Joginder Ltd v Edmonton (City), 2017 ABQB 328

Court of Queen’s Bench of Alberta Citation: Joginder Ltd v Edmonton (City), 2017 ABQB 328 Date: 20170517 Docket: 1103 00237 Registry: Edmonton Between: Joginder Ltd Plaintiff - and - The City of Edmonton Defendant _______________________________________________________ Reasons for Decision of L.A. Smart , Master, Court of Queen's Bench of Alberta _______________________________________________________ Introduction [ 1 ] In October 2009 the City of Edmonton (City) issued a Request for Proposal (RFP) for the award of a Disabled Adult Transit Service Ambulatory Contract (DATS Contract).

Joginder Ltd (Joginder) alleges that the City failed to accept Joginder’s bid which is alleged to be compliant with the RFP and instead accepted an alleged noncompliant bid of the successful bidder Prestige Transportation Ltd (Prestige). Furthermore, it is alleged that the City breached its duty to act fairly and bargain in good faith. As a consequence of not being awarded the DATS Contract, Joginder alleges it lost profits of $24 million. [ 2 ] The City has applied for

Summary Judgment on the basis that there is no merit to the claim in that: a. The Joginder bid was noncompliant; b. The Prestige bid was compliant; and c. The Joginder bid could not have succeeded even if it were compliant. Discussion [ 3 ] The mandatory requirements of the RFP included the following:

22.1.1: Proponents (or their principals) must be actively and currently engaged in commercial passenger transportation for a period of at least three years. 22.1.2: Proponents must be commercial passenger transportation companies whose primary business is to provide commercial passenger transportation services. 22.1.3: Proponents must have their own dispatch and business telephone number(s).

The telephone number shall be used exclusively by the company (i.e., not a shared line). 22.1.4: Proponents must have drivers and vehicles in active service. 22.1.5: Proponents submitting Proposals for an Accessible Taxi Contract must have a valid Accessible Taxi Vehicle License pursuant to the City of Edmonton Vehicle for Hire Bylaw #14700. 22.1.6: Proponents must provide Proposal Security and a Certificate of Insurance or Letter of Insurability. 22.1.7: Proposals must contain pricing for both Trip Flat Rate and Hourly Rate. [ 4 ] On October 29, 2009 the City issued Addendum No.

Three setting out the following Questions and Responses: Question 1

Section 22.1.2 “Mandatory Requirements and Evaluation Criteria” – States that Proponents must be commercial passenger transportation companies whose primary business is to provide commercial transportation services.

Section 22.1.4 “Mandatory Requirements and Evaluation Criteria” – States that Proponents must have drivers and vehicles in active service. My client’s company is currently an inactive holding corporation that would be used to provide the services if its bid was successful. The company has provided D.A.T.S. contract services in the past, and my client is currently active in the industry, just not through his company. Response 1 The language in 22.1.2 is present tense – “whose primary business is ...........” Similarly, 22.1.4 states “in active service”. Therefore, if the Proponent is the company and is “an inactive holding company”, then the company does not meet the requirement. Question 2

Schedule B

Section 1.2.2 – Requests the submission of un-audited financial statements including an income statement, balance sheet and notes. As the company is inactive, there are no financial statements available. All required investment would be made once my client’s bid was chosen as the successful proposal. Instead of financial statements, my client would be able to include a commitment letter for the estimated required financing for the project. Response 2

Section 1.2.1 of

Schedule B outlines the time period for which financial information is required – “for the most recent fiscal year and previous two years”.

Section 1.2.2 provides an option to the audited financial statements – but not to the time period the financial information is required for. Therefore, if the Proponent is the company and “there are no financial statements available”, a commitment letter does not meet the requirement. Question 3

Schedule B

Section 2.3 - Requests a list of vehicles for use in the provision of services including make, model, year, kilometers, license plate and registration number. All vehicles will be purchased new if my clients bid were chosen. While he cannot provide the exact detail requested in this section, number of vehicles and types of vehicles to be purchased would be provided. Response 3

