Roger Gauthier Inc. v. Canada, docket T-1124-76

                                              Date: 19991126

                                           Docket: T-1124-76

OTTAWA, ONTARIO, NOVEMBER 26, 1999.

BEFORE:    TREMBLAY-LAMER J.

Between:

                    ROGER GAUTHIER INC.,

                                                  Plaintiff,

                           - and -

                   HER MAJESTY THE QUEEN,

                                                  Defendant,

                           - and -

               BELCOURT CONSTRUCTION COMPANY,

                                               Mis-en-cause.

                          O R D E R

     The plaintiff's action is dismissed with costs.

Danièle Tremblay-Lamer             JUDGE

Certified true translation

Bernard Olivier, LL. B.

                                                                                              Date: 19991126

                                                                                         Docket: T-1124-76

Between:

                                        ROGER GAUTHIER INC.,

                                                                                                          Plaintiff,

                                                       - and -

                                    HER MAJESTY THE QUEEN,

                                                                                                       Defendant,

                                                       - and -

                          BELCOURT CONSTRUCTION COMPANY,

                                                                                                  Mis-en-cause.

                                         REASONS FOR ORDER

TREMBLAY-LAMER J.

[1]       This is an action in tort against the Crown brought pursuant to ss. 3(1)(a) and 8 of the Act respecting the Liability of the Crown for Torts and Civil Salvage[9] to determine the latter's liability for the damages alleged by the plaintiff to have resulted from the rejection of a public tender.

FACTS

[2]       In 1974 the Department of Public Works, following the preparation of a project with a customer department, the Post Office Department, made a leasing/construction call for tenders to build a postal station at Cartierville on Montréal Island, the postal station to be known as the "Cartierville" postal station. The call for tenders notice was published in the newspapers of April 8, 16 and 22, 1974.

[3]       The call for tenders sought bids for a building with an area of approximately 9,780 sq. ft., with three alternative leasing arrangements, leases for 10, 15 or 20 years, for the future site of the post office. The deadline for submitting bids was set at May 22, 1974.

[4]       On May 22, 1974 two bids had been received, one by the plaintiff and the other by the mis-en-cause Belcourt Construction Company (hereinafter "Belcourt").

[5]       The plaintiff submitted[10] a leasing offer for a building having a total area of 10,364 sq. ft., containing the following leasing provisions:

          [TRANSLATION]

          THE LESSEE SHALL LEASE the said premises for a period of twenty years beginning on November 1, 1974 and ending on October 31, 1994.

          The lessee hereby undertakes to pay the owner the sum of $88,164 per annum during the said period, in monthly installments of $7,347, the first payment to be due and payable on November 1, 1974, subject to abatements under any other clause of this lease.

                                                        . . . . .

          It is hereby agreed that the lessee shall reimburse the lessor the sum of $50,000, representing part of the cost of renovating the building referred to above. This amount shall be payable by the lessee to the lessor on the date of the first monthly payment of rent, namely November 1, 1974.

[6]       In Belcourt's case, it submitted[11] a one-story building with a service area of 9,780 sq. ft. The leasing provisions were the following:

          (a)       lease for a period of ten years at an annual rental of $135,000, at a rate of $13.80 a sq. ft.;

          (b)       lease for a period of fifteen years at an annual rental of $128,000, at a rate of $13.08 a sq. ft.;

          (c)       lease for a period of twenty years at an annual rental of $125,000, at a rate of $12.78 a sq. ft.

[7]       The plaintiff's bid was not accepted on the ground that the $2,500 security deposit required in chapter B3, article 5 of the specifications had not been provided.

[8]       After its bid was rejected, the plaintiff was told that the call for tender forms which it was given at its request had been old and outdated forms which did not include the $2,500 security deposit requirement, a requirement which was clearly contained in the new forms.

Plaintiff's arguments

[9]       The plaintiff submitted that it never had an opportunity to be heard or to be given any clear explanation of the reasons prompting the defendant to reject its bid, despite the fact that the defendant has never denied having given it the wrong call for tender forms.

[10]     In fact, the plaintiff's failure to provide the security deposit was the result of the defendant's error in not supplying the same forms to all potential bidders.

[11]     The government authorities had a legal duty to correct their error by allowing it to complete its bid by filing the $2,500 security deposit required.

