Canada v. Monit International Inc., 2004 FCA 335

Date: 20041007

Docket: A-90-04

Citation: 2004 FCA 335

CORAM :       DÉCARY J.A.

NOËLJ.A.

PELLETIER J.A.

BETWEEN:

                                                    HER MAJESTY THE QUEEN

                                                                                                                                            Appellant

                                                                           and

                                                 MONIT INTERNATIONAL INC.

                                                                                                                                        Respondent

                                 Hearing held at Montréal, Quebec, on September 22, 2004.

                                Judgment delivered at Ottawa, Ontario, on October 7, 2004.

REASONS FOR JUDGMENT:                                                                                     DÉCARY J.A.

CONCURRED IN BY:                                                                                                       NOËL J.A.

                                                                                                                                 PELLETIER J.A.

Date: 20041007

Docket: A-90-04

Citation: 2004 FCA 335

CORAM :       DÉCARY J.A.

NOËL J.A.

PELLETIER J.A.

BETWEEN:

                                                    HER MAJESTY THE QUEEN

                                                                                                                                            Appellant

                                                                           and

                                                 MONIT INTERNATIONAL INC.

                                                                                                                                        Respondent

                                                    REASONS FOR JUDGMENT

DÉCARY J.A.

[1]                This appeal concerns the federal government's extra-contractual liability to a bidder whose proposal was not accepted.

[2]                As a detailed account of the facts in evidence was given by Beaudry J. of the Federal Court (2004 FC 75), for the purposes of this appeal I will simply give an outline. This is especially appropriate as the appeal relates only to part of the judge's findings, which are contained in paragraphs 174 to 229 of his reasons.

[3]                The respondent (Monit) owns a building located at 1000 Sherbrooke Street West, in Montréal. In November 1974 the International Civil Aviation Organization (ICAO) concluded a twenty-year lease under which it occupied the greater part of the building. Since Canada, as host country of the ICAO, is responsible for deciding on the choice of premises occupied by the ICAO, in December 1991 the Department of Foreign Affairs instructed the Department of Public Works to make recommendations regarding the post-1994 period. Monit then proposed to renew the long-term lease, but Public Works refused and instead on February 12, 1992, offered to renew the lease until April 1996 (A.B. vol. 6, p. 1108). On February 27, 1992, Monit submitted to Public Works the conditions for such a renewal and gave Public Works until June 30, 1992, to accept these conditions (A.B. vol. 6, p. 1110).

[4]                In late April 1992, Public Works published a call for tenders (A.B. vols. 19, 20 and 21), which referred to leases lasting 20 to 35 years and gave June 15, 1992, as the final date for filing proposals. The preamble to the specifications describe the "General Process" as follows:

Once having received proposals, a PWC committee will first analyse all proposals as to their conformity with requirements, standards and norms. Acceptable proposals will then be analysed as to their financial implications.

PWC reserves the unqualified right to do a comparative evaluation of all proposals received and evaluate them based on considerations which in the sole opinion of Public Works Canada would yield to the Government of Canada the best value.

                                                                                                           [A.B. vol. 19, p. 3915]

[5]    It will be useful to set out the relevant clauses of the specifications here:

[TRANSLATION]

                                                                 PART 2

                                       INSTRUCTIONS TO PROPONENTS

1.     GENERAL

. . .

(In fine) The Government of Canada reserves the unqualified right to negotiate with the successful proponent other formulae for determining rent adjustments. (A.B. vol. 19, p. 3921)

. . .

4.      EVALUATION PROCESS

. . .

4.4 In completing the financial analysis, the Lessee may make certain estimates for this project, including, but not limited to the following . . .

4.5 For the purposes of the financial analysis, the following provisions will apply:

(a)     all costs estimated by the Lessee shall be final;

(b)    the measurements quoted in the Proposal will be utilized;

(c)     with respect to any allowance which is unclear, the Lessee's decision on how to apply the allowance in the analysis shall be final.

4.6 The Lessee reserves the unqualified right to do a comparative evaluation of all Proposals received and evaluate them based on considerations which in the sole opinion of the Lessee would yield to the Lessee the best value. This evaluation may be on such matters as, but not limited to, quality of space offered, the efficiency of the space being offered, building design and access security consideration, and the level at which all requirements are met or achieved in comparison to the rental rate being requested.

