MJB Ent. Ltd. v. Defence Constr. Co.

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Supreme Court (Canada)
• Judge: Iacobucci, Major, Bastarache and Binnie, JJ.A.
• Citation: (1999), 237 N.R. 334 (SCC),[1999] 7 WWR 681,[1999] ACS no 17,232 AR 360,87 ACWS (3d) 681,[1999] CarswellAlta 301,237 NR 334,EYB 1999-11937,[1999] 1 SCR 619,44 CLR (2d) 163,JE 99-859,3 MPLR (3d) 165,170 DLR (4th) 577,195 WAC 360,[1999] SCJ No 17 (QL),49 BLR (2d) 1,69 Alta LR (3d) 341,1999 CanLII 677 (SCC)
• Date: 22 April 1999

MJB Ent. Ltd. v. Defence Constr. Co. (1999), 237 N.R. 334 (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: [1999] N.R. TBEd. AP.018

M.J.B. Enterprises Ltd. (appellant) v. Defence Construction (1951) Limited and the said Defence Construction (1951) Limited carrying on business as Defence Construction Canada and the said Defence Construction Canada (respondent)

(25975)

Indexed As: M.J.B. Enterprises Ltd. v. Defence Construction (1951) Co. et al.

Supreme Court of Canada

Lamer, C.J.C., Cory, McLachlin,

Iacobucci, Major, Bastarache and

Binnie, JJ.A.

April 22, 1999.

Summary:

The defendants invited tenders for the construction of a pump house, installation of a water distributing system and the dis­mantling of a water tank on a military base. MJB was the second lowest tenderer. MJB contended that the lowest tender was invalid and that MJB should have been awarded the contract. MJB sued the defendant for dam­ages.

The Alberta Court of Queen's Bench, in a decision reported at 164 A.R. 399, dismissed the action. MJB appealed.

The Alberta Court of Appeal, in a decision reported at 196 A.R. 124; 141 W.A.C. 124, dismissed the appeal. The plaintiff, although unsuccessful, sought to deprive the defen­dants of their costs on appeal. The Court of Appeal, in a decision reported at 200 A.R. 372; 146 W.A.C. 372, held that there was no reason to depart from the general rule that costs should fol­low the event. MJB appealed.

The Supreme Court of Canada allowed the appeal, awarded the agreed to damages and remitted the two disputed damage issues to trial for assessment.

Building Contracts - Topic 1302.2

Tender calls - General - Privilege clause - [See Building Contracts - Topic 1345 ].

Building Contracts - Topic 1304

Tender calls - General - Effect of tender by builder - The Supreme Court of Canada discussed its 1981 decision in Ron Engi­neering & Construction (Eastern) Ltd. v. Ontario and Water Resources Commis­sion - The court stated that it was always poss­ible that a "Contract A" did not arise upon the sub­mis­sion of a tender or that if Con­tract A did arise, the irrevocability of the tender was not one of its terms, all this depending upon the terms and conditions of the tender call - The court also stated that it did not wish to endorse Ron Engineering's charac­teriz­ation of Contract A as a unilat­eral contract - See paragraphs 15 to 20.

Building Contracts - Topic 1345

Tender calls - The tender contract - Inter­pre­tation - The defendants invited con­struc­tion ten­ders and accepted the lowest ten­der - However, the lowest ten­der was in­valid because it con­tained a qualification - The invitation to tender contained a priv­i­lege clause which stated that "[t]he lowest or any tender shall not necessarily be ac­cepted" - The plain­tiff, the second lowest tenderer, sued the defendants for damages - The Alberta Court of Appeal held that the privilege clause was a com­plete de­fence to the action - The plaintiff appealed - The Supreme Court of Canada allowed the appeal - The court held that: "Contract A" arose upon the sub­mission of the ten­der; Contract A con­tained no explicit term imposing an obli­ga­tion to award Contract B (the construc­tion con­tract) to the lowest valid ten­der; Contract A contained an implied term that only a compliant tender would be accepted (but not necess­arily the lowest compliant ten­der); and the privilege clause did not over­ride the obli­gation to accept only com­pliant bids.

Building Contracts - Topic 1385

Tender calls - Breach of tender - Action for breach - [See Building Contracts - Topic 1345 ].

Building Contracts - Topic 1389

Tender calls - Breach of tender - Dam­ages - The defendants invited construction tenders - MJB was the second lowest tenderer - MJB con­tended that the lowest tender was invalid and that MJB should have been awarded the con­tract - MJB sued the defen­dant for dam­ages for breach of contract - The Supreme Court of Canada allowed the action, holding, inter alia, that the damages were not too remote - The court awarded the agreed to dam­ages and remitted the two disputed damage issues to trial for assessment - See para­graphs 55 to 61.

Contracts - Topic 1270

Formation of contract - Tender calls - Bid - Effect of - [See Building Contracts - Topic 1304 ].

Contracts - Topic 1276

Formation of contract - Tender calls - Breach of tender - [See Building Con­tracts - Topic 1345 and Contracts - Topic 3523 ].

Contracts - Topic 3523

Performance or breach - Breach - What constitutes a breach - The defendants invited construction tenders - MJB was the second lowest tenderer - MJB con­tended that the lowest tender was invalid and that MJB should have been awarded the con­tract - MJB sued the defen­dant for dam­ages for breach of contract - The Supreme Court of Canada stated that act­ing in good faith or thinking that one had inter­preted the con­tract cor­rectly were not valid defences to an action for breach of con­tract - See paragraph 54.

