Monit International Inc. v. Canada

Monit International Inc. v. Canada
Court (s) Database
Federal Court Decisions
Date
2004-01-20
Neutral citation
2004 FC 75
File numbers
T-878-93
Notes
Digest
Decision Content
Date: 20040120
Docket: T-878-93
Citation: 2004 FC 75
Ottawa, Ontario, Tuesday, January 20, 2004
PRESENT: THE HONOURABLE MR. JUSTICE BEAUDRY
BETWEEN:
MONIT INTERNATIONAL INC.
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
A. INTRODUCTION
1 Monit International Inc. (Monit) is claiming $106 million in damages from the defendant. From 1974 to 1996, the International Civil Aviation Organization (ICAO), a United Nations agency, was a tenant in the plaintiff's building situated at 1000 Sherbrooke Street West in Montréal. Monit alleges that in 1992, in the course of negotiations to extend the rental through a short-term lease, and two calls for tender they made with a view to signing a long-term lease, the representatives of Public Works Canada (PWC) breached their duties of collaboration, information, equity, good faith, diligence or commercial fair play towards the plaintiff.
2 Canada, as a host country for the ICAO, is responsible for finding accommodation for the organization. The Department of Foreign Affairs (DFA), the government's representative, instructs PWC to make recommendations.
3 In December 1991, realizing that the 20-year lease executed with PWC was to expire in 1994, Monit made a proposal with the intention of executing another long-term lease. PWC rejected this proposal but asked and agreed that the lease be extended to 1996.
4 In May 1992, PWC published a call for tenders to execute a long-term lease with a lessor. Monit submitted an offer. PWC subsequently decided to cancel this call for tenders and made a second one in September 1992. Monit made a second submission, which was rejected. In the end, the Westcliff company was retained to construct a building at 999 Université Street in Montréal. ICAO's head office is now located at that address.
5 On April 26, 2001, upon consent of the parties, Prothonotary Morneau made an order stating that the damages would be determined once liability had been established:
[translation] The Court orders that the issue of the damages purportedly suffered by the plaintiff in this proceeding be addressed by way of a reference to a judge or another person designated by the Associate Chief Justice once the issue of liability has been determined following a trial, costs in the cause to follow.
6 The trial lasted 48 days, including a tour of the premises. Twenty-three witnesses were heard and the parties filed 1,189 exhibits totalling about 25,000 pages.
7 To facilitate the reading of these reasons, an index can be found in Schedule 1.
B. ISSUES
8 The parties jointly formulated three issues. The plaintiff proposed a further 16, either ancillary or complementary, while the defendant submitted six additional ones, including one main issue and five underlying ones.
9 In my analysis, I discuss three distinct periods:
(a) the period preceding the first call for tenders;
(b) the first call for tenders;
(c) the second call for tenders.
10 In my opinion, the issues in dispute are the following:
(a) during the period preceding the first call for tenders, and during the first call for tenders and the second call for tenders, did the government and its representatives have a duty of fairness, good faith or diligence to the plaintiff?
(b) if so, did the government and its representatives breach this duty of fairness, good faith or diligence to the plaintiff?
(c) if so, did the government, in doing so, incur liability to the plaintiff?
(d) did the defendant or any of its departments or representatives conspire to ensure that the ICAO would not remain in the Monit building?
(e) during the period preceding the first call for tenders, did the defendant make misrepresentations to Monit concerning its intentions to renew the leases on a long-term basis or did the defendant breach its duty to act in good faith?
(f) did Monit know, or should it have known very early in the process, that PWC would consider more than one option and that consequently the long-term renewal of the leases was not guaranteed in any way?
(g) during the period of the first call for tenders, was the proposal made by Monit carefully, equitably and impartially evaluated by the defendant?
(h) during the period of the second call for tenders, was Monit's proposal carefully, equitably and impartially evaluated by the defendant?
(i) during the period of the second call for tenders, did the defendant act in accordance with its duty of good faith towards everyone?
11 The answers to these questions are found in the conclusion of the decision (see paragraph [353] at page 90).
C. FACTUAL CONTEXT
(1) GENERAL
(a) History of the building
12 In 1974, the owners of 1000 Sherbrooke Street West executed a 20-year lease with the ICAO. Two five-year renewal options were provided at the end of this lease. In 1983, the plaintiff purchased the building.
(b) Who is Monit?
13 Monit, a renowned family-owned company, has been operating for fifty years or so and owns a number of prestigious buildings in Montréal. The ICAO is its biggest tenant.