5.      ACCEPTANCE

5.1    The Lessee may accept any Proposal whether it is the lowest or not, or may reject any or all Proposals . . . (A.B. vol. 19, p. 3927)

                                                                 PART 3

                                        STATEMENT OF REQUIREMENTS

6.      TERM / EXTENSIONS

6.1    The Lessee requires that the Proponent propose a lease term beginning on May 1, 1996 or earlier, and terminating April 30, 2016.

In addition, the Lessee requires that the Proponent propose lease terms of a minimum of 25 and 35 years, in all cases beginning at the latest on May 1, 1996. (A.B. vol. 19, p. 3933)

. . .

7.      COMMENCEMENT DATE OF THE LEASE

7.1    The Commencement Date of the Lease will be no later than the first (1st) day of May 1995, ready for use and occupancy.

7.2    The Lessee presently is located in leased premises at 1000 Sherbrooke Street West with the lease to expire on the thirty-first (31st) day of October 1994.

If required, the Lessee will exercise an offer to extend the leases at 1000 Sherbrooke Street West, for a period of eighteen (18) months to the thirtieth (30th) day of April 1996.

Proposals which involve a move to the premises prior to May 1, 1996 will be considered in which case proponents must express their intentions with respect to these leases (e.g.: commit to paying the rent or having the present lease transferred to it and, in the latter case, be legally bound to the lessor of 1000 Sherbrooke Street West, Monit International Inc.). Copies of the existing leases may be viewed through the Lessee's representative.

(A.B. vol. 19, p. 3934)

[6]                Nine promoters, including Monit, responded to the call for tenders. They filed fourteen proposals. The proposals were evaluated between June 15 and June 24, 1992. Seven proposals were disqualified in a preliminary evaluation (A.B. vol. 6, p. 1201). Seven proposals were accepted for analysis: four of them, including Monit's proposal, offered a lease beginning in November 1994; the other three offered a lease beginning in May 1996 (A.B. vol. 6, p. 1201 et seq.).

[7]                After analysing the seven proposals, Public Works established a short list, which included only the three proposals offering a lease beginning in May 1996. It explained its position as follows:

ESTABLISHMENT OF SHORT LIST

Based on the results of the financial analysis of the 20 year lease proposals it was evident that a 1996 lease commencement was the lowest cost option. Due to this fact, as well as technical concerns with respect to proponent's ability to complete a project by November 1994, the proposals with a 1994 lease commencement were eliminated from further consideration.

                                                                                                             [A.B. vol. 6, p. 1214]

[8]                It further appeared from the record that of the four proposals offering a lease beginning in November 1994, that of Monit was by far the most costly (A.B. vol. 6, pp. 1206 and 1208). This proposal, set by Monit at $184.5 million but estimated by Public Works at some $210 million, according to an independent analysis done by Ernst & Young, considerably exceeded the budget of $153.3 million authorized by the Treasury Board (see paragraph 182 of the reasons for judgment).

[9]                On July 7, 1992 Public Works informed Monit of its decision as follows:

This is to advise you that your proposal ... will not be considered in that the decision has been made to remain in the present premises until April 30, 1996. You only made a proposal with a start date of November 1, 1994.

The decision was based on a best value/least cost analysis of the proposals. The best proposals were made for projects with 1996 lease start dates.

                                                                                                             [A.B. vol. 6, p. 1230]

[10]            It also appears from a document entered in evidence, titled "Proposal Call Results", that Monit was not officially disqualified and that it was excluded on account of its price: "Reason for disqualification: 'Price. Not officially disqualified.'" (A.B. vol. 7, p. 1332).

[11]            In the meantime, on June 29, 1992, Public Works had exercised the option given it by Monit to extend the lease to May 1996.

[12]            In the summer of 1992, the three proposals which had successfully reached the short list stage were disqualified.

[13]            Public Works issued a second call for tenders in September 1992 to bidders who had responded to the first call. Monit submitted a new proposal, which was disqualified in March 1993. The proposal made by the Westcliff company to construct a building at 999 Université Street in Montréal was finally accepted. That is where the ICAO headquarters are now located. This second call for tenders is no longer at issue: the challenge made to it by Monit was dismissed by Beaudry J. and on appeal Monit did not challenge that part of the judgment. I only refer to it because the appellant relied on the participation of Monit in this second call for tenders as a basis for arguing that, on account of that participation, Monit implicitly waived its right to challenge the Public Works decision on the first tender.

