Date: 20000531
Docket: A-146-96
CORAM: DÉCARY J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA and
THE FEDERAL MINISTER OF PUBLIC
WORKS CANADA,
Appellants,
- and -
HERVÉPOMERLEAU INC.,
Respondent.
Hearing held at Montréal, Quebec on Tuesday, May 16, 2000.
Judgment at Ottawa, Ontario on Wednesday, May 31, 2000.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRING REASONS BY: NOËL J.A.
DISSENTING REASONS BY: LÉTOURNEAU J.A.
Date: 20000531
Docket: A-146-96
CORAM: DÉCARY J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA and
THE FEDERAL MINISTER OF PUBLIC
WORKS CANADA,
Appellants,
- and -
HERVÉPOMERLEAU INC.,
Respondent.
REASONS FOR JUDGMENT
DÉCARY J.A.
[1] In this appeal brought by Her Majesty the Queen ("Her Majesty") from a judgment by Denault J. reported at (1996), 108 F.T.R. 273, the Court must interpret a tax adjustment clause contained in contracts concluded between Her Majesty and the respondent bidder.
[2] The background to this case is a very special one.
[3] The tax increase in question was announced by the Minister of Finance before the bids were filed; it was not to come into effect until after the filing of the said bids and was not retroactive to the date the bids were filed; the legislation authorizing this tax increase had not been adopted by Parliament at the time the bids were filed; and the political fates decreed that Parliament was dissolved a few days before the bids were filed and a new government elected even before the date scheduled for the tax increase to come into effect. In short, it is an imbroglio in contractual, legislative and political terms the background to which I shall give without further ado.
[4] On April 19, 1983, the Minister of Finance, Hon. Marc Lalonde, filed a "Notice of Ways and Means Motion in the Budget" in which he announced inter alia that as of October 1, 1984 the federal sales tax on building materials and equipment intended for building would increase from 5 percent to 6 percent.
[5] On July 9, 1984, even before Parliament adopted a bill implementing this Notice, Parliament was dissolved and a general election called for September 4, 1984.
[6] On July 11, 1984, and then on August 8, August 22, September 5, September 12 and September 19, 1984, the respondent contractor responded to calls for projects in Sainte-Flavie and Donnacona and filed six bids. In each of these bids the contractor had calculated its price based on the 5 percent tax rate that was in effect at the time each of the said bids was filed.
[7] The bid form completed by the contractor contained the following standard clause:
[TRANSLATION]
. . . the said amount is a total, subject to any addition or deduction provided for in the contractual documents, but if there is a change in any tax imposed pursuant to the Excise Act, the Excise Tax Act, the Old Age Security Act, the Customs Act or the Customs Tariff, and such change is made public after:
(1) the date when this tender was posted or delivered by other means, or
(2) if this tender is revised, the date of the final revision,
the amount of this offer shall be increased or decreased as provided in GC22.
[A.R.. vol. 1, at p. 26]
[8] General condition GC22, referred to by the aforesaid clause, read as follows:
[TRANSLATION]
GC22 Increase or decrease in costs
22.1 The amount established in the Articles of Agreement shall neither be increased or decreased by reason of an increase or decrease in the cost of the work resulting from an increase or decrease in the cost of labour, machinery, materials or salary scales set out or prescribed in the Terms and Conditions of Employment.
22.2 Notwithstanding paragraph GC22.1 and clause GC35, the amount set out in the Articles of Agreement shall be adjusted in the manner provided for in paragraph GC22.3 in the event of a change in a tax imposed pursuant to the Excise Act, the Excise Tax Act, the Old Age Security Act, the Customs Act, or the Customs Tariff.
22.2.1 occurring after the date on which the Contractor presented a bid for the Contract,
22.2.2 applying to the materials, and
22.2.3 affecting the cost of these materials to the Contractor.
22.3 In the event of a fiscal change in accordance with paragraph GC22.2, any relevant amount indicated in the Articles of Agreement shall be increased or decreased by an amount equal to the amount which, on an examination of the registers referred to in clause GC51, represents the increase or the decrease, as the case may be, in the costs that is directly attributable to this change.
22.4 For the purposes of paragraph GC22.2, where a tax is changed after the date on which the Contractor presented a bid, but where the Minister of Finance had given public notice thereof prior to the date of presentation of the bid, the fiscal change shall be deemed to have occurred prior to the date on which the bid was presented.
