Hub Excavating Ltd. v. Orca Estates Ltd. et al., (2009) 269 B.C.A.C. 186 (CA)

• Judge: Hall, Chiasson and Neilson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 13, 2009
• Jurisdiction: British Columbia
• Citations: (2009), 269 B.C.A.C. 186 (CA);2009 BCCA 167

Hub Excavating v. Orca Estates (2009), 269 B.C.A.C. 186 (CA);

    453 W.A.C. 186

MLB headnote and full text

Temp. Cite: [2009] B.C.A.C. TBEd. AP.036

Hub Excavating Ltd. (respondent/plaintiff) v. Orca Estates Ltd., McColl Investments Co. Ltd., and Christopher Estates Limited doing business as Rocky Point Joint Venture (appellants/defendants) and Leslie Allan Morris and Morris Engineering Ltd. (respondents/defendants)

(CA035544)

Hub Excavating Ltd. (respondent/plaintiff) v. Leslie Allan Morris and Morris Engineering Ltd. (appellants/defendants/third parties) and Orca Estates Ltd., McColl Investments Co. Ltd. and Christopher Estates Limited doing business as Rocky Point Joint Venture (respondents/defendants)

(CA035545; 2009 BCCA 167)

Indexed As: Hub Excavating Ltd. v. Orca Estates Ltd. et al.

British Columbia Court of Appeal

Hall, Chiasson and Neilson, JJ.A.

April 17, 2009.

Summary:

Hub Excavating Ltd. bid to provide construction and excavation services for Phase 12 of Rocky Point, a multi-phase subdivision in Nanaimo owned and developed by Orca Estates Ltd., McColl Investments Co., and Christopher Estates Ltd. (collectively, the joint venture appellants). Morris Engineering Ltd. and Morris (collectively, the Morris appellants) were the engineering firm and its principal who acted as project engineer for all phases of the Rocky Point development. Hub submitted the lowest bid. Shortly after bids closed Hub's representative, Webber, had a conversation with Morris, who made representations that Hub said led it to believe that it would be awarded the contract for Phase 12. As a result, Hub did not bid on a contemporaneous project in Comox. The joint venture appellants ultimately rejected all bids and decided not to proceed with Phase 12 as it was not economically feasible. Hub brought an action against the joint venture appellants for breach of an implied contractual duty of fairness in the tendering process, and also claimed against both sets of appellants for negligent misstatement.

The British Columbia Supreme Court allowed Hub's action and awarded Hub damages of $300,000, representing lost profit that it would have earned on the Comox project (see [2007] B.C.T.C. Uned. F62; 2007 BCSC 1512). In supplemental reasons, the court found that the joint venture appellants and the Morris appellants were jointly and severally liable for those damages, and apportioned fault 80% to the joint venture appellants and 20% to the Morris appellants (see [2008] B.C.T.C. Uned. A08; 2008 BCSC 21). The joint venture appellants and the Morris appellants appealed.

The British Columbia Court of Appeal allowed the appeal, set aside the award of damages with respect to both the claim in contract against the joint venture appellants and the claim in negligent misrepresentation against the joint venture appellants and the Morris appellants.

Building Contracts - Topic 1302

Tender calls - General - Duty of care (incl. fairness) - Hub Excavating Ltd. bid to provide construction and excavation services for a subdivision developed by the joint venture appellants - Morris Engineering Ltd. and Morris (collectively, the Morris appellants) were the engineering firm and its principal who acted as project engineer for all phases of the development - Hub submitted the lowest bid - Shortly after bids closed Hub's representative, Webber, had a conversation with Morris, who made representations that Hub said led it to believe that it would be awarded the contract - As a result, Hub did not bid on a contemporaneous project in Comox - The joint venture appellants ultimately rejected all bids and decided not to proceed with the project as it was not economically feasible - Hub brought an action against the joint venture appellants, asserting, inter alia, breach of an implied contractual duty of fairness in the tendering process - The trial judge found that the joint venture appellants had breached the duty of fairness owed to Hub in three ways: they proceeded with a futile bidding process when they knew or ought to have known from the outset that the project was not economically feasible; through Morris they made inaccurate statements to Hub that led it to believe it would be awarded the job; and having decided that the project would not proceed they failed to advise Hub promptly of that decision - The British Columbia Court of Appeal allowed an appeal - The trial judge's findings were premised on a misapprehension of the nature and scope of the implied duty of fairness - First, the trial judge erred in finding that the duty of fairness arose before the formation of Contract A - Second, the duty of fairness was confined to an obligation to treat all bidders fairly and consistently in the process of accessing the bids - It did not extend to other aspects of the tendering process - While it would have been polite business to advise Hub and the other bidders promptly of the decision not to proceed, the joint venture appellants had no obligation to do so - See paragraphs 27 to 50.