[14]            In its action, Monit objected that Public Works had failed in its duty of fairness, good faith or diligence, at three separate times: before the first call for tenders, during the first call for tenders and during the second call for tenders. It claimed damages which it set at $106 million and described as follows:

227.          The damages sustained by Plaintiff MONIT as a consequence of the unfair treatment and misrepresentations of Defendants can be categorized as follows:

i/       expenses incurred by Plaintiff in the re-negotiations for the long term renewal and in the preparation of the First and Second MONIT Proposals;

ii/      additional cost to MONIT as result of Short Term Lease extension;

iii/     cost of releasing premises to third parties;

iv/     loss of reputation as a result of Defendant's actions;

v/      loss of existing and future tenants due to obligation of MONIT to ensure availability of space for ICAO in the event of acceptance of Call for Proposal;

vi/     loss of profit by reason of not being able to have Government-backed lease . . .

                                                                                                              [A.B. vol. 1, p. 173]

[15]            It was agreed at the outset, and the Court approved this agreement, that the trial would be divided into two stages, one regarding the determination of the government's liability and the other, if necessary, setting the quantum of damages. The judgment by Beaudry J. terminated the first stage.

[16]            After a lengthy hearing the judge came to the conclusion that Public Works had a duty of fairness, good faith or diligence to Monit in the three periods in question. That conclusion was not questioned in the appeal at bar.

[17]            He also came to the conclusion that Public Works did not fail to perform this duty in the first period (preceding the first call for tenders) and the third period (that of the second call for tenders). Monit did not appeal that finding.

[18]            Finally, he came to the general conclusion that with respect to the second period (that of the first call for tenders), Public Works had failed in its duty of fairness, good faith or 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.

and that despite the fact that Public Works had evaluated the Monit proposal "carefully, equitably and impartially", it

should have considered the Monit proposal and entered into negotiations with it after finding that its proposal alone was technically qualified.

                                                                         [paragraph 353 of reasons]

It is this general conclusion which the appellant is challenging.

Applicable system of law

[19]            First, a word about the applicable system of law. The question arises as to whether Quebec civil law or the common law should be applied here. The awarding of contracts by the government is initially a matter of public law, which in principle means that public common law should be applied. However, it is not that simple since in matters involving the awarding of contracts and liability resulting therefrom the rules of private law necessarily come into play. In the case at bar, the private law is the civil law of Quebec (see St-Hilaire v. Canada (Attorney General), [2001] 4 F.C. 289 (C.A.)). Fortunately, it is not necessary for me to get into a long dissertation on that question here since, in my opinion, both the courts and Parliament have dealt with it satisfactorily so far as the points raised by this appeal are concerned.

[20]            On the question of government liability as such, Parliament has expressly indicated that in Quebec it is the Civil Code of Quebec that governs actions in delict against the federal government (Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50; Federal Law - Civil Law Harmonization Act, No. 1, S.C. 2001, c. 4; La Couronne en droit canadien, Ed. Yvon Blais, 1992, p. 405). In principle, here, since the relevant facts occurred before January 1, 1994, it is the Civil Code of Lower Canada which applies, and in particular article 1053, but all counsel agreed that the Civil Code of Quebec, in particular article 1457, had codified the earlier law and it is permissible to refer to the case law established under either Code.

[21]            On the question of the nature of the contractual relations between the government and bidders, which serve as a background to the use of extra-contractual remedies and some aspects of which relate more to public common law, the Quebec Court of Appeal in Bau-Québec Ltée v. Ste-Julie (Ville de), [1999] R.J.Q. 2650 (C.A.) "civilized", if I may put it that way, the concept of the existence of two contracts _ a contract A between the government and each of the bidders at the call for tenders stage and a contract B between the government and the bidder who is accepted after analysis of the proposals submitted _ established at common law by the Supreme Court of Canada in [1981] 1 S.C.R. 111">Ontario v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111, and in M.J.B. Enterprises v. Defence Construction (1951) Ltd., [1999], 1 S.C.R. 619. (On integrating the Quebec civil law into the contracts A and B concept, see the text by Pierre Giroux, Le mécanisme d'appel d'offres : quelques réflexions à la suite des arrêts M.J.B. Enterprises Ltd. et Martel Building Ltd., Développements récents en droit de la construction, 2002, Yvon Blais, pp. 217 et seq.). That is why, for example, in either of the systems of law there is a duty on the government at the contract A stage to treat all bidders fairly and on an equal footing.