(c) Picard Report
14 The Picard Report, published in 1986, recommended that the City of Montréal acquire an international presence by creating a Cité internationale. Accordingly, the Société du centre de conférences internationales de Montréal (SCCIM) was founded. In 1990, the federal government, the provincial government, the City of Montréal and the private sector agreed to fund some studies with a view to developing a proposal for an International Conference Centre (exhibit 987). As a result of this project, it was expected that the ICAO could be offered new premises at the end of the lease in 1994.
(2) CHRONOLOGY OF DISCUSSIONS AND CALLS FOR TENDERS BETWEEN MONIT AND PWC
(a) In 1991
15 In April 1991, Monit announced to the Canadian government that it was prepared to begin negotiating a long-term lease to continue to house the ICAO when its lease ended. In May 1991, Monit's president, Barry Kotler, met with the PWC representative, Avrum Miller. In a letter by Mr. Miller confirming the particulars of the meeting, he indicated that Monit wished to negotiate a long-term lease but did not seem prepared to sell its building. Notwithstanding, Mr. Miller asked Monit to provide him with some approximate prices, without prejudice, for the purchase of its building in November 1992 and November 1994. Mr. Miller eventually confirmed that Mr. Kotler was not in favour of a short-term extension of the lease ending in 1994 (exhibit 173).
16 The minutes of a meeting held at Monit's offices on November 29, 1991 (exhibit 995) reveal that its architect presented a report to PWC for renovating the building and meeting the ICAO's long-term requirements. The minutes report that Mr. Miller took the opportunity to explain the major scenarios that were being contemplated at this time by PWC:
(a) leasing from Monit from 1994 to 2029;
(b) purchasing the Monit building and renovating the premises;
(c) publishing a call for tenders to lease a new building from another lessor;
(d) the construction by the government of a building meeting the ICAO's needs.
17 He mentioned as well that PWC had received no fewer than four unsolicited proposals regarding the relocation of the ICAO.
18 On December 12, 1991 (exhibit 279), Mr. Miller, referring to a letter sent on December 2, 1991, asked Mr. Kotler to provide him with a financial proposal for a 35-year lease no later than December 16, failing which PWC would make its own estimates that could prove to be higher than Monit's, and thereby put it at a disadvantage.
(b) Monit's proposal of December 19, 1991
19 On December 19, 1991 (exhibit 288), Monit sent its proposal, which amounted to $143,998,295. This represented the discounted net value of a 35-year lease (exhibit 287). During a telephone conversation the next day, Mr. Miller told Mr. Kotler that this proposal was too high and asked him to review his figures (exhibit 997). Monit then sent another letter, dated December 19, with a price this time of $134,871,007 (exhibit 287). At page 8 of this letter, Mr. Kotler explained that this proposal was only a business proposition, sent for analytical purposes only, and that it was not binding on Monit. An internal memorandum from Monit, dated January 21, 1992, referred to a conversation with Mr. Miller during which he said he had no instructions to negotiate a long-term lease with Monit and that he could not, therefore, make any offer binding on the government (exhibit 999).
(c) Letter of February 12, 1992 - Request for extension of a short-term lease (exhibit 340)
20 On behalf of his client, Mr. Miller asked Monit to extend the lease from November 1, 1994 to April 30, 1996 and to include two additional renewal options of six months each while retaining the two five-year options already provided in the original lease. Mr. Miller notified Monit that should it refuse, PWC would continue to look at other long-term solutions for the ICAO.
21 On February 27, 1992, Mr. Kotler acquiesced in PWC's request and gave it until June 30 to confirm its acceptance of the lease extension. In his letter, he again stated that Monit preferred to execute a long-term agreement and that it was prepared to begin the renovations forthwith (exhibit 355). On April 7, 1992, the newspaper La Presse published an article entitled "[translation] ICAO might move to WTC" (World Trade Centre of Montreal, a building belonging to another promoter) (exhibit 385).
(d) First call for tenders - June 1992
22 In May, PWC announced in the newspapers that it was seeking bids for leases with a duration of 20 to 35 years for the purpose of relocating the ICAO on or before May 1, 1996. The proposals were to be received no later than June 15, 1992.
(e) Proposals received
23 As of the date provided, PWC had received 14 proposals from nine different promoters. Among these was Monit's bid for a lease from November 1, 1994 (exhibit 443). The proposals were evaluated from June 15 to 26, 1992, and a report was presented to the ICAO. On June 29, PWC agreed on behalf of the government to an extension of the lease for 18 months and the two six-month renewal options with Monit (exhibit 480).
(f) Monit proposal not considered
24 On July 7, 1992 (exhibit 489), Mr. Miller wrote to Mr. Kotler to inform him that the Monit proposal of June 15, 1992 would not be considered. Two reasons were cited. First, it had been decided to remain in its building until April 30, 1996, and Monit had only made a proposal for a lease commencing November 1, 1994. Second, it was a question of costs: the less onerous proposals were those in which the lease commenced May 1, 1996.
