Mellco Developments Ltd. v. Portage La Prairie (City),

• Jurisdiction: Manitoba
• Judge: Scott, C.J.M., Kroft and Steel, JJ.A.
• Neutral Citation: 2002 MBCA 125
• Citation: 2002 MBCA 125,(2002), 166 Man.R.(2d) 285 (CA),222 DLR (4th) 67,[2003] 1 WWR 216,28 BLR (3d) 17,[2002] MJ No 381 (QL),166 Man R (2d) 285,19 CLR (3d) 1,32 MPLR (3d) 1,4 RPR (4th) 28,222 D.L.R. (4th) 67,166 ManR(2d) 285,[2002] M.J. No 381 (QL),(2002), 166 ManR(2d) 285 (CA),166 Man.R.(2d) 285
• Date: 01 October 2002
• Court: Court of Appeal (Manitoba)

Mellco Dev. v. Portage la Prairie (2002), 166 Man.R.(2d) 285 (CA);

    278 W.A.C. 285

MLB headnote and full text

Temp. Cite: [2002] Man.R.(2d) TBEd. OC.015

Mellco Developments Ltd. and Newton Enterprises (1983) (plaintiffs/appellants) v. The City of Portage la Prairie and Lions Park Housing Inc. (defendants/respondents)

Mellco Developments Ltd. and Newton Enterprises (1983) (plaintiffs/appellants) v. Lions Park Housing Inc. and Lions Club of Portage la Prairie (defendants/respondents)

(AI01-30-05134; AI01-30-05135; 2002 MBCA 125)

Indexed As: Mellco Developments Ltd. et al. v. Portage la Prairie (City) et al.

Manitoba Court of Appeal

Scott, C.J.M., Kroft and Steel, JJ.A.

October 1, 2002.

Summary:

The City of Portage la Prairie issued a request for proposals (RFP) for the sale and development of 31.2 acres of city owned land. Only two proposals were received, one from Lions Park Housing Inc. (Lions) and one from Mellco Developments Ltd. (Mellco). The city decided to accept the Lions' proposal as being the "most attractive to the city". Mellco filed a caveat against the land and later a pending litigation order. Mellco sued the city and Lions, claiming that the Lions' proposal should not have been considered by the city given the magnitude of the non-compliance in the Lions' proposal, and that the city was legally obliged to accept the Mellco's conforming bid as mandated by the terms of the RFP itself. Alternatively, Mellco argued that the Lions breached fiduciary duties to Mellco and therefore held the lands in a constructive trust for Mellco. Lions counterclaimed for damages.

The Manitoba Court of Queen's Bench, in a decision reported 167 Man.R.(2d) 161, held that there were valid reasons for the city's desire to use a RFP rather than a formal tendering document. The judge pointed out that this RFP was explicitly not a simple call for a tender or a bid and that the city was entitled to prefer the proposal of Lions over that of Mellco. The law relating to tenders did not apply. All that Mellco was entitled to was to have the City consider its proposal fairly, and in that regard, the city gave fair consideration to both proposals in coming to its conclusion that the Lions' proposal was most attractive. Since no enforceable contracts were formed by the RFP, it was immaterial as to whether either or both of the proposals were "compliant" or "non-compliant" with the express or implied terms and conditions of the RFP. The city was at best obliged to enter into good faith negotiations. Respecting the constructive trust argument, the court concluded that Lions had not been unjustly enriched to the detriment of Mellco. In the result, the court dismissed Mellco's claim with costs and granted judgment in favour of Lions for $35,000 in compensatory damages and $10,000 in exemplary damages for Mellco's wrongful registration of the caveat and pending litigation order filed against the land. Mellco appealed and Lions cross-appealed.

The Manitoba Court of Appeal dismissed the appeal and cross-appeal. The court affirmed all the findings and conclusions of the trial judge.

Building Contracts - Topic 1344

Tender calls - The tender contract - What constitutes - [See Contracts - Topic 1262 ].

Contracts - Topic 1106

Formation of contract - Duty to negotiate in good faith - The Manitoba Court of Appeal discussed the issues of fairness and good faith with respect to contract negotiations generally - See paragraphs 86 to 88.