[22]            However, I would hesitate to take the analogy with the common law any further. In Quebec civil law, there is a corpus juris which has developed regarding the extra-contractual liability of the government to its bidders and it would seem to be pointless, not to say incautious, to apply common law precedents in this connection. An example of this is the duty of good faith imposed on the government: article 1376 C.C.Q. applies to the government the rules in the chapter dealing with "Obligations", including the rule laid down in article 1375 that the parties shall conduct themselves in good faith. The existence of a duty of good faith does not seem to me to be as clear at common law.

[23]            I will now consider the grounds of appeal relied on by the appellant.

Grounds for appeal

[24]            The appellant argued that the judge erred:

[TRANSLATION]

(1)    by concluding that only the Monit proposal was technically qualified;

(2)    by concluding that the Monit proposal had been eliminated because it offered a lease beginning in November 1994, which in the judge's view was a unilateral change to the rules of the game;

(3) by concluding that Public Works had a duty to negotiate with Monit before eliminating its proposal;

(4)    by concluding that Public Works was responsible for the loss of an opportunity to obtain the contract, without evidence on a balance of probabilities that the contract would have been awarded to Monit but for the fault of Public Works;

(5)    by concluding that Monit's participation in the second call for tenders was not an implied waiver of its right to challenge the first call for tenders.

(1)         The only compliant proposal

[25]            I find no palpable and overriding error in the judge's conclusion that Monit's proposal was the only one that was compliant from a technical standpoint.

[26]            There undoubtedly was an ambiguity, in the sense that in the procedure described in the [TRANSLATION] "General Process" section of the specifications, Public Works first had to analyse the proposals [TRANSLATION] "as to their conformity with requirements, standards and norms", and then analyse only the acceptable proposals [TRANSLATION] "as to their financial implications". In its analytical report, Public Works said it had disqualified seven of the fourteen proposals at the first stage of its analysis and only proceeded to the second stage _ that of financial implications _ with the seven other proposals, which were presumably all compliant.

[27]            Having said that, letters in the record and an internal document deal with the disqualification for lack of compliance of all the other bidders, whose proposals were nevertheless analysed at the second stage. Beaudry J. could certainly have relied on the content of those documents and on the fact that, unlike the others, Monit had never been told that its proposal was not compliant as a basis for drawing the inference that from a technical standpoint only the Monit proposal complied with the specifications.

(2)         Reason for rejecting Monit proposal

[28]            In paragraph 186, the judge said that in his opinion "Monit was rejected because in its proposal the lease begins in 1994". In his view, the specifications expressly provided that a proposal could offer a lease beginning in 1994 and did not require that the bidder make an alternative offer of a lease beginning in 1996. At paragraph 194 of his reasons, he concluded as follows:

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.

[29]            Here, with respect, there is such a misunderstanding of the basis for rejecting the Monit proposal that it constitutes a palpable and overriding error.

[30]            It is clear, as the judge said, that the specifications allowed a bidder to file a proposal offering only a lease beginning in November 1994. If the Monit proposal was eliminated for that reason, there can be no doubt that it would have been an unacceptable change in the rules of the game: but quite clearly that is not the case.

[31]            Clause 7.2 of the specifications stated _ and this was not really necessary _ that [TRANSLATION] "Proposals which involve a move to the premises prior to May 1, 1996 will be considered" (supra, paragraph 5).

[32]            Monit's proposal was in fact considered, although it only offered a lease beginning in November 1994, and it even successfully completed the first stage of the analysis _ compliance with the specifications. What is more, of the seven proposals accepted by Public Works at that stage, four, including Monit's proposal, offered a lease beginning in November 1994. It appears from the Public Works report (A.B. vol. 6, p. 1214) that the reason the Monit proposal, like those offering a lease beginning in November 1994, was finally eliminated was because on analysis they were too costly and it was not clear that they could be completed in time. I take the liberty of again reproducing the conclusion arrived at by Public Works:

ESTABLISHMENT OF SHORT LIST

Based on the results of the financial analysis of the 20 year lease proposals it was evident that a 1996 lease commencement was the lowest cost option. Due to this fact, as well as technical concerns with respect to proponent's ability to complete a project by November 1994, the proposals with a 1994 lease commencement were eliminated from further consideration.                                                  [A.B. vol. 6, p. 1214]

[33]            The specifications made it quite clear that ultimately it would be the "financial implications" of the "acceptable proposals" (supra, paragraph 4) that would determine the final choice of Public Works, which had moreover reserved the discretion to evaluate the proposals [TRANSLATION] "which in the sole opinion of the Lessee would yield to the Lessee the best value" (supra, paragraph 5).