[A.R., vol. 2, at p. 171]
[9] On August 9, 1984, in the middle of the election campaign, Hon. Lalonde issued press release No. 84-126 titled "Government Would Reintroduce Fiscal Measures", various relevant passages from which should be cited:
The Honourable Marc Lalonde, Minister of Finance, announced today that it is the government's intention, if re-elected, to reintroduce in the new Parliament the tax and tariff measures proposed in the Budgets of April 19, 1983 and February 15, 1984, that were on the Order Paper of the House of Commons at the time of dissolution. These would be effective from the dates set out in the Notices of Ways and Means Motions in the last session.
. . . . .
In the interim, pending such government action, the Department of National Revenue will continue, in the traditional manner, to administer budgetary measures on a provisional basis.
The Minister said he is making this announcement in order to minimize confusion and uncertainty among taxpayers.
. . .
[A.R., vol. 2, at p. 196]
[10] On September 4, 1984 the government of Prime Minister Turner was defeated and the Progressive Conservative Party, led by Brian Mulroney, took over. The new government began operation on September 17, 1984 and Michael Wilson became Minister of Finance at that time.
[11] On September 27, 1984 Hon. Wilson issued press release No. 84-144 titled "Sales Tax Increase to Proceed as Scheduled", from which I take the following passages:
Finance Minister Michael Wilson announced today that the government has decided it must proceed with the 1 percentage point increase in the federal sales tax already scheduled to take effect October 1, 1984.
The increase was originally proposed by the previous government in the April 1983 budget in order to finance its Special Recovery Program.
"The previous government committed funds in the April 1983 budget that it counted on recouping by levying the tax increase," Mr. Wilson said. "In effect, those funds have already been largely spent. They have left us to pay the bills and the cupboard is bare."
"I am announcing the implementation of the increase now to eliminate any uncertainty that may exist," Mr. Wilson said.
Legislation for the increase will be introduced as early as possible in the new Parliament. As originally announced, the increase will be effective during the period October 1, 1984, to December 31, 1988.
. . .
[A.R., vol. 2, at p. 200]
[12] On October 9, 1984 the Assistant Deputy Minister, Operations, of the Department of Public Works released the following memorandum, titled [TRANSLATION] "Federal Sales Tax Increase":
[TRANSLATION]
We have been informed that the 1 percentage point increase in the federal sales tax, announced by the Minister of Finance on September 27, 1984, comes under the Excise Tax Act.
Consequently, building contracts in effect on October 1, 1984 and bids for building projects posted or delivered to the Bid Depository before this announcement are eligible for a price adjustment. This adjustment should be made in accordance with the calculation method laid down in the "construction tender" form, in clause GC22 of the General Conditions of the standard government form for building contracts and in clause 19 of the General Conditions of the short form for bids and contracts.
Enclosed for reference purposes are extracts from the "construction tender" form, copies of the relevant clauses from the General Conditions and the press release of September 27, 1984 published by the Minister of Finance.
To ensure that the bidders take this federal sales tax increase into account in preparing their bids for future calls for tenders, please make sure that the following notice is included in the "General Instructions to Tenderers":
The Department of Finance has informed us that when Parliament convenes on November 5, 1984 legislation will be adopted to increase the federal sales tax, retroactive to October 1, 1984.
This special notice should be inserted in the bid documents for calls for tenders on building projects issued before the date of adoption of the legislation, scheduled for early November 1984.
[A.R., vol. 2, at p. 201]
[13] On November 8, 1984 Hon. Wilson tabled in the House of Commons a "Notice of Ways and Means Motions to amend the Excise Tax Act", which indicated that the government intended to table a bill that, inter alia, would increase the sales tax on certain goods from 5 percent to 6 percent as of October 1, 1984 (ss. 11 and 82(i) of the Notice of Motions (A.R., vol. 2, at pp. 206 and 221)).
[14] On November 13, 1984 the Assistant Deputy Minister, Operations, of the Department of Public Works changed his mind and issued the following memorandum:
[TRANSLATION]
Further to my memorandum of October 9, 1984 regarding the proposed federal sales tax increase, we have just received from the Treasury Board Secretariat a revised memorandum telling us that, although the initial announcement of this 1 percent increase was made on April 19, 1983, only building contracts in effect on that date and contracts resulting from calls for tenders for building projects sent by mail or delivered to the bid office before that date, and still in effect on October 1, 1984, will be eligible for the adjustment in accordance with the calculation method laid down in the building contracts form. The adjustment accordingly applies only to materials purchased after October 1, 1984.