(g) Second call for tenders - September 1992
25 During the summer, PWC decided to cancel the first call for tenders because all of the proposals had been disqualified and Monit's had not been adopted. It was then decided to make a second call for tenders. This time, only those who had made proposals on June 15, 1992 were invited to participate.
26 The new process was set in motion. A mandatory tour of the Monit building was organized for all the participants and some individual meetings were scheduled to inform each of them of the strengths and weaknesses of their initial proposal. This second call for tenders included some new categories of requirements and divided the process into two phases. To pass the technical phase, the participants had to obtain a minimum of 70% in each of the categories. Those who passed the first phase could then go on to the second phase, the financial one. Some questions and answers were prepared to help each participant clearly understand the estimate. Some addenda were sent to correct, clarify or revoke certain provisions.
27 After receiving the proposals, including Monit's, PWC sent some requests for clarification to the proponents. Each submitted its replies no later than December 31, 1992. The proposals were evaluated during the first two weeks of January 1993.
28 Of the ten proposals received, three passed the first phase. The promoters who were entitled to present a financial proposal were Pomerleau for one site, and Westcliff for two sites.
29 On March 24, 1993 (exhibit 773), Monit received a letter from PWC informing it that its proposal was disqualified. It had failed to obtain 70% in the following categories: architecture, security, engineering and functionality.
30 On April 19, 1993, Monit decided to commence this suit for damages. Nevertheless, the company's president wrote to the Minister of Public Works on the 29th and proposed to him a 35-year lease on the same terms and conditions as those provided in the lease ending in 1994. He also undertook to spend 15 million dollars to renovate his building to meet the ICAO requirements (exhibit 804). He sent a letter to all MPs, ministers and the Canadian prime minister explaining the situation.
31 On May 5, 1993, the Minister of Public Works replied to Monit's president that he would not intervene in the process. The proponents who had passed the first phase had submitted financial proposals and PWC was now evaluating them (exhibit 812).
32 PWC subsequently chose the proposal that it considered best, the one from the Westcliff firm. Recommendations along these lines were made to the ICAO Board and Assembly, which accepted them, and Treasury Board approved the transaction. A contract was accordingly awarded to Westcliff for the construction of a new building for the ICAO.
33 On March 29, 1994, PWC exercised one of the six-month renewal options provided in the original lease extension contract executed with Monit.
D. PARTIES' SUBMISSIONS
(1) THE PLAINTIFF
34 The plaintiff agrees that it must prove a fault, damages and a causal relationship. On the facts, PWC committed a number of faults in relation to Monit between 1990 and 1992. One should bear in mind that the ICAO was occupying 85% of its building in 1991 and 1992. During those years, the recession was ravaging the Montréal area, and the building rental industry in particular. PWC was not unaware that a move by the ICAO would have disastrous financial consequences for Monit. An excellent relationship had been established over the years between the ICAO and Monit through the "leases management" committee. Monit had indicated clearly to PWC that it was anticipating confidential negotiations in good faith. PWC had been doing business with Monit for a very long time, so there were some contractual undertakings.
(a) The law
(i) Legal context
(A) Applicable law - Resort to provincial law
35 The general rule, which is consequent on the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 provisions incorporating laws between subject and subject, is that in tort actions against the federal Crown, provincial actions governing actions between subject and subject apply (Paul Lordon, Crown Law (Toronto: Butterworths, 1991), at p. 369).
36 "Unless indicated otherwise, ... no document other than the Civil Code shall serve as ordinary law, in private law, in the federal legislation applicable to Quebec." (St-Hilaire v. Canada (Attorney General), [2001] 4 F.C. 289 (C.A.), at paragraph 39. This principle is also found in the Federal Law-Civil Law Harmonization Act, No. 1, S.C. 2001, c. 4.
(B) Transitional law
37 Because the facts in this litigation occurred prior to 1994, it is the Civil Code of Lower Canada (C.C.L.C.) that applies. The previous jurisprudence in such matters was codified with the coming into force of the Civil Code of Québec (C.C.Q.) in 1994.
(C) Nature of the proceeding
38 Irrespective of whether the liability is in contract or in tort, the duties and obligations are the same (Wabasso Ltd. v. National Drying Machinery Co., [1981] 1 S.C.R. 578, at page 590.
(D) Value of common law precedents
39 Citing cases and authorities, the plaintiff argues that not all common law concepts apply in the Quebec civil law (Wabasso, supra).