[34]            It appeared, on receipt and thorough analysis of the proposals, that those offering a lease beginning November 1994 were less attractive compared with those offering a lease beginning in May 1996. Indeed, it was this conclusion which led Public Works, on May 30, 1992, to finally agree to renew the lease with Monit until May 1996.

[35]            I do not overlook the fact that the first paragraph of the letter of rejection sent to Monit on July 7, 1992, could suggest that the proposal was rejected because it only offered a lease beginning in November 1994. However, there is absolutely unquestionable evidence that the Monit proposal was eliminated on account of its price, which is precisely the reason given by Public Works in the second paragraph. The clumsiness of certain language used cannot change the true and clear reason for the rejection.

(3)         Duty to negotiate

[36]            Beaudry J. concluded that the government had a duty to negotiate with Monit and criticized its not doing so as follows:

[212]       . . . 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 proposal.

                                                                                                                  [Emphasis added.]

[37]            The judge was right to say in paragraph 212 that the government had the authority to negotiate. In law, he was wrong to say in paragraph 213 that the government should have negotiated.

[38]            The wording of the contract is clear. Subject to its duty to act with fairness and good faith, the government has complete discretion to accept or reject a proposal even if it meets the technical requirements. Where there is no ambiguity in the language of the contract, and worse, where there is a clearly expressed intention not to impose on the government a duty to negotiate before the contract is awarded, it would not be proper to apply the rule of contractual interpretation set out in article 1426 of the Civil Code of Quebec that "usage [is] . . . taken into account".

[39]            Usage may still be relevant as to the effect of contracts between the parties, since under article 1434 C.C.Q., which deals with the "binding force and content of [the] contract",

Usage may also have to be taken into account, under article 1457 C.C.Q., in determining the civil liability that one person incurs toward another:

The bridge is built, if I may so put it, between articles 1434 (contractual liability) and 1457 (civil liability) by article 1458 C.C.Q., which provides that:

[40] What is this "usage" referred to by the Civil Code? I will only refer here to these passages from the text by Prof. Vincent Karim, Les Obligations, vol. 1, Yvon Blais, 2002:

[TRANSLATION]

Relying on usage in determining the actual intention of the parties means the conclusion that there is an implicit clause in the contract, by which it is possible to determine either the existence of a right or duty that was not expressly provided for or to clarify the scope or extent of such a right or duty which was vaguely and inaccurately expressed. It is in this case that reference is made to established usage in the field of contracts to determine the rights and duties of the parties.

Article 1434 C.C.Q. provides that the rights and obligations of the parties are not limited to those set out in the contract, but may embrace whatever is incident to it according to its nature and in conformity with law and usage. Usage thus has a great importance in commercial contracts. The discretion given to the court in applying general rules of construction allows the judge to take usage into account as an integral part of the commitments made by the parties, provided the usage does not conflict with an express provision of the contract that is not itself either ambiguous or vague. The usage in question must be consistent with the common intent of the contracting parties when this is apparent. It should not be contrary to public order or contravene any provision of legislation specifically dealing with the point at issue between the parties.

Additionally, for usage to have evidentiary force at the stage of interpreting the contract, it must meet the conditions of antiquity, generality, publicity and uniformity. Consequently, situations that do not correspond to these prior conditions will not give rise to the application of usage in interpreting a contract.

                                                                               [pp. 343 and 344, regarding article 1426]

                                                                                                                 [footnotes omitted]

1263.        See Stienberg Katz v. Empire Life Insurance Co., [1982] C.P. 1, where it states that [TRANSLATION] "usage, as an additional source of obligations resulting from a contract must be proven. Five conditions are necessary for an act to become usage: it must be (1) uniform (2) public (3) general (4) frequent (5) of long standing". Canadian Indemnity Insurance Co. v. Bureau d'investigation Concorde du Canada Ltée, (1987) R.R.A. 105 (C.S.); Noël v. Massicotte, [1991] R.D.I. 522 (C.S.); Association des propriétaires du chemin Boyer inc. v. Autotte, J.E. 96-1672 (C.S.); Cima, société d'ingénierie v. Immeubles Marton ltée, J.E. 96-385 (C.S.); Poulin v. Centre de location Anjou inc., REJB 1999-11027, AZ-99021299 (C.S.): usage is an established practice which individuals follow in their contracts and which they are deemed to rely on unless there is a provision to the contrary.

