the DFA.

166             Was Mr. Miller biassed in favour of the SCCIM project? That is possible, especially in light of the memo by Claude Bernard of the DFA to his director (exhibit 164, April 11, 1991). This memo relates a conversation between a board member of the ICAO and Thomas Paradis, a PWC employee with the ICAO, about a meeting between Mr. Miller and this board member. During this meeting, Mr. Miller is said to have sought to persuade this individual to support the SCCIM project. Examined on this matter, Mr. Miller said it is possible that a meeting did take place with this board member but he does not recall having attempted to convince him.

167             Clearly, even if Mr. Miller had preferred the SCCIM project, he was not the one who had to make the final decision and he had no authorization to negotiate a long-term lease.

168             A document included in exhibit 997 of February 19, 1992 (reports of various telephone conversations prepared by Mr. Kotler) confirms that Mr. Miller called Mr. Kotler to inquire about his intentions concerning the extension of the lease. Mr. Miller informed him that the officials were favourable to the idea of a general competition for the ICAO site; that was why he was asking for an 18-month extension of the lease. Mr. Miller added that Monit could, within the framework of this competition, make a proposal for one of the sites in the Cité internationale. However, if the extension was not granted, PWC might negotiate a 35-year lease with another landlord in the Cité internationale. Monit would therefore be ruled out since the federal government favoured the Cité internationale. The second choice was to issue a call for tenders for a downtown site. Mr. Miller also notified him that Monit's proposal of December 19, 1991 had not been considered by Treasury Board or the Privy Council.

169             On February 27, Mr. Kotler informed Mr. Miller that he was favourable to the requested extension, but PWC would have until June 30 to exercise this option.

170             On March 16, 1992, Mr. Miller asked Mr. Kotler to postpone the deadline to December 31, and at the same time told him that two sites to accommodate the ICAO were being studied: the Cité internationale and downtown Montréal. On April 21, he told him that no decision had yet been taken by the Ministers and repeated to him that he did not think the government wanted to negotiate directly with Monit (exhibit 997).

171             As to the issuing of a call for tenders, Mr. Kotler confirmed on cross-examination that Mr. Miller had informed him of such a possibility.

172             In regard to the renovations made by Monit before the end of the lease, it is correct to say that the Canadian government wanted to ensure that the ICAO headquarters was kept in Montréal. The evidence shows that the ICAO had previously complained about the conditions of accommodation with Monit, in particular concerning the quality of the air. A special committee had been established and PWC had delegated Thomas Paradis to ensure good relations between Monit and the ICAO. Monit had participated actively in this committee. In the December 19, 1991 offer, Monit undertook to make a number of renovations to satisfy certain requests by the ICAO and it added that these renovations would be completed without any increase in the rent and notwithstanding any decision that PWC might make in relation to its proposal.

173             My conclusions concerning the evidence as a whole on the issue of the alleged conspiracy are as follows:

(a)         Monit was not the victim of swindling or a conspiracy;

(b)         Monit was not misled; it was adequately informed of the situation by PWC;

(c)         PWC had no hidden agenda when it requested the 18-month extension of the lease;

(d)         no promise was made to Monit that the ICAO would remain in its building; and

(e)         the renovations performed by Monit were made in the normal course of landlord-tenant relations.

(4)         FIRST CALL FOR TENDERS

(a)         Context of the first call for tenders

174             Because Monit's proposal, made on December 19, 1991, and evaluated by PWC at $163 million, was not accepted, and the SCCIM project was aborted, PWC decided to proceed with a public call for tenders applying not only to the sites in the Cité internationale but also including downtown Montréal, in order to encourage the plaintiff to bid (exhibit 368).

(b)         Process

175             This call for tenders, issued May 5, 1992, provided that the deadline for presenting bids was June 15. Three categories were indicated: (1) architecture (50%); (2) engineering (20%); and (3) security (30%). Proposals had to obtain an average of 50% in each of the categories and a cumulative average of 70%. Although PWC was seeking a 20-year lease, bidders also had to provide proposals for 25-year and 35-year leases.

176             Clause 16.1 of the specifications provided that "[translation] the tenant requests a term of lease beginning on or before May 1, 1996 and ending on April 30, 2016" (exhibit 382).

177             Monit hired some professionals and filed its bid, in which it proposed a lease commencing November 1, 1994. Nine promoters presented 14 proposals: two proposals for 1996, four for 1994 and eight for 1994 or 1996.

178             Monit criticizes the defendant concerning this process. For example, it argues that the defendant was biassed and discriminated against existing buildings. I think these criticisms have become academic, since Monit's proposal was considered consistent with the requirements after the analysis made by PWC.

179             The proposals were evaluated from June 15 to 24. PWC determined that the ones containing a lease beginning May 1, 1996 were the most advantageous, hence the government's decision to reject the proposals providing for November 1, 1994. That is why four proposals were rejected, including Monit's.

180             On June 29, 1992, PWC exercised the option for an 18-month extension of the lease with Monit.

181             On July 7, Monit received a letter (exhibit 489) from Mr. Miller announcing that its proposal would not be considered since it had been decided that the ICAO would remain in its building until April 30, 1996 and Monit had made only a proposal commencing November 1, 1994. Mr. Miller explained in this letter that this decision was based on the evaluation of the best quality-price relationship and that the best proposals were those commencing in 1996.

182             PWC calculated that the Monit proposal ($184.5 million) was more in the order of $209 or $211 million, which was corroborated by an independent analysis performed by the accounting firm Ernst & Young. In any event, Monit's proposal exceeded the $153.3 million authorized by Treasury Board.

183             However, the Monit proposal was the only one consistent with the requirements. All the other proposals were disqualified. Exhibit 559 ("Proposal Call Results") explains the reasons for the disqualifications. For example, one of the proposals required a bonus at the time of acceptance of the offer; another was disqualified because the specifications were misinterpreted; others did not provide a fixed leasing fee; and one proposal had a leasing formula after ten years that PWC was unable to analyze. In Monit's case, the following words are entered: "Price, not officially disqualified" (emphasis added).

184             The defendant refers to the following clauses in the specifications (blue notebooks, volume no. 5 at paragraph 4.6 on page 833 and at paragraph 5.1 on page 834)

[translation]

4.6            The Tenant reserves the absolute right to compare the proposals received and to evaluate them in terms of the best quality-price relationship as determined by the Tenant, at its sole discretion. This evaluation may cover certain aspects such as, but not limited to, the quality and functionality of the proposed premises, the design of the building and its accessibility, the security aspect and the degree to which the requirements correspond to the requested rental rate.

5.1            The Tenant may accept any proposal whatsoever, whether or not at lowest cost, or may reject any or all of the proposals. [Emphasis added]

and argues that this reservation in law provides great latitude in the evaluation of the bids, subject only to her obligation to treat all bids equitably and on an equal footing. She cites pages 897 and 898 of the Martel judgment, supra, and adds that a number of clauses in the call for tenders documents in that judgment were identical to the ones here. She also notes that the two reports of the witness Will Young (an advisor to Mr. Miller) on the determination of the best quality-price relationship indicate that the government exercised its discretion reasonably, relying on serious and quantifiable criteria, and in particular that all bidders were treated equitably and on an equal footing.

185             The Court must determine whether the decision to reject the Monit proposal was consistent with the specifications. For the reasons that follow, I think this decision was erroneous.

186             First of all, clause 16.1 of the specifications refers to a request for proposals for a lease "beginning on or before May 1, 1996" (emphasis added). Monit was rejected because in its proposal the lease begins in 1994. The defendant alleges that Monit cannot complain because it could have made more than one proposal, as some developers did, i.e. for a lease beginning in 1994 and another in 1996. The decision of R. Fréchette J. in Entreprises Jarbec 2000 Inc. v. La régie d'Assainissement des Eaux de la région de Sherbrooke, (October 2, 1995), 450-05-000063-947 (S.C.), would support this thesis. I think that the facts in that case are different than the facts in this one. In Jarbec, the specifications clearly provided two options that had to be addressed separately. In the present case, the specifications do not stipulate two options anywhere. How could Monit know that it was to make two proposals, one in 1996 and the other in 1994, in order to avoid the risk of being eliminated? There was no such provision in the call for tender documents.