Contracts - Topic 1262

Formation of contract - Tender calls - What constitute - Tender call vs. request for proposal - The City of Portage la Prairie issued a request for proposals (RFP) for the sale and development of certain city land - The city received proposals only from Lions and Mellco and accepted the Lions' proposal - Mellco sued the city and Lions - The trial judge dismissed Mellco's action - The judge held that there were good and valid reasons for the city's desire to use a RFP rather than a formal tendering document - This RFP was explicitly not a simple call for a tender or a bid and, therefore since no contracts were formed by the RFP, the city was entitled to prefer the proposal of Lions over that of Mellco without regard to whether the proposals were "compliant" or "non-compliant" with the express or implied terms and conditions of the RFP - The law relating to tenders did not apply - All that Mellco was entitled to was to have the City consider its proposal fairly, and in that regard, the city gave fair consideration to both proposals in coming to its conclusion that the Lions' proposal was most attractive - The Manitoba Court of Appeal affirmed the decision - See paragraphs 1 to 75.

Damage Awards - Topic 2020.1

Exemplary or punitive damages - Wrongful registration of caveat or pending litigation order or certificate - The City of Portage la Prairie issued a request for proposals (RFP) for the sale and development of 31.2 acres of city owned land - Only two proposals were received, one from Lions and one from Mellco - The city decided to accept the Lions' proposal - Mellco filed a caveat against the land and later a pending litigation order and sued the city and Lions, claiming that the Lions' proposal should not have been accepted - Mellco's action was dismissed and Lions was awarded $35,000 in compensatory damages and $10,000 in exemplary damages for Mellco's unreasonable registration of the caveat and pending litigation order - The Manitoba Court of Appeal affirmed that the registration of the caveat and pending litigation order was unreasonable and affirmed the award of damages - See paragraphs 90 to 110.

Municipal Law - Topic 2488

Contracts by a municipality - Contracts requiring public tenders - Tender call vs. request for proposal - [See Contracts - Topic 1262 ].

Real Property - Topic 7846

Title - Registration of instruments, etc. - Lis pendens or certificate of pending litigation - Practice - The Manitoba Court of Appeal noted that it was the practice in Manitoba not to file affidavit evidence on an ex parte motion to obtain a pending litigation order (PLO) - The court opined that it was time for the Queen's Bench Rules Practices Committee to reconsider this practice in order to avoid abuse - The court stated that "at a minimum, the applicant for a PLO should be obliged to file an affidavit which indicates in a reasonable manner the positions known or likely to be taken by the party or parties opposite. It is ironic that there is a higher standard imposed on an applicant for a caveat inasmuch as s. 195 of the Real Property Act, C.C.S.M., c. R-30, gives the document requesting a caveat the status of an affidavit." - See paragraphs 96 to 101.

Real Property - Topic 7858

Title - Registration of instruments, etc. - Lis pendens or certificate of pending litigation - Evidence and proof - [See Real Property - Topic 7846 ].

Real Property - Topic 7859

Title - Registration of instruments, etc. - Lis pendens or certificate of pending litigation - Damages for wrongful filing - The Manitoba Court of Appeal discussed when a filing of a caveat or lis pendens would be so "unreasonable" as to justify an award of damages - See paragraphs 102 to 106.

Real Property - Topic 7859

Title - Registration of instruments, etc. - Lis pendens or certificate of pending litigation - Damages for wrongful filing - [See Damage Awards - Topic 2020.1 ].

Real Property - Topic 7946

Title - Registration of instruments, etc. - Caveats or cautions - Damages for wrongful filing - [See Damage Awards - Topic 2020.1 ].

Cases Noticed:

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Ron Engineering & Construction (Eastern) Ltd. v. Ontario and Water Resources Commission, [1981] 1 S.C.R. 111; 35 N.R. 40, refd to. [para. 36].

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, refd to. [para. 37].

Hughes Land Co. v. Manitoba (1998), 131 Man.R.(2d) 202; 187 W.A.C. 202 (C.A.), refd to. [para. 38].

Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services) et al. (2000), 260 N.R. 367 (F.C.A.), refd to. [para. 38].

Canada Square Corp. v. Versafood Services Ltd. et al. (1981), 130 D.L.R.(3d) 205 (Ont. C.A.), refd to. [para. 43].

Wong v. DiGrazia (1963), 386 P.2d 817 (Cal. Sup. Ct.), refd to. [para. 43].

Los Angeles (City) v. Superior Court (1959), 51 Cal.2d 423; 333 P.2d 745, refd to. [para. 43].

