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Announcements
The 13th Annual Canadian College of
Construction Lawyers Conference
was held May 27 – May 30, 2010
at
The Westin Nova Scotian Halifax, Nova Scotia.
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Case Comment:
Tercon Contractors Ltd.
v. British Columbia:
the Final Nail
in the Coffin of the Doctrine of Fundamental Breach?
The Supreme Court of Canada released its
reasons in the much anticipated decision in
Tercon Contractors Ltd. v. British Columbia (Transportation and
Highways),
2010 SCC 4 on February 12,
2010. In a five/four decision, the majority found in favour of
Tercon, allowing the appeal. The Court agreed on the
appropriate framework of the analysis as to the enforceability
of the exclusion clause in issue, but were divided on the
applicability of the relevant exclusion clause to the facts at
hand.
The facts of Tercon arose out of a
tendering contract between Tercon Constructors Ltd. ("Tercon")
and Her Majesty the Queen in Right of the Province of British
Columbia (the "Province') which issued the tender call. The key
issue in the case was the interpretation of provisions in the
contract relating to the eligibility to bid and a damages waiver
which excluded compensation resulting from participation in the
tendering process.
In 2000, the Ministry of Transportation
and Highways for the Province issued a request for expressions
of interest ("RFEI") for designing and building a highway in
northwestern British Columbia. Six teams made submissions,
including Tercon and Brentwood Enterprises Ltd. ("Brentwood").
Later in 2000, the Province informed the six proponents that it
now intended to design the highway itself and would issue a
request for proposal ("RFP"), which RFP in fact was issued on
January 15, 2001. Under the terms of the RFP, only the
six original proponents were eligible to submit a proposal. The
RFP also included an exclusion clause which stated as follows:
2.10… Except as expressly and specifically permitted in
these Instructions to Proponents, no Proponent shall have any
claim for compensation of any kind whatsoever, as a result of
participating in this RFP, and by submitting a Proposal each
Proponent shall be deemed to have agreed that it has no claim.
[Emphasis added] (para. 61)
Subsequent to the issuance of the RFP,
Brentwood teamed up with Emil Anderson Construction Co. ("EAC")
because it was unable to submit a competitive bid on its own.
EAC was not one of the six qualified bidders. Together,
Brentwood and EAC submitted a bid in Brentwood's name.
Brentwood and Tercon were the two short-listed proponents. The
Province ultimately selected Brentwood as the preferred
proponent.
Tercon brought an action seeking damages,
alleging that the Province had considered and accepted an
ineligible bid and that, but for that breach, Tercon would have
been awarded the contract. The trial judge agreed and awarded
approximately $3.5 million in damages and pre-judgment interest
to Tercon.
The Court of Appeal reversed the trial
judge’s decision. Tercon sought and obtained leave to appeal to
the Supreme Court of Canada.
...
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