40 The plaintiff asks that I distance myself from the judgment in Martel Buildings Ltd. v. Canada, [2000] 2 S.C.R. 860, since it involved an Ontario case. For example, the duty to negotiate in good faith does not appear to be recognized in that case, while it has long been recognized in the Quebec civilian doctrine (B. Lefebvre, La bonne foi dans la formation du contrat (Éditions Yvon Blais, 1998), at pages 114 and 117). Furthermore, N. Rafferty criticizes the Supreme Court's approach on this issue in "Developments in Contract and Tort Law: the 2000-2001 Term", (2001), 15 S.C.L.R. (2d) 173, at page 196.
41 Another example has to do with the right to compensation for purely economic loss, a concept unknown to the common law. The Quebec civil law has consistently held that this type of harm ought to be compensated, the plaintiff argues (D. Jutras, "Civil Law and Pure Economic Loss: What are we missing?" (1986-87) 12 Can. Bus. L.J. 295).
42 In short, the common law principles that are incompatible with the civil law in this important judgment of the Supreme Court should not apply here.
(E) Burden of proof
43 The burden of proof is on the plaintiff, on a balance of probabilities. However, the plaintiff may use presumptions of fact or of law to alleviate its burden.
44 The Quebec courts favour the rule that a party cannot profit from its refusal to provide evidence that is within its knowledge. "[translation] In civil matters, where the objective is the search for the truth, a party may not profit from its refusal to provide elements within its reach that are necessary to resolve the litigation." (Kahn v. Toronto-Dominion Bank, [1997] R.R.A. 50, at pages 56 and 57 (Que. C.A.))
(b) Wrongful conduct prior to the calls for tenders
(i) Good faith
(A) Crown liability
45 In contractual matters, the civil law rules govern relations between the Crown and individuals. Good faith, a universal principle, applies to both natural persons and corporate bodies.
(B) General comments
46 The Supreme Court has sanctioned the duty to act in good faith (Houle v. Canadian National Bank, [1990] 3 S.C.R. 122, at page 145).
47 The duty to act in good faith may be breached notwithstanding a lack of evidence of malice or malicious intention (G.D.G. Environnement Ltée v. Zoecon Canada inc., J.E. 93-1255 (S.C.); J.-L. Baudouin and P.-G. Jobin, Les obligations, 5th ed. (Éditions Yvon Blais, 1998), at page 111).
48 This duty of good faith is expressed in such standards of conduct as loyalty, collaboration and sharing of information (Lefebvre, supra, at pages 91 and 166).
(C) Good faith in negotiations
49 Good faith should inspire all legal acts at all times. (Lefebvre and Baudouin, supra).
(ii) Breakdown in talks: source of liability
(A) Principle
50 The parties are no longer third parties when they enter into negotiations. Certain obligations arise in such situations: breaches of these obligations are sources of liability. The duty to negotiate in good faith is recognized by the Quebec courts (Hôtel de l'aéroport de Mirabel inc. v. Aéroports de Montréal, [2002] R.J.Q. 1721 (S.C.), upheld by (2003) J.E. 2003-1606 (C.A.)).
51 Once a partner has been led to believe that an agreement will be reached, negotiations should not be broken off without justification (Cie France Film inc. v. Imax Corp., J.E. 2002-5 (C.A.)).
(B) Particular context of the lease
52 The plaintiff argues that the law has evolved. Initially, the emphasis was placed on the freedom to contract. Some decisions now rule against a party to a lease who, in good faith, refuses to negotiate its renewal. "[translation] In Quebec civil law, however, it is necessary to negotiate... agreements in uberrima fide." (Hôtel de l'aéroport de Mirabel inc., supra).
(C) Unacceptable conduct
53 The duty to negotiate in good faith prohibits a party from becoming involved in a process of negotiations either knowing that it will lead nowhere or for other purposes. While, as a general rule, good faith does not require that parallel negotiations be disclosed, there are however some extremely important exceptions, including the necessity to inform a co-contractor who believes the negotiations are unique or who asks a question in this regard (Lefebvre, supra, at pages 144 and 145).
54 To determine whether a breakdown is unreasonable, certain factual items should be analyzed: the length of the negotiations, the nature of the documentation exchanged, and the capacity of the parties. The existence of prior business relations plays a preponderant role, as this increases the degree of trust (Lefebvre, supra, at pages 117 and 118).
(D) Nature of the liability
55 The failure to negotiate attracts extracontractual liability. Irrespective of whether the proceeding is in contract or in tort, the duties and obligations are the same.
(iii) Breach of the obligation to inform
(A) General comments
56 The victim of a breach of an obligation to inform may choose the remedy it prefers: it may proceed by way of an action in nullity or by an action in damages (Giovest inc. v. Place Brossard inc., [2000] R.D.I. 192 at page 196 (Que. C.A.)). There is an obligation to inform in commercial lease matters (Gestion Solvic ltée v. Amusement Daniel inc., J.E. 96-298 at page 11 (S.C.)).