                                                                               [note at page 374, regarding article 1434]

[41]            It thus appears that usage cannot override an express provision in the contract which is neither ambiguous nor vague. It further appears that usage is only a source of additional obligation if it has the qualities of uniformity, publicity, generality, frequency and antiquity, proof of which is on the party relying on the usage.

[42]            In the case at bar the only proof of usage Monit sought to present was in the testimony of an expert witness, which the judge summarized as follows:

[209]        Louis-Yves Lebeau (Macogep, plaintiff's expert) says it often happens that a client who receives proposals 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, transcript at pages 160 and 161).

[43]            What I take from this finding by the judge and the testimony of the expert witness as a whole is that the client frequently exercises its discretion to negotiate with the lowest compliant bidder. At most, this is proof of a power to negotiate, but I have looked in vain for any evidence whatever of a duty to negotiate that could constitute "usage" within the meaning of the Civil Code (see Société immobilière Trans-Québec Inc. v. 2981092 Canada Inc., J.E. 98-389 (C.A.)). In his cross-examination, the expert witness himself agreed that Public Works [TRANSLATION] "had _ could decide to cancel the process and take no further action on it, then initiate a second one. It had the choice _ I think it had this option, as it also had the option of sitting down with the promoter" (A.B. vol. 25, p. 5203) and [TRANSLATION] "we are not talking here of a custom" (p. 5204).

[44]            I think it goes without saying that when a client decides to exercise its power to negotiate, it must do so in good faith. In view of the good faith requirement which is implicit in any contract in Quebec (articles 7 and 1375 C.C.Q.), it is also probable that, when the circumstances are appropriate, a client must not eliminate the only compliant bidder on frivolous grounds or without first checking to see whether minor points or incidental discrepancies could not be the subject of discussion, the content and effect of which would not impinge on the client's duty to treat all bidders fairly. However, to go from this to concluding that the client has a duty to negotiate with the only compliant bidder is a step which cannot be taken.

[45]            Thus, in the case at bar the disparity between the budget authorized by Treasury Board and the price proposed by Monit was so large that the government clearly could not be blamed for making no attempt to bring the two together. What is more, a reconciliation could not in the circumstances have been attempted without impinging on the principle of fairness in respect of the other bidders that governs the awarding of contracts.

[46]            I thus conclude that the judge erred in law in requiring the government to observe usage of which absolutely no evidence had been presented.

[47]            In addition to usage, the judge also discussed guidelines and other internal documents from the Treasury Board that were entered in evidence at the trial, and of which Monit was until then unaware. Though he admitted that guidelines do not create rights, the judge stated that this did not mean they should be ignored, and relying on three short extracts he appeared to come to the conclusion that the guidelines imposed a duty to negotiate the price when a bidder was in compliance.

[48]            It is quite clear that in general guidelines do not bind the government (see P. Issalys and D. Lemieux, L'action gouvernementale, 2d ed., Yvon Blais, 2002, p. 567). Even accepting for the purposes of discussion that they can be used to provide a background, to be evidence of usage or, who knows, clarify the intent of the parties _ I note that in Yves Germain Construction Inc. v. Hydro-Québec, J.E. 2000-1658 (C.A.), a judgment cited by Monit, the Quebec Court of Appeal discussed apparently specific internal rules which were [TRANSLATION] "known to the public" and which [TRANSLATION] "justified the bidders in believing that the contract would be awarded to the lowest bidder whose proposal was in accordance with the call for tenders document, thereby limiting the freedom and discretion which the [client] would otherwise have had in the manner" _ such guidelines still have to be so precise, clear and well-known that bidders will be [TRANSLATION] "justified", to use the Quebec Court of Appeal's word, in believing that if any one bid is compliant the government will have a duty, whatever the cost of the said proposal, to negotiate a reduction of that cost.

