Q.B. A.D. 1993 No. 1522 J.C. S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: WEST CENTRAL AIR LTD. and THE GOVERNMENT OF SASKATCHEWAN DEFENDANT Henry R. Kloppenberg, Q.C. for the plaintiff Donald A. McKillop, Q.C. for the defendant JUDGMENT MAURICE J. December 18, 2000 [1] The defendant, The Government of Saskatchewan, tendered a spruce bud worm aerial spraying program in northern Saskatchewan. Four companies submitted tenders in response to the defendant’s invitation to tender. The plaintiff, West Central Air Ltd., submitted the lowest tender. The contract was awarded to another tenderer, Nielsen Ashdown Flying Services. The plaintiff complained the defendant had not treated it fairly in awarding the contract to Nielsen Ashdown and sued for damages. [2] It is settled law that the submission of tender in response to an invitation to tender may give rise to contractual obligations—depending upon whether the parties intend to initiate contractual relations by the submission of tender: M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. et al. (1999), 1999 CanLII 677 (SCC), 170 D.L.R. (4th) 577 (S.C.C.); The Queen in Right of Ontario et al. v. Ron Engineering Construction Eastern Limited (1981), 1981 CanLII 17 (SCC), 119 D.L.R. (3d) 267 (S.C.C.). In fact, it may be said, that unless there is something in the circumstances to indicate otherwise, the submission of tender in response to an invitation to tender invariably results in contract. [3] An implied term of the contract is that the person inviting the tenders agrees to treat all tenderers fairly and not give any of them an unfair advantage over the others: Chinook Aggregates Ltd. v. Abbotsford (Mun. Dist.), 1989 CanLII 241 (BC CA), [1990] W.W.R. 624 (B.C.C.A.); Martselos Services Ltd. v. Arctic College (1994), 1994 CanLII 5245 (NWT CA), 111 D.L.R. (4th) 65 (N.W.T. C.A.); Yorkton Flying Services Ltd. v. Saskatchewan (Minister of Natural Resources) (1995), 1995 CanLII 6194 (SK QB), 135 Sask. R. 63 (Q.B.). This term must be implied in the contract because without it the tendering system would be unworkable: If tenderers are not satisfied they will be treated equally and fairly, they will not tender on project. There would be no competition and no purpose in putting project up for tender. [4] The tender package contained the usual privilege clause: The lowest, or any tender need not be accepted by the defendant—which clause has the effect of relieving the defendant from accepting the lowest tender for the project: M.J.B. Enterprises Ltd., supra. But such a clause does not entitle the defendant to disregard its obligation to treat all tenderers fairly—because, as noted, without the implied term of fairness there would be no tender system and no tenders to accept. The implied term of fairness and the privilege clause are compatible and can co-exist together in the contract. [5] The person who invites the tenders must treat all tenderers fairly and equally, but the privilege clause entitles him to consider all relevant factors, such as the amount of each tender, the experience and capabilities of the tenderers and the equipment to be used on the project, in determining who should get the contract. [6] Larry Stanley was in charge of the project for the defendant. He made the recommendation that resulted in the contract being awarded to Nielsen Ashdown. The project was first for the defendant. It was politically sensitive program fraught with danger for the defendant. Segments of Saskatchewan society were opposed to spraying. They considered spraying to be environmentally harmful to humans, flora and fauna. The defendant was going to have to tread carefully. To paraphrase Stanley: With the scrutiny the project was under, it would be an unmitigated public relations disaster if plane went down over populated area or had to ditch its load of pesticides over populated area. Stanley was looking for tenderer with experience in this type of spraying. [7] The plaintiff had no experience in this area—which put it at disadvantage to the other tenderers who did have experience. Each tenderer was required to list the planes it intended to use on the project. The defendant investigated the planes and got favourable reports on the planes the other tenderers intended to use, but an unfavourable report on the plaintiff’s planes. [8] The unfavourable report on the plaintiff’s planes doomed the plaintiff’s tender. Stanley was not about to take chance on an inexperienced operator with unfavourably rated planes, regardless of the fact it was the lowest tenderer on the project. The plaintiff’s tender was rejected. The contract was ultimately awarded to Nielsen Ashdown who had previous experience in the area and whose planes received favourable reports. [9] With the benefit of hindsight, it now appears that the plaintiff had compensated for its lack of experience by making arrangements to bring on board an experienced sub-contractor—a fact Stanley did not know at the time he made his recommendation. And planes of the type the plaintiff