(B) Parameters of the obligation to inform
57 The tests in relation to the obligation to inform were laid down by the Supreme Court in Bank of Montreal v. Bail Ltée, [1992] 2 S.C.R. 554 at page 586: knowledge of the information, whether actual or presumed, by the party which owes the obligation to inform; the fact that the information in question is of decisive importance; and the fact that it is impossible for the party to whom the duty to inform is owed to inform itself, or that the creditor is legitimately relying on the debtor of the obligation.
58 This obligation may be lessened by the obligation a party has to inform itself. However, the information must be accessible. The expertise of the parties may also be a consideration.
59 The duty to inform oneself may also be ousted by the trust that has been established between the parties.
60 It has been held that this trust may be increased by the fact that one is negotiating with the government (Grandmont et Fils Ltée v. Québec (Procureur général), [1996] R.J.Q. 1290 (S.C.)). The plaintiff alleges that PWC was in a privileged position and should have disclosed to Monit the possibility that the ICAO would move to other accommodations, as it was hard for Monit to agree in full knowledge to the short-term renewal of the original lease.
(iv) Appropriation of confidential information
61 Because there is an obligation to inform, it is common for the parties to exchange information that may often be of a private or confidential nature. Two types of wrongful conduct may then arise: on the one hand, where a party is negotiating only for the purpose of obtaining private information; on the other hand, where a party uses such information ill-advisedly or to benefit a third party (Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574).
(c) Wrongful conduct during calls for tenders
(i) Nature of the call for tenders
62 The recourse to the call for tenders process demonstrates the government's desire to award contracts with transparency and impartiality (P. Issalys and D. Lemieux, L'action gouvernementale, 2nd ed. (Éditions Yvon Blais, 2002), at page 1016).
(ii) Foundation: equality of bidders
63 Inherent to this process is the principle of equality of bidders. Good faith must always be present, as a number of decisions of the Quebec Court of Appeal have held (Pavage L. Métivier inc. v. Beauport (Ville de), 2002 BE-960 (C.A.) at page 2 and Entreprises Bon Conseil ltée v. Hydro-Québec, REJB 2002-32248 at page 1 (C.A.)).
(iii) Duty to act with fairness and transparency
64 The courts rule against public agencies that do not disclose all relevant information (Voltelec Inc. v. Corp. de l'hôpital Saint-Charles Borromée Inc., J.E. 90-1490 at page 18 (S.C.), [1990] A.Q. No. 1448 (S.C.) (QL), upheld by [1995] A.Q. No. 314 (C.A) (QL). This duty to inform is especially important where there are previous relationships.
(iv) Duty to accept a complying bid
65 Notwithstanding the presence of a reserve clause (or "privilege clause"), the Supreme Court has held that the government has an obligation to contract with a compliant bidder (M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619). This principle applies in civil law (9071-8214 Québec inc. v. Roch Lessard 2000 inc., REJB 2001-25544 (Que. C.A.) at pages 2 and 3).
(v) A bona fide fault brings about liability
66 Ignorance, even in good faith, by the author of the rules pertaining to the call for proposals ought to be penalized (J. P. Doyon ltée v. Trois-Rivières (Ville de), J.E. 96-2014 (S.C.) at page 6 and Bau-Québec ltée v. Sainte-Julie (Ville de), [1999] R.J.Q. 2650 at page 2654 (C.A.).
(vi) Initial call for tenders: the refusal to negotiate constitutes fault
67 Following the initial call for tenders, all the proposals except Monit's were disqualified. A government guideline provided that in the event that only one proposal were to fulfill the requirements, the government should negotiate with that bidder (page 9, excerpts from exhibit 1185A, Policies and Guidelines).
68 Although the guideline does not have the same force as the regulations, it is nonetheless a "rule of conduct". A breach of this rule is attributable to its author ((M. Tancelin, Des obligations: actes et responsabilités, Wilson & Lafleur, 1997 at page 316). The guideline must be taken into consideration in the assessment of what constitutes reasonable conduct. The plaintiff argues that when someone has relied on a guideline, that guideline may be set up against the authority. This concurs with the theory of reasonable expectation developed in administrative law. Moreover, in the case of calls for tenders, the courts have held that guidelines are relevant considerations (Yves Germain Construction inc. v. Hydro-Québec, J.E. 2000-1658 (C.A.)).
69 The duty to negotiate is one such usage in similar matters, and failure to comply with this usage may constitute a fault (article 1457 C.C.Q. and article 1053 C.C.L.C.).