Boult Enterprises Ltd. v. Bissett (1985), 21 D.L.R.(4th) 730 (B.C.C.A.), refd to. [para. 44].

Cable Assembly Systems Ltd. v. Board of Education (Roman Catholic Separate) of Dufferin-Peel, [2000] O.T.C. Uned. 41; 1 C.L.R.(3d) 143 (Sup. Ct.), affd. (2002), 155 O.A.C. 139 (C.A.), refd to. [paras. 45 and 87].

Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73 D.L.R.(4th) 400 (B.C.C.A.), dist. [paras. 45, 87].

Powder Mountain Resorts Ltd. et al. v. British Columbia et al., [1999] 11 W.W.R. 168; 19 B.C.T.C. 241 (S.C.), affd. (2001), 159 B.C.A.C. 14; 259 W.A.C. 14 (C.A.), refd to. [para. 55].

Walford et al. v. Miles et al., [1992] 2 A.C. 128; 142 N.R. 179 (H.L.), refd to. [para. 61].

Cedar Group Inc. v. Stelco Inc., [1995] O.J. No. 3998 (Gen. Div.), affd. [1996] O.J. No. 3974 (C.A.), refd to. [para. 61].

Becker Developments Ltd. v. Alberta (1996), 185 A.R. 20 (Q.B. Master), refd to. [para. 62].

G.P.I. Greenfield Pioneer Inc. et al. v. Moore et al. (2002), 155 O.A.C. 305 (C.A.), refd to. [para. 67].

Whiten v. Pilot Insurance Co. et al. (2002), 283 N.R. 1; 156 O.A.C. 201 (S.C.C.), refd to. [para. 68].

Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943; 277 N.R. 1; 153 O.A.C. 341, refd to. [para. 71].

Silver Lake Farms Inc. v. Saskatchewan (2001), 212 Sask.R. 177; 46 R.P.R.(3d) 66 (Q.B.), refd to. [para. 73].

Canamerican Auto Lease & Rental Ltd. and Hertz Canada Ltd. v. Canada (Minister of Transport) (1987), 77 N.R. 141; 37 D.L.R.(4th) 591 (F.C.A.), refd to. [para. 74].

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. 76].

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Labrador Airways Ltd. v. Canada Post Corp. et al. (2001), 198 Nfld. & P.E.I.R. 116; 595 A.P.R. 116 (Nfld. T.D.), refd to. [para. 78].

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Chinook Aggregates Ltd. v. Abbotsford (Municipal District) (1989), 40 B.C.L.R.(2d) 345 (C.A.), refd to. [para. 83].

Vachon Construction Ltd. v. Cariboo (Regional District) et al. (1996), 78 B.C.A.C. 43; 128 W.A.C. 43; 24 B.C.L.R.(3d) 379 (C.A.), refd to. [para. 83].

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Coronation Insurance Co. et al. v. Taku Air Transport Ltd. et al., [1991] 3 S.C.R. 622; 131 N.R. 241; 6 B.C.A.C. 161; 13 W.A.C. 161, refd to. [para. 86].

Tilden Rent-A-Car Co. v. Clendenning (1978), 83 D.L.R.(3d) 400 (Ont. C.A.), refd to. [para. 86].

Mannpar Enterprises Ltd. v. Canada (1999), 121 B.C.A.C. 275; 198 W.A.C. 275; 173 D.L.R.(4th) 243 (C.A.), refd to. [para. 87].

Canada (Attorney General) v. Fontaine (1995), 104 Man.R.(2d) 219 (Q.B.), affd. (1996), 110 Man.R.(2d) 77; 118 W.A.C. 77 (C.A.), refd to. [para. 93].

Hornsby v. Bone (Bankrupt) (1993), 113 Sask.R. 1; 52 W.A.C. 1 (C.A.), refd to. [para. 93].

ConAgra Ltd. v. Universal Grain Systems Inc. et al. (1998), 130 Man.R.(2d) 281 (Q.B. Master), refd to. [para. 93].

Aitken v. Trainor Estate, [2002] O.T.C. 520 (Sup. Ct.), refd to. [para. 93].

Winnipeg Paint and Glass Co. v. Lackman et al., [1923] 3 W.W.R. 361 (Man. K.B.), refd to. [para. 94].