proposed to use, on this project, were used in Saskatchewan on similar spraying programs in subsequent years. [10] At this time, there is no reason to doubt that the plaintiff would have successfully completed the project if it had been awarded the contract. However, Stanley had to make recommendation on the information he had at the time. There is no doubt that his staff, who provided him with the information on which he based his recommendation, could have been more thorough in evaluating and investigating the tenders, but for the most part they were inexperienced in projects of this nature, and they relied heavily on the advice of Gregory Curniski, consultant who was advising the defendant on the project. Curniski, who had considerable previous experience in projects of this kind, had been seconded to the defendant from Weyerhaeuser Canada Ltd., a forestry company, to advise the defendant on the technical aspects of the project. [11] Stanley made his recommendation in fair and impartial manner based on the information he had. It was based on factors relevant to the project: The experience and capabilities of the tenderers and the equipment they proposed to use on the project. [12] The plaintiff suggests that Curniski, who had the task of investigating the planes the tenderers proposed to use on the project, conducted the investigation in an unfair manner to the plaintiff. [13] In the case of Nielsen Ashdown, Curniski contacted the chief pilot of the manufacturer of the planes Nielsen Ashdown proposed to use on the project. He was assured by the chief pilot that the planes were operationally viable. In the case of the plaintiff, Curniski contacted source in New Brunswick where the planes were based and two sources in Ontario where the planes had been used. All three sources told him to avoid the planes if possible. The sources contacted by Curniski were part of network of professionals involved in the aerial spraying industry. [14] Curniski did not check the log books of any of the planes he investigated because he testified it was not common practice to do so, and, in his view, it would have given him little relevant information on the operational viability of the planes. Curniski testified he followed common industry practice in the manner in which he investigated the planes—there was no evidence to the contrary. In every case, Curniski used reliable independent sources for his information. I am satisfied Curniski conducted his investigation of the planes in a fair and impartial manner and in accordance with common industry practice. [15] In the end result, the plaintiff was treated fairly by the defendant and no unfair advantage was given to Nielsen Ashdown in selecting the successful tenderer on the project. [16] The plaintiff’s action is dismissed. While costs usually follow the result, this is an appropriate case in which to exercise my discretion to disallow costs to the successful party. While am satisfied that the plaintiff was treated fairly, and the reason for its lack of success was due to negative reports on the planes it intended to use on the project, the recommendation itself contained other reasons for rejecting its tender which were specious and which would, invariably, lead the plaintiff to believe it did not get fair treatment. Why these reasons appear in the recommendation is difficult to say. Perhaps it is simply the unfathomable product of bureaucracy. But, in any event, cannot fault the plaintiff for believing it had been treated unfairly and for commencing the action. It was only after trial and full vetting of the evidence that one could say with satisfaction that the plaintiff was treated fairly. award no costs of this action. The exhibits filed by the parties may be returned to them at the expiration of the appeal period.
The plaintiff submitted the lowest tender of four made in response to the defendant's invitation to tender on a spruce bud worm aerial spraying program in northern Saskatchewan. HELD: The action was dismissed. 1)The tender package contained the usual privilege clause which stated the lowest tender need not be accepted. It is an implied term of the contract that the person inviting the tenders agrees to treat all tenders fairly and will not give any an unfair advantage.  2)The plaintiff had no experience in the type of pesticide spraying. It was not known at the time that the plaintiff made arrangements to hire an experienced subcontractor. The consultant hired to advise the defendant on the technical aspects of the project used reliable independent sources for his information about the operational viability of the planes. He followed common industry practice and conducted his investigation of the planes to be used by the plaintiff in a fair and impartial manner.  3)Discretion was exercised to deny costs because, while the plaintiff was treated fairly and the reason its tender was rejected was due to negative reports, the recommendation contained other reasons which led the plaintiff to believe it did not get fair treatment.