187             The defendant argues that Monit's proposal was far in excess of the amount authorized by Treasury Board and that, as a result of the reserve clause in the specifications, PWC lawfully exercised its discretion. Monit cannot complain since all of the proponents that submitted proposals for 1994 were eliminated, and PWC complied with the principles laid down in Martel, supra.

188             In exercising the option to extend the initial lease by 18 months, PWC eliminated Monit's proposal (exhibits 446, 465, 468, 503 and 530).

189             Exhibit 446, memo of Mr. Noble, June 19, 1992:

Exercising the 18 month option would basically exclude four of the proposals which are good only for 1994 (including all three existing buildings). It would mean deciding to go for a new building.[...] [Emphasis added]

190             Exhibit 465, fax from Mr. Miller to Mr. Bélec, June 23:

Based on the above, we conclude that the 18 month extension should be exercised. This would eliminate Monit and leave us with four potential providers of space. There are however, some downsides to this recommendation. [Emphasis added]

191             Exhibit 468, internal memo from DFA to the same effect, June 24:

The PWC report concludes that the 18 month extension should be exercised. This would eliminate Monit's proposition which is for 1994 only and leave us with four potential proponents. PWC has also identified some downsides to the 18 month extension. [Emphasis added]

192             Exhibit 503, from Mr. Noble to Mr. Rochat of the ICAO, July 22, 1992:

[translation] On June 30, Ms. Barbara McDougall, ... was required to notify the present owner of her intention to extend or not to extend the current lease for a period of 18 months. This decision, as Mr. Noble explained, led to the elimination of the proposals that did not offer a delivery date in 1996. ... The lack of extension of the lease meant the elimination of the options of a move in 1996. ... [Emphasis added]

193             Exhibit 530, memo from Mr. Pelletier to Ms. Callahan (Chief, Leasing), on the issue of the rejection of the proposals, August 11:

[translation] MONIT INTERNATIONAL INC.: were notified on 92.07.07 of their disqualification because their proposal set the commencement date of the lease at November 1, 1994 without any other alternative, although PWC decided that it was more economical to remain at 1000 Sherbrooke West until April 30, 1996 following the financial analysis of the proposals. [Emphasis added]

194             By choosing to exercise the short-term extension and deciding to eliminate the Monit proposal, PWC unilaterally changed the rules of the game. In my opinion, that conflicts with the terms and conditions set out in the specifications.

195             It is my view, therefore, that Monit complied with the call for tenders documents by submitting a proposal for a lease commencing in 1994.

196             I accept the following evidence:

(a)         it was more economical that the ICAO remain in the Monit building and that the lease be extended for the short term without an increase in rent;

(b)         by adopting this line of conduct, PWC would retain the option to move in 1996;

(c)         all of the proposals other than Monit's were disqualified;

(d)         the Monit proposal was the least onerous; and

(e)         it was a mistake not to consider the Monit proposal.

(c)         Duty to negotiate with Monit

197             The defendant also argues that clauses 4.6 and 5.1 of the specifications and the principles in the Martel judgment, supra, prevail over the PWC guidelines.

198             She submits that exhibit 1170, tab 1, provides that the guidelines have no mandatory force. Exhibit 415, entitled "Evaluation Process Flow Chart", is simply an internal forecast by Mr. Miller. With the June 1992 opinion of the Department of Justice, PWC had no discretion to negotiate with a proponent. This, she says, is confirmed by exhibit 1185C (PWC real estate division guidelines).

199             The cases on calls for tenders prohibit negotiation with only one of the bidders after the opening of the bids. Negotiating would have violated the principle of equality among the bidders.

200             Even if PWC has the authority to negotiate, it has no obligation to do so.

201             The reserve clause gives it wide latitude.

202             On May 12, 1992, in a memo to Mr. Noble (excerpt from exhibit 415, "Evaluation Process Flow Chart"), Mr. Miller described the steps to follow in selecting the best bid. After determining it was the best, negotiations were to be held. The words "negotiate to see if terms can be improved, i.e. lower rental rate higher standards" are fairly eloquent. It means that Mr. Miller was planning to negotiate after the opening of the bids. However, four days before the opening of the bids, PWC received an opinion from the Department of Justice that this call for tenders was not a call for proposals and there could be no negotiation. This opinion was not filed as evidence.

203             Louis Plante, a PWC official who is now retired, who was well acquainted with the guidelines in force in 1991 and 1992, filed a number of documents and testified that there were no guidelines for calls for tenders and calls for proposals that differed.

204             Exhibit 1170A, Treasury Board, tab 1, article 10, page 22 states:

[translation] When only one valid bid has been received, that bidder may also be asked to provide price substantiation. If the information provided is not acceptable to the contracting authority, then price negotiation should take place. [Emphasis added]

205             Exhibit 1185A, Portfolio "[translation] Property, Real estate, Leasing-general number 10.275, circular number 1990 - 6 dated June 29, 1990, page 3 article 4 (a)" defines a competitive market:

[translation]

(a)            a market is competitive even if only one valid bid is received. ... [Emphasis added]

206             Clause 9 of Schedule C of that document (pages 2 and 3) provides that where there is only one complying bid following a call for bids, a contract may be awarded by the Crown if it considers that the price is fair. If the Crown thinks the price is not fair, negotiations should be undertaken with the proponent with a view to obtaining a fair value. If these negotiations fail, consideration should be given to begin the process again.

207             According to the authorities, in some special cases the legislator will allow negotiations on the contract price where there is only one compliant bidder and the price submitted is significantly out of line with the initial estimate (G.P. Allard, "Les droits des autres soumissionnaires et la modification du contrat administratif" (1996), 10 R.J.E.U.L. 101 at page 110).

208             The defendant's directives or guidelines do not have the same legal force as the specifications. As we know, these directives do not create rights for third parties, but they cannot be ignored as if they did not exist. They may be cited in a dispute such as the one with which we are concerned (Michel Miller inc. v. Québec (Procureur général), J.E. 90-957 (S.C.) at pages 7 and 8).

209             Louis-Yves Lebeau (Macogep, plaintiff's expert) says it often happens that a client who receives bids will go to the lowest compliant bidder and negotiate with it certain terms of its proposal that exceed its budget. This is acceptable practice, provided it does not discriminate against the second lowest compliant bidder (uncontradicted testimony of April 24, 2003, volume 13, transcripts at pages 160 and 161).

210             In this case, the principle of equality among bidders is not at issue. Only Monit was not disqualified, and negotiating with it would certainly not have jeopardized this norm established by jurisprudence.

211             The reserve clause is not absolute, and is not authority for acting inequitably (P. Giroux, "Le mécanisme d'appel d'offres: quelques réflexions à la suite des arrêts M.J.B. Entreprises Ltd. et Martel Building Ltd.", in Développements récents en droit de la construction, 139 at pages 240 to 251.

212             PWC planned to negotiate with the bidders after the opening of the bids (excerpt from exhibit 415, "Evaluation Process Flow Chart"). Current use and practice in such matters confirm this authority to negotiate with compliant bidders provided the principles of equality and fairness are upheld. The defendant's directives or guidelines provide for negotiation with a compliant bidder.

213             I conclude that PWC should have considered the Monit proposal and entered into negotiations with it following its June 1992 bid.

214             I am not saying, however, that Monit should have been awarded the contract, but I am saying that Monit was made to lose the opportunity to obtain a contract. It is nevertheless entitled to damages, which will have to be determined later, in accordance with the desire expressed by the parties.

(d)         By agreeing to participate in the second call for tenders, did Monit waive its rights resulting from the first call for tenders?

215             As we will see later, Monit accepted PWC's invitation to participate in a second call for tenders in September 1992.

216             Until the filing of its second bid on November 15, 1992, Monit did not send any notice, commence any legal proceeding or reserve any right against PWC after learning that its June proposal would not be considered.