[A.R., vol. 2, at p. 223]
[15] On February 26, 1985 royal assent was given to the Act to amend the Excise Tax Act and the Excise Act (S.C. 1985, c. 3). In ss. 16(2) and 51, this Act gave legislative form to the intentions set out in the Notice of Motions of November 8, 1984 regarding the increase in the sales tax retroactive to October 1, 1984.
[16] On May 25, 1987 the contractor Pomerleau claimed the sum of $177,385.58 from Her Majesty, with interest from October 1, 1984. At the start of the hearing the statement of claim was orally amended by counsel for the contractor Pomerleau, who was now claiming the sum of [TRANSLATION] "$161,259.62 with interest pursuant to payment provisions PP 6.2 and PP 6.3". This sum, the amount of which is not in dispute, represents the total additional cost to the contractor of the 1 percent tax increase which came into effect on October 1, 1984.
[17] During the trial the contractor called its Administrative Director, René Mathieu, whom Denault J. found to be "very articulate and credible". Denault J. summarized the gist of Mr. Mathieu's testimony as follows:
[7] The record shows that René Mathieu knew, when he participated in the preparation of the bids, that the sales tax might be increased effective October 1, 1984, but he also was aware that the dissolution of the House effectively terminated all its proceedings of a legislative character, which would have to commence anew as if they had never begun. In fact, he had obtained a copy of the Rules of the Senate in early 1984. Since an initial bid had to be filed on July 11, 1984, two days after the dissolution of the House, he nevertheless advised his estimators that a tax rate of 5% should be taken into account in making the bid. And, he says, that is how all the subcontractors whom he had asked to participate in the bid, and the materials suppliers, prepared their prices, in terms of a 5% tax. All of the bids submitted between July 11, 1984 and September 19, 1984 were made on the same basis. As indicated above, the plaintiff was the lowest bidder (the evidence disclosed that even if the bids had been made to reflect a tax of 6% on the materials, the plaintiff would still have been the lowest bidder), the contracts were signed and the work duly performed.
[My emphasis.]
The evidence did not disclose what tax rate the other bidders used in calculating their prices. The record did show that as of September 27, 1984, the date of Hon. Wilson's press release, every new bid prepared by the contractor Pomerleau was calculated on a 6 percent tax basis (transcript, at p. 52).
[18] On January 18, 1986 Denault J. allowed the action and ordered Her Majesty to pay the respondent the sum of $161,259.62 with interest at the legal rate as of May 6, 1986, the date of the notice.
[19] On analysis, this case does not have the broad dimensions it seems to have at first sight. Counsel for the respondent readily agreed that the trial judge from time to time used the word "prorogation" when only "dissolution" of Parliament was at issue in the case at bar. Counsel also admitted that he was not arguing that the "public notice" referred to in clause GC22 had to take the form of a notice of ways and means motion; further, according to his own argument it was the Minister's press release of September 27, 1984, not the Notice of Motions dated November 8, 1984, that was the "public notice" contemplated by the contract. Counsel also noted that, unlike the trial judge, he did not base his argument on ss. 53 and 54 of the Constitution Act, 1867. Finally, counsel noted that this was a case in which the dissolution of Parliament and the filing of the bids occurred even before the tax at issue could be the subject of provisional collection - it only became applicable as of October 1, 1984 - so that administrative precedents relating to provisional implementation of taxation cases are in no way in question. I should note here that by "provisional implementation of taxation" I refer to the administrative policy by which the Department of National Revenue collects a tax not yet approved by Parliament, but which it is known will be retroactive because the Minister of Finance has already announced this. Such provisional collection is sometimes described as a voluntary payment.
[20] The issue turns essentially on the interpretation to be given to the phrase "public notice" contained in clause GC22. According to counsel for Her Majesty, this phrase refers to any public notice given by the Minister of Finance, regardless of parliamentary context: such a notice is effective as soon as it is given, regardless of the fact that Parliament may subsequently be dissolved. According to counsel for the respondent, the phrase contemplates a public notice given by the Minister of Finance in a parliamentary context: that notice may no longer be set up against a contract when at the time of the bids there was no longer a Parliament capable of adopting legislation to give effect to the announced intention to impose a tax. Further, counsel for the respondent added, if there is any doubt as to the meaning of the expression "public notice" that doubt should be resolved in favour of the party who has contracted the obligation (here the respondent bidder) in accordance with the rule for interpreting contracts laid down in art. 1019 of the Civil Code of Lower Canada.
