Double N Earthmovers Ltd. v. Edmonton (City) et al., (2007) 356 N.R. 211 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: January 25, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 356 N.R. 211 (SCC);2007 SCC 3;JE 2007-213;28 BLR (4th) 169;29 MPLR (4th) 1;356 NR 211;58 CLR (3d) 4;275 DLR (4th) 577;[2007] 3 WWR 1;[2007] 1 SCR 116;401 AR 329;68 Alta LR (4th) 1;[2007] SCJ No 3 (QL);EYB 2007-112458;153 ACWS (3d) 583

Double N Earthmovers v. Edmonton (2007), 356 N.R. 211 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2007] N.R. TBEd. JA.013

Double N Earthmovers Ltd. (appellant) v. City of Edmonton and Sureway Construction of Alberta Ltd. (respondents)

(30915; 2007 SCC 3; 2007 CSC 3)

Indexed As: Double N Earthmovers Ltd. v. Edmonton (City) et al.

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.

January 25, 2007.

Summary:

The City of Edmonton called for tenders for landfill equipment and a site operator. The tender documents required that all equipment to be used be 1980 or newer. The contract was awarded to Sureway Construction. An unsuccessful bidder, Double N Earthmovers Ltd., commenced an action against the city claiming that the city breached its contract with Double N arising from Double N's tender (i.e., contract A). Double N alleged that Sureway's tender listed equipment that was noncompliant with the date requirement. The city commenced third party proceedings against Sureway.

The Alberta Court of Queen's Bench, in a decision reported 213 A.R. 81, dismissed the action, but provisionally assessed damages. Double N appealed and the city and Sureway cross-appealed.

The Alberta Court of Appeal, in a decision reported 363 A.R. 201; 343 W.A.C. 201, dismissed the appeal and cross-appeal. Double N appealed again.

The Supreme Court of Canada, McLachlin, C.J.C., Bastarache, Binnie and Charron, JJ., dissenting, dismissed the appeal.

Building Contracts - Topic 1301

Tender calls - General - [See Contracts - Topic 1261 ]

Building Contracts - Topic 1302

Tender calls - General - Duty of care (incl. fairness) - The Supreme Court of Canada, in a case involving a tender call for the supply and operation of equipment, held that an owner's obligations under Contract A to unsuccessful bidders, and in particular its implied obligation to treat bidders fairly, did not survive the creation of Contract B with the successful bidder - See paragraph 69 - The court also discussed whether an owner had a duty to investigate a bid prior to acceptance and whether pre-award negotiations between an owner and bidders constituted "bid shopping" - See paragraphs 46 to 67.

Contracts - Topic 1261

Formation of contract - Tender calls - General - The Supreme Court of Canada stated that "as was reiterated by this Court in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. [1999] ... and Martel Building Ltd. v. Canada, [2000] ... the express terms set out in the tender documents govern Contract A. However, Contract A may also contain certain implied terms if they meet the test for implied terms set out by this Court in Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] ...  Implied terms can be based on the existence of any of: (1) custom; (2) the legal incidents of a particular class or kind of contract; or (3) the presumed intentions of the parties, where the term is necessary to give business efficacy to a contract" -  See paragraph 30 - The court noted that in M.J.B. Enterprises, the court recognized an implied term in Contract A that an owner would only accept a compliant bid - Further, in Martel, the court recognized an additional implied obligation on the part of owners to treat all bids "fairly and equally" - See paragraphs 31 and 32.

Contracts - Topic 1263

Formation of contract - Tender calls - Duties - Re bid shopping - The City of Edmonton called for tenders for landfill equipment (newer than 1980) and a site operator - Sureway was awarded the contract - An unsuccessful bidder, Double N, sued the city claiming that the city breached its contract A with Double N when it was subsequently discovered that Sureway's tender listed, and work was performed with, some pre-1980 equipment - The trial judge dismissed Double N's action - Double N appealed - The Alberta Court of Appeal dismissed the appeal - Double N appealed again - The Supreme Court of Canada dismissed the appeal - The court held that the city did not breach any duties owed to Double N under Contract A by accepting Sureway's bid or by failing to investigate Sureway's bid prior to acceptance - Double N's bid received fair treatment throughout the bidding process - Sureway's bid was compliant on its face - The court found that the city did not enter into a contract on terms other than those set out in its bidding documents and thus did not violate any duties owned to Double N in this regard - Further, the city did not violate its duties to Double N by permitting Sureway to supply equipment manufactured prior to 1980 because the city's obligations under Contract A to Double N (i.e., an unsuccessful bidder), and in particular the implied obligation to treat bidders fairly, did not survive the creation of Contract B with the successful bidder - Here the conduct complained of by Double N (i.e., the waiver by the city of the 1980 requirement) was conduct that occurred after the award of Contract B - Double N as unsuccessful bidder was not privy to Contract B - Once the city accepted the offer of compliant units, Sureway's failure to supply as promised became a matter between the city and Sureway alone - See paragraphs 30 to 75.