[49]            In the case at bar the documents entered in evidence cover some 2,500 pages (c.a. vols. 7 to 19). At the outset they indicate that the guidelines [TRANSLATION] "are not binding unless the contrary is indicated" (A.B. vol. 7, p. 1432) and that [TRANSLATION] "each case must be examined on its merits to determine whether price should play a primary or secondary role in the selection process"(p. 1466). They certainly contain the passages cited by the judge, but with respect I see nothing in those passages, and still less in the rest of the document, to suggest to bidders that if the proposal of a bidder is in compliance that will be sufficient for negotiations to be undertaken as to price. In my opinion, such a suggestion is entirely inconsistent with the basic rules for awarding the contracts, which are defined in the call for tender documents, with the fundamental principle implicit in the guidelines themselves that the primary purpose of the call for tenders exercise is to ensure that public funds are used efficiently and in the manner most advantageous to the government, and with the duty of fairness toward other bidders laid down by case law. To borrow from another context the remarks of Gonthier J., then a member of the Quebec Superior Court, in Lepage v. Visitation-de-la-Bienheureuse-Vierge-Marie (Corp. Mun. de la paroisse de la), J.E.-83-29 (S.C.), at 8, [TRANSLATION] "Is the excessive level of proposals a valid reason for rejecting them? Asking the question suggests the answer".

[50]            In my opinion, therefore, the government did not commit the fault which the trial judge concluded that it did _ there was no unilateral change in the rules of the game and the government incurred no duty to Monit to negotiate. Where there is no fault, there clearly can be no liability. This conclusion suffices to dispose of the appeal without the need to decide the other arguments raised by the appellant. However, in view of the effort made by counsel regarding the question of the causal link, I feel it is worth making a few comments on this point.

(4)         Absence of evidence of causal link

[51]            Even if there had been fault, I do not think Monit's action could be allowed since there was a complete absence in the case at bar of proof of any causal link between the fault and the loss.

[52]            The Quebec precedents seem clear: it is not possible to conclude that a person is responsible for loss of opportunity to obtain a contract without evidence being presented on a balance of probabilities that the contract would have been concluded but for the fault committed. Such evidence and evaluation of the causal link are concerned with liability: they are not concerned with the assessment of damages. Without a causal link, there can clearly be no liability. The judge could not really, as he did in paragraph 214 of his reasons, leave unresolved the question of whether "Monit should have been awarded the contract". As the Quebec Court of Appeal recently pointed out,

[TRANSLATION]

[79]          In Quebec, law causation must be established on a balance of probabilities. The respondent submitted no evidence to persuade the trial judge that the contract was such that the sale of this property was probable and collection of his commission equally so. As damage must be the logical, direct and immediate consequence of the fault, it is impossible to conclude here that, if the property had continued to be up for sale, it would have been probable (not possible) that it would have been sold.

[80]          However, in fact, and without having presented theoretical argument, the respondent is seeking compensation for the loss of opportunity. Because of the wrongful act _ representing that a cash offer rather than a conditional offer was being made _ the appellant allegedly caused the respondent to lose the opportunity to make a profit. How can it be said with certainty that, if the property had not been withdrawn from the market, it would have been sold? There is no evidence to support arriving at such a conclusion.

. . .

[85]          In Quebec, the rules of civil liability generally require proof of causation, which must be established on a balance of probabilities. Even incorporating into Quebec law the theory of loss of opportunity in areas other than medical ones, it is still necessary to show that the opportunity was real and tangible and that the probability was that the opportunity could have been exploited.

                                         [Benakezouh v. Immeubles Henry Ho, [2003] R.R.A. 76 (C.A.)]

                                                                                                                [Footnote omitted.]

Disposition

[53]            I would allow the appeal, reverse the judgment by the Federal Court and dismiss the action of Monit International Inc., with costs in the Federal Court and in this Court.

"I concur

Marc Noël, J.A."

"I concur

J.D. Denis Pelletier, J.A."

Certified true translation

Suzanne M. Gauthier, C Tr, LL L

                                                  FEDERAL COURT OF APPEAL

                                                      SOLICITORS OF RECORD

DOCKET:                                          A-90-04

APPEAL FROM JUDGMENT OR ORDER BY FEDERAL COURT ON JANUARY 20, 2004, FEDERAL COURT DOCKET No. T-878-93

STYLE OF CAUSE:                          H.M. THE QUEEN v. MONIT INTERNATIONAL INC.

PLACE OF HEARING:                    Montréal, Quebec

DATE OF HEARING:                      September 22, 2004

REASONS FOR JUDGMENT:      Décary J.A.

CONCURRED IN BY:                     Noël J.A.

Pelletier J.A.

DATE OF REASONS:                      October 7, 2004

APPEARANCES:

SOLICITORS OF RECORD: