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Bruce Reynolds

Featured Article, March 2010 Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4   © 2010 Bruce Reynolds and Sharon Vogel

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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