[12]     The plaintiff met all the requirements contained in the specifications except as regards the security deposit: since this was an error by the defendant and this requirement was only incidental and minor, it would have been easy for the plaintiff to correct the situation without altering the nature of the contract in question.

[13]     The plaintiff submitted that in the circumstances it was entitled to expect to be treated fairly by the government authorities and that having its bid arbitrarily disqualified was a civil wrong by the authorities in question for which they should be held liable.

[14]     Further, it was entitled to have a legitimate expectation that the government authorities would strictly observe the procedures laid down by statute and regulation.

[15]     Moreover, the existence of a list to be used in informing certain contractors that there was a call for tenders before the latter was published is contrary to the rules of fairness and natural justice, since this situation gives the latter an unfair advantage.

[16]     The plaintiff further submitted that Belcourt's bid was not in accordance with the requirements contained in the specifications. The defendant therefore committed an abuse of her discretionary authority by permitting unilateral changes to be made to Belcourt's bid after the closing date for the filing of bids had expired [sic]. This abuse of authority was especially significant as the plaintiff's bid met all the requirements contained in the specifications.

[17]     Regarding the non-compliance of Belcourt's bid, the plaintiff submitted that the evidence was that the purchase option filed with the other documents required had expired, thereby contravening article 5 contained in chapter A1 of the specifications.

[18]     In addition to the purchase option, no resolution was filed by the company authorizing a signatory to act for and on behalf of the company, and in such circumstances no signature was valid; further, there was no trace of the company's seal, contrary to article 17 of chapter A1 of the specifications; no plan was submitted by Belcourt when its bid was filed and this was contrary to article 9 of chapter A1 of the specifications.

[19]     In view of these omissions the defendant had misused her discretionary authority, since under article 20 contained in chapter A1 of the specifications she was not empowered to consider Belcourt's bid.

[20]     Moreover, the price suggested by the plaintiff was less than Belcourt's price, and as a result of negotiations with the defendant Belcourt had to reduce its rental price for a twenty-year period.

[21]     Moreover, Belcourt submitted four series of plans before the latter were finally accepted. The plaintiff further noted that there were several discrepancies outstanding at the time Treasury Board approval was given: the final plans were not submitted until January 29, 1975 and approved on February 2, 1975. On January 17, 1975 the plaintiff had to move the back yard so that the requirements of the specifications would be met.

[22]     As the rights of the parties took their final form when the bids were finally submitted any subsequent renegotiation of the essential parts of the contract without consulting the other bidders was an abuse of the defendant's discretionary authority and vitiated the entire call for tenders procedure. This abuse was a civil wrong by the defendant. A new call for tenders should have been held as soon as the latter discovered the discrepancies in Belcourt's bid.

[23]     Citing the testimony of Mr. Bellemare, the project officer representing the Department of Public Works at the time, the plaintiff submitted that it had been the victim of systematic discrimination by the defendant and that there had been an agreement between Crown officials that it would never get any government contracts. This conduct was therefore a civil wrong which clearly demonstrated the abuses of right committed by the defendant's officials.

[24]     The plaintiff submitted that it is entitled to receive damages for the loss of profit resulting from the arbitrary actions of the defendant.

[25]     As regards the application of the Treasury Board order dated May 29, 1964, to the extent that it was applicable, the Belcourt bid should have been rejected since it did not meet the specifications.

Defendant's arguments

[26]     The defendant submitted that the plaintiff had been given special treatment by being provided with information on the call for tenders even before the public notices appeared in the newspapers.

[27]     Based on this information, the plaintiff was then in a position to submit a bid consistent with the specifications. However, its lack of experience, knowledge and expertise had prevented it from realizing the importance of filing a bid consistent with the specified requirements.

[28]     The evidence was that the plaintiff's duly authorized representative Mr. R. Gauthier did not go to the right floor of the Department of Public Works to obtain the call for tender documents. Accordingly, the defendant maintained that it was up to potential bidders to do whatever was necessary in order to go to the address indicated in the public notices published in the newspapers.

[29]     Furthermore, there was no question that the plaintiff had not submitted the $2,500 security deposit as required by article 5 of chapter B3 of the specifications and had not submitted the three leasing arrangements as set out in article 18 of chapter A1 of the specifications.

[30]     The defendant submitted that in 1974 there was no statute or regulation requiring the Crown to proceed by a call for tenders in leasing a building, whether existing or to be built. It was not until after 1975 that this requirement was imposed and the courts developed new rules of administrative law.