[21] The interpretation of the contract suggested by the respondent seems correct to me, or at least reasonable in the circumstances. Paragraphs .2, .3 and .4 of GC22 contemplate a "fiscal change" occurring after a bid is filed. This "fiscal change" must result from "a change in a tax imposed pursuant to the Excise Act" and other statutes named. The "public notice" given by the Minister of Finance is notice of the "fiscal change", and so necessarily of a legislative amendment to be made with retroactive effect. This "public notice" is given before the filing of the bid.
[22] We know, from the agreement which has developed on budgetary policy, and which by exception allows the government to collect on a voluntary basis a tax which Parliament has not yet approved, that the public notice that makes such early implementation possible is a formal notice that the government intends to table legislation to that effect. What is in question is a notice of legislative intent, and in my opinion it cannot be otherwise: the measure is so exceptional in our parliamentary system that the public notice cannot be severed from the legislative process which must eventually be completed, and without which the notice can have no effect.
[23] Also, when the contract refers to public notice of a change in a tax imposed under legislation, it necessarily refers to the same notice to which the legislation in question has given effect. The legislation here is that which came into effect in February 1985, and the notice here, to which the legislation gave effect, the press release by the Minister dated September 27, 1984.
[24] As the Parliament which could have given effect to the Notice of Motions of April 19, 1983 was dissolved on July 9, 1984, that Notice of Motions could no longer be associated with a legislative process and accordingly could no longer be the notice contemplated by clause GC22. Moreover, I note that this was the approach taken by the Minister himself as he felt it necessary, in a new Parliament, to start the process over from the beginning and to issue an independent press release and then a Notice of Motions before proposing adoption of the legislation. It was also the approach initially taken by the Department of Public Works.
[25] However, what about the press release issued by Hon. Lalonde on August 9, 1984, during the election campaign? In the circumstances, this press release could not have any effect. It was stated to be, and was, conditional: the Minister could not, at a time when the fate of the government to which he belonged was uncertain, give an undertaking to table legislation in some hypothetical Parliament. The Minister could promise: he could not give an undertaking. As I have already said, the announcement of a change in a tax imposed by legislation is only tolerated in our political system in a parliamentary context. The press release of August 9, 1984 has no effect because there was no Parliament capable of implementing it.
[26] I thus come to the same conclusion as that reached by Denault J. in para. 25 of his reasons:
. . . viewed from a strictly contractual standpoint, insofar as the fiscal change had not been completed at the time Parliament was dissolved, prior to the filing of the initial bid, the defendant cannot hold against the plaintiff the presumption in clause 22.4 of the General Conditions of the Contract.
[27] Even if there were any doubt as to the meaning to be given to the phrase "public notice" in the circumstances, that doubt, as stated in art. 1019 of the Civil Code of Lower Canada, should be resolved in favour of the bidding contractor, especially as the government's spokespersons themselves mentioned the confusion that could result. Hon. Lalonde spoke of confusion and uncertainty. Hon. Wilson spoke of uncertainty. The Department of Public Works issued two contradictory press releases. In a policy statement titled "The Canadian Budgetary Process: Proposals for Improvement" published by Hon. Wilson in May 1985, the Minister of Finance noted the following, at p. 17:
Additional uncertainty and confusion surround the status of proposed tax measures that are being provisionally implemented when Parliament is prorogued or dissolved.
If confusion surrounded provisional implementation, it is all the more likely that there would be confusion if, as in the case at bar, there had not yet been provisional implementation.
[28] Additionally, the interpretation which I have adopted seems to me to be the fairest in the circumstances. The contractor inquired in advance as to the effects of a dissolution of Parliament where there had been a notice of motions of the type tabled by Hon. Lalonde in April 1983. At that time he learned that this type of notice became invalid, and in complete good faith he and his subcontractors calculated the price of bids on the basis of the tax in effect at the time the bids were filed rather than on the basis of an increase which the calling of elections made purely hypothetical. In my opinion, the contractor was right to be concerned about the effect of the dissolution of Parliament on its bids and, in the circumstances, was right to believe that the legislative process, which alone could produce a retroactive tax increase, would start over from the beginning with the newly elected Parliament. That is exactly what would happen and exactly what Hon. Wilson did.
