Supreme Court of Canada
Nova Scotia Construction Co. v. The Quebec Streams
Commission, [1933] S.C.R. 220
Date: 1933-02-07.
The Nova Scotia
Construction Company Limited (Plaintiff) Appellant;
and
The Quebec Streams Commission (Defendant) Respondent.
and
The Royal Bank of
Canada (Mise-en-cause).
1932: November 14, 15, 16, 17; 1933:
February 7.
Present: Rinfret, Lamont, Smith, Cannon and
Crocket JJ.
ON APPEAL FROM THE COURT OF KING’S BENCH,
APPEAL SIDE, PROVINCE OF QUEBEC
Contract—Building of dam—Tender—Fixed price—Additions
or deductions to be at the rates of the tender—Extras—Quantum meruit—False
representations—Contract not void, but voidable.
A party to a contract, as soon as he has
knowledge of any fraud or false representations, must decide at once either to
continue to carry out
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the contract or take immediate steps to
repudiate it. If he continues to carry out the contract, he cannot later, on
the ground of such fraud or false representations, ask for payment on a basis
different from that provided for in the contract or on quantum meruit or
as damages arising from the fraud or misrepresentations. United Shoe
Machinery Co. v. Brunet ([1909] A.C. 330) followed.
APPEAL from the decision of the Court of King’s
Bench, appeal side, province of Quebec, affirming the judgment of the Superior
Court, Sévigny J., and maintaining the appellant’s action in part.
The respondent, The Quebec Streams
Commission, is an instrumentality of the Crown in the right of the province of
Quebec and has been incorporated to build improvements in the rivers and
streams of the province; and, under statutory provisions, it was authorized to
erect certain structures designed to raise the high water level of Lake
Kenogami to a certain height and to regulate and control the discharge of the
lake at its outlet. The respondent called for tenders, after preparing plans
and specifications. The appellant put in a tender much lower than the other
offers received by the Commission which had estimated the cost at $1,324,513,
its tender being for $880,682, a difference of more than $225,000 between it
and the lowest of the other tenders submitted which had been prepared on the
same estimates and quantities. The Chief Engineer of the Commission warned the
appellant that he considered their price too low and that he did not feel that
the Commission should accept their tender. However the appellant insisted to do
the work and signed a contract by which it agreed to do the work embraced by
its tender and contract for the sum of $880,682 and to proceed at such rate of
progress as to enable the waters of Lake Kenogami to be raised to elevation 108
on April 1st, 1924, for the further sum of $105,000, making a total of
$985,682, and further agreed that all subsequent additions to or deductions
from the quantities indicated in the said form of tender should be figured at
the rates appearing in its said tender. The trial judge found that the
Commission paid upon the progress estimates the sum of $1,176,994.84, and that
it also paid $351,451.59 of which it advanced $168,992.34, guaranteed by
plaintiff’s deposit of $150,000, or $18,992.34 more than the deposit. The
appellant, however, was not satisfied with the payments made and sued to
recover either as extras
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under the contract, or as damages arising
from misrepresentations, or on the basis of quantum meruit, an
additional sum which had been transferred to the mise-en-cause, The Royal Bank
of Canada, of $442,600.60. The trial judge granted, on different heads, a total
sum of $30,756.91. As the Commission should be credited with the sum of
$18,992.34 which it advanced to appellant in excess of $150,000, it left to the
credit of appellant a sum of $11,764.57, for which judgment was given by the
trial judge. That judgment was affirmed by the appellate court.
L. A. Forsyth K.C., O. L. Boulanger K.C.
and H. Hansard for the appellant.
Chs. Lanctot K.C. and Louis St.-Laurent
K.C. for the respondent.
The judgment of Rinfret, Cannon and Crocket JJ.
was delivered by Cannon J., and the judgment of Lamont and Smith JJ. was
delivered by Smith J.—The Court was unanimous in dismissing the appeal with
costs.
Mr. Justice Cannon, after stating the facts as
concisely as possible (the case being printed in seventeen volumes), added the
following remarks:
Cannon J.—* * * Can a, quantum meruit be recovered in this case?
The contract would first have to be set aside
either by mutual consent of the parties or by a judgment. Arts. 1022 (3) and
1138 C.C. The works have been executed and the case of United Shoe Machinery
v. Brunet is
authority to the effect that, even in case of false and fraudulent
representations, a contract is not void, but merely voidable at the election of
the person defrauded, after he has had notice of the fraud.
Unless and until he makes his election, and
by word or act repudiates the contract or expresses his determination not to be
bound by it (which is but a form of repudiation), the contract remains as valid
and binding as if it had not been tainted with fraud at all.
In the present case, the appellant asked for an
extension of time, as provided in the contract, to complete the works, which
was granted; but never at any time did elect to have
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the contract cancelled for the error alleged in
the declaration, and the action itself does not pray for such cancellation by
the Court. On the contrary, appellant elected to treat the contract as
subsisting, claiming that it executed it in its entirety and cannot and does
not now asked to avoid it. Art. 1000 C.C. Error, fraud and violence or fear are
not causes of absolute nullity in contracts. They only give a right of action,
or exception, to annul or rescind them.