70 The wholesale rejection of all bids must be allowed only on reasonable grounds. Although the existence of excessively high bids may constitute a reasonable ground, in this case Monit had not adopted a firm position since it had previously, on numerous occasions, demonstrated its intention to negotiate downwards the prices it had proposed.
71 The courts penalize authorities who use calls for tenders to promote a particular solution or who determine the outcome of the competition from the outset of the process (The Queen v. Wilfrid Nadeau Inc., [1973] F.C. 1045, at page 1046 (C.A.)).
(vii) Second call for tenders
(A) Amendment of criteria
72 As a rule, the courts refuse to interfere in the analysis of the criteria unless the evidence demonstrates an advantage to a particular bidder. The following are to be considered: (1) the factors used were not relevant to the objective of the procedure; (2) the factors used were not known to the bidders; (3) the evaluators acted in an unfair or discriminatory manner or in bad faith in their evaluation of the bids; (4) the result amounts to gross negligence or a miscarriage of justice (P. Giroux, C. Moffet, M.-C. Belleau and D. Lemieux, Contrats des organismes publics québécois, Publications CCH/FM (looseleaf), section 7-7701 at page 1193).
(B) Amendment of contract
73 Since what was involved was a contract with the government, the amendments to the contract had to keep within the limitations of the contractual authority (P. Lemieux, "Les récents développements en matière de contrats de l'administration" (1986) 16 R.D.U.S. 541 at page 570). The courts accept later amendments that are minor or incidental. However, there is no presumption that an amendment is minor. Fault in the attribution of the contract may be inferred where the rejected bidders' proposals that were considered non-compliant are replicated by the winning bidder (Tuyauterie Caribou Inc. v. Hôpital Louis-H. Lafontaine, J.E. 98-607 (S.C.) at page 6, upheld REJB 2001-25347 (C.A.)).
74 Fault may also be inferred where the rejection of the bid is not accompanied by any explanation. The courts do not accept that administrative authorities alter the rules during the call for tenders or after the fact.
75 The Quebec Court of Appeal ruled that a subsequent grant could not be awarded to the chosen bidder because no provision had been made for it in either the terms and conditions of the call for tenders or in the bid (Cité de St-Romuald d'Etchemin v. S.A.F. Construction Inc., [1974] C.A. 411 (Que. C.A.).
(2) THE DEFENDANT
76 Citing a number of paragraphs in the amended statement of claim, the defendant points to unjustified allegations of conspiracy, injustice and inequity raised by Monit. The defendant also notes that the plaintiff is complaining that the defendant hid some documents from it.
77 According to the defendant, huge efforts were made to convey about 20,000 pages of documents to the plaintiff. Although the plaintiff availed itself of the Access to Information Act, R.S.C. 1985, c. A-1, it did not use any document in addition to those supplied.
78 The defendant performed its obligations notwithstanding its right to confidentiality in regard to certain documents. Moreover, it waived its privilege regarding some documents.
79 It pleads as well that a number of witnesses, some even from outside the country, were called to the witness stand to demonstrate that the harsh accusations against the defendant were unfounded.
80 The burden of proof is on the plaintiff, and it has failed to discharge it and must suffer the consequences of the dismissal of its suit.
(a) Applicable law
81 The awarding of contracts by the Crown through calls for tender pertains to public and administrative law, and the common law jurisprudence applies here. The defendant cites a number of authorities, and in particular Madam Justice Thérèse Rousseau-Houle, Les contrats de construction en droit public et privé (Montréal: Wilson & Lafleur, 1982).
(b) Obligations applicable prior to the calls for tenders process
82 Good faith is presumed and a preponderance of evidence must be presented to rebut that presumption.
83 A party has no obligation to enter into negotiations with another party and the defendant therefore had no obligation to negotiate with the plaintiff.
84 A distinction must be made between the obligation to negotiate in good faith and the obligation to negotiate. There is no obligation to negotiate until the talks are securely under way (Lefebvre, supra, at pages 114 to 120).
85 Discussions or negotiations with a view to renewing a lease cannot force the parties to execute a contract. In any event, the obligation to negotiate in good faith and not to break off negotiations unreasonably was complied with in this case. In support, the defendant cites a number of authors as well as the decision in Paul v. Vancouver International Airport Authority (2000), B.L.R. (3d) 135 (B.C.S.C.).