[29] If the Minister of Public Works, as he said today, had wanted to remove the doubt and confusion which Messrs. Lalonde and Wilson noted in their respective press releases and which his own Department recognized when it published two contradictory memoranda on this subject, it would have been easy for him to inform contractors in advance of the procedure they should follow. Counsel for the respondent submitted evidence of the practice followed by the Department of Public Works in 1989 when there was an announcement in the budget of April 27, 1989 of a forthcoming increase in the sales tax in January 1990 and the introduction of a new goods and services tax in January 1991. At that time the Department altered the "construction - heavy civil works" bid form by inserting, after the principal clause which I set out in paragraph 7, a note informing contractors of the procedure to be followed, which varied depending on whether the sales tax or the goods and services tax was in question (A.R., vol. 2, at pp. 260 and 261). The contractors thus knew how to proceed. In the case at bar the contractor Pomerleau did not have that opportunity.
[30] I would dismiss the appeal with costs.
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Robert Décary
J.A.
|
Certified true translation
Martine Brunet, LL. B.
Date: 20000531
Docket: A-146-96
CORAM: DÉCARY J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA and
THE FEDERAL MINISTER OF PUBLIC
WORKS CANADA,
Appellants,
- and -
HERVÉPOMERLEAU INC.,
Respondent.
REASONS FOR JUDGMENT
NOËL J.A.
[1] I have had the benefit of reading the opinions of Décary J.A. and of Létourneau J.A. Like Décary J.A. and Denault J. before him, I consider that paragraph 22.4 of clause GC22 is not clear as to the meaning to be given to the words "public notice". In my opinion, since the "public notice" mentioned in paragraph 22.4 deals with the changing of a tax imposed by legislation, it is far from clear that the meaning to be given to these words is independent of the legislative process as Létourneau J.A. suggests.
[2] When paragraph 22.4 is read in the context of the clause where it appears, the argument that the parties were agreed in respect of a notice associated with the legislative process, which would suffer the fate of the legislation it was announcing, may be made just as easily as the contrary argument. It follows that the first notice would have become invalid when the House was dissolved and the second would have been without effect as it was issued after the House was dissolved and before a new government was formed.
[3] Since the issue is one of contractual interpretation, since the ambiguous clause was stipulated by the Department of Public Works and since this ambiguity allows for the reading adopted by the respondent, I feel that Denault J. properly opted for the interpretation favouring the respondent.
[4] Like Décary J.A., I would dismiss the appeal with costs.
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Marc Noël
J.A.
|
Certified true translation
Martine Brunet, LL. B.
Date: 20000531
Docket: A-146-96
CORAM: DÉCARY J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA and
THE FEDERAL MINISTER OF PUBLIC
WORKS CANADA,
Appellants,
- and -
HERVÉPOMERLEAU INC.,
Respondent.
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1] I have had the benefit of reading the opinion of my colleague Décary J.A., but unfortunately I cannot subscribe to it. For the facts I rely on the clear and concise account given by him, apart from mentioning and enlarging upon certain facts where necessary to explain my reasoning.
[2] Essentially, the respondent's position as set forth in its memorandum is based on the theory of the counter-notice: the dissolution of Parliament amounted to a counter-notice to the public notice given by the Minister of Finance on April 19, 1983, the public notice by which the Minister announced a 1 percent increase in the federal sales tax. As I understand it, the position accepted by my colleague is based on the theory of an absence of any valid public notice. Conceptually, the two theories have much in common but that does not make them identical. In fact, the respondent argued that there was no valid public notice because the latter was subsequently cancelled, whereas my colleague also accepted that there was no valid public notice because that public notice could not be severed from the legislative process and the latter had been suspended by the dissolution of Parliament. In practical terms, these two theories overlap as they lead to an identical outcome. As the approach taken by the respondent and that taken by my colleague are both based on the absence of a valid public notice, I propose to analyse the two positions together as, be it said with the greatest respect, I feel that they result from the same misunderstandings of the very nature of the notice contemplated in the contract, the objective sought by that notice and the rule of interpretation applicable in the circumstances.
Theory of counter-notice and theory of absence of valid public notice
[3] This is not the place to analyse and deplore the extent of the confusion surrounding the legislative process at the time Parliament is dissolved or prorogued: rather, we must interpret a specific provision of the contract governing the parties, in particular the concept of "public notice" contained in paragraph 22.4 of clause GC22 regarding increases or decreases in the cost of performing that contract. For the reader's benefit, I reproduce clause GC22 in its entirety.