Building Contracts - Topic 1316

Tender calls - General - Negligent misrepresentation - Hub Excavating Ltd. bid to provide construction and excavation services for a subdivision developed by the joint venture appellants - Morris Engineering Ltd. and Morris (collectively, the Morris appellants) were the engineering firm and its principal who acted as project engineer for all phases of the development - Hub submitted the lowest bid - Shortly after bids closed Hub's representative, Webber, had a conversation with Morris, who made representations that Hub said led it to believe that it would be awarded the contract - As a result, Hub did not bid on a contemporaneous project in Comox - The joint venture appellants ultimately rejected all bids and decided not to proceed with the project as it was not economically feasible - Hub brought an action against the joint venture appellants, asserting, inter alia, that both sets of appellants had made negligent misstatements - The trial judge found that Morris negligently made two inaccurate statements to Webber during their May 21, 2004, telephone conversation where Morris stated that "the bid of Hub was close to his estimate, and that he would advise the owner and get back to Mr. Webber as soon as he got the 'go ahead'" - The trial judge found that Hub relied on those representations in its decision not to submit a tender for the Comox job - The British Columbia Court of Appeal allowed an appeal - The trial judge only dealt briefly with reliance - The trial judge erred in finding that it was reasonable for Hub to rely on Morris' representations of May 21, 2004, in deciding not to bid on the Comox project - Those representations had been supplanted by the information Hub received from Morris and the joint venture appellants on May 26 and 27, 2004 - By May 27, 2004 there were clear indications that the future of the project was uncertain - See paragraphs 51 to 66.

Cases Noticed:

Ron Engineering & Construction (Eastern) Ltd. v. Ontario and Water Resources Commission, [1981] 1 S.C.R. 111; 35 N.R. 40, refd to. [para. 30].

M.J.B. Enterprises Ltd. v. Defence Construction (1951) Co. et al., [1999] 1 S.C.R. 619; 237 N.R. 334; 232 A.R. 360; 195 W.A.C. 360; 170 D.L.R.(4th) 577, refd to. [para. 30].

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

Midwest Management (1987) Ltd./Monad Contractors Ltd. (Joint Venture) et al. v. BC Gas Utility Ltd. (2000), 147 B.C.A.C. 175; 241 W.A.C. 175; 82 B.C.L.R.(3d) 79; 2000 BCCA 589, refd to. [para. 39].

Elite Bailiff Services Ltd. v. British Columbia (2003), 179 B.C.A.C. 51; 295 W.A.C. 51; 223 D.L.R.(4th) 39 (C.A.), refd to. [para. 40].

Chinook Aggregates Ltd. v. Abbotsford (Municipal District), [1990] 1 W.W.R. 624; 40 B.C.L.R.(2d) 345 (B.C.C.A.), refd to. [para. 40].

Sound Contracting Ltd. v. Nanaimo (City) (2000), 138 B.C.A.C. 116; 226 W.A.C. 116; 74 B.C.L.R.(3d) 239; 2000 BCCA 312, refd to. [para. 43].

Continental Steel Ltd. v. Mierau Contractors Ltd. (2007), 243 B.C.A.C. 21; 401 W.A.C. 21; 70 B.C.L.R.(4th) 5; 2007 BCCA 292, refd to. [para. 43].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 51].

Kripps et al. v. Touche Ross & Co. et al., [1997] 6 W.W.R. 421; 89 B.C.A.C. 288; 145 W.A.C. 288; 33 B.C.L.R.(3d) 254 (C.A.), refd to. [para. 54].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 55].

Counsel:

J.S. Logan and J.S. Twa, for the appellants, Orca Estates, McColl Investments Co. Ltd. and Christopher Estates Limited;

G.S. Miller and C. Tham, for the appellants, L.A. Morris and Morris Engineering;

P.C.P. Behie, Q.C., for the respondent, Hub Excavating Ltd.

These appeals were heard on January 13, 2009, at Vancouver, B.C., by Hall, Chiasson and Neilson, JJ.A., of the British Columbia Court of Appeal. The following judgment of the Court of Appeal was delivered by Neilson, J.A., on April 17, 2009.