217             The defendant argues that, by so acting, Monit implicitly waived any rights to which it might have been entitled at the time of the first call for tenders.

218             The defendant, supported by court decisions, cites the doctrine of estoppel (referred to in French as fin de non-recevoir) (Les Entreprises d'électricité Adamik Inc. v. Les Constructions Sicor Inc., supra; Lavigueur v. Municipalité de Ste-Clothilde de Chateauguay, Que. C.S., supra; Jourdain v. Grand-mère, supra; Tétreault et Frères Ltée v. Les Commissaires d'écoles pour la municipalité de la cité de Lachine, supra; Gabias v. Mainville, supra).

219             The plaintiff, on the other hand, qualifies the defendant's proposition, alleging that the person against whom this waiver is invoked must have had knowledge of all the relevant facts.

220             It reproduces, to its advantage, the decisions cited by the defendant in which the courts hold that a precondition to the application of this theory is that the party in question acted in "full knowledge".

221             It adds that the waiver must be unambiguous and must be based on facts that necessarily presuppose it (E.B. Eddy Forest Products Ltd. v. Beamer & Lathrop (Québec) Ltd., J.E. 84-417 (C.A.) at pages 30 and 31).

222             In the case at bar, it argues, the plaintiff did not know all of the relevant facts, so it is above reproach and no unfavourable conclusion can be inferred from its failure to act.

223             In [1924] S.C.R. 120">The Mile End Milling Company v. Peterborough Cereal Co., [1924] S.C.R. 120 at page 131, the Supreme Court held that waiver of a right may be implied but must be unambiguous, that is, the intention to waive must be demonstrated.

224             More recently, the Superior Court of Quebec, in A.S.M. Canada Ltd. v. Créalise Conditionnement Inc. J.E. 97-1399 (S.C.), held that "[translation] if a waiver of a right can be implied, any doubt about it must favour the one who allegedly waived."

225             The plaintiff accordingly expresses its complete disagreement with the defendant.

226             Estoppel, a well-known principle in English law, is the equivalent in civil law of a renunciation or a fin de non-recevoir.

227             I do not think that a waiver of this nature is applicable here. On November 15, 1992, Monit certainly did not have in its possession the document (excerpt from exhibit 415, "Evaluation Process Flow Chart") prepared by Mr. Miller with a view to negotiate after the opening of the bids on the first call for tenders. Furthermore, it was only on the second day of the hearings that the policies and guidelines (exhibits 1170A and 1185A) were brought to Monit's attention.

228             As to the practice and use of negotiation with a compliant bidder, Mr. Lebeau refers to this in his report dated 2003.

229             There is no evidence on the record that clearly shows that Monit waived or wanted to waive its rights. Nor is there any express or implied indication of any such waiver. It is also my view that Monit, prior to the filing of its bid on November 15, 1992, was unaware of all the relevant facts that might have enabled it to waive its rights pursuant to the first call for tenders.

(5)         SECOND CALL FOR TENDERS

(a)         Process

230             After deciding to cancel the first call for tenders, PWC on September 15 invited all those bidders who had filed a proposal on June 15 to a second call for proposals closing on November 15, 1992. To justify this decision, PWC alleged both that the bidders had misunderstood the May specifications and that the proponents had not had enough time to prepare their bids.

231             On September 17, all those invited attended a general meeting. Each was given the new tendering documents.

232             There were two phases to the process: the technical phase and the financial phase. Three categories were added and the participants now had to obtain 70% in all of the categories if they were to go on to the financial phase.

233             On September 19, a mandatory tour of the Monit building was held to enable the bidders to get a clearer understanding of the ICAO's needs.

234             For the following stage, individual meetings were conducted with each bidder. On October 15, PWC sent some questions and answers of a general nature to the various bidders. Monit had already sent a series of questions on October 6; it obtained PWC's answers on October 21, 1992.

235             PWC published three addenda to the specifications:

(a)         Addendum no. 1: October 22;

(b)         Addendum no. 2: October 30;

(c)         Addendum no. 3: November 12.

236             On November 18, the bids were opened. Requests for clarifications were then sent to the various bidders. Monit received four, on December 8, 16 and 17 (one at 2:30 p.m., the other at 4:10 p.m.).

237             From January 5 to 11, 1993, the proposals were evaluated and on January 12, PWC organized a general meeting of the evaluation teams to discuss the results of their evaluations.

238             On March 24, 1993, Monit learned that its proposal was disqualified because it had not obtained the 70% passing mark on the technical level.

(b)         Individual meeting of September 29, 1992

239             Some PWC representatives met with Monit's representatives on September 29, 1992. The purpose of this meeting was to ensure that Monit clearly understood the second set of specifications, to discuss its first proposal and inform the company of its strong and weak points, and finally to enable it to successfully complete the technical phase.

240             Two sets of minutes were filed as evidence: PWC's, sent to Monit (exhibit 575 version 40) and the second, prepared by Monit from an authorized recording of the meeting (exhibit 570). The plaintiff's expert used a table (exhibit 1144C) to show the criteria that were discussed, not discussed and partially discussed during this meeting. He used PWC's minutes instead of the set prepared by Monit because, he said, the first document was official and was part of the contractual documentation. Relying on this document and the comments made by PWC during the meeting, the expert stated that PWC had suggested to Monit that its proposal would be accepted at the technical level when it filed its second bid.

241             Mr. Cuccioletta, Monit's vice-president, interpreted PWC's comments as a gratuitous go-ahead to the second stage, namely the financial phase. As he recalls from the comments that were exchanged, only the interpreters' booths and the work schedule constituted minor problems that he could easily resolve.

242             In regard to the security-related criteria, Claude Bernard, PWC's architect, reportedly said that "[translation] there is always a solution." There was no indication to Mr. Cuccioletta that some major problems could arise in regard to security.

243             Monit also criticizes PWC for not giving it sufficient and complete comments about the evaluation process. During the meeting, Donald Byrne of the Royal Canadian Mounted Police (RCMP) did not explain how Monit might be able to meet the requirements of the specifications.

244             An expert for the defendant, Nessim Habashi of Cogerec, stated that it was necessary to analyze all of the documents and, above all, the specifications, addenda, questions and answers, requests for clarification and the replies. The minutes of the meetings are part of a whole and should not be analyzed separately, but they are clearly less important than the documents referred to above, he said. Mr. Habashi did not see why the Monit version of the minutes of the November 29 meeting should be overlooked. This version could help the Court identify what Monit had in fact understood at this meeting, not to mention that these minutes were based on an authorized mechanical recording.

245             The defendant argues that PWC was under no obligation to summon Monit to a meeting on September 29, and this was conceded by the plaintiff's expert.

246             Having analyzed the testimony of Messrs. Louis-Yves Lebeau, Stéphane Auger, Pierre Cuccioletta, Nessim Habashi, Donald Byrne and Claude Bernard concerning the meeting of September 29, 1992, I agree with the defendant's position on this question.

247             It should not be forgotten that this meeting was one of the first steps prior to the filing of the bid. Questions and answers of a general nature were to be sent subsequently; some addenda and requests for clarification and answers would follow.

248             In my opinion, it is necessary not only to examine the minutes sent by PWC to Monit. It is also necessary to analyze the minutes prepared by Monit (exhibit 570). This document indicates that Monit's security problems were discussed at length (testimony of Donald Byrne).

249             Monit had been well aware for some time that the security in its building could be problematic (Monit internal memos, exhibits 1008 and 1009).

250             Claude Bernard's reply to Question 17 (exhibit 575, version 40), i.e. "[translation] Is it possible to be disqualified because of security?", Answer 17: "[translation] It would be surprising if there were such a situation in a proposal that there was no solution in terms of security", ends with "[translation] however, the cost could be prohibitive". At trial, Mr. Bernard testified that he no longer recalled the content of the specifications discussed at the meeting of September 29, and in particular what was said about security, which was not his responsibility. The specifications and evaluation criteria were being prepared and were to be established by the RCMP.

