Mainville, Hamilton, Baudouin

Appeal from a judgment of the Superior Court condemning the appellant to pay $1,989,398 in damages. Allowed in part.

In 2018, the appellant city launched a call for tenders in connection with a 5-year snow transportation contract. Before the time limit for the receipt of tenders, the appellant entered into discussions with Transvrac to find out if it was interested in doing the work in question under a contract by mutual agreement. Although the respondent had made the lowest compliant tender, the contact was awarded to Transvrac and the call for tenders was cancelled. The same situation occurred in 2020. The trial judge concluded that the city could not negotiate by mutual agreement with Transvrac at the same time as the ongoing call for tenders. The city had to choose one of these two options. He granted the respondent the anticipated profits over the term of the contract.

When a municipality decides to proceed through a call for tenders, it must respect the fundamental rules of the tendering process.  In this case, the city justified its decision to negotiate a contract by mutual agreement with Transvrac by the desire to obtain the best possible price for the work, but this concern cannot be used to evade the rules of transparency and public interest that govern all tendering processes.

Moreover, the exception under section 573.3(3) of the Cities and Towns Act (CQLR, c. C-19) must be interpreted based on all the provisions of the Act regarding the awarding of municipal contracts, in accordance with its purpose and the intention of the legislature. One of the important objectives of the process for awarding municipal contracts through a call for tenders is to replace negotiation by competition through a public and transparent process providing all tenderers with an equal chance. In light of the parliamentary proceedings, it was never intended to allow municipalities to use the exception under section 573.3(3) of the Act to circumvent the tendering process. The judge was therefore correct in ruling that the fact of simultaneously availing itself of two methods of awarding of contracts is clearly incompatible with the purpose of the public call for tenders process under the Act.

In addition, the judge did not err in dismissing the city’s claims that it would have invoked the client's right to unilaterally resiliate the contract under article 2125 of the Civil Code of Québec. (1991, c. 64) at the end of the first year of the contract. First, the city cannot assert a posteriori the resiliation under article 2125. Second, the city did not prove that would have run the risks involved in using this provision simply because the contract that would have been awarded at the time to the respondent exceeded the costs of its estimates.  

With respect to the quantum, the city cannot raise for the first time on appeal the fact that the respondent failed in its obligation to mitigate its damages. However, since it is reasonable to infer from the evidence that the loss occurred during the year for which the work was performed, the judge erred in awarding interest and the additional indemnity on future profits as of a date when a portion of those future profits had not materialized.  

Legislation interpreted: s. 573.3(3) of the Cities and Towns Act 

Text of the decision: http://citoyens.soquij.qc.ca