[31]     However, these rules do not apply to the case at bar since they did not exist at that time. Accordingly, legitimate expectation and the duty to act fairly cannot be relied on as a basis for tortious liability, as provided in art. 1053 of the Civil Code of Lower Canada, and the latter creates no positive right.

[32]     As indicated by the bid analysis sheet,[12]Belcourt's bid met all the specified requirements. In so far as the purchase option was not consistent with the requirements, this was only a minor discrepancy and did not invalidate the bid.

[33]     The defendant noted that Belcourt had agreed to carry out the customer department's request regarding a separate entrance for postal workers and a separate yard, although the changes were made subsequently as the result of discussion with the Post Office Department.

[34]     As to the negotiation of a lower leasing cost for twenty years, it was suggested since only one bidder had met the specified requirements and the Treasury Board was informed of this decision: the latter accordingly awarded the contract to Belcourt with full knowledge of the facts.

[35]     Certainly, during the construction and the delivery of the premises there were several exchanges between the defendant, the customer department (the Post Office Department) and Belcourt: however, the latter did not in any way alter the nature or cost the project authorized by the Treasury Board.

[36]     Additionally, the changes made for the postal workers' entrance and the separate back yard were simply normal adjustments that had no effect on acceptance of Belcourt's bid.

[37]     The Treasury Board order dated May 29, 1964 was a provision having the effect of law as it was adopted pursuant to the 1952 Financial Administration Act,[13]and the plaintiff was thus properly rejected since it did not meet the essential requirement of submitting a security deposit when it filed its bid.

[38]     According to Wilfrid Nadeau Inc. v. The Queen,[14]it is for the plaintiff to show that the Crown's representatives were at fault in making the recommendations on which the Treasury Board based its decision. It will not suffice to show that the recommendations were false, incomplete or misleading: they must have led to the approval by the Treasury Board and without them the Treasury Board would have given preference to the plaintiff's offer.

[39]     Additionally, the rules of law applicable to an action in tort against the Crown were those in effect at that time. Under s. 3 of the Act respecting Liability of the Crown for Torts and Civil Salvage,[15]*it is arts. 1053 et seq. of the Civil Code of Lower Canada which apply.

[40]     The Crown's representatives committed no fault or negligence in the case at bar in the various stages of the call for tender approval process. The evidence was that Belcourt's bid was consistent with and met the requirements of the specifications.

[41]     In any event, the defendant argued that judicial review of administrative decisions and tort liability do not necessarily cover identical situations. As a result, not every situation gives rise to a remedy in damages.

[42]     Finally, there is a distinction between Crown officials, namely employees of the Department of Public Works, and members of the Treasury Board, since the latter cannot be regarded as Crown officials. Treasury Board decisions based on all the relevant information cannot give rise to liability by the Crown. In order to create such liability the plaintiff must present evidence of the existence of wilful or deliberate fault. In the case at bar the defendant submitted that there was no evidence of such fault in the awarding of the contract to Belcourt by the members of the Treasury Board.

POINT AT ISSUE

          Based on the applicable law, did one or more Crown officials commit fault in applying the Treasury Board order dated May 29, 1964?

LAW APPLICABLE IN 1974

General principles

[43]     As indicated by the Supreme Court of Canada in R. v. Nord-Deutsche et al.,[16]the rules of law applicable to an action in tort against the Crown in right of Canada are those in effect at the time the acts giving rise to the action were committed.

                                                                                     

[44]     In these circumstances, we need to look at the law applicable in 1974, the year in which the acts giving rise to the right occurred.

[45]     It is worth noting that the legislative background was very different in administrative law from what it is today, especially as regards the concept of the "duty to act fairly", which was not developed until the late 1970s.[17]

[46]     The action for damages brought by the plaintiff is thus based on ss. 3(1)(a) and 4(2) of the Act respecting Liability of the Crown for Torts and Civil Salvage,[18]which read as follows:

3. (1) La Couronne est responsable des dommages dont elle serait responsable, si elle était un particulier majeur et capable,                      (a)      d'un délit civil commis par un préposé de la Couronne, ou ...           4. (2) On ne peut pas exercer de recours contre la Couronne, en vertu de l'alinéa 3(1)a) à l'égard d'un acte ou d'une omission d'un préposé de la Couronne, sauf si, indépendamment de la présente loi, l'acte ou l'omission eût donné ouverture à une poursuite en responsabilité délictuelle contre ce préposé ou sa succession.

