municipalities liberty in the drafting of municipal contracts · 2019-12-05 · 1.1 contracts whose...

Municipalities’ liberty in the

drafting of municipal contracts

Presented by Mr Pier-Olivier Fradette

SECTION 1JURISPRUDENCE

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Jurisprudence examples where simple drafting

and planification mistakes led to disputes.

1.1 Contracts whosedrafting has causeddisputes havingdisadvantaged theMunicipality

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1.1 Contracts whose drafting has

caused disputes having

disadvantaged the Municipality

Calestagne (Marquage & Scellant Lanaudière) v.

St-Esprit (Municipalité de), 2014 QCCQ 5401;

Monetary stakes: $1 724,63

[28] Any tenderer can expect the tender to

accurately describe the work to be carried out.

There must be no trap or ambiguity.**Our translation

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Calestagne (Marquage & Scellant Lanaudière) v.

St-Esprit (Municipalité de)

[29] The Tribunal is convinced that if the "Skating

rink and courtyard of Dominique-Savio School" had

been indicated in the tender, the applicant would

have tendered for a higher amount. At least, that

is what the overwhelming evidence demonstrates.

**Our translation

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Blanchette SAMN inc. v. Preissac (Municipalitéde), 2015 QCCQ 3979


The Municipality proceeds by calling for tenders inorder to award a contract for the municipal officerenovation. Following the works, Blanchette SAMNinc. claims additional costs for extras not providedfor in the tender.

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Blanchette SAMN inc. v. Preissac (Municipalité de)

The court concludes that the Municipality, when indicating

it wants a "turnkey" contract, wishes to conclude an all

inclusive and fixed price contract. However, it had to take

the means to have a clear and precise contract. It had to

describe the works with sufficient care and clarification so

that the bidders knew the nature of the works to be carried

out. The indications given by the Municipality were vague

and imprecise. The latter can not free itself from the

payment of extra costs by invoking a “turnkey” contract.

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Blanchette SAMN inc. v. Preissac (Municipalité de)

[25] If we go over the list of documents forming

part of the contract again […], it can be seen that

this list is borrowed from a model for roads

construction and that several of these documents

do not exist in the present contract.

**Our translation

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7680597 Canada inc. v. Val-David (Municipalité

de), 2014 QCCQ 1221

Monetary stakes: $941,78

The Municipality had concluded a contract with

the plaintiff to purchase surveillance equipment

($ 3,013.10). It was a verbal agreement, without a

written contract. The city had mainly insisted on

the duration of battery life.

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7680597 Canada inc. v. Val-David (Municipalité de)

The batteries life duration proved to be

insufficient and the Municipality proceeded to the

resolution of the contract and returned the

equipment to the plaintiff.

The judge ruled in favor of the Municipality at the

outset, given the plaintiff's breach of contractual

obligations.

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7680597 Canada inc. v. Val-David (Municipalité de)

However, since the Municipality did not send a

formal notice of default to the plaintiff, nor was it

in a situation of rightful default, it could not

proceed with the resolution as it did (section 1590

CCQ) (paragraphs 64-69). A simple stipulation to

that effect in the contract could have remedied

the situation.

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L.A. Hébert ltée v. St-Mathieu-de-Laprairie

(Municipalité de), 2012 QCCQ 14934


The Municipality had works done on its sewer system.

Due to problems, it had additionnal works done for

which the contractor claims $ 9,851.05.

The Municipality considers these works covered by the

warranty against defects of the original contract (2120

C.C.Q.), and that it therefore does not have to pay for

these expenses.

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L.A. Hébert ltée v. St-Mathieu-de-Laprairie(Municipalité de)

However, the evidence is that these latterworks were not part of the original contract'splans and specifications. Therefore, they arenot covered by this warranty and theMunicipality must bear the costs (paragraphs20 -23). The situation could have been avoidedby further specifying the contract to definethe warranty extent and duration.




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Norgereq ltée v. Montréal (Ville de), 2017 QCCS

1199

Monetary stakes: $1 364 960

The City claims that Norgereq's bid is non-

compliant as the bid’s surety provided does not

meet the time required for bidding. The Court

refused to consider the tender non-compliant

despite the bid’s surety 90 days term whereas the

tender documents required a 120 days term.




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Norgereq ltée v. Montréal (Ville de)

The Court held that such an irregularity was

understandable and minor given that there was

some ambiguity in the content of the City's tender

documents. At one point in the tender it was

required that the bid be valid for 90 days, while

the suretyship form provided in the schedule

required a minimum period of 120 days.

1.2 Well writtencontracts having favoredthe Municipality

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Ste-Croix Pétrolier & Plus v. Montréal (Ville de), 2008 QCCS 1317

Monetary stakes: $40 772

The City had entered into a contract with thecontractor for the pumping and disposal ofcontaminated soil. The contractor, arguing thatthe operating costs have increased due to aneighboring landfill site closure, is claiming ahigher price per ton of waste than the oneintended in the contract.

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1.2 Well written contracts having

favored the Municipality

Ste-Croix Pétrolier & Plus v. Montréal (Ville de)

The judge rejected such claim. The contract

clearly stipulated that the unit price could not

vary during the term of the contract (paragraphs

59-60). The contractor had no ground for

requesting an increase during the course of the

contract.