Contracts - Topic 1263

Formation of contract - Tender calls - Duties - Re bid shopping - The City of Edmonton called for tenders for landfill equipment (newer than 1980) and a site operator - Sureway was awarded the contract - An unsuccessful bidder, Double N, sued the city claiming that the city breached its contract A with Double N when it was subsequently discovered that Sureway's tender listed, and work was performed with, some pre-1980 equipment - The trial judge dismissed Double N's action - Double N appealed - The Alberta Court of Appeal dismissed the appeal - Double N appealed again, arguing that the city's pre-award negotiations with Double N and with Sureway amounted to "bid shopping" -  The Supreme Court of Canada dismissed the appeal - The court stated that in this case the documents clearly indicated that some measure of negotiation was anticipated - Condition 25 provided that "changes in tenders will not be permitted after the tenders have been opened, unless negotiated with the lowest evaluated tenderer" - Accordingly, pursuant to Condition 25, the city was specifically entitled to negotiate with Sureway, which was the lowest bidder offering compliant units after the city's initial evaluation - It was no breach of the city's Contract A with Double N for it to have exercised a right specifically conferred by Condition 25 - The court stated further, that if the City could be criticized at all, it was not in its negotiations with Sureway, but rather with Double N - Since Double N was not the lowest evaluated tender, an argument can be made that the City ought not to have negotiated with Double N - However, since Double N had no basis for complaining about a breach that was to its benefit, this breach was of no assistance to Double N - See paragraphs 55 to 61.

Contracts - Topic 1267

Formation of contract - Tender calls - Acceptance of tender - [See both Contracts - Topic 1263 ].

Contracts - Topic 1276

Formation of contract - Tender calls - Breach of tender - General - [See both Contracts - Topic 1263 ].

Cases Noticed:

Ontario and Water Resources Commission v. Ron Engineering and Construction (Eastern) Ltd., [1981] 1 S.C.R. 111; 35 N.R. 40, refd to. [paras. 1, 105].

M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. et al., [1999] 1 S.C.R. 619; 237 N.R. 334; 232 A.R. 360; 195 W.A.C. 360, refd to. [paras. 30, 105].

Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860; 262 N.R. 285; 2000 SCC 60, refd to. [paras. 30, 105].

Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711; 77 N.R. 161; 21 O.A.C. 321, refd to. [para. 30].

Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943; 277 N.R. 1; 153 O.A.C. 341; 2001 SCC 58, refd to. [para. 56].

Stanco Projects Ltd. v. British Columbia (Minister of Water, Land and Air Protection) [2004] B.C.T.C. 1038; 242 D.L.R.(4th) 720; 2004 BCSC 1038, affd. (2006), 226 B.C.A.C. 210; 373 W.A.C. 210; 266 D.L.R.(4th) 20; 2006 BCCA 246, refd to. [para. 56].

British Columbia v. SCI Engineers & Constructors Inc. (1993), 22 B.C.A.C. 89; 38 W.A.C. 89 (C.A.), refd to. [para. 109].

Silex Restorations Ltd. v. Leasehold Strata Plan VR 2096, Owners et al. (2004), 201 B.C.A.C. 244; 328 W.A.C. 244; 35 B.C.L.R.(4th) 387; 2004 BCCA 376, refd to. [para. 110].

Graham Industrial Services Ltd. v. Greater Vancouver Water District et al. (2004), 194 B.C.A.C. 1; 317 W.A.C. 1; 25 B.C.L.R.(4th) 214; 2004 BCCA 5, refd to. [para. 110].

Authors and Works Noticed:

Goldsmith, Immanuel, and Heintzman, Thomas G., Canadian Building Contracts (4th Ed. 1988) (2006 Looseleaf Update, Release 1),  p. 1-15 [para. 65].

Counsel:

Brian A. Crane, Q.C., and I. Samuel Kravinchuk, for the appellant;

Darrell Lopushinsky and David Woo, for the respondent the City of Edmonton;

Shauna C.  Miller, Q.C., and Peter D. Banks, for the respondent Sureway Construction of Alberta Ltd.

Solicitors of Record:

I. Samuel Kravinchuk, Edmonton, Alberta, for the appellant;

City of Edmonton, Alberta, for the respondent the City of Edmonton;

Fraser Milner Casgrain, Edmonton, Alberta, for the respondent Sureway Construction of Alberta Ltd.

This   appeal  was  heard  on  June  16,   2006,  before McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deshamps, Fish, Abella, Charron and Rothstein, JJ., of the Supreme Court of Canada.  The judgment of the Supreme Court of Canada was delivered in both official languages on January 25, 2007, including the following opinions:

Abella and Rothstein, JJ. (LeBel, Deschamps and Fish, JJ., concurring) - see paragraphs 1 to 75;

Charron, J., dissenting (McLachlin, C.J.C., Bastarache and Binnie, JJ., concurring) - see paragraphs 76 to 131.