3. (1) The Crown is liable in tort for the damages for which, if it were a private person of full age and capacity, it would be liable           (a)       in respect of a tort committed by a servant of the Crown, or ...                                                                 4. (2) No proceedings lie against the Crown by virtue of paragraph 3(1)(a) in respect of any act or omission of a servant of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or his personal representative.

[47]        For the definition of a tort, s. 2 indicated:[19]

2. Dans la présente loi :                                           . . . . . « Délit civil » , relativement à toute matière surgissant dans la province de Québec, signifie un délit ou un quasi-délit.

2. In this Act                                           . . . . . "tort" in respect of any matter arising in the Province of Quebec, means delict or quasi-delict.

[48]        We must therefore refer to the law applicable in the province of Quebec as set out in art. 1053 of the Civil Code of Lower Canada, which read as follows:

Art. 1053. Toute personne capable de discerner le bien du mal, est responsable du dommage causé par sa faute à autrui, soit par son fait, soit par imprudence, négligence ou inhabilité.

Art. 1053. Every person capable of discerning right from wrong is responsible for the damage caused by his fault to another, whether by positive act, imprudence, neglect or want of skill.

[49]        Accordingly, in order to make the Crown liable the plaintiff had (and still has to, despite the introduction of the new Civil Code of Quebec in 1994) first present evidence that a fault was committed by the Crown or one of its officials.

[50]        In the case of a Crown official, the provisions applicable in delict or quasi-delict were different from those applicable in situations involving an ordinary litigant: there had to be two essential factors.

[51]        First, in view of s. 4(2) of the Act respecting Liability of the Crown for Torts and Civil Salvage,[20]for the Crown to be held liable the act or omission alleged as the basis for compensation must have created a cause of action in tort against the Crown official.

[52]        Secondly, although Crown immunity was still the rule the Crown's liability was admitted when it was expressly stated in legislation adopted by the federal Parliament. Additionally, such legislation should be given a limiting interpretation.

[53]        These rules applicable in questions of delict and quasi-delict by Crown officials were restated many times in decisions of the period. The late Noël J.A. indicated in Deslauriers-Drago v. The Queen:[21]*

                     [TRANSLATION]

                     It thus appears that when a claim is made against the Crown for damages resulting from the negligence of its servants in the performance of their duties, the claimant must conclusively establish that the servant himself could be held liable for the damages sustained and claimed if he were sued. [My emphasis.]

                     In the case at bar under s. 3(1)(a), therefore, the applicant must clearly establish that one or more of the respondent's officials was negligent in the performance of their duties and functions; that the injuries sustained by the applicant were the result of that negligence; and that the negligence of one or more officials is such that he or they could have been held personally liable if he or they had been sued. [My emphasis.]

                     The burden of proof on these facts is with the applicant and no presumption can shift this statutory duty. The provision imposing liability derives from a special federal statute, to which we referred earlier, and not from the Civil Code of Quebec. [My emphasis.]

                     Further, s. 4(2) of the Act confirms that the Crown's liability in such a case is vicarious liability, in accordance with the rule respondeat superior, not direct liability. For it to be held liable, as we said earlier, it must be shown that one or more of the Crown's servants could have been held liable if the claim had been brought against them. In a decision of the President of this Court dealing with s. 19(c) of the Exchequer Court Act, which laid down the conditions of Crown liability at the time, and the rules contained in which were subsequently reaffirmed by the new ss. 3(1)(a) and 4(2), it was stated in Magda v. The Queen [1953] Ex.C.R. 22, at 31:

                               To engage the responsibility of the Crown to a suppliant under section 19(c) it must be shown that an officer or servant of the Crown, while acting within the scope of his duties or employment, was guilty of such negligence as to make himself personally liable to the suppliant, for the Crown's liability under section 19(c), if the term liability is a precise one to apply to the Crown, is only a vicarious one. Consequently, the suppliant must allege facts from which negligence on the part of an officer or servant of the Crown may be found, that is to say, facts showing that the officer or servant of the Crown owed a legal duty, whether imposed by statute or arising otherwise, to the suppliant to take care to avoid injury to him, that there was a breach of such duty while the officer or servant was acting within the scope of his duties or employment and that injury to the suppliant resulted therefrom: vide Lochgelly and Coal Co. v. McMullan; Hay or Bourhill v. Young; The King v. Anthony.

