” The appeal from the judgment of the Court of Appeal for British Columbia (Vancouver), Number CA033983, 2007 BCCA 592, dated December 3, 2007, heard on March 23, 2009, is allowed, the order of the Court of Appeal is set aside and the judgment of the trial judge is restored, McLachlin C.J. and Binnie, Abella and Rothstein JJ. dissenting. ” http://scc.lexum.umontreal.ca/en/news_release/2010/10-02-12.3/10-02-12.3.html
From the Reason for Judgement :
” V. Disposition
 I conclude that the judge did not err in finding that the Province breached the tendering contract or in finding that Tercon’s remedy in damages for that breach was not precluded by the exclusion clause in the contract. I would therefore allow the appeal, set aside the order of the Court of Appeal and restore the judgment of the trial judge. The parties advise that the question of costs has been resolved between them and that therefore no order in relation to costs is required.
Reasons for Judgement : http://scc.lexum.umontreal.ca/en/2010/2010scc4/2010scc4.html
See this earlier post of mine, for history on this case: http://lailayuile.wordpress.com/2010/01/08/tercon-contractors-ltd-vs-british-columbia-ministry-of-transportation-and-highways/
Let me give you a lay-persons summary of this judgement, if you will, in one sentence.
In essence, the Supreme court is upholding the original judgement in favor of Tercon Contracters Ltd. ,with no damages ordered.
I spoke with one of the key players in this case today, former chairman of Tercon Contractors Ltd., Glenn Walsh, and asked him what his reaction was to the judgement of the court.
Walsh had this to say:
Although I am no longer associated with this particular Tercon company, I am obviously pleased and feel vindicated with the judgement–after 9 years.
It supports the whole principle of integrity, honesty, fairness and transparency being requirements in government tendering processes. The court has agreed that the Ministry acted ‘agregiously’ and purposely ‘obfuscated’ the role of Emil Anderson such that the real relationship—-was ‘smothered’.
Ministry staff got caught cooking the books.
I think it is unfortunate though, that the court accepted the validity of ‘exclusion clauses’, which effectively prohibit contractors from any claim against a public agency that doesn’t abide by its own tendering rules.
It called such a clause to be a ‘negotiat[ion] between savvy participants in the construction business’, saying that bidders are ‘free to decline to participate’ in any tender.
I cannot accept that a contractor whose primary business is highway construction can ‘choose’ to not tender highway projects because of an overly onerous clause that allows the agency to bend the rules. That effectively takes away his right to carry on his business.
Unlike a negotiated contract between a contractor and a private owner, where any terms of the contract can be negotiated, in a public tender the contractor must accept all of the terms, including the tendering rules, with absolutely no qualifications.
To accept the court’s finding that ‘there was no relevant imbalance in bargaining power’ is difficult for me, in that there is no ‘bargaining’ in the public tendering process.
The industry has been waiting for years for some clarity on this issue, but this seems to perpetuate heavy-handed procurement practices.
As for myself, someone now so deeply intrigued by the procurement process of government projects – particularly with regards to the BC ministry of transportation – I too feel relieved to see such validation of what I consider to be a clearly unacceptable business practice among the statements from the Justices of the Supreme Court. At best, the MOT’s behavior is unethical – slimy, shall we say- at the least, it is indicative to me of a deeper rot within the ministry that must be stopped if smaller contractors in the construction industry in BC are to have any chance of surviving at all.
Tercon is a large company, with many subsidiaries and deep pockets that allowed such a case to go this far. Other contractors are not so lucky, and would have no other alternative other than to suck it up and move on.
( On that note, I would strongly urge anyone interested in this case, or in how the provinces procurement process works, to read the entire reasons for judgement in the link above. One does not need to be a lawyer to understand the gist of the ruling, and if anything, it is a shocking look into the inner workings of the BC government. )
However, let us not all jump for joy at once now. Although this judgement clearly vindicates Tercon with respect to the behavior of Ministry officials, it left the onus for enforcing change upon the ministry’s business practices, with the contractors themselves!
The construction industry in British Columbia is run by knowledgeable and sophisticated people who bid upon and enter government contracts with eyes wide open.
No statute in British Columbia and no principle of the common law override their ability in this case to agree on a tendering process including a limitation or exclusion of remedies for breach of its rules.
A contractor who does not think it is in its business interest to bid on the terms offered is free to decline to participate. As Donald J.A. pointed out, if enough contractors refuse to participate, the Ministry would be forced to change its approach.
So long as contractors are willing to bid on such terms, I do not think it is the court’s job to rescue them from the consequences of their decision to do so.
Quite the point, no? On one hand, I agree that if you sign a contract knowing the terms of the contract, you get what you signed for. That being said, the expectation and “good faith” one holds with respect to the other parties honest business practices is a given.
In other words, one should not expect that one is going to get shafted when bidding on a public project, but in this case, that is exactly what happened. From my investigation on the ministry,Tercon is not the first contractor to experience this kind of behavior from the ministry, nor will it be the last . In fact, this judgement leaves me with more questions than answers, because as Walsh indicates in his statement, how can any contractor reasonably be expected to refrain from bidding on projects that make up their bread and butter?
In the name of government transparency to the public, there remain some pressing questions in my mind tonight.
- Who, within the Ministry of Transportation, called the shots on this bid? Who really orchestrated this entire debacle? And more importantly, where are they now?
- Why did the job change from from the ‘design-build’ concept to the ‘alliance’ arrangement shortly after Tercon was rated the top proponent (and Brentwood 5th) under the former scheme, which would have seen the bidders list shortened to the top 3?
- Who’s original idea was the EAC/Brentwood association?
- What effect did Tercon’s success with its Parksville suit in the 90’s have on how this project was handled?
And most importantly… what does the government plan to do about it ?
Or are the elected folks happy to allow these kind of business practices continue?
To be more blunt, although the judgement clearly recognizes the horrible and unethical behavior in which the Ministry of Transportation acted, it still leaves the door open to an increase in highly questionable and unethical bidding on public projects in British Columbia.
In my mind, that is simply not acceptable and I say now, that this ruling indicates the need for a full investigation and public inquiry into the public procurement process within all ministries of the government of British Columbia.