Legal Blog

The Consequences of One Second on the Clock, Judicial Embarrassment, and Mootness

Courts do not like to decide matters raising abstract questions; they want their decisions to decide real disputes. When a decision is irrelevant to the real dispute because of subsequent events, the matter is said to be moot. For example, consider an action brought for an injunction to restrain a landowner from tearing down a building, but, before the action is heard, the homeowner has already demolished the building. While the decision might be interesting, it is irrelevant. The building is no longer standing. Now consider what happens when the law of tender deals with the concept of mootness. Such was the case in Yukon v. P.S. Sidhu Trucking Ltd., a 2015 decision of the Yukon Territory Court of Appeal. As an aside, this court is comprised of British Columbia Court of Appeal judges.

Timing

 Tender submissions were called to be “received up to and including 4:00 p.m.” The contractor submitted his tender at 3:59 p.m. He then had misgivings and felt he might have made an arithmetical error. On a Yukon employee’s alleged advice that he had sufficient time to take back the tender and re-submit it with a compliant timestamp of 4:00 p.m., he withdrew it, reviewed it, realised it was fine, and resubmitted it. The employee time-stamped the re-submitted tender at 4:00 p.m. The contractor’s bid was low. Jubilation reigned in the contractor’s camp.

The jubilation was short-lived. The second low tenderer claimed that the contractor’s tender was submitted too late; it brought an application for a declaration that the contractor’s bid was therefore non-compliant. The contractor and Yukon consented to the dispute being resolved by way of the proceedings because the project was for a replacement bridge and construction had to start almost immediately.

 

Problem

 You might be asking yourself “What’s the problem? The contractor submitted its tender at 4:00 p.m. in accordance with the tender call.” This question accords with a 1998 decision of the Ontario Court of Appeal in Bradscot v. Hamilton-Wentworth Catholic District School Board. The Bradscot case also dealt with whether a tender called for 4:00 p.m. meant that the tender had to be submitted before 4:00:00 or on or before 4:00:59. The tender authority decided, in good faith, that it meant 4:00:59, the trial judge agreed, and the Court of Appeal decided that the interpretation by the trial judge was reasonable and would not be set aside.

Both the trial judge and the Court of Appeal in Bradscot referenced the British Columbia Supreme Court decision in Smith Bros. dealing with the same issue. In that decision, the trial judge stated that 11:00 a.m. meant 11:00:00 a.m. The Bradscot Court of Appeal commented on the Smith Bros. decision as follows:

“I do not think that there is one “right” interpretation of the words “at”, “only until” or “not later than” in the instruction to tenderers. Both the interpretation given by Shaw J. in the Smith Bros. case and the interpretation given by Somers J. in the present case are reasonable, and each interpretation produces a clear rule that the industry can follow. Moreover, the appellant does not suggest that Somers J. applied incorrect principles of contract interpretation. Faced with two interpretations, either of which is reasonable, and no error in the application of the relevant legal principles, in my view this court should defer to the finding of the trial judge.”

 

First Instance

 The application judge referred to both Bradscot and Smith Bros. He noted that neither had the precise wording of the instructions to bidders in the case before him, but preferred the approach in Smith Bros.  He reasoned that if the instructions to bidders said that “tenders must be received before the specified time”, which was said to be 4:00 p.m., then all tenders must be received by 3:59 pm. (by which, we assume, he meant, on or before 3:59:59).

Using that analysis, the judge decided that the contractor’s tender was late and that Yukon could not award the contract to the contractor because its tender was non-compliant.

The contractor appealed that decision and commenced an action against Yukon for breach of contract and for negligent misrepresentation relating to the conduct of Yukon’s staff at the time of the tender closing.

The applicant (second-lowest tenderer) did not participate in the appeal because it did not care who won. Yukon had already awarded the contract to it and, by the time the appeal was heard and judgment rendered, it seems that the project had been completed.

 

Concerns

The parties were ready to argue the appeal on its merits, but the Yukon Court of Appeal raised, on its own initiative, the issue of mootness. It simply did not matter to the construction project what the result on the appeal would be; the contract was awarded and the project was already built. However, both parties wanted a decision on the appeal because the decision would then simplify matters in the action that the contractor had commenced against Yukon. The Court was not quite so keen.

The Court criticised the initial application for a declaration. Although the practical value of the original application was to remove the necessity for Yukon to decide whether the contractor’s bid was compliant, even then the potential for litigation was unlikely to disappear.

“The probability was that whichever contractor did not get the job would sue. The practical value of the declaration was suspect. More importantly it raised the possibility, which has occurred, that the respondent would be exposed to a claim in contract based on following the court’s advice. In my view, this raised circumstances akin to judicial embarrassment and militates against the appropriateness of the court providing a declaratory opinion in the circumstances of this case.”

So what is “judicial embarrassment?” It is not a “bad” decision; it is an “inconsistent” decision. In this case, the application judge held that the contractor’s tender was late. Relying on this decision, Yukon awarded the contract to the applicant. In the subsequent, pending action, the contractor asserted that its tender was not late, but the contractor could succeed only if the Court of Appeal agreed. If it did, Yukon would be liable for damages for proceeding in accordance with the order of the application judge.

Decision

 The Court held that the appeal did not raise a tangible and concrete dispute because that dispute had disappeared; therefore, the appeal was moot. However, the Court analysed whether it should also exercise its discretion to deal with the appeal on the merits, regardless of the lack of a tangible and concrete dispute. In doing so, the Court considered the following factors: “will it resolve a dispute; will it respect judicial economy; will it extend beyond the court’s proper law making function.”

The first factor was determinative. The Court noted that the resolution of the appeal on the merits would have the collateral consequence of resolving an issue in the subsequent action. However, it held that the collateral consequences approach risked a legally embarrassing result in which Yukon was exposed to a claim for damages because it followed the opinion of the application judge. The contractor consented to the use of the declaration proceedings to resolve the tender dispute, but was seeking damages against Yukon for awarding a contract in accordance with the application judge’s ruling. The Court refused to allow the contractor “to cast off the results of legal proceedings it supported.”

 

Consequences

The contractor was bound by the application judge’s ruling and its claim in the subsequent action for damages based on breach of contract would fail. However, it was still able to pursue damages based on negligent misrepresentation, claiming that Yukon’s employees acted improperly to its detriment.

 

Image courtesy of Flikr, Creative Commons.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.