Mid Valley Construction, 2012 NSSC 307

SUPREME COURT OF NOVA SCOTIA Citation: Mid Valley Construction

(1997) Ltd.v. Colchester County (Municipality) , 2012 NSSC 307 Date: 20120604 Docket: Hfx. 284285 Registry: Halifax Between: Mid Valley Construction

(1997) Limited Plaintiff v. Municipality of the County of Colchester Defendant DECISION Judge: The Honourable Justice J. E. Scanlan Heard: June 4, 2012, Truro, Nova Scotia Written Decision: August 7, 2012 Counsel: Cory Withrow, Solicitor for the Plaintiff Dennis James/Adriana Meloni, Solicitors for the Defendant By the Court : [ 1 ] Counsel it is not every day we have a motion for a non-suit at this stage. In the 19 years or so I ’ ve been on the Bench it is even rarer that they are granted. I think I remember once before that I may have granted a non-suit motion.

That is because it is very difficult to get, in the sense there must basically be a lack of evidence on the material aspect of the case. The cases make it very clear, including the Tingly case, that a Judge sitting and hearing a motion for non-suit has to resist the weighing of the evidence but rather just ask is there any evidence on the crucial issue?

[ 2 ] In this case the issue goes to the matter of the tender document itself, or the bid document itself, and whether or not it met the requirements as set out in the tender document. About the only evidence we have that would suggest the bid was sufficient is the evidence of Ms. Moreau who says, “ well I thought it was enough, if I just checked the box ” . It was related to the cost of insurance and thinking that, yes, we calculated the cost of insurance in calculating the numbers to put together this bid. I see nothing in any of the documents that in any way would support her

interpretation that this is all about costs. In fact, I would go so far as to say if her subjective

interpretation of the document had anything to do with sufficiency of these bids then there would never be a non-compliant bid, in the sense that every time somebody like her puts one of these documents together and says, well I thought it was good enough, then they would be good enough. Every bid whether compliant or not by today ’ s standards in terms of the industry, by any stretch of the imagination, would in fact be sufficient. [ 3 ] Well, that is not the way it works. It does not work that way for a reason. There has to be enough certainty in these bids and in the tender packages.

The Municipality and the people that spend all the money putting these bids together, because there is a lot of money spent in putting bids together, the information in the bid is sufficient that the person who puts the bid in can be held to the contract then they are stuck with it. The problem from the people ’ s perspective, the ones who put out the tenders, and I said this at the very beginning of the case, they are dammed if they do and they are dammed if they don ’ t.

In other words in this particular case, even though the bid in terms of the numbers was the lowest of four bids, had they accepted the bid as put forth by the Plaintiff then ACL may have come along and said, look you accepted a non-compliant bid. They are entitled to see the package, of course, and see what was included.

They could simply say, look they didn ’ t include any Certificate of Insurance or, looking at the supplementary specifications as set out in paragraph 24(2), not only did they not include a Certificate of Insurance but specifically 24(2) said the contractor will have included with the tender proof of ability to obtain insurance coverage for subsections 8.1. It is very clear they were asked to include something in the documents. Again, the subjective belief of Ms. Moreau is really not relevant nor would it be relevant at trial in terms of the issue of compliance. [ 4 ]

Section 8.1 talks about the preparation of tender and it says: Complete form of tender provided with project documents in ink or typewriter. Tender all items and fill in all blanks. Have corrections initialled by the person signing the tender. It clearly contemplates that you do not just tick off the box. It says, “ tender all items ” . Paragraph 12, Insurance, refer to

section 00720, General Conditions. Subsection GC11.1 insurance required. [ 5 ] All of these documents talk of insurance and what speaks the loudest is, so far as I am concerned, taking into account what Ms. Moreau said, you couldn ’ t get a specific Certificate of Insurance for this contract because there was no Contract A yet and no Contract B yet. The same with the performance bonds and the labour and material bonds. Certainly the insurers were committing to do something, or at least they thought they were.

The people that were putting the bids together and I am referring to the other three bids, they thought their insurers were committing to insure them both in terms of the bonds, that is the performance bond and the labour material bonds, and they went out and sought something in terms of a Certificate of Insurance. It is correct that maybe none of these things were, in reality, something that at the end of the day were complete. It certainly addressed the requests of the person who put out the tender.

In this case of course that is the Municipality. [ 6 ] In this case there was no, using the words of 24.2, proof of ability to obtain insurance coverage per. subsection 8.1. In other words, there is a complete lack of evidence before me that, that issue was addressed by Ms. Moreau or by her principal. It is her evidence which addresses that issue. It is very clear to the Court. I do not have to weigh her evidence, it is the only evidence. The only evidence is it was not there. I am not talking about the sufficiency of the insurance or the proof.

I am talking about the existence of the proof or even the attempt to prove that there was insurance. It just was not there. [ 7 ] Sure, at the end of the day, it would have been something the Municipality was entitled to do, to go back to all four of them, one at a time, and say, you offer proof but we are not satisfied with it. It may be in fact there is no compliant bid here. The test for the principal in this case is whether or not there is any evidence that Mid Valley Construction had either included a Certificate of Insurance or proof of ability to obtain insurance.

