Martel Building Ltd. v. Canada, (1997) 129 F.T.R. 249 (TD)

• Judge: Reed, J.
• Court: Federal Court (Canada)
• Case Date: April 22, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 129 F.T.R. 249 (TD)

Martel Building Ltd. v. Can. (1997), 129 F.T.R. 249 (TD)

MLB headnote and full text

Temp. Cite: [1997] F.T.R. TBEd. MY.024

The Martel Building Limited (plaintiff) v. Her Majesty the Queen (defendant)

(T-1273-93)

Indexed As: Martel Building Ltd. v. Canada

Federal Court of Canada

Trial Division

Reed, J.

April 22, 1997.

Summary:

The Atomic Energy Control Board, a federal agency, was the primary tenant in the plaintiff's office building under a 10 year lease expiring in August 1993. Officials in the Department of Public Works were responsible for negotiating renewals and recommending that certain decisions be made. The plaintiff pushed for negotiations for a lease renewal. The officials involved did not diligently pursue negotiations, even in light of time constraints that the plaintiff was unaware of. A lease renewal was never negotiated and tender documents were issued. The plaintiff's bid was not accepted. The plaintiff sued the federal Crown claiming that (1) the government breached an implied term of the existing lease and of an agreement for the renewal of the lease; (2) the government was negligent by failing to negotiate a renewal in good faith; and (3) the government was negligent in conducting the lease renewal negotiations, preparing tender documents and in evaluating the plaintiff's bid.

The Federal Court of Canada, Trial Division, dismissed the action. There was no obligation to renegotiate and no binding agreement to renew. There did not yet exist an actionable tort of failure to negotiate in good faith. Finally, although officials owed the plaintiff a duty of care and breached that duty by their conduct, there was no causal connection between that breach and the plaintiff's loss of the opportunity to renew the lease.

Crown - Topic 1207

Contracts with Crown - Leases - Renewal - Duty respecting - [See Crown - Topic 1562 and Torts - Topic 9110 ].

Crown - Topic 1562

Torts by and against Crown - Negligence by Crown - Negotiation of leases - The plaintiff leased space to a government department - The lease was expiring - The plaintiff sought to negotiate a renewal with government officials - There was no obligation to renew or negotiate a renewal - Negotiations began, but the manner in which the officials conducted the negotiations foreclosed any possibility of renewal - The lease was not renewed and tender documents were issued - The plaintiff's tender was not accepted - The plaintiff sued for damages, claiming that the officials were negligent in negotiating, preparing tender documents and in evaluating the plaintiff's bid - The Federal Court of Canada, Trial Division, dismissed the claim - Although the officials owed the plaintiff a duty of care (relationship one in which a reasonable person would contemplate damage to the plaintiff resulting from carelessness by officials) and the officials breached that duty, there was no causal connection between the plaintiff's lost opportunity to have the lease renewed and the official's breach of their duty - The plaintiff lost only a chance to negotiate a lease renewal, not a renewed lease - See paragraphs 70 to 77.

Torts - Topic 61

Negligence - Causation - Causal connection - [See Crown - Topic 1562 ].

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See Crown - Topic 1562 ].

Torts - Topic 9110

Duty of care - Particular relationships - Economic interests - Duty to negotiate in good faith - The plaintiff leased office space to a government agency - The lease was due to expire - The government had no obligation to renew or to negotiate a renewal - When negotiations were unsuccessful, the plaintiff sued for damages, claiming breach of a duty to negotiate in good faith - The Federal Court of Canada, Trial Division, dismissed the action - The court refused to extend tort law to include an actionable tort of failing to negotiate in good faith - See paragraphs 67 to 69.

Cases Noticed:

Gibson v. Parkes District Hospital (1991), 26 N.S.W.L.R. 9, dist. [para. 65].

Houle v. Banque Nationale du Canada, [1990] 3 S.C.R. 122; 114 N.R. 161; 35 Q.A.C. 161, dist. [para. 65].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), dist. [para. 65].

Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73 D.L.R.(4th) 400 (B.C.C.A.), dist. [para. 65].

Verreault (J.E.) & Fils Ltée v. Québec (Procureur général), [1977] 1 S.C.R. 41; 5 N.R. 271; 8 N.R. 72, refd to. [para. 66].

Hoffman v. Red Owl Stores Inc. (1965), 133 N.W.(2d) 267 (Wisc. S.C.), refd to. [para. 66].

Brewer v. Chrysler Canada Ltd., [1979] 3 W.W.R. 69; 4 A.R. 497 (T.D.), refd to. [para. 66].

Canada Steamship Lines Ltd. v. Canadian Pacific Ltd. (1979), 7 B.L.R. 1 (Ont. H.C.), refd to. [para. 67].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 69 O.R.(2d) 287; 35 E.T.R. 1, refd to. [para. 67].

Courtney & Fairbairn Ltd. v. Tolaini Brothers (Hotel) Ltd., [1975] 1 W.L.R. 297 (C.A.), refd to. [para. 68].

Walford et al. v. Miles et al., [1992] 2 A.C. 128; 142 N.R. 179 (H.L.), refd to. [para. 68].

MacDougall v. St. Peters Bay (Community) (1992), 100 Nfld. & P.E.I.R. 45; 318 A.P.R. 45 (P.E.I.T.D.), refd to. [para. 68].

London Drugs Ltd. v. Brassart and Vanwinkel, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 74].

Hall v. Hebert, [1993] 2 S.C.R. 159; 152 N.R. 321; 26 B.C.A.C. 161; 44 W.A.C. 161, refd to. [para. 75].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; [1984] 5 W.W.R. 1; 10 D.L.R.(4th) 641; 29 C.C.L.T. 97; 8 C.L.R. 1, refd to. [para. 75].

Stewart v. Pettie et al., [1995] 1 S.C.R. 131; 177 N.R. 297; 162 A.R. 241; 83 W.A.C. 241, refd to. [para. 77].

Snell v. Farrell, [1990] 2 S.C.R. 311; 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94, refd to. [para. 77].

Statutes Noticed:

Federal Real Property Act, S.C. 1991, c. 50, sect. 16(2)(b), sect. 16(4) [para. 62].

Financial Administration Act Regulations (Can.), Government Contract Regulations, SOR/87-402, sect. 5, sect. 6 [para. 61].

Government Contract Regulations - see Financial Administration Act Regulations (Can.).

Authors and Works Noticed:

Canada, Treasury Board Manual (Sept. 15, 1997), para. 3.1 [para. 62].

Hawkings, R.E., LAC and the Emerging Obligation to Bargain in Good Faith (1990), 15 Queen's L.J. 65, generally [para. 67].

Hogg, Peter W., Liability of the Crown (2nd Ed. 1989), p. 168 [para. 66].

Counsel:

James H. Smellie and Lynn Starchuk, for the plaintiff;

Frederick Woyiwada and Ian McCowan, for the defendant.

Solicitors of Record:

Osler, Hoskin & Harcourt, Ottawa, Ontario, for the plaintiff;

George Thomson, Deputy Attorney General of Canada, Ottawa, Ontario, for the defendant.

This action was heard on March 10-26, 1997, at Ottawa, Ontario, before Reed, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on April 22, 1997.