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BIDDING PROCESS - Breach of tender

Thursday, May 06, 2021 @ 6:16 AM  

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Appeal by the plaintiff from trial judgment dismissing its action for breach of contract. The appellant was disqualified because of alleged breaches of the Request for Proposals issued by the City for a construction project. The appellant denied the breaches and claimed it was disqualified because of bias. The appellant’s principals had deep roots in the City and had a familiar relationship with City staff and with members of city council. The trial judge found that the appellant perceived itself as having something of a home field advantage in relation to decisions made by city council and that the appellant perceived that the greater the involvement of council in the bidding process, the greater the advantage to the appellant. Ultimately, the appellant wanted council to have input into the selection of the successful bidder. The appellant and two other contractors were selected to participate in the Competitive Dialogue. The City required each contactor to sign a confidentiality agreement prior to the Competitive Dialogue. The appellant objected to signing it on the basis that the Confidentiality Agreement was overly broad. Both the process and fairness adviser and the Evaluation Committee concluded that allowing the appellant to make submissions to council would be a fatal breach of the bidding process and would contravene principles of fairness and equity. The trial judge found the appellant breached the contract by failing to sign the Confidentiality Agreement, the sole point of contact provision of the contract by having its lawyer write to the mayor and council, effectively asking them to intervene in the process, and the prohibition of public announcements or disclosure to the media. The appellant argued the trial judge erred in the interpretation of the contract, failed to recognize that the City breached a duty of fair and equal treatment, and erred in the quantification of damages.

HELD: Appeal dismissed. The trial judge’s interpretation of the contract was reasonable and entitled to deference. The appellant had no credible basis for not signing the Confidentiality Agreement. The appellant also breached the prohibition against media release, public announcement or public disclosure. The sole point of contact feature of the bidding process was designed to ensure consistency and fairness in bidding communications. The appellant was disqualified because its conduct not only breached the terms of the contract, but because it threatened the credibility and integrity of the bidding process. The trial judge was entitled to consider the underlying principles of the bidding process and its structure to properly interpret the contract. The appellant’s breach was fundamental as it threatened the integrity of the bidding process itself. In contrast, the breach of the successful bidder was inconsequential. It related to a second phase of the project, which never happened. The breach was also technical as City officials never had any doubt that the contractor was able to secure an option on the property.

Inzola Group Ltd. v. Brampton (City), [2021] O.J. No. 1097, Ontario Court of Appeal, G.R. Strathy C.J.O., D.M. Brown and B. Miller JJ.A., March 8, 2021. Digest No. TLD-May32021009