GC22 Increase or decrease in costs
22.1 The amount established in the Articles of Agreement shall neither be increased or decreased by reason of an increase or decrease in the cost of the work resulting from an increase or decrease in the cost of labour, machinery, materials or salary scales set out or prescribed in the Terms and Conditions of Employment.
22.2 Notwithstanding paragraph GC22.1 and clause GC35, the amount set out in the Articles of Agreement shall be adjusted in the manner provided for in paragraph GC22.3 in the event of a change in a tax imposed pursuant to the Excise Act, the Excise Tax Act, the Old Age Security Act, the Customs Act, or the Customs Tariff.
22.2.1 occurring after the date on which the Contractor presented a bid for the Contract,
22.2.2 applying to the materials, and
22.2.3 affecting the cost of these materials to the Contractor.
22.3 In the event of a fiscal change in accordance with paragraph GC22.2, any relevant amount indicated in the Articles of Agreement shall be increased or decreased by an amount equal to the amount which, on an examination of the registers referred to in clause GC51, represents the increase or the decrease, as the case may be, in the costs that is directly attributable to this change.
22.4 For the purposes of paragraph GC22.2, where a tax is changed after the date on which the Contractor presented a bid, but where the Minister of Finance had given public notice thereof prior to the date of presentation of the bid, the fiscal change shall be deemed to have occurred prior to the date on which the bid was presented.
[A.R., vol. 2, at p. 171]
[4] In my opinion, the meaning to be given to the term "public notice" depends on the objective sought by clause GC22. Apparently, the provisions contained in clause GC22 are designed to insulate the contract from any cost fluctuation, except that relating to materials when it is the result of an increase or decrease in the tax applicable to those materials, here the federal sales tax. In that event, clauses 22.2, 22.3 and 22.4 are intended to provide fair protection for both parties to the contract by allowing for a possible change in the tax rate and the fact that a bidder was, or was not, informed in good time of such a possibility so he could protect himself against the financial consequences that might result.
[5] If we keep in mind the obvious objective sought by the parties in clause 22.4, I have to agree that this contractual provision is clear and unambiguous. It becomes obvious that the word "notice" contained in it must be given its ordinary, usual and everyday meaning, namely according to the English dictionary Merriam-Webster Collegiate Dictionary 2000, that of a "warning or intimation of something" or "notification by one of the parties to an agreement". The dictionary Le Petit Robert defines notice as [TRANSLATION] "what is brought to someone's attention". The Dictionnaire de droit québécois et canadien gives a similar definition: it defines notice as [TRANSLATION] "action by which something is brought to someone's attention" (Hubert Reid, 2d ed., Wilson et Lafleur Ltée, Montréal, 1996, p. 53). That is precisely what the appellants did in the case at bar: they brought to the respondent's attention the fact that there might be an increase in the federal sales tax.
[6] There is no doubt that the public notice given by the Minister of Finance on April 19, 1983 meets the requirements of clause 22.4 and simply initiates the process of implementing it in accordance with the clearly expressed intent of the parties. As the writers Baudoin and Jobin so clearly put it in their text on Les Obligations (5th ed., Yvon Blais, Cowansville, 1998, p. 344):
[TRANSLATION]
Where the contract is clear, the judge's function is one of implementation rather interpretation. The difference between implementation and interpretation is not a semantic one: the implementation process entails the application of a definite legal norm to a given factual situation, while interpretation involves defining the scope of the legal norm before it can be applied.
(My emphasis.)
[7] Saying that the public notice of April 19, 1983 is not valid for the purposes of the contract in the case at bar is, first, to insert into the actual wording of a quite clear contractual provision, without good reason, an ambiguity which is external and foreign to the contract, namely that surrounding the legislative process, and then conclude that the contractual provision itself is ambiguous and requires interpretation and that the ambiguity must be interpreted against the party drafting the contract. It is clear that government Ministers and M.P.s as well as the parties to the contract at bar have at different times had different opinions in turn about the effect that dissolution of Parliament might have on the legislative process, legislation which had been tabled and announced and the validity of measures for provisional implementation of taxation. However, this does not have the effect of obscuring the clarity of a contractual provision which simply requires that notice be given of a possible tax increase.
