Legal Blog

Tender

The tender cases keep on coming. The latest case warms the cockles of our hearts for reasons that will become apparent. It is the 1997 decision of the Ontario Court (General Division) in George Wimpey Canada Limited v. The Regional Municipality of Hamilton Wentworth. 

The Region had pre-qualified a number of general contractors for a road contract. Wimpey submitted the low tender. The Region’s Director of Roads recommended that the Wimpey bid be accepted.  The next high bidder, Dufferin, wrote to the Region requesting that its tender be accepted, instead of Wimpey’s. Dufferin’s letter noted that it was a local contractor, paying realty and business taxes to, and employing 250 employees in, the Region. The author of this letter was a member of one of the local municipalities forming the Region.

The Region awarded the contract to Dufferin.  Although the Region failed to give any reasons for its decision, these reasons were patently obvious.  As a result, Wimpey sued.

Of course, the usual weasel clause was included in the tender documents. The Region argued that it could, therefore, award the contract to any contractor, regardless of whether the local preference was set out in the tender documents or in any published policy of the Region.

The facts of this case were remarkably similar to those of Acme Building Construction Limited v. Town of Newcastle. In that case, the Ontario Court of Appeal held that the weasel clause meant what it said and that local preference could be considered, even if no notice of the local preference had ever been given. The problem in the Acme case was that the contract was awarded to the second low bidder on two bases: local preference and a reduced construction period of four months. As a result, the Court of Appeal did not feel that the Town had acted unfairly.

The judge in the Wimpey case was not constrained by the time factor. Further, in the five years since the Acme decision, a number of cases have concentrated on the fairness issue. As a result, the judge held that the Region did not act fairly or in good faith when it awarded the contract to a tenderer who was not the low bidder. The judge awarded damages to Wimpey “measured by the difference between the revenue it would have received had it been awarded the contract and costs it would have incurred in performing the work if economically and skilfully done.”

When we reviewed this decision, we admit it brought us feelings of glee. There were two reasons. First, if a general contractor is compelled to abide by its tender, even if a mistake is made, then an owner should be compelled to choose a pre-qualified low bidder. Second, we acted for Acme and our opposing counsel in that case was the losing counsel in the Wimpey case.

By the way, the Region is appealing the case to the Court of Appeal. Stay tuned.