251             However, when he replied to Monit's question on October 22, "[translation] in our original proposal, were there some criteria for which we did not get the minimum mark of 70%?", Mr. Bernard drew attention to the security issue, answering "[translation] none, except for the issue of the progress of the work and handicapped access to the translation booths. As explained at the meeting, in the second proposal you must give more information than in the first proposal, in particular concerning security" (exhibit 598, answer 22) [Emphasis added].

252             Mr. Bernard, a highly credible witness, explained that the individual meetings were held to assist bidders in preparing their bids. He testified in a disinterested and honest manner, and he indicated clearly the context in which the discussions had occurred.

253             I conclude that Monit was not misled and that PWC did not hold out the prospect to it of a free ride from the first phase to the second. On the contrary, it was given some serious warnings, particularly by Claude Bernard, in terms of the criteria pertaining to the schedule and to security.

(c)         Questions and answers, requests for clarification

254             PWC had provided a further mechanism to assist bidders in understanding the specifications. The general questions and answers (exhibit 594) were forwarded to all proponents on October 15, 1992. Once the bids were received, PWC sent them requests for clarification; Monit received theirs in December.

255             The plaintiff alleges that the criteria in each of the categories were unknown. Furthermore, it says, the cancellation of some requests for clarification by Avrum Miller discriminated against it.

256             The defendant argues that the questions and answers were an additional tool to help bidders understand clearly the requirements in the specifications and to improve their bids. The requests for clarification were covered in the instructions received by the proponents, and PWC reserved the right to request them only once.

257             The cases hold that the client may make requests for clarification even if this is not provided for in the specifications (Gestion Complexe Cousineau (1989) Inc. v. Canada, supra; Assn. des pêcheurs propriétaires des Îles-de-la-Madeleine v. Canada, supra).

258             Although it is in fact true that the criteria in each of the categories were unknown, they were unknown to all of the bidders and not only to Monit.

259             Nor was PWC under any obligation to notify Monit or to hear from Monit prior to its elimination (Lapointe v. A.M.A.R.C., supra; Northeast Marine Services Ltd. v. Atlantic Pilotage Authority, supra; Cegeco Construction Ltée v. Ouimet, supra).

260             In my opinion, the requests for clarification crossed out by Mr. Miller on December 17 had no significant impact on the evaluation of the Monit proposal.

261             In addition to the general questions and answers it received, Monit had an opportunity to send in some questions through its vice-president to Claude Bernard on October 6, 1992 (exhibit 586). The answers were communicated to Monit on October 21 (exhibit 598).

262             I conclude, therefore, that Monit, like the other bidders, obtained from PWC the information it needed for the adequate preparation of its proposal.

(d)         Evaluation

263             The method of evaluation was covered in the "[translation] Instructions to Proponents".

264             Under clause 4.2.1, the proposals were reviewed by a committee composed primarily of PWC employees.

265             The specifications included the following categories:

(a)         Architecture (25%);

(b)         Functionality (25%);

(c)         Harmony with the urban fabric (5%);

(d)         Image of the ICAO (5%);

(e)         Security (20%);

(f)          Engineering (20%).

266             A minimum of 70% had to be obtained in each of the categories in order to get to the second stage. Each category included some evaluation criteria and a total of 10,000 points were allocated for the six categories as a whole. The evaluators could assign a mark of 0 to 10 to each criterion. A specific weighting factor assigned by PWC (0.652 to 50) was applied to each evaluation criterion. The weighted marks were then counted. The average was calculated and had to be greater than 70% for each category, failing which the proposal was disqualified.

267             Each proponent was to be evaluated in terms of a certain number of criteria in order to get an overall tally. To evaluate the proponents, the following criteria had to be met:

(a)         Proponent: experience and financial capacity (40%);

(b)         Building management (30%);

(c)         Design team (30%).

268             Before proceeding to the second stage, the ICAO was to be consulted.

269             Under clause 4.4, PWC reserved the unfettered right to compare the proposals received and evaluate them at its sole discretion as to what was the best proposal.

270             In clause 5.1, PWC reserved the right to accept or reject one or all of the proposals. Such discretion was upheld by the Supreme Court in Martel, supra, at page 895:

A tendering authority has "the right to include stipulations and restrictions and to reserve privileges to itself in the tender documents" ...

271             The courts refuse to substitute their judgment for that of the evaluation committee, unless it is demonstrated that the committee acted in bad faith or did not treat the bidders on an equal footing.

272             The public authority need not disclose its evaluation criteria or the weighting factors (see Hypertec Systèmes inc. v. Commission scolaire de la Capitale, supra).

273             The authority may add some criteria unknown to the bidders, so long as all bidders are treated in the same way (Cécile Lemay et al. v. Corporation de transport Les Seigneuries et al., J.E. 2002-1511 (S.C.)).

274             The purpose of the tendering procedure is essentially to protect taxpayers by enabling PWC to select among bids substantially meeting the requirements the one which, all things considered, has the greatest advantage for the government. (Gestion Complexe Cousineau (1989) Inc. v. Canada, supra, at page 707).

275             As long as all bidders were treated equally, the discretion that PWC gave itself left the evaluators with a certain degree of subjectivity when they compared the proposals with each other. This exercise must be conducted in complete integrity and good faith.

276             In light of these principles, I reject Monit's criticisms of PWC concerning the date of commencement of the lease set at May 1, 1996 in the specifications. This date was the same for all proponents. In regard to the weighting of the criteria without the knowledge of the bidders, all were treated similarly: the method used and the sensitivity of the evaluation model were uniform.

277             The plaintiff cites the inexperience of the evaluators. It was indeed proved that the members of the evaluation team, who were the same for all proponents, had little or no experience in the evaluation of this kind of bids. Nonetheless, I am persuaded, after hearing from several of them, that these evaluators were qualified professionals in their field and that they acted in complete good faith and integrity.

278             Their work was done without bias, without prejudice, to the best of their ability and their knowledge; they exercised their judgment in comparing the various proposals.

(e)         Experts' evidence

279             The instructions given to Macogep (exhibit 1142), the plaintiff's expert, were much broader than those of Cogerec, the defendant's expert. Among other things, Macogep had to

(a)         compare the requirements of the first and second specifications;

(b)         study PWC's evaluation of the Monit proposal on the first and second calls for tender;

(c)         determine whether Monit had met the criteria in both sets of specifications;

(d)         comment on the methodology used by the evaluators during the first and second calls for tender;

(e)         analyze and comment on the Cogerec report of November 17, 2002;

(f)          determine whether the government had altered or improved the project at its expense after the awarding of the contract to Westcliff to enable Westcliff to meet the functionality, engineering, architecture and security criteria.

280             Cogerec's instructions (exhibits 1145A to 1145C) were to review the Monit proposal on the second call for proposals and to express an opinion on the merits of Monit's disqualification by PWC.

281             I must begin by saying that I am impressed by the gigantic, painstaking and precise work of both firms of experts. Transparencies, colour charts, drawings and comparative tables were filed on both sides to facilitate understanding and analysis of the issues to be examined. Messrs. Louis-Yves Lebeau and Charles Aboukhaled, witnesses for the plaintiff, and Nessim Habashi for the defendant, were examined and cross-examined at length. These experts replied to questions in a frank and straightforward manner albeit vigorously in support of their respective theses.

282             My analysis will be limited to a large degree to the experts' comments on the Monit proposal on the second call for tenders. As the evidence demonstrated, Monit was not disqualified on the first call, which means it had satisfied the requirements of the first set of specifications.

283             First of all, I must determine how the experts analyzed Monit's second proposal. Macogep's main criticism of Cogerec in this regard is that Cogerec examined only those criteria in which Monit did not obtain the passing mark of 7 or 70%. Because of this, Macogep says, it is impossible to get an overall view of the proposal since no other criteria were considered by Cogerec.

284             Cogerec replies that in order to conduct that exercise, it would have been necessary to analyze the 172 existing criteria as well as all of these criteria in the other proposals, making a total of 1,720 criteria, because of the relativity between the proposals. Its role, it says, was not to substitute its opinion for that of the evaluators. It was only to verify whether the failures imposed on Monit by the PWC evaluators were justified in light of the specification requirements. To do otherwise could have increased Monit's marks but also decreased them, which would have been contrary to its instructions. It needed only to determine whether the Monit proposal was or was not consistent with the tendering documents.