                     The rule that an act of negligence can only be regarded as fault giving rise to liability if it corresponds to a legal duty to act has been recognized by our courts in many situations, inter alia in [1927] S.C.R. 575">Canadian National Railways Co. v. Lepage, [1927] S.C.R. 575, at 578, per Rinfret J.:

                               It is a familiar principle that neglect may, in law, be considered a fault only if it corresponds with a duty to act. [My emphasis.]

Crown officials' legal duty to act in concluding lease

[54]        Adopted pursuant to the Financial Administration Act,[22]the Government Contracts Regulations[23]indicated the procedure to be followed by government authorities in concluding certain contracts between the Crown, acting through its duly authorized representatives, and litigants.

[55]        In the action at bar, since the conclusion of a lease was in question, we must refer to the relevant sections, namely ss. 20 and 21 of the Regulations,[24]which read as follows:

20. (1) Une autorité contractante peut, sans l'agrément du Conseil du Trésor, conclure un bail,           a)         dans le cas d'un bail requis relativement à l'administration du ministère des Travaux publics, lorsque :                      i)         le taux annuel calculé en fonction du montant à payer en vertu du bail ne dépasse pas quinze mille dollars et la durée du bail ne dépasse pas cinq ans, ou                      ii)        le taux annuel calculé en fonction du montant à payer en vertu du bail dépasse quinze mille dollars mais le montant total en vertu du bail ne dépasse pas quinze mille dollars, ou           b) en tout autre cas, lorsque                      i)         le taux annuel calculé en fonction du montant à payer en vertu du bail ne dépasse pas cinq mille dollars et la durée du bail ne dépasse pas cinq ans, ou                                                                                                      ii)        le taux annuel calculé en fonction du montant à payer en vertu du bail dépasse cinq mille dollars mais le montant total à payer en vertu du bail ne dépasse pas quinze mille dollars et la durée du bail ne dépasse pas un an.

20. (1) A contracting authority, without the approval of the Treasury Board, may enter into a lease,           a)         in the case of a lease required in connexion with the administration of the Department of Public Works, where                      (i)       the annual rate calculated on the basis of the amount to be paid under the lease does not exceed fifteen thousand dollars and the term thereof does not exceed five years, or                      (ii)      the annual rate calculated on the basis of the amount to be paid under the lease exceeds fifteen thousand dollars but the total amount to be paid under the lease does not exceed fifteen thousand dollars; or           (b)       in any other case, where                      (i)       the annual rate calculated on the basis of the amount to be paid under the lease does not exceed five thousand dollars and the term thereof does not exceed five years, or                                (ii)      the annual rate calculated on the basis of the amount to be paid under the lease exceeds five thousand dollars but the total amount to be paid under the lease does not exceed fifteen thousand dollars and the term thereof does not exceed one year.

(2) Une autorité contractante peut, à l'expiration de la durée d'un bail prévu au sous-alinéa (i) de l'alinéa (a) du paragraphe (1) ou au sous-alinéa (i) de l'alinéa (b) du paragraphe (1) concernant tous les locaux, renouveler le bail ou conclure un nouveau bail concernant ces locaux, sous réserve des dispositions prévues au paragraphe (1) en ce qui concerne le montant à payer en vertu du bail, mais en aucun cas l'autorité contractante ne peut, sans l'agrément du Conseil du Trésor, rester en possession continue des locaux pour plus de dix ans sauf si chaque bail concernant les locaux ou chaque renouvellement du bail est requis relativement à l'administration du ministère des Travaux publics et si le montant à payer en vertu de chaque semblable bail ne dépasse pas cinq mille dollars par année.

(2) A contracting authority may, upon the termination of the term of a lease described in subparagraph (i) of paragraph (a) of subsection (1) or subparagraph (i) of paragraph (b) of subsection (1) of any premises, renew the lease or enter into a new lease of those premises, subject to the provisions set out in subsection (1) respecting the amount to be paid under the lease, but in no event, without the approval of the Treasury Board, may the contracting authority remain in continuous possession of the premises for longer than ten years except if each lease of the premises or each renewal of the lease is required in connection with the administration of the Department of Public Words and the amount to be paid under each such lease does not exceed five thousands [sic] dollars per annum.