Section 2.3 of

Schedule B states the list is of Vehicles “which it proposes to use for the provision of Services”. The list should be of the Vehicles the Proponent is proposing. [ 5 ] Although the author of the questions is not disclosed it is apparent that they are from Joginder. Receipt of this Addendum was acknowledged by Joginder. [ 6 ] On November 12, 2009 the City sent a letter to Joginder rejecting its bid on the basis that it failed to comply with mandatory requirements and, in particular as follows: • Proponents must be commercial passenger transportation companies whose primary business is to provide commercial passenger

transportation services as required by

Article 22.1.2 of the Instructions to Proponents. • Proponents must have their own dispatch and business telephone number(s). The telephone number shall be used exclusively by the company (i.e., not a shared line) as required by

Article 22.1.3 of the Instructions to Proponents. • Proponents must have drivers and vehicles in active service as required by

Article 22.1.4 of the Instructions to Proponents. Law of Tender [ 7 ] Joginder and the City agree that the principles for tendering applicable to this case are set out in Double N Earthmovers Ltd v Edmonton (City of) , 2005 ABCA 104 . It is argued by Joginder that it was compliant with the mandatory requirements as required by the RFP thereby satisfying what would constitute Contract A. Futhermore, whether it was compliant or not, Prestige was not compliant and the City had an obligation to act fairly and bargain in good faith, that is, it must treat the bidders equally.

The City does not take exception to the legal analysis but quite simply takes the position, inter alia, that the mandatory requirements were not met by Joginder and were by Prestige. Requirement for Own Dispatch and Business Telephone Number [ 8 ] There is a requirement for exclusive dispatch and business telephone numbers. In the proposals telephone numbers are disclosed by the proponents on the front of the tender bid and in the City of Edmonton Contractors Environmental Acknowledgment Form.

It is not indicated anywhere that the telephone numbers provided would ultimately be those exclusive telephone numbers for dispatch and their business nor is there an express request to provide the telephone numbers. Indeed it would seem odd to me that the proponents would have established such numbers in advance of receiving an award of the contract particularly when noting that the service would not be implemented until some nine months later. Joginder says that one of the telephone numbers it provided was compliant with the requirement and the numbers provided by Prestige are noncompliant.

In my view the deficiency identified by the City in the Joginder proposal and Joginder’s concern expressed over Prestige’s compliance is of no consequence in either case. Requirements that Proponents be Commercial Passenger Transportation Companies and Have Drivers and Vehicles in Active Service [ 9 ] For purposes of discussion I have combined the first and third reasons given by the City for rejecting Joginder’s tender bid. These issues were directly addressed in Question 1 and the Response in Addendum No. Three.

The City advised that the language of the Requirements was in the present tense and therefore an inactive holding company would not meet the requirements that the primary business “is” providing commercial passenger transportation services and “in active service”. In Joginder’s proposal it described itself as a “dormant corporation”.

Notwithstanding this description Joginder argues that at the time of the tender bid Joginder was an active Corporation with one vehicle and two drivers available as described in the tender bid together with evidence supporting the same. [ 10 ] This one vehicle is identified as a 2002 Ford Taurus. It was inspected and insured on October 31, 2009, and registered with Alberta registries on November 2, 2009, this latter date being the same date the tender bid was submitted by Joginder to the City of Edmonton.

On questioning the deponent of the affidavit filed on behalf of Joginder in response to this application acknowledged that the vehicle had not been used for commercial transportation purposes. [ 11 ] Joginder described itself both as an inactive holding company and as dormant. These are apt descriptions. Despite the registration of the Taurus and identification of the two potential drivers, in my view the City was justified in arriving at the conclusion that Joginder did not meet the requirements. On a technical note the requirement was for vehicle s and there was only one.

More to the point, Joginder was simply not a commercial passenger transportation company providing commercial transportation services. Acquiring a vehicle, identifying drivers for that vehicle and saying it is available only hours before the tender bid falls short of the requirement for vehicles and drivers in active service. Non-Compliance by Prestige [ 12 ] Joginder argues that Prestige was non-compliant and in the circumstances ought not to have been the successful bidder. The first issue was with respect to the dispatch telephone number that was dealt with above.

The second issue arises under Articles 22.1.4 which as set out above requires the proponent to have drivers and vehicles in active service and under

Article 22.1.6 to provide a Certificate of Insurance on its vehicles. [ 13 ] Prestige is a wholly owned subsidiary of 331001 Alberta Ltd. At the time of the bid all of Prestige’s vehicles were registered under 311001 and the certificate of insurance provided described the insured as 331001 Alberta Ltd. et al. Joginder argues that as a consequence Prestige was non-compliant. Prestige was the incumbent supplier and the evidence is that it had seventy trained DATS drivers and operated eighty DATS compliant vehicles albeit registered to 331001.