285             I note, however, that Macogep proceeded in the same way as Cogerec (Macogep report, exhibit 1142, at page 40, 6.2 analysis): "[translation] We reviewed the evaluation of the Monit proposal using the process presented in figure 5.1, for all the evaluation criteria in which it did not receive at least a passing mark of seven (7) in the second call for tenders...."

286             The methodology used by the experts is thus appreciably the same, other than with respect to certain adjustments made by Macogep in favour of Monit. Indeed, while maintaining a failure in some criteria, Mocogep increased the mark, for example from 2 to 5.

287             During the trial, I asked that a document be prepared for me identifying all of the criteria adjusted by Macogep. Exhibit 1151 was filed. Using this information, I will review the categories and the criteria analyzed by the experts (indicated by an asterisk [*]).

"PART A:       ARCHITECTURAL" (ARCHITECTURE)

*          "A. 6.6.1: Main Lobby" (Hall de l'entrée principale)

*          "A. 6.8.1: Number of Spaces" (Nombre d'espaces de stationnement)

288             Here, the two experts agree that these first criteria should be given a passing mark of 7. The defendant asks that I not intervene since the two scores of 6 awarded by PWC were amply explained by Claude Bernard and there was no evidence of bad faith or obvious lack of objectivity on the part of the evaluators.

289             I do not agree. Monit should have been given a 7 for these two criteria. I cannot ignore the experts' comments even if there was no demonstration of bad faith or lack of objectivity.

*           "A.7.1: Time frame for Construction / Renovation" (Échéancier pour la construction/rénovation)

290             Macogep gives this criterion a 7 while Cogerec maintains the 6 awarded by PWC. The fundamental difference between the two experts boils down to this. In a letter, the City of Montréal indicated a 10.5 months delay instead of the 3.5 months provided by Monit for obtaining building permits for some work requiring an alteration in the master plan and the by-laws. The plaintiff's experts claim that this delay could have been negotiated with the City, and, notwithstanding the already tight schedule, the 3.5 months delay could have been complied with by Monit.

291             However, there is no evidence in the record showing how Monit could have compressed this seven-month discrepancy. Monit could have met with the City of Montréal and provided some explanations to the evaluators in order to obtain the passing mark. In fact, PWC suggested to Monit on December 10, 1992 that it meet with the City to gain a clearer understanding of the approval process for its renovation work (exhibit 686). I am therefore confirming the mark of 6 for this criterion.

*          "A.7.2: ICAO Occupancy During Construction" (Occupation de l'OACI durant la construction/rénovation)

292             Macogep assigned a 7 to this criterion instead of the 5 awarded by PWC and supported by Cogerec.

293             PWC was concerned about the disruptions that the ICAO might suffer during the construction and renovation. Macogep, on the other hand, thinks the passing mark should have been awarded because a number of floors were free and available; because no work would be done between 8:00 a.m. and 6:00 p.m. during the week; and because Monit undertook to provide the particulars for the occupancy in a subsequent phase.

294             The PWC evaluator was not satisfied, since the sequence of the move onto the floors had not been demonstrated by Monit. The scenario offered by the evaluator, Mr. Le Sieur, i.e. the inconvenience for the ICAO of being located between two floors under construction, was not unreasonable. I do not intend to intervene here and I confirm the mark of 5 for this criterion.

295             In its conclusions, Macogep awards 70.5% to Monit in architecture. According to my analysis, using exhibit 1151, the mark of 69.4% awarded by PWC increases to 69.7%, which constitutes an insufficient mark for Monit to proceed to the financial stage. Notwithstanding this observation, I intend to analyze the other categories.

"PART B:       ENGINEERING" (INGÉNIERIE)

"B.2.3 Plumbing Systems" (Plomberie)

*           "B.2.3.1 Conformity to Requirements" (Conformité aux exigences)

296             The mark of 6 awarded by PWC and confirmed by Cogerec should be 7 or more according to Macogep. The issue here is whether the ceiling space of 21 inches in certain locations and 17 inches in others in the Monit building could satisfy the specifications.

297             According to the plaintiff's expert, this constraint was not sufficient in itself to yield a tally lower than 7. However, the explanation provided by Mr. Choinière, an evaluator, and confirmed by Cogerec, is reasonable in my opinion. If the ICAO had requested the addition of a partition, a water fountain or a toilet, the 17-inch ceiling space would have compromised its feasibility. So I am maintaining the mark of 6.

"B.5    ELECTRICAL STANDARDS AND COMMUNICATION

SYSTEMS" (Normes de sécurité en électricité et systèmes de

communication)

"B.5.2 Emergency Systems" (Installations de secours)

*          "B.5.2.1.1. General" (Général)

298             The experts agree the mark should be increased from 6 to 7. The defendant concedes that this was an error in good faith since there is a contradiction between the French version and the English version of the specifications. The mark of 7 is accepted.

"B.5.2.2 Emergency Power System" (Système électrique de secours)

*           "B.5.2.2.1 General" (Général)

299             The mark of 4 should be increased to 7, since the experts agree that this failure is unjustified. The defendant conceded this mark in her submissions.

"B.5.5 Vertical Transportation" (Déplacements entre les étages)

*          "B.5.5.1 Service Areas" (Aires de service)

300             The experts agree that Monit failed here. However, Macogep says the mark of 2 awarded by PWC should be increased to 5.

"B.5.5.2 Elevators" (Ascenceurs)

*          "B.5.5.2.1 Passenger Elevators" (Ascenceurs pour les passagers)

301             The experts agree that this is a failure. However, the plaintiff's expert thinks the mark of 5 awarded by PWC should be increased to 6.

"B.5.5.3 Escalators" (Escaliers mécaniques)

*          "General" (Général)

302             The experts agree: Monit fails, but, in Macogep's opinion, the mark of 2 awarded by PWC should be 4.

303             I note, first of all, that Macogep and Cogerec agree that Monit does not obtain a passing mark in respect of the three criteria referred to above. However, Macogep thinks the marks awarded by the evaluators are too severe. That is why, in their analysis, Macogep's experts increase the marks while maintaining a failure. The defendant's counsel examined Mr. Lebeau at length on this issue. It is important to reproduce one of the answers by this witness (transcript, volume 16 at pages 17 and 18):

[translation]

We didn't adjust the marks, we didn't make any value judgment on adjustments where we say: "there's a failure, it should be a bit more... A bit less..." that, we have already explained that to the Court. We made value judgments only if there was a pass or no pass.

...

From memory, the details of the calculations could be verified with Mr. Aboukhaled, but it seems to me we didn't make any adjustment, namely, is it a 2, it should have been a 4, we didn't have any yardstick for doing that. [Emphasis added]

304             When the defendant's counsel asked him whether the adjustments made by Macogep were to take the failure marks and increase them to 7, Mr. Lebeau replied "[translation] exactly".

305             Mr. Aboukhaled, for his part, likewise found that the marks were too severe, but he did not provide any details to justify such adjustments, other than comparing one of the criteria with the same criterion in another bid.

306             In light of this evidence and because of the principle of relativity among the various proposals, I do not see how I could justify an intervention and increase the marks while maintaining a failure under these three criteria. In my opinion, it would have been necessary to analyze these criteria in each of the ten proposals and prove a lack of objectivity or bad faith on the part of the evaluators, and this has not been done.

307             In conclusion, I will use exhibit 1151, and Monit's mark in the "ENGINEERING" (Ingénierie) category will be 68.98%.

"PART C: SECURITY" (SÉCURITÉ)

308             This category was the subject of lengthy debate at trial. At the end of the day, however, the RCMP, Cogerec and even Macogep ended up agreeing that Monit had not obtained the 70% passing mark. The following are the findings of the Macogep report (exhibit 1142, section 6.3 at pages 57 and 58):

[translation]

... We turn now to the "Security" category. We must confirm the evaluation made by PWC according to its requirements: we did not find enough positive elements to adjust the mark obtained in the first call for tenders according to PWC's requirements. The same major problems were carried forward: level B-6 and stairs, movement of the public in the conference block, library and emergency evacuation, level B-2 and B-3 and stairs in the call for tenders no. 2...