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. 1].

Megatech Contracting Ltd. v. Carleton (Regional Municipality) (1989), 34 C.L.R. 35 (Ont. H.C.), refd to. [para. 8].

Bate Equipment Ltd. et al. v. Ellis-Don Ltd. et al. (1992), 132 A.R. 161 (Q.B.), affd. (1994), 157 A.R. 274; 77 W.A.C. 274 (C.A.), leave to appeal dismissed [1995] 2 S.C.R. v; 190 N.R. 398; 193 A.R. 78; 135 W.A.C. 78, refd to. [para. 8].

Martselos Services Ltd. v. Arctic College, [1994] 3 W.W.R. 73 (N.W.T.C.A.), leave to appeal dismissed [1994] 3 S.C.R. viii; 178 N.R. 80, refd to. [para. 11].

Blackpool & Fylde Aero Club Ltd. v. Blackpool Borough Council, [1990] 3 All E.R. 25 (C.A.), refd to. [para. 20].

Hughes Aircraft Systems International v. Airservices Australia (1997), 146 A.L.R. 1 (F.C.), refd to. [para. 20].

Pratt Contractors Ltd. v. Palmerston North City Council, [1995] 1 N.Z.L.R. 469 (H.C.), refd to. [para. 20].

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. 27].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1; 152 D.L.R.(4th) 1, refd to. [para. 27].

Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200; 91 D.L.R.(4th) 491, refd to. [para. 27].

Cartwright & Crickmore Ltd. v. MacInnes, [1931] S.C.R. 425, refd to. [para. 44].

Acme Building & Construction Ltd. v. Newcastle (Town) (1992), 2 C.L.R.(2d) 308 (Ont. C.A.), agreed with [para. 46].

Glenview Corp. v. Canada (1990), 34 F.T.R. 292 (T.D.), refd to. [para. 47].

Chinook Aggregates Ltd. v. Abbotsford (Municipal District) (1987), 28 C.L.R. 290 (B.C. Co. Ct.), affd. (1989), 35 C.L.R. 241 (B.C.C.A.), refd to. [para. 50].

Kencor Holdings Ltd. v. Saskatchewan, [1991] 6 W.W.R. 717; 96 Sask.R. 171 (Q.B.), refd to. [para. 50].

Welsh (Fred) Ltd. v. B.G.M. Construction Ltd., [1996] 10 W.W.R. 400 (B.C.S.C.), refd to. [para. 50].

Wimpey (George) Canada Ltd. v. Hamilton-Wentworth (Regional Munici­pality) (1997), 40 O.T.C. 68; 34 C.L.R.(2d) 123 (H.C.), refd to. [para. 50].

Twin City Mechanical v. Bradsil (1967) Ltd. and Ontario (1996), 27 O.T.C. 1; 31 C.L.R.(2d) 210 (Ont. Gen. Div.), refd to. [para. 50].

Thompson Brothers (Construction) Ltd. v. Wetaskiwin (City) (1997), 205 A.R. 185; 34 C.L.R.(2d) 197 (Q.B.), refd to. [para. 50].

Hadley v. Baxendale (1854), 9 Exch. 341; 156 E.R. 145, refd to. [para. 57].

Cornwall Gravel Co. v. Purolator Courier Ltd., Levert and Boisvenue (1978), 32 N.R. 597; 83 D.L.R.(3d) 267 (Ont. H.C.), affd. (1979), 32 N.R. 596; 115 D.L.R.(3d) 511 (Ont. C.A.), affd. [1980] 2 S.C.R. 118; 32 N.R. 594, refd to. [para. 59].

Workers' Compensation Board (Alta.) v. Riggins et al. (1992), 131 A.R. 205; 25 W.A.C. 205; 5 Alta. L.R.(3d) 66, agreed with [para. 61].

Authors and Works Noticed:

Blom, Joost, Mistaken Bids: The Queen v. Ron Engineering & Construction East­ern Ltd. (1981-82), 6 Can. Bus. L.J. 80, p. 91 [para. 18].

Fridman, Gerald Henry Louis, Tendering Problems (1987), 66 Can. Bar Rev. 582, p. 591 [para. 18].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (3rd Ed. 1994), p. 476 [para. 29].

Goldsmith, Immanuel, Canadian Building Contracts (4th Ed. 1988) (Looseleaf), p. 1-20 [para. 45].

Nozick, R.S., Comment on The Province of Ontario and the Water Resources Com­mission v. Ron Engineering and Con­struction (Eastern) Ltd. (S.C.C.) (1982), 60 Can. Bar Rev. 345, p. 350 [para. 18].

Swan, John, Comment on The Queen v. Ron Engineering & Construction (East­ern) Ltd. (1981), 15 U.B.C.L. Rev. 447, p. 455 [para. 18].

Waddams, Stephen M., The Law of Con­tracts (3rd Ed. 1993), para. 159 [para. 18].

Counsel:

W. Donald Goodfellow, Q.C., and Eugene Meehan, for the appellant;

Larry M. Huculak, for the respondent.

Solicitors of Record:

W. Donald Goodfellow, Calgary, Alberta, for the appellant;

Department of Justice Canada, Edmonton, Alberta, for the respondent.

This appeal was heard on November 6, 1998, by Lamer, C.J.C., Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ., of the Supreme Court of Canada.

On April 22, 1999, Iacobucci, J., delivered the following judgment for the court in both official languages.