86 Presenting a bid in the context of a call for tenders constitutes a waiver or a plea in bar to any right that is claimed on the basis of previous relations (Affiliated F.M. Insurance Co. v. Symons General Insurance Co., [1990] R.J.Q. 2421 (C.A.); Gabias v. Mainville (1922), 33 B.R. 32 (Que. C.A.); Stevenson v. Brique Champlain Ltée, [1943] B.R. 196 (Que. C.A.); E.R. v. A.T., [2001] R.J.Q. 691 (S.C.); J.C. v. B.V., [2001] R.J.Q. 1051 (S.C.); Robichaud v. Panneton, [1989] R.J.Q. 1267 (S.C.)).
87 The obligation to inform does not extend to information that the co-contractor has already or to which it may have access by applying due care and diligence. (J.L. Baudouin and P.G. Jobin, Les obligations, 5th ed. (Éditions Yvon Blais, 1998), at pages 314 and 315; Lefebvre, supra, at pages 171 to 175; Canada v. Covex, J.E. 98-198 (S.C.); Paul v. Vancouver International Airport Authority, supra; Hughes Land Co. v. Manitoba (Minister of Government Services (1991), 72 Man. R. (2d) 215 (Q.B.)).
(c) Principles applicable to calls for tender
88 The tendering document may give its author great discretion in the evaluation of the submissions, provided that it respects the duty to treat all bidders fairly and on an equal footing (Martel, supra).
89 The tendering sponsor has some discretion in determining the compliance of the bids and it is not the court's job to substitute its evaluation for that of the evaluator, absent evidence of bad faith or a manifest lack of objectivity by the evaluator (Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services) (1995), 90 F.T.R. 214 (F.C.T.D.), upheld by [1995] 2 F.C. 694 (C.A.); Halifax Shipyard Ltd. v. Canada (Minister of Public Works and Government Services) (1996), 113 F.T.R. 58 (F.C.T.D.)).
90 A tendering sponsor who negotiates with only one of the bidders violates the principle of equality of bidders (J. Pineau and S. Gaudet, Théorie des obligations, 5th ed. (Éditions Thémis, 2001), at page 76; G.P. Allard, "Les droits des autres soumissionnaires and la modification du contrat administratif" (1996), 10 R.J.E.U.L. at page 109; A. Langlois, L'adjudication des contrats municipaux par voie de soumissions, 2nd ed. (Éditions Thémis, 1994), at pages 173 to 175; P. Giroux, L. Moffet and D. Lemieux, Contrats des organismes publics québécois (Publ. C.C.H., No. 5-450)).
91 A reserve clause under which neither the lowest bid nor any bid will necessarily be accepted means that the tendering sponsor is not bound to accept the lowest complying bid (Martel, supra; M.J.B. Entreprises v. Defence Construction, supra; Bau-Québec ltée v. Sainte-Julie (Ville de), supra).
92 The tendering sponsor is not bound to allow a bidder to provide an explanation or to be heard (Lapointe v. A.M.A.R.C., [1992] R.J.Q. 1321 (S.C.); Northeast Marine Services v. Atlantic Pilotage Authority, [1995] 2 F.C. 132 (C.A.); Halifax Shipyard Ltd. v. Canada, supra; Cegeco Construction Ltée v. Ouimet, [1991] F.C.J. No. 1144 (F.C.T.D.) (QL)).
93 The tendering sponsor may request clarifications in order to clear up any ambiguities (Gestion Complexe Cousineau (1989) Inc. v. Canada, supra; Assn. des pêcheurs propriétaires des Îles-de-la-Madeleine v. Canada, [1996] F.C.J. No. 113 (T.D.) (QL).
94 A government guideline does not have force of law and cannot create rights in favour of third parties (M. Filion, "Le pouvoir discrétionnaire de l'administration exercé sous forme de normes administratives: les directives", (1979) 20 C. de D. 855 at pages 867, 889 and 892; P. Garant, Droit administratif , volume 1, 4th ed. (Éditions Yvon Blais, 1996), at pages 395 and 396; R. Dussault and L. Borgeat, Administrative Law: A Treatise, vol. 1, 2nd ed. (Toronto: Carswell, 1985), at pages 329 to 340).
95 The lowest bid may be rejected if its price is too high (Bernier Lecomte inc. v. Verdun (Ville de), J.E. 2002-1551 (S.C.)).