...

Some other problems recurred since they were inherent to the buildings: dock shared with BNS, shops in B-2, access to parking by BNS. These situations were therefore going to require security that would be specific to this building. [Emphasis added]

309             The weighted mark awarded by PWC is 66.5% and Macogep, with an adjustment, would have increased it to 67.2%, which is still below the requisite 70% .

310             I do not intend to analyze all of the security criteria in which Monit failed but I will examine some of the criticisms of the defendant made by Monit.

311             Monit is surprised that it could house the ICAO for many years and yet fail in terms of security. The RCMP, who was acquainted with its building, having evaluated it in the past, never sent the results to Monit. The value assigned to certain questions was no longer the same as the value indicated at the meeting of September 29, 1992 and substantially influenced the weighting. Macogep indicated a lot of redundancy in the criteria pertaining to security. Monit had hired a security consultant, CSP, and some control measures by humans or electronic mechanisms had been provided to meet the requirements of the specifications. PWC is criticized for having, with an addendum, removed the clause that allowed this kind of control (static, dynamic) and instead emphasizing the architectural aspect. Because of this, Monit's proposal in regard to the security aspect was doomed to failure.

312             As to the problems related to the deed of easement provided by Monit following a request for clarification by PWC, the plaintiff does not understand why the defendant saw some impediment in the easement to achieving the security concept proposed by Monit. On this issue, the witness M. Riedstra of the Scotia Bank confirms that the deed of easement linking Monit to the bank included an amending clause and it would have been easy to respond to the questions raised by the RCMP.

313             The defendant, for her part, refutes all of these criticisms with the allegation that Monit had known since the spring that its building posed some major security problems (exhibits 1008 and 1009): even Monit's president confessed that he had not been surprised at the failure in this category, the defendant says.

314             The weighting and the existence of a certain redundancy are aspects that all bidders had to deal with, and this does not violate the principle of equality among bidders. PWC was fully entitled to add the addendum in question and to leave the preparation of the security evaluation criteria and the weighting between each question to the RCMP. Coloured plans had been requested as means of conceptualizing the principle of "security zones" established by the RCMP.

315             In response to the PWC requests for clarification on security, Monit limited itself to answering the RCMP concerns with a standard phrase that the details would be provided in a subsequent phase of the project.

316             In response to a request for clarification concerning the easements that might affect the building, Monit simply produced the deed of easement encumbering its property and that of the Scotia Bank, without providing further particulars.

317             Questioned about this, the witnesses Messrs. Byrne and Desjardins of the RCMP provided some explanations that seem reasonable to me.

318             Messrs. Byrne and Desjardins were worried by the answers prepared by Monit's security consultants. Postponing the particulars concerning the contemplated measures was unsatisfactory. In their view, it was absolutely necessary to understand the concept of "security zones" proposed by the various bidders in order to assess whether security could be compromised. The RCMP requirement in this regard was clear: the "security zones" had to be connected with the structure of the building and not established only by human or electronic (static and dynamic) control measures. That is why certain criteria were considered much more important than others and why the drafting of the criteria and the determination of their respective weight had been assigned to the RCMP. The weighting was uniformly applied by the evaluators irrespective of whether the proposals pertained to new buildings or existing ones (testimony of Mr. Habashi).

319             In regard to the deed of easement, the RCMP witnesses had such concerns that they requested an opinion from the Department of Justice. Although it is true that this opinion did not reach them until after the marks had been determined, it nevertheless remains that they were very concerned with the consequences of this easement on security in the Monit building.

320             Concerning the amending clause in this notarial deed, the bank's representative, Mr. Riedstra, confirmed that Monit had never approached the bank to amend the easement in 1992.

321             Accordingly, the defendant's argument concerning the security category is accepted. As a consequence, Monit's mark will be 66.5%.

"PART F: FUNCTIONALITY" (FONCTIONNALITÉ)

322             Monit obtained 68% in this category. Macogep adjusts the mark for one criterion from 5 to 7, which increases the overall mark for this category to 72%. Cogerec, for its part, maintains the PWC evaluation. The criterion on which the experts do not agree is the following:

*          "Single Use Nature" (Occupation unique)

323             To increase the Monit mark, Macogep argues that the definition of "[translation] enjoyment of the building as if it were the sole occupant" did not exist anywhere. According to Macogep, Monit had provided for a garage control that met the requirement that only the RCMP could authorize cars to park on an hourly or short-term basis. At level B-2, the presence of shops did not alter the image and functioning of the ICAO. The only irritant was the joint use of the truck entrance to the dock and the automobile entrance to the parking lot. An additional joint control with the Scotia Bank was needed. Macogep does not understand either why Monit obtained the passing mark on this criterion on the first call for tenders and failed with a mark of 5 on the second call for tenders.

324             Cogerec's reply (testimony of Mr. Habashi, transcript, volume 40 at pages 131 to 133) is the following:

[translation]

A. Well there are two possible situations, that there is only one occupant in a building. In that case, it is "single use" situation. There is one occupant in a building. If there is more than one occupant in a building, there is a requirement that says that one of these occupants must use the building as if it was the only occupant. It's as if there were no other occupants in the building.

To my way of thinking, it's very clear, the difference. That it's "single use" or "single use in nature".

325             This interpretation is consistent with the written reply of the evaluators to the question that was asked (Macogep report, section 6.2.4 at page 54):

Q: Has the proponent demonstrated that the ICAO premises can function such that ICAO has enjoyment of the building as if it were the sole occupant?

[translation]

E: doesn't satisfy, shared basement: shops, parking lot

[Emphasis added]

326             In my opinion, the words "single use nature" are not at all confusing. Cogerec's opinion confirms that Monit did not satisfy the requirements of this criterion at the following levels (exhibit 1145A, section (3) 3.4 at page 84):

(a)         B-2: presence of shops and a food court;

(b)         L-1: receiving dock and loading area shared with the bank;

(c)         B-6: parking spaces for tenants of the Scotia tower.

327             It should be kept in mind that the RCMP had raised a number of questions about the security in these places in particular. It would have been necessary to amend the deed of easement if ICAO was to be able to enjoy the building as if it were the sole occupant. Since such evidence was not presented, I do not intend to intervene and the 68% mark in the category of functionality is maintained.

328             To sum up, my analysis confirms that Monit fails in the following categories: architecture, engineering, security and functionality.

(f)         Meeting of January 12, 1993

329             At the general meeting of January 12, 1993, the evaluators filed the marks they had awarded to each of the criteria in their own sphere of activity. They examined the marks in the other disciplines. The main objective was to determine the final marks for each of the proposals. In other words, the goal was to respect the principle of relativity among the proposals (testimony of Claude Bernard).

330             The report of this meeting prepared by Mr. Byrne of the RCMP, filed as exhibit 727, shows that Monit had qualified in all categories except security. The plaintiff does not understand why, after this meeting, its proposal did not get a passing mark in three other categories: architecture, engineering and functionality. It argues that because of the obvious contradictions in the testimony of Messrs. Byrne, Miller, Bernard, Desjardins and Choinière, PWC should not have added Monit to the list of those who failed in these three categories.

331             After a detailed review of this testimony, I am not persuaded that the evidence supports the plaintiff. Mr. Bernard testified that when he learned of the security reports prepared by the RCMP, it was decided that the evaluation of functionality in all the proposals would be reviewed because there was a significant connection between security and functionality. Because the functionality was being re-evaluated, it was necessary to review the architecture because there was also a connection between functionality and architecture. In Monit's case, since it had failed in the security category, the re-evaluation had to be done for functionality and then for architecture (Claude Bernard, transcript, volume 34 at pages 15 to 24).

332             All of the proposals, and not just Monit's, were re-examined, with the result that six proposals failed in the functionality category while in Mr. Byrne's report all of the proposals had obtained the passing mark in that category.