(3) En aucun cas, l'autorité contractante ne peut, sans l'agrément du Conseil du Trésor, renouveler un bail ou conclure un nouveau bail à l'égard des locaux, à l'expiration de la durée du bail, prévu au sous-alinéa (ii) de l'alinéa a) du paragraphe (1) au sous-alinéa (ii) de l'alinéa b) du paragraphe (1), concernant les locaux en question, sauf si l'ensemble des montants à payer pour la possession des locaux en vertu de chaque bail concernant les locaux et chaque renouvellement en l'espèce ne dépasse pas quinze mille dollars.

(3) In no event, without the approval of the Treasury Board, may the contracting authority, upon the termination of the term of a lease, described in subparagraph (ii) of paragraph (a) of subsection (1) or subparagraph (ii) of paragraph (b) of subsection (1) of any premises, renew the lease or enter into a new lease of those premises except if the aggregate of amounts payable for possession of the premises under each lease of the premises and each renewal thereof does not exceed fifteen thousand dollars.

21.       Aucune autorité contractante ne doit, sans l'agrément du Conseil du Trésor, conclure un bail concernant des locaux devant servir d'habitation à des fonctionnaires ou employés de Sa Majesté.

21.       No contracting authority shall, without the approval of the Treasury Board, enter into a lease of premises intended to be used as living quarters for offices of servants of Her Majesty.

[56]        In addition to these Regulations, the Treasury Board at that time also adopted, pursuant to the powers conferred by the 1952 Financial Administration Act,[25]an order dealing with the rejection of tenders and the information to be supplied by bidders when the tenders were filed. That order reads as follows:

          Government Contracts - Rejection of Tenders and Information to be Provided at Public Opening of Tenders                                                

          ____________________________________________________________________________

          The Board at its meeting of May 21, 1964, decided that the procedure outlined below should be followed regarding (a) the rejection of tenders where bidders have not complied with the security requirements or where specifications have not been met, and (b) information to be given by departments at public opening of tenders.

         

                     (i)      A tender submitted without security, where the furnishing of security is specified in the tender call, should be rejected at tender opening as it is not a tender. [My emphasis.]

                     (ii)     A tender submitted with improper security is to be dealt with in the following manner. If the department considers the security to be such that the bid does not qualify as a tender and the tender which is recommended by the department [deletions omitted] would not otherwise require Board approval for entry into the contract, the disqualified tender is not considered a tender and Board approval is not required for entry into the contract. If, under a similar situation, the tender recommended by the department [deletions omitted] requires Board approval for entry into the contract, the submission to the Board should contain a list of bona fidetenders and a separate list showing the bids which the department considers should not be classified as tenders. As regards the latter list, if the bid is lower than the tender recommended by the department, an explanation should be given as to why in the judgment of the department, it is not considered to be a tender.

                     (iii)     A tender which does not meet the specifications is to be dealt with in the same manner as a tender submitted with improper security as outlined in (ii) above. For the contracts which require Board approval, an explanation should accompany the list of bids which the department considers are not classified as tenders explaining in what respects the bid, in the judgment of the department, does not meet the specifications and is not acceptable. [My emphasis.]

                     (iv)     At the public opening of tenders the general rule to be followed is that only the name and address of the bidder, the amount of the tender and an indication as to whether or not security has been furnished should be given.

[57]        This order is especially important as it directly affects the acceptance of any bid made pursuant to a call for tenders issued by government authorities, whether the call for tenders procedure was imposed by statutory regulation or was used freely by the authorities. It thus has the force of law and imposes a legal duty on Crown officials responsible for applying it in the course of their duties.

[58]        In short, therefore, we can conclude from the wording of this order that failure to observe it by officials of the Crown amounted to regulatory fault giving rise to an action under the Act respecting Liability of the Crown for Torts and Civil Salvage,[26]and hence in the case at bar an action in delict and quasi-delict under ss. 1053 et seq. of the Civil Code of Lower Canada.