96 With reasonable justification, a tendering sponsor may reject all bids and issue a second call for tenders. Such reasonable justifications may include the excessive price of the bids received, the need to correct some ambiguity in the tendering documents or an amendment in the terms of the call for tenders (Beauchesne v. Bécancour (Ville de), J.E. 84-631 (C.A.); Community Enterprises Limited v. La corporation de la Ville d'Acton Vale, [1970] C.A. 747 (Que. C.A.); J.R. Proulx et fils inc. v. Municipalité du village de Baie-Trinité, 98BE-526 (C.S. Qué.); Boless inc. v. Université du Québec to Hull, J.E. 92-1746 (S.C.); Centre Routier inc. v. St-Luc de Matane (Corp. municipale de la paroisse de), J.E. 92-513 (S.C.); Lepage v. Visitation-de-la-Bienheureuse-Vierge-Marie, J.E. 83-29 (S.C.); La Compagnie d'assurances du Québec v. La Ville de Charlesbourg, J.E. 83-568 (S.C.); Transport Déchex Inc. v. Saint-Hubert (Ville de), J.E. 82-855 (S.C.); Fontaine et Fils inc. v. Ville de Ste-Hyacinthe (1979), 11 M.P.L.R. 51; Glenview Corporation v. Canada (Ministre des Travaux publics) (1990), 34 F.T.R. 292 (F.C.T.D.)).
97 The filing of a bid on a second call for tenders constitutes a waiver of any alleged claim based on the first call for tenders (Les Entreprises d'électricité Adamik Inc., v. Les Constructions Sicor Inc., (December 8, 1992), 500-05-000379-907 (S.C.); Lavigueur v. Municipalité de Ste-Clothilde de Chateauguay, (November 10, 1989), 760-05-000477-891 (S.C.); Jourdain v. Grand-mère (Corp. de la Ville de), J.E. 83-328 (S.C.); Tétreault et Frères Ltée v. Les Commissaires d'écoles pour la municipalité de la cité de Lachine, (February 26, 1969), 597, 470 (S.C.).
98 The principal may make amendments to the contract. A fortiori, the principal may do so when a clause in the call for tenders so provides (P. Lemieux, Les contrats de l'administration fédérale, provinciale et municipale, R.D.U.S., 1981 at pages 280, 281 and 291; Rousseau-Houle, supra, at page 260; Adricon Ltée v. Town of East Angus, [1978] 1 S.C.R. 1107; Whistler Service Park Ltd. v. Whistler (Resort Municipality), [1990] B.C.J. No. 1546 (B.C.S.C.) (QL).
(d) Causal relation
99 A bidder who disputes the award of the contract must prove on a balance of probabilities that it would have obtained the contract if the tendering sponsor had not committed a fault (Toitures Quatre-Saisons inc. v. Casiloc Inc., J.E. 2003-1195 (S.C.); Bernier Lecomte inc. v. Ville de Verdun, supra; Hypertec Systèmes inc. v. Commission scolaire de La Capitale, J.E. 2001-1446 (S.C.); Chauffage Moderne (1977) inc. v. Réfrigération Noël Inc., (May 8, 1995), 150-05-000175-929 (S.C.); 142710 Canada Inc. v. Construction Canvar inc., J.E. 93-517 (S.C.); Bilodeau Électrique Ltée v. Santerre Électrique inc., (October 26, 1989), 655-05-000035-873 (S.C.); Acier D.C.L. Inc. v. Construction D. Leblanc Inc., (January 22, 1987), 700-02-001968-859 (P.C.).
(e) Evidence
100 The Crown's privileges under the Canada Evidence Act, R.S.C., c. C-5, have their rationale (J.-C. Royer, La preuve civile, 2nd ed. (Éditions Yvon Blais, 1995), at Nos. 1066 to 1098; J. Sopinka, The Law of Evidence in Canada, 2nd ed. (Butterworths, 1999), at Nos. 15.10 and 15.11; Goguen v. Gibson, [1983] 2 F.C. 463 (C.A.); Kevork v. Canada, [1984] 2 F.C. 753 (T.D.)).
(f) Defendant's submissions concerning the conspiracy alleged by Monit
(i) General context
(A) Canadian government
101 It is necessary to bear in mind the reality of government, i.e. the complexity of the numerous government departments that often leads to decisions that must be weighed in light of each department's mission.
(B) ICAO
102 The ICAO is an independent agency that does not report to any particular state authority. Canada handles its accommodation and a number of government departments, including PWC and DFA, participate in this task.
(C) Search for options by DFA and its agent, PWC
103 Relying on the testimony of Messrs. Noble, Duguay, Miller and Kotler, and on certain exhibits that were filed, the defendant argues that it acted with professionalism and integrity, and that both it and its representatives are above reproach.
(g) Calls for tenders
(i) First call for tenders issued May 5, 1992
104 The defendant explains why PWC decided to proceed with a call for tenders.
105 The defendant draws attention to the Martel judgment, supra, in support of its argument that PWC did not need to consider its previous relationship with Monit.
106 The defendant argues that Monit understood very well the requirements of the call for tenders and was well aware that from a security standpoint, its building had some architectural problems.
107 The defendant considers its representatives kept to the specifications. The reservations of rights in that document are similar to those at issu