333             In terms of architecture, it was not only Monit that was added to the list of failures; another proponent suffered the same fate.

334             In engineering, Mr. Choinière explains that his marks concerned only mechanical engineering while two other disciplines, electrical and structural, were assigned to other evaluators. In Mr. Byrne's report, the reference to only one evaluator, Mr. Choinière, is the reason why Monit appeared, erroneously, to have obtained the passing mark in that category. Blue book no. 75 at page 17,586 indicates clearly a final mark of 68.4%. It was the electricity subcategory that was the decisive factor in Monit's failure.

335             The report of this meeting also indicates as follows:

[translation]

Mr. Miller made a recapitulation of the various disciplines. The Pomerleau, Westcliff, Canderel B and Monit proposals would be among the qualifying proposals but the Monit proposal would have to be reviewed....

12:50 - suspension of the meeting

12:55 - discussions with Mr. Miller about the Monit case

13:20 - lunch break

14:15 - return to the Cedars room. Re-evaluation of the Monit proposal, evaluation mark maintained....

[Emphasis added]

336             Three witnesses were examined concerning these references. On the one hand, Mr. Miller wanted to satisfy himself that the security evaluators were certain of the result of their evaluation. That is why he asked them to re-evaluate the Monit proposal. On the other hand, he asked them to review their marks, to verify the reasons for their decision and to let him know whether this proposal could be accepted in the security category or whether the evaluators still maintained a failure. This testimony is corroborated by Messrs. Byrne and Desjardins.

337             They therefore re-evaluated the security in the Monit proposal and, after a serious review, they maintained their initial evaluation, a failure.

338             I attempted, without success, to find some contradictions in this testimony that could have supported the plaintiff's thesis.

339             The minor divergences do not support Monit's conclusions in any way. It is my opinion, rather, that the defendant's witnesses were transparent and had done their work conscientiously. As for the RCMP representatives, they acquiesced in Mr. Miller's request, re-examining the category of security in the Monit bid to see if it had any chances on its side. This exercise convinces me that Monit was treated in complete fairness like all the other bidders.

340             Moreover, the plaintiff' experts confirmed the lack of discrimination or favouritism on the part of the evaluators. It is interesting, in this regard, to reproduce some extracts from the testimony of Mr. Lebeau (transcript, volume 16 at page 143):

[translation]

Q. Yes, of course. And at the end of this analysis, did you find any evidence whatsoever that the proponents had not been treated on the same footing?

A. We concluded that the methodology used to evaluate the various bids seemed to be the same that had been used for everyone; that was part of our conclusions.

Q. So there is no evidence of discrimination or favouritism?

A. No, there is no evidence of discrimination or favouritism. What we did mention, however, that in our opinion was an element that is not possible to judge, but there is a lack of benchmarks in the marking. And that's important, the lack of a benchmark, it leads to evaluations that we characterized as discretionary.

Q. But obviously, this lack of benchmarks was common to all.

A. It was common to all, exactly. [Emphasis added]

(g)         Westcliff

341             The proposal that was finally adopted, accepted and authorized by all the decision-making bodies was that of the Westcliff company on its site on Université Street in Montréal. Westcliff constructed a building there in which the ICAO now resides.

342             The plaintiff submits that there was some "arm-twisting" to persuade the ICAO to move into the Cité internationale, where the new building stands. Reproducing to its advantage some extracts from the testimony of Messrs. Duguay, Miller, Coulombe and Bélec and exhibits 124, 126, 331, 543 and 1179, the plaintiff argues that all of the parties involved in this case favoured the Cité internationale and that as a result Monit was treated unfairly.

343             Moreover, the City of Montréal, the government of Quebec, the SCCIM, the FORD-Q and PWC achieved their dream by relocating the ICAO in the Cité internationale. From the outset, Monit did not have a chance of obtaining the 20-year contract that was awarded to Westcliff.

344             Also, the way in which the Monit proposal was treated is in no way comparable to Westcliff's, which had the benefit of $4.5 million in studies and projects paid out of public funds by the defendant after Westcliff was awarded the contract.

345             On the other hand, the defendant argues that the specifications specifically provided that the ICAO would be consulted prior to the final decision. This right of veto in favour of the ICAO was known to all (testimony of Mr. Miller). That is why the ICAO had hired a consultant, Mr. Pierre Martin, to conduct an independent evaluation of the proposals and make recommendations. The results of that evaluation, without technical security and engineering comments, demonstrated that the Westcliff site on Université came first with 92.5% , while Monit ranked fourth at 76.8%. Mr. Martin recommended that a number of proposals be eliminated, but not Monit's.

346             Although the ICAO obtained the money to pay its consultant from the FORD-Q, the preponderance of evidence established that Pierre Martin had no bias against Monit. He could very well have asked that it be eliminated like some others, but he did not do so.

347             The three proposals qualified to present financial proposals were Westcliff-Université, Westcliff-Viger and Pomerleau. In accordance with the provisions of the specifications book, the ICAO was consulted. Some particular concerns were raised concerning air quality, vibrations or noise at some of the three sites suggested by the government. The ICAO even hired consultants. The latter recommended the Westcliff-Université project, relying on the existing studies, without doing the calculations by computer because of time and budget constraints. In June 1993, an offer providing that Treasury Board would authorize the financing of the construction project in Montréal was presented to the ICAO. This offer was submitted to the member states, which almost unanimously accepted the project.

348             In response to Monit's criticisms of PWC for amending the Westcliff contract after the fact, contrary to the technical requirements of the specifications, the government counsel emphasize that the Canadian authorities were forced to incur some additional expenses before reaching a final decision on the Westcliff proposal. In any event, they say, a clause in the tendering document expressly permitted the negotiation of changes in the contract, both before and after it was awarded. It is in fact obvious from a reading of this clause that the government did reserve this right. The plaintiff, relying on [1978] 1 S.C.R. 1107">Adricon v. Town of East Angus, [1978] 1 S.C.R. 1107, claims that such action would have necessitated a new call for tenders. However, that case was the subject of comment by Thérèse Rousseau-Houle, supra. She saw it, rather, as a measure intended to lessen the rigidity of the administrative formalities. She writes, at page 260:

[translation] If the amendment has to do with an essential term of the contract, or if it alters the overall cost of the contract, the prescribed formalities must be strictly observed....

349             Notwithstanding a very eloquent argument by counsel for the plaintiff, I accept the defendant's argument that the anti-vibration and anti-explosion measures, which cost $4.5 million, are far from significantly exceeding the maximum budget for the contract in the order of $166.5 million awarded to Westcliff.

F.          CONCLUSION

(1)         ACKNOWLEDGEMENTS

350             I want to take the opportunity to express my sincere thanks to the two teams of counsel who accompanied me for 48 days: for the plaintiff, Marc Laurin, Peter Cullen, Judith Dagenais and Patrice Deslauriers; and for the defendant, Marie-Josée Hogues, Guy Sarault and André Brault. These talented, experienced lawyers helped me to familiarize myself rapidly with the numerous facts in dispute. Civility and respect reigned throughout the proceedings.

351             I do not want to overlook, either, the contribution of counsel Judith Dagenais and of Sylvie Baribeau and Denise Doss, who provided me with technical support and ensured the efficient progress of the hearings.

352             I wish to note the impeccable work of the clerks, Line Vaillant and Sylvie Baillargeon. Finally, my thanks as well to the bailiffs.

(2)         ISSUES AND ANSWERS

353             The answers to the issues in dispute are as follows:

(a)         during the periods preceding the first call for tenders, and during the first call for tenders and the second call for tenders, did the government and its representatives have a duty of fairness, good faith or diligence to the plaintiff?

Answer: Yes.

(b)         if so, did the government and its representatives breach this duty of fairness, good faith or diligence to the plaintiff?

Answer: No, for the first and third period and yes for the second period, as to the duty of fairness and diligence, in failing to consider the Monit proposal after the first call for tenders despite the fact that it was the only technically qualified proposal.

(c)         if so, did the government, in doing so, incur liability to the plaintiff?

Answer: Yes, for the second period.