[8] Even assuming that the parties could, and did, have different opinions about the interpretation to be given to the words "public notice" in clause 22.4 as a consequence of the ambiguity of the legislative process, those differences of opinion do not necessarily lead to the conclusion that the provision is ambiguous. [TRANSLATION] "The fact that the parties differ on interpretation does not automatically mean that an ambiguity actually exists": Baudoin and Jobin, supra, p. 345. In my opinion, this is still more the case when the ambiguity is external to the contract itself and does not affect its implementation or that of the relevant provision. In other words, the respondent could not use factors external to the contract to create an ambiguity which serves its interests and allows it to rely to its benefit on the rule in art. 1019 of the Civil Code of Lower Canada, that an ambiguity should be interpreted in its favour.
[9] Saying that the public notice of April 19, 1983 is not valid is also to confuse the concept of public notice mentioned in clause 22.4 of the contract and that of Notices of Ways and Means Motions on the Budget by which the public notice of the contract was implemented. While it is true that the Notice of Ways and Means, which is necessary to initiate the legislative process, ceased to have effect within the said process when Parliament was dissolved, the same cannot be said with respect to the contract between the parties, as the condition in clause 22.4, namely that the respondent shall be told before the bids closed to adjust the latter to allow for a possible tax increase, was duly carried out and fully met, with the result that the fiscal change which actually occurred on October 1, 1984, and of which the respondent was informed on April 19, 1983, is deemed to have taken place before the latter's bids were filed. In other words, the purpose of the public notice contemplated by clause 22.4 was achieved and its function performed and fulfilled even before Parliament was dissolved and before an ambiguity arose in the legislative process pertaining to or consequent upon that dissolution.
[10] However interesting or intriguing the vagaries of the electoral and legislative process may be, they cannot alter the factual and legal reality, or if you like, conceal the true perspective on the course of events. The respondent received in good time a notice telling it of a possible tax increase and warning it to protect itself against such an increase by immediately inserting the latter in its bid. Apparently, so as to enhance its position in relation to the other bidders, it preferred to keep to a lower bid and speculate on the fact that the tax might not be adopted, as well as on the legal effect of the dissolution of Parliament. It failed in part in the first stage of its speculation as, although it did obtain the better position it desired, the tax was nonetheless imposed as announced and it is now under an obligation to bear the consequences. It therefore now falls back on the second stage of its speculation, diverting attention from its contract, to the detriment of the taxpayer, who through the Minister of Finance duly informed it of a tax increase and, despite having carried out the contractual obligation in its entirety, is now being required to pay the cost of this speculation.
[11] It is one thing to give the benefit of legislative ambiguity to a taxpayer who, to his detriment and against his will, is suffering the harmful effects of such ambiguity: but in my opinion it is quite another thing to extend that benefit to a contracting party which, after being duly warned to protect itself, chose instead to speculate on the ambiguity in order to, first, improve its contracting position, and then, once it had obtained the contract, again seek to benefit from the ambiguity.
[12] For these reasons, I would allow the appeal, reverse the trial judgment and dismiss the plaintiff's action with costs.
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Gilles Létourneau
J.A.
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Certified true translation
Martine Brunet, LL. B.
Date: 20000531
Docket: A-146-96
Ottawa, Ontario, Wednesday, May 31, 2000.
CORAM: DÉCARY J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA and
THE FEDERAL MINISTER OF PUBLIC
WORKS CANADA,
Appellants,
- and -
HERVÉPOMERLEAU INC.,
Respondent.
JUDGMENT
The appeal is dismissed with costs.
|
|
Robert Décary
J.A.
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FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
FILE: A-146-96
STYLE OF CAUSE:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA et al.
and
HERVÉ POMERLEAU INC.
PLACE OF HEARING: MONTREAL, QUEBEC
DATE OF HEARING: MAY 16, 2000
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRING REASONS BY: NOËL J.A.
DISSENTING REASONS BY: LÉTOURNEAU J.A.
DATED: MAY 31, 2000
APPEARANCES:
Stéphane Lilkoff FOR THE APPELLANTS
Louis Sébastien
Éric Atkinson FOR THE RESPONDENT
SOLICITORS OF RECORD:
Morris Rosenberg FOR THE APPELLANTS
Deputy Attorney General of Canada
Ottawa, Ontario
Lapointe, Rosenstein FOR THE RESPONDENT
Montréal, Quebec
Article 1019 of the Civil Code of Lower Canada.
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