[59]        The defendant submitted that the Crown could not be held liable since the necessary approvals had to be given by the Treasury Board, which cannot be regarded as a servant of the Crown. However, such an argument has not been accepted by the courts, which have found that the Crown could be held liable when an act of [sic] omission by the servant contributed to the Treasury Board approval. As Walsh J. indicated in Nadeau Inc. v. The Queen:[27]

                               Plaintiff's present proceedings cannot therefore be based on the decision of the Treasury Board to award the contract to A. Plamondon & Fils Inc. rather than to itself but must rest on proving fault on the part of Crown servants as such in the recommendations made by them to the Treasury Board on which its decision was based, that not only were the recommendations made false, incomplete or misleading, but that it was as a result of such recommendations that Treasury Board gave its approval, and that but for such recommendations it would instead have approved plaintiff's tender. This very evidently poses a heavy burden of proof on plaintiff, but in view of the decision of the Court of Appeal, proof of a nature which it is entitled to attempt to make.

                               Article 1053 of the Quebec Civil Codereads as follows:

                                                                                                . . . . .

                     This is not substantially different from common law rules of tort, and plaintiff emphasises that act of "imprudence" or "neglect" can be sufficient to found an action in damages. Defendant made reference to sections 3(1)(a) and 4(2) of the Crown Liability Act which read respectively as follows:

                                                                                                . . . . .

                     and contended that since no specific allegation of fault was made against any individual Crown servant the present action could not lie against the Crown. I would not go this far in interpreting the limiting provisions of section 4(2) as it would appear to me that liability can still accrue to the Crown for a collective act or omission of a number of servants all of whose acts or omissions contributed, though perhaps in a small way, to the fault complained of which resulted in the recommendation to the Treasury Board which plaintiff complains of as being the cause or origin of the damages. Interpreted in this way there would be no apparent conflict between the provisions of the Crown Liability Act and Article 1053 of the Quebec Civil Code in its application to the facts of this case.

[60]        We indicated above that one of the essential requirements in the order was in fact the filing of security in the form of a sum of money. A second requirement stated that a bid which did not meet the conditions contained in the specifications was to be rejected.

[61]        We conclude from the foregoing that in the initial stage officials who in the course of their duties have accepted a bid which is not in accordance with the requirements have committed fault making the Crown liable.

[62]        It is interesting to note that over the years there have been few substantial changes in the call for tenders procedure. Quite recently the Supreme Court, in M.J.B. Enterprises Ltd. v. Construction de Défense (1951) Limitée et al.,[28]emphasized the importance of complying with the conditions contained in the specifications. A failure to do this will invalidate the bid when it appears from the documents that the bidders must comply:[29]

                               It is clear from the foregoing description of the Instructions to Tenderers and the Tender Form that the invitation for tenders may be characterized as an offer to consider a tender if that tender is valid. An invalid tender would be, as outlined in these documents, one that either was submitted too late, was not submitted on the required Tender Form, altered the Tender Form or did not provide the information requested, did not include the required bid security, had an imbalance in prices, did not comply with the Rules of Practice for sub-trades, or did not conform to the plans and specifications.

                                                                                                . . . . .

                               Therefore, according to the Instructions to Tenderers and the Tender Form, a contractor submitting a tender must submit a valid tender and, in submitting its tender, is not at liberty to negotiate over the terms of the tender documents. Given this, it is reasonable to infer that the respondent would only consider valid tenders. For the respondent to accept a non-compliant bid would be contrary to the express indication in the Instructions to Tenderers that any negotiation of an amendment would have to take place according to the provisions of paragraph 12(b). It is also contrary to the entire tenor of the Tender Form, which was the only form required to be submitted in addition to the bid security, and which does not allow for any modification of the plans and specifications in the tender documents.

[63]        In conclusion, I should observe that in connection with art. 1053 of the Civil Code of Lower Canada, when the requirements for fault had been met it was necessary to prove the existence of damage and of a causal link between the damage and the alleged fault.

[64]        However, my jurisdiction in the case at bar is limited to determining the existence of fault. In accordance with the directive issued by Hugessen J. on April 2, 1998, if I come to the conclusion that fault was committed a re-hearing will be held to allow the parties to make representations regarding the damages alleged.

ANALYSIS OF EVIDENCE AND APPLICATION IN CASE AT BAR

A. Applicable stages in acceptance of offer

[65]        The plaintiff called Mr. J.A. Laurendeau, an engineer, Regional Director of the Department of Public Works, who was responsible at the time for all Quebec operations. This testimony is especially relevant as it clearly explains the operation of the Department of Public Works and the decision-making process leading to the awarding of government contracts. I therefore accept the major evidentiary value of his testimony on this point. I reproduce a table submitted by the defendant that illustrates the various stages.[30]