Thompson v. Yockney (1913), 23 Man.R. 571 (C.A.), refd to. [para. 95].

United States of America v. Friedland, [1996] O.J. No. 4399 (Gen. Div.), refd to. [para. 97].

Griffin Steel Foundries Ltd. v. Canadian Association of Industrial, Mechanical and Allied Workers et al. (1977), 80 D.L.R.(3d) 634 (Man. C.A.), refd to. [para. 97].

Schickedanz (B.G.) (Peel) Inc. et al. v. Salna et al., [1997] O.T.C. Uned. 362; 14 C.P.C.(4th) 253 (Gen. Div.), refd to. [para. 97].

Eastwalsh Homes Ltd. v. Anatal Development Corp. et al. (1988), 29 C.P.C.(2d) 266 (Ont. H.C.), refd to. [para. 97].

J & P Goldfluss Ltd. v. 306569 Ontario Ltd. (1977), 4 C.P.C. 296 (Ont. H.C.), refd to. [para. 98].

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L'Unita Development Corp. v. 505369 Ontario Ltd. et al., [2001] O.T.C. Uned. 924; 44 R.P.R.(3d) 303 (Sup. Ct.), refd to. [para. 98].

Cimaroli et al. v. Pugliese (1988), 25 C.P.C.(2d) 10 (Ont. H.C.), refd to. [para. 99].

Captain Developments Ltd. v. Nu-West Group Ltd. (1984), 1 O.A.C. 132; 45 O.R.(2d) 213 (C.A.), refd to. [para. 103].

Thorman v. Parnes (1990), 73 O.R.(2d) 149 (H.C.), refd to. [para. 103].

Meadowfield Ventures Inc. v. Kennedy, [1990] O.J. No. 295 (H.C.), refd to. [para. 103].

Micro Carpets Ltd. et al. v. De Souza Developments Ltd. et al. (1980), 29 O.R.(2d) 77 (H.C.), refd to. [para. 103].

Ribic v. Weinstein et al. (1982), 140 D.L.R.(3d) 258 (Ont. H.C.), refd to. [para. 103].

11 Suntract Holdings Ltd. et al. v. Chassis Service & Hydraulics Ltd. et al. (1997), 49 O.T.C. 112 (Gen. Div.), refd to. [para. 103].

Hilltop Group Ltd. et al. v. Katana et al., [2002] O.T.C. 423 (Sup. Ct.), refd to. [para. 103].

First Canadian Land Corp. v. Rosinante Holdings Ltd. and Fane (1985), 62 B.C.L.R. 262 (C.A.), refd to. [para. 103].

Ross v. Acorn (1984), 31 Sask.R. 87 (Q.B.), varied (1986), 46 Sask.R. 69 (C.A.), refd to. [para. 103].

Texas Industries Ltd. v. Unicon Environmental Planning Ltd. (1978), 16 A.R. 234 (T.D.), refd to. [para. 103].

Penvidic Contracting Co. v. International Nickel Co. of Canada Ltd., [1976] 1 S.C.R. 267; 4 N.R. 1, refd to. [para. 107].

Wood v. Grand Valley Railway Co. (1913), 30 O.L.R. 44 (C.A.), refd to. [para. 107].

Lundy and McLeod v. Powell (1921), 60 D.L.R. 607 (Sask. K.B.), refd to. [para. 108].

Authors and Works Noticed:

Canadian Encyclopedic Digest (Western) (3rd Ed.), vol. 7, § 8 [para. 42].

Devonshire, Peter, Contractual Obligations in the Pre-Award Phase of Public Tendering (1988), 36:2 Osgoode Hall L.J. 203, generally [para. 82].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), p. 42 [para. 58].

Sandori, Paul, and Pigott, William M., Bidding and Tendering: What is the Law? (2nd Ed. 2001), p. 239 [para. 72].

Counsel:

G.P.S. Riley and J.A. Myers, for the appellants;

R.B. McNicol, Q.C., and D.G. Giles, for the respondent, City of Portage la Prairie;

R.A. Dewar, Q.C., for the respondents, Lions Park Housing Inc. and Lions Club of Portage la Prairie.

This appeal and cross-appeal were heard on June 11, 2002, before Scott, C.J.M., Kroft and Steel, JJ.A., of the Manitoba Court of Appeal.

The decision of the Court of Appeal was delivered by Scott, C.J.M., on October 1, 2002.