That is the two things, the least in terms of the position they could take in order to have a

compliant bid. Either proof by way of Certificate of Insurance or proof of ability to obtain insurance coverage. Those are the two things the documents spoke of. [ 8 ] It is not enough for Ms. Moreau, on behalf of Mid Valley, to say, I checked the box, I thought I was including the cost and that ’ s what they were talking about. Certainly when she checked the boxes in terms of performance bond and the materials bond, she knew there was no bond in place but the bonding companies made it clear they were prepared to enter into bonds. The evidence before me says that this case cannot succeed. It is the only evidence.

It is not a matter of weighing the evidence. It is the only evidence before me. It is not lost upon the comment Ms. Moreau made that as a result of this they ’ ve changed the practice and they now have a list of documents you have to have in the constructions industry and through the association. As I read these documents, I can understand why they would want to do that. There is probably some confusion and there is a lot of money at stake here, for both the people who put tender packages together and those who bid on them.

You would want to know whether you were exposing your company to liability if you put a bid in and those who put the tender out would want to know, am I going to get three, four, five or six companies, however many bid, all being able to come at me and recover because my package was so uncertain that nobody could say they did or did not comply. [ 9 ] On the plain reading of this contract, I am talking about the tender package, in this case this one plaintiff could not say they complied with the requirements. Mr.

James ’ point is not lost on me either and that is, where does it get you if ACL ’ s bid was non- compliant? I do not think it gets you anywhere. If ACL ’ s bid was not compliant, neither were the other two, and there were no bids. Then the Municipality was free to go out and negotiate with whoever they wanted to. That is the essence of the argument when counsel pointed me to the other insurance documents, as to say, well I don ’ t think their ’ s were much better, so what? The point ’ s not lost. It just speaks to the frailty of the tender package that went out.

The frailty that insurance binders I ’ m going to call them, because we see all the time insurance companies saying, yes I will provide you with insurance but we don ’ t know what the final document is going to look like. You know, and I know, and the industry knows, there are many, many forms that insurance can take. If municipalities, or anybody else that puts tender packages together, got to look at all of these contracts they might be horrified later when they thought they were getting coverage in one way and the insurance policy has enough loop holes in it that you could drive a truck through it.

Yet they think just because it says two million dollars, or whatever, they are covered. There are so many different insurance policies, you could drive a truck through some of the loop holes. They are not looking at it. From a commercial perspective they probably could not afford to look at all the policies and the detail that they have to. [ 10 ] In this case, I simply have to stop at the issue of whether or not there was a Certificate of Insurance .

In the alternative, because I think there was a lower standard and that was set out in 24.2, proof of ability to obtain insurance coverage per. subsection 8.1, it says that would have to be included with the tender. Again if you look at the instructions in 8.1 and I referred to them earlier, you have to both complete the forms and tender all items. It is not a one step thing where you complete the form. You have to tender the items. [ 11 ] Motion for non-suit, yes it is appropriate. Like I said, the only evidence before me would leave you in a position, and that is accepting all of Ms.

Moreau ’ s evidence, to say you cannot succeed in this case at the end of the day at law. [ 12 ] I ask counsel to keep in mind this whole process of Contract A, Contract B, tenders, bids, it is a very difficult issue because of the potential exposure of either side here. We know that Mid Valley may well have signed a contract that would find them out of pocket millions of dollars if they bid too low. We hold them to those types of contracts if they make a bad estimate in terms of costing.

We know that when you put this tender package out, if you accept one of the bids you run the risk of offending three others in a case such as this and exposing yourself to huge liability. The lowest bid was $2,000,000.00 and the highest was $4,178,000.00. It shows the range of the bids but it also shows the potential exposure for the Municipality in this case, because if anybody challenged any one of these bids, number one, two, or three, for being non-compliant, as you have counsel, and Brycon was to come along and say well we ’ re really the only ones that were compliant.

The Municipality could have been on the hook to Brycon for upwards of $4,100,000.00 in addition to the contract price. [ 13 ] Mr. James, I am referring to a lot of things here that go into the consideration on costs. When I am talking about a process that is necessary, and it is the only process that we have that I am aware of that protects the tax dollars when we are expending huge amounts of money on projects that are for the public good.

Yet it is a process in terms of the tender packages where you have, certainly in this case, the Plaintiffs coming and saying there ’ s something wrong with the process and we had to fix it after this. You can come and ask for a whole bunch of costs but in doing so ask yourself is there something wrong with some of the processes. One of your defences, or one of the planks in your argument here today, was we went with the next compliant bid. They are not going to be any further ahead if none of the bids were compliant. That is a difficult argument and you are kind of rolling upstream when you say, okay now penalize

them double, or triple, in terms of costs. Keep it in mind. I am not making a decision but you should talk about costs as opposed to coming back. I hope you can settle the costs because you both see the problem. I am not suggesting this is going to be a perfect process either. [ 14 ] Good luck. J. 06/28/2012