(d)         did the defendant or any of its departments or representatives conspire to ensure that the ICAO would not remain in the Monit building?

Answer: No.

(e)         during the period preceding the first call for tenders, did the defendant make misrepresentations to Monit concerning her intentions in relation to the long-term renewal of the leases or did she breach her duty to act in good faith?

Answer: No.

(f)          did Monit know, or should it have known very early in the process, that PWC would consider more than one option and that consequently the long-term renewal of the leases was not guaranteed in any way?

Answer: Yes.

(g)         during the period of the first call for tenders, was the proposal made by Monit evaluated carefully, equitably and impartially by the defendant?

Answer: Yes, but the defendant should have considered the Monit proposal and initiated negotiations with it after finding that its proposal alone was technically qualified.

(h)         during the period of the second call for tenders, was Monit's proposal evaluated carefully, equitably and impartially by the defendant?

Answer: Yes.

(i)          during the period of the second call for tenders, did the defendant act in accordance with her duty of good faith toward everyone?

Answer: Yes.

(3)         COSTS AND DAMAGES

354             The parties reserved the right to make representations on both the damages and the costs once liability had been determined. They will therefore have until April 19, 2004, to attempt to settle these questions. After that date, if no settlement has been reached, the case will proceed by way of a reference to a judge or to another person designated by the Chief Justice.

                                           JUDGMENT

FOR THE REASONS SET OUT ABOVE,

THE COURT ORDERS THAT:

the parties will have until April 19, 2004, to attempt to settle the questions of costs and damages. After that date, if no settlement has been reached, the case will proceed by way of a reference to a judge or to another person designated by the Chief Justice.

           "Michel Beaudry"

                    Judge

Certified true translation

Suzanne Gauthier, C.Tr., LL.L.

SCHEDULE 1

INDEX

[paragraph number]

A.        INTRODUCTION                                                                                                     [1]

B.        ISSUES                                                                                                                       [8]

C.        FACTUAL CONTEXT                                                                                              [12]

1)         GENERAL

(a)        History of the building                                                                        [12]

(b)        Who is Monit?                                                                                   [13]

(c)        Picard Report                                                                                     [14]

2)         CHRONOLOGY OF DISCUSSIONS AND CALLS FOR

TENDERS BETWEEN MONIT AND PWC                                              [15]

(a)        In 1991

(b)        Monit's proposal of December 19, 1991                                          [19]

(c)        Letter of February 12, 1992 - Request for extension

of a short-term lease (exhibit 340)                                                     [20]

(d)        First call for tenders - June 1992                                                      [22]

(e)        Proposals received                                                                             [23]

(f)        Monit proposal not considered                                                          [24]

(g)        Second call for tenders - September 1992                                        [25]

D.        PARTIES'SUBMISSIONS                                                                           [34]

(1)        THE PLAINTIFF

(a)        The law                                                                                               [35]

(i)         Legal context

(A)       Applicable law -- Resort to

provincial law

(B)       Transitional law                                                          [37]

(C)       Nature of the proceeding                                           [38]

(D)       Value of common law precedents                               [39]

(E)       Burden of proof                                                          [43]

(b)        Wrongful conduct prior to calls for tenders                           [45]

(i)         Good faith

(A)       Crown liability

(B)       General comments                                                     [46]

(C)       Good faith in negotiations                                         [49]

(ii)        Breakdown in talks: source of liability                                  [50]

(A)       Principle

(B)       Particular context of the lease                                   [52]

(C)       Unacceptable conduct                                                 [53]

(D)       Nature of the liability                                                 [55]

(iii)       Breach of the obligation to inform                                         [56]

(A)       General comments

(B)       Parameters of the obligation to inform                      [57]

(iv)       Appropriation of confidential information                  [61]

(c)        Wrongful conduct during calls for tenders                             [62]

(i)         Nature of the call for tenders

(ii)        Foundation: equality of bidders                                             [63]

(iii)       Duty to act with fairness and transparency               [64]

(iv)       Duty to accept a complying bid                                              [65]

(v)        A bona fide fault brings about liability                                   [66]

(vi)       Initial call for tenders: the refusal to

negotiate constitutes fault                                                     [67]

(vii)      Second call for tenders                                                          [72]

(A)       Amendment of criteria

(B)       Amendment of contract                                             [73]

(2)        THE DEFENDANT                                                                           [76]

(a)        Applicable law                                                                                    [81]

(b)        Obligations applicable prior to the calls

for tenders process                                                                            [82]

(c)        Principles applicable to calls for tenders                                           [88]

(d)        Causal relation                                                                                   [99]

(e)        Evidence                                                                                             [100]

(f)        Defendant's submissions concerning the

conspiracy alleged by Monit                                                  [101]

(i)         General context

(A)       Canadian government

(B)       ICAO                                                              [102]

(C)       Search for options by DFA and

its agent, PWC                                                            [103]

(g)        Calls for tenders                                                                                [104]

(i)         First call for tenders issued May 5, 1992

(ii)        Second call for tenders issued

September 17, 1992                                                               [110]

E.         ANALYSIS                                                                                                                 [119]

(1)        PRELIMINARY REMARKS

(2)        APPLICABLE LAW                                                                           [122]

(3)        PERIOD PRIOR TO THE FIRST CALL FOR TENDERS                        [126]

(a)        Access to information requests, privileges

invoked under the Canada Evidence Act

(b)        SCCIM                                                                                               [130]

(c)        Monit's intention to negotiate a long-term lease                              [145]

(d)        Request for an 18 month renewal option at the

expiration of the lease: swindle, conspiracy                          [159]

(4)        FIRST CALL FOR TENDERS                                                                    [174]

(a)        Context of the first call for tenders

(b)        Process                                                                                               [175]

(c)        Duty to negotiate with Monit                                                            [197]

(d)        By agreeing to participate in the second call

for tenders, did Monit waive its rights resulting

from the first call for tenders?                                                           [215]

(5)        SECOND CALL FOR TENDERS                                                                [230]

(a)        Process

(b)        Individual meeting of September 29, 1992                            [239]

(c)        Questions and answers, requests for clarification                [254]

(d)        Evaluation                                                                                          [263]

(e)        Experts' evidence                                                                              [279]

(f)        Meeting of January 12, 1993                                                            [329]

(g)        Westcliff                                                                                             [341]

F.        CONCLUSIONS                                                                                                       [350]

(1)        ACKNOWLEDGEMENTS

(2)        ISSUES AND ANSWERS                                                                            [353]

(3)        COSTS AND DAMAGES                                                                            [354]

FEDERAL COURT

SOLICITORS OF RECORD

DOCKET:                                            T-878-93

STYLE:                                                MONIT INTERNATIONAL INC.

v.

HER MAJESTY THE QUEEN

PLACE OF HEARING:                      MONTRÉAL, QUEBEC

DATES OF HEARING:                     March 24, 25, 26, 27 and 31, 2003;

April 1, 3, 7, 8, 9, 10, 23, 24, 29 and 30, 2003;

May 1, 5, 6, 7, 8, 20, 21 and 22, 2003;

June 2, 4, 5, 9, 10, 11, 12, 25 and 26, 2003;

July 2, 3, 7, 8, 9, 10, 21, 22, 23 and 29, 2003;

August 18 and 19, 2003;

September 8 and 9, 2003

REASONS FOR JUDGMENT

AND JUDGMENT:                           THE HONOURABLE MR. JUSTICE BEAUDRY

DATED:                                              JANUARY 20, 2004

APPEARANCES:

Marc Laurin

Peter Cullen

Judith Dagenais

Patrice Deslauriers                                 FOR THE PLAINTIFF

Marie-Josée Hogue

Guy Sarault      

André Brault                                          FOR THE DEFENDANT

SOLICITORS OF RECORD:

Stikeman Elliot

Montréal, Quebec                                 FOR THE PLAINTIFF

Heenan Blaikie

Montréal, Quebec                                 FOR THE DEFENDANT

Morris Rosenberg

Deputy Attorney General of Canada

Montréal, Quebec                                 FOR THE DEFENDANT