Don’t tell anybody, but it might be possible to live without EU-style procurement regulations. The proof could be alive and well and living in Canada, with the latest evidence a decision of the Court of Appeal for Ontario in Maystar General Contractors Inc. v The Corporation of Town of Newmarket.
In issue 57, we saw the two contract analysis of tenders adopted by the Supreme Court of Canada in The Queen in Right of Ontario v Ron Engineering & Construction (Eastern) Limited. There the Supreme Court said that a unilateral contract (contract A) arises automatically on the submission of a tender by a contractor, and under that contract, the tender cannot withdraw the tender for a specified period of time. The terms of Contract A are found in the express provisions of the tender requirements or can also be implied where the criteria for the implication of terms in a contract are met.
Since the Ron Engineering decision (and leaving aside the federal bid challenge regime created pursuant to Canada’s obligations under certain trade agreements), the Supreme Court has added to the law in Canada governing the tender process for public construction projects, finding:
- in M.J.B. Enterprises Limited v Defence Construction an implied term that an owner was obliged to accept only compliant bids;
- in Double N Earthmovers Limited v Edmonton (City) that the compliance required is “substantial compliance” with the tender documents and all material conditions of the tender;
- and in Martel Building Limited v Canada an implied term that an owner must treat all bids fairly and equally.
In Maystar the Town of Newmarket accepted a tender that contained a discrepancy in the bid price. The price was uncertain and incapable of forming the basis of a contract but the Town corrected the discrepancy. But for the discrepancy, Maystar would have been the lowest bidder.
Maystar brought proceedings against the Town, alleging that the accepted bid was non-compliant and had been improperly amended by the Town, and that the Town was therefore in breach of its contract A with Maystar. The Ontario Court of Appeal agreed. Amending the bid was a breach of the duty to treat all bidders fairly and equally. It noted that the Supreme Court had made clear that:
“...the integrity of the tender process is essential in order to foster a fair and orderly bidding process where contractors will expend the time, effort and expense to bid, knowing they will be treated fairly and equally. A public owner cannot undermine that process by purporting to accept a bid with an uncertain price, or to encourage contractors to believe that they can communicate with owners after the fact to clarify or explain inconsistencies in their bids. In M.J.B. Enterprises, .....Iacobucci J pointed out that good faith on the part of the owner is not a defence to the claim for breach of contract.”
And all without the benefit of sophisticated regulations..