Furthermore, Prestige was part of a group of companies that included 331001 and collectively operated with more than a thousand drivers and seven hundred vehicles. The Proponent

in the bid was Prestige, a wholly owned subsidiary of 331001. The City argues that the direct ownership of vehicles was not what was explicitly required in the mandatory requirements. I am not convinced that is necessarily a proper

interpretation but that does not end the matter. [ 14 ] The issue of whether it is satisfactory to meet mandatory requirements through related parties was addressed in I.M.P. Group Ltd v Canada (Minister of Public Works & Government Services ), 2006 FC 1223 ( IMP ). In that circumstance the bidder was to certify it had been in the relevant business for a minimum of five of the past eight years. In fact the bidder had not but its sister company had been for a great many more years than the requirement.

Although the decision recognizes that conformance with mandatory requirements must be evaluated thoroughly and strictly, it goes on to note that mandatory requirements should not be construed in an isolated and disjunctive manner. The conformance should be interpreted with consideration of the overall purpose and objectives of the RFP. [ 15 ] I am mindful that IMP is decided in the context of a judicial review but in my view it is equally applicable to these circumstances.

The underlying purpose of the mandatory requirement here is to insure that the successful bidder will have the necessary vehicles and drivers to perform if it is awarded the contract. I am satisfied that the Prestige bid satisfied this mandatory requirement The same analysis would apply to the insurance requirement and in my view it was also satisfied. Joginder Bid Could Not Have Succeeded (Contract B) [ 16 ] The City argues that even if Joginder had satisfied the mandatory requirements, its tender bid could not have succeeded.

One notable shortcoming was Joginder’s inability to provide financial statements for the current and two previous years. This issue was expressly addressed in Addendum No. Three. Joginder advised that due to its inactivity it could not fulfill the requirement and indicated that upon acceptance of the tender bid the two principals of Joginder would inject $100,000 each. In addition, a third party was giving its commitment to provide financial support and a financial statement for that third party was provided.

It is apparent that the underlying purpose of the financial statements is to provide some evidence that the Proponent, if successful, would have the financial capacity to perform. Although having concluded that Joginder did not meet the mandatory requirements, I question why in general terms the principles in IMP wouldn’t have similar application to this aspect of the tender bid. [ 17 ] In the affidavit the City’s witness also stated she had assessed Joginder’s tender bid based on the Evaluation Criteria to be used once the mandatory requirements were met set out briefly at

article 22.2 of the RFP as:

a) Proponent Experience and Financials (20%)

b) Service Delivery (20%)

c) Management of Service (20%)

d) Price (40%). [ 18 ] In her opinion the proposal of Prestige outweighed the proposal of Joginder in every category and that Joginder would not have been awarded the DATS contact, regardless. On questioning she confirmed that it was her opinion based on her many years of experience albeit she would not have been the decision maker had the mandatory requirements been met. I agree with the argument of counsel for Joginder that the evidence of the City falls short of establishing Joginder would not have succeeded if it had met the mandatory requirements. Conclusion [ 19 ] Since Hyrniak v Mauldin , 2014 SCC 7 , and the subsequent consideration given to it by Alberta courts, the test for

summary judgment briefly is whether or not a fair and just determination can be made on the record. There are no material facts in dispute that prevents the court in this case from concluding there is no genuine issue requiring a trial. Joginder did not meet the mandatory requirements of Contract A as described in Double N . Although the City did not make out its case that Joginder’s bid would not have succeeded in any event it is unnecessary for them to do so as the creation of a Contract B with Joginder did not occur. Finally, I am satisfied that Prestige met the mandatory requirements. [ 20 ] Accordingly the application for

summary dismissal of the action is granted and the action dismissed. The City will have its costs of the action. Dated at the City of Edmonton, Alberta this 16 th day of May, 2017.

L.A. Smart M.C.Q.B.A. Appearances: Ken Slupek Hladun & Company for the Plaintiff Allan Delgado City of Edmonton Law Branch for the Defendant