May 6, 2020

Keywords: Bids/Tenders; Judicial Review

Synopsis:

Alberta Environment and Parks uses a tendering process to solicit bids for a contract to perform the operation, monitoring, and servicing of water/wastewater services in the Kananaskis Region. The Appellant, Aquatech Canadian Water Services Inc., is an unsuccessful bidder. Aquatech argues the successful bidder did not comply with a mandatory requirement in the request for proposals; that Alberta breached its obligation to only accept compliant bids.

Aquatech does not sue Alberta for breach of contract. Instead, Aquatech brings a judicial review application of the decision (i.e. to award the contract to a non-compliant bid) to the Court of Queen’s Bench. The Court of Queen’s Bench dismisses the application; finds Alberta could waive non-compliance because of a “discretion clause”. The Court of Appeal agrees, finding no errors in the Chambers Judge’s reasoning.

Importance:

The Court of Appeal set out the policy rationale behind enforcing the acceptance of compliant bids as follows:

To protect the integrity of the tendering process, an owner is required under Contract A to strictly follow the requirements set out in the tender documents. The owner also has an implied obligation to treat all bids fairly and equally, and only accept a compliant bid: Martel Building Ltd v Canada, 2000 SCC 60 at para 88; Everest Construction Management Ltd v Strathmore, 2018 ABCA 74 at para 2; MJB Enterprises Ltd v Defence Construction (1951) Ltd, 1999 CanLII 677 (SCC), [1999] 1 SCR 619 at para 42. (See para. 3).

This case is about the ways in which tenderers have sought to protect themselves from these bedrock principles. In particular, it is about the use of discretion clauses, limitation of liability clauses, and growing judicial acceptance for “substantial compliance”. (See paras. 10-11). A good question for Leave to the Supreme Court of Canada might be: is close enough really good enough for Canadian bidders? Further, should a tenderer be permitted to effectively insulate itself from judicial scrutiny, or remove any hope of “meaningful remedy” for an unsuccessful bidder? From a practical point of view, is this case a roadmap for future frustrated compliant bidders seeking remedy? If suing in contract is not an available option, then what about a judicial review application? Lots of questions, not many answers, yet.

The Court of Appeal explained that the Appellants in this case did not sue for breach of contract because Alberta’s request for proposals contained a clause limiting Alberta’s liability. As the Court wrote, “…Aquatech challenged the tendering process by making an application for judicial review. It might have done so by suing Alberta for breach of Contract A but the request for proposals contained a clause limiting Alberta’s liability and Aquatech took the position that this meant it had no meaningful remedy in contract law.” (See para. 13).

The question for future litigants is whether administrative law analyses offer a meaningful alternative. The Court of Appeal herein suggests that may be a way forward, but declined to fully address the point: “we have not addressed whether it was proper for Aquatech to seek judicial review of Alberta’s award of the contract to H2O. This Court has not considered whether disappointed bidders can seek judicial review of tendering decisions where a public body is the owner.” (See para. 14).

Curiously, the Court of Appeal noted the Chambers Judge conducted the administrative law analysis under the framework set out in Dunsmuir v. New Brunswick, 2008 SCC 9. It remains to be seen whether the outcome would be affected by significant changes to the administrative law standard of review following the release of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (CanLII). For more information on these developments, contact Supreme Advocacy LLP. We have developed a simple, two-page chart summarizing the decision.

Counsel for the Appellant: Andrew Sunter and Joanne Luu (Burnet, Duckworth & Palmer LLP, Calgary)

Counsel for the Respondent: M.N. Burkett