* * *
Moreover, in this case, clause 37 protects the
respondent completely and binds the appellant to suffer the consequences of any
miscalculation or misinformation bona fide contained in the call for
tenders or plans. We have here a “marché sur devis” defined as follows by
Planiol and Ripert, “Traité de droit civil français,” 1932, tome XI, p. 163,
no. 917:
917. Suite. Marché sur
devis—Au lieu de fixer définitivement par avance la somme globale à payer, les
parties peuvent se contenter de simples prévisions, basées sur le coût d’exécution
des divers détails. L’entrepreneur présente ces prévisions dans un écrit appelé
devis, et le marché est dit “marché sur devis.” Le prix total dépendra le l’ensemble
des travaux accomplis conformément au devis. Il peut donc varier par l’addition
de détails nouveaux, de travaux supplémentaires. On peut dire que dans ce cas
encore il y a marché à prix fait, mais article par article, et non plus en
bloc; chaque détail du travail a son prix particulier, et le total à payer ne
pourra être connu qu’après exécution, suivant que tels ou tels travaux auront
été faits. Il est fixé après coup, et non d’avance comme dans le forfait. Le
marché sur devis concerne presque exclusivement les entreprises de travaux
matériels.
If appellant had wished to protect itself and
secure a possible increase in the unit price, it should have done what its
witness Swan says at page 120, line 28, vol. III:
In actual practise myself, I invariably
stipulate if there is some question of depth that we do not know about and that
there is likely to be a variation in the depth of the foundation, we invariably
put in a clause to the effect that unit rates under the contract would be
applicable down to five feet below what is shown on the plans, and anything
beyond that, then you have got to take the matter into consideration and try
and meet the cost and work out what is a fair and reasonable price to allow for
the additional cost. That is my own personal practice and has been with my
chiefs for all my career.
Nothing of the sort happened; appellant took a
chance and its speculation brought it a loss. Who is to suffer for its
miscalculation?
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Article 1012 C.C. enacts:
Persons of the age of majority are not
entitled to relief from their contracts for cause of lesion only.
What I have said disposes, in my opinion, of any
attempt to recover for the alleged tort, under 1053 of the Code, because the
information that the appellant says it relied upon was, in its view, grossly
inaccurate and misleading. Grant v. The Queen, under circumstances more favourable to the
petitioner, was decided in favour of the Crown. It should have consulted an
experienced engineer to prepare a well considered tender and understood that
the honest belief and hope of the Respondent’s engineer did not amount to a
warranty as to plans and quantities; forsooth, it could have found that out by
reading, with enough attention to understand them, the specifications and
standard form of contract placed at its disposal. This case is distinguishable
from Pearson & Sons v. Dublin Corporation, as it is impossible to find here
fraudulent representations. The contract in this case stands as the law of the
parties. In Bush v. Whitehaven Trustees, reported in Hudson’s On
Building contracts, vol. 2, p. 122, there was a finding by the jury, that the
conditions of the contract were so completely changed, in consequence of the
defendants’ inability to hand over the sites of the work as required as to make
the special provisions of the contract inapplicable. Here the contract was made
with anticipation of the circumstances of which the appellant complains and
provided for them; it is therefore applicable and must be applied. I refer to
these English cases because they have been quoted and discussed before us and
below, although this case must be, and our decision is governed by the law of
Quebec.
* * *
These findings, on matters of fact, unanimously
concurred in by the Court of King’s Bench, cannot be disturbed by us, unless we
reach the conclusion that they are clearly wrong or against the evidence. The
appellant has failed to establish either of these two conditions.
Under the statute 3 Geo. V, c. 6, secs. 6 and
16, any change in the consideration or price of the contract for extra work,
not covered by the terms of the contract or the
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unit price, had to be approved by the
Lieutenant-Governor in Council. The engineer, even if acquiescing to any
change, could not bind the Crown and change the contract. See De Galindez v.
The King.
The province paid appellant large sums over and
above the price of its tender. It is not entitled to more, unless the
respondent agrees to it. We cannot, by a judgment, order a thing, which, under
the contract, can be done only by mutual consent, expressed by Order in
Council, according to the special statute limiting the capacity to contract of
the respondent. Arts. 360-364-366 C.C. We agree with the arguments and
conclusions contained in the very able and complete judgment of the learned
trial judge and the clear cut exposition of the law of contracts of the
province of Quebec of the ex-Chief Justice Lafontaine and we concur when he
says:
un principe primordial
doit dominer tout le litige. C’est celui de la sécurité des contrats que les tribunaux
ont pour mission de maintenir, et non pas de refaire pour venir en aide à un
contractant malheureux.
Plaintiff can get no relief from the courts. His
case might bring further adjustments by mutual consent, if the respondent
agrees to reconsider the matter. On the evidence, it is impossible to differ
from the conclusions unanimously arrived at by the provincial courts and the
appeal must be dismissed with costs.
Mr. Justice Smith agreed with Mr. Justice Cannon
that the appeal should be dismissed, being of the opinion that “in view of the
provisions of the contract, there was no misrepresentation and no difference of
conditions to warrant the setting aside of the contract entered into by the
parties, and that the appellant must be paid for the work done according to the
terms of the contract, except as varied by mutual consent.”
Appeal dismissed with costs.
Solicitors for the appellant: Boulanger, Marquis
& Lessard.
Solicitor for the respondent: Louis St. Laurent.
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