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Distribution Jean Blanchard inc. v. Régie de gestion des matières résiduelles de Manicouagan, 2016 QCCS 4417;


« [36] It is well established that a publicbody has the right to prescribe the formal andsubstantive conditions to be fulfilled by those whowill bid on the call for tender and that it benefitswide discretion at this stage. »

**Our translation

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Distribution Jean Blanchard inc. v. Régie de

gestion des matières résiduelles de Manicouagan

According to Tribunal, the requirement for wheel

diameter is neither arbitrary nor frivolous. This

criterion was connected to the objectives pursued

by the Régie, namely those of stability and

maneuverability of carts.

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Camions Carl Thibault inc. v. Nicolet (Ville de), 2016 QCCQ 8941


The City is interested in a fire truck under twodifferent manufacturing scenarios. Option Arequires a pump corresponding to the technicaldescription of a model produced and distributedby a single company. Option B provides for a pumpwith more general specifications.

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Camions Carl Thibault inc. v. Nicolet (Ville de)

After recalling that the public administration has a

very wide discretion over the characteristics and

descriptions of the products it seeks to acquire,

the judge decides that there was no breach of the

City's obligation to treat bidders on an equal

footing. Moreover, the judge insists that the

tender was not for a pump, but rather for the

supply of a fire truck equipped with a pump.

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Camions Carl Thibault inc. v. Nicolet (Ville de)

Nothing prevents a tender from being open tocompanies that are both the exclusive distributorand the retailer of a product, as long as a seriousinvestigation is made to make sure there are noother possible tenderer.

The City had the authority to establish thecriterions and conditions that would be used toevaluate the bids. It could include a mechanism ofoptions and choose the option that meets itsneeds without having to motivate its choice.

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1.3 Bid complianceanalyzes that have causeddisputes

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1.3 Bids compliance analyzes that

have caused disputes

Construction TRB inc. v. Québec (Procureur

général), 2015 QCCS 1300;


When time comes to carry out construction works,

contractors must hold the appropriate license

delivered by Régie du bâtiment du Québec. If,

however, the owner wishes the contractor to hold

a particular license, it must be stated so by

identifying the wanted (and appropriate) license.

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Construction TRB inc. v. Québec (Procureur général)

In the absence of such a clarification in the call fortenders, as soon as the contractor has the appropriatelicense for the type of works planned, the tenderercan not be refused on the grounds that the ownerwould have preferred a different license.

In this case, tender documents stipulates that "thecontractor must hold the licenses required under theBuilding Act by the date fixed for the receipt oftenders". The owner refused the bid of ConstructionTRB inc. since it held license 1.4 whereas the ministryconsidered license 1.5 was necessary.

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EBC inc. v. Matane (Ville de), 2014 QCCS 5067

Confirmed by the Court of Appeal, see 2016 QCCA 1912


The City of Matane has awarded a contract to Habitat

for the rehabilitation of its sports center. Habitat was

the lowest bidder for the price offered. EBC came

second for the prize. The invitation to tender provided

for a requirement as to the experience of the tenderer

for the realization of projects of the same scope and

complexity.

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EBC inc. v. Matane (Ville de)

According to the architect who analyzed thecompliance of Habitat’s bid, it lacked the experiencerequirement for comparable projects. Despite thatwarning, the City still awarded the contract toHabitat.

The court considered the requirement of experienceto be an essential condition and that the call fortenders provided clear enough sections on thissubject. Therefore, the City could not itself decide toignore such defect.

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Paul Pedneault inc. v. Saguenay (Ville de), 2012 QCCS 4700


The plaintiff's bid was rejected because it wasnon-compliant, as he did not submit with its bidall the required attestations. However, the call fortenders indicated that contractors had to “have"the necessary certification cards, which isdifferent from the words “provide with bid" usedelsewhere in the contract.

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Excavations Marchand & Fils inc. v. Sources

(Municipalité régionale de comté des), 2015 QCCS

1010


[36] The applicant acknowledges not to have

provided the documentation referred to in

sections 3.3 and 3.4.** Our translation

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(Municipalité régionale de comté des)

[37] However, the plaintiff states that only the

successful contractor, and not the tenderer, has

this obligation. The documentation set out in

sections 3.3 and 3.4 would have to be provided

only after the award of the contract and not at

the time of the bid.** Our translation

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(Municipalité régionale de comté des)

[38] In support of its argument, the applicant

submits that the first part of the tender strictly

refers to the term "tenderer". In the third part

entitled, "Technical clause", the MRC uses the

expression “contractor".** Our translation

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Excavations Marchand & Fils inc. v. Sources (Municipalité régionale de comté des)

[39] The plaintiff argues that the contractorreferred to in parts 2 and 3 of the call for tendersis the successful tenderer. It concludes that theconditions set out in part 3 of the invitation totender are at the time of performance of thecontract, which includes disclosure of thedocuments provided in sections 3.3 and 3.4.** Our translation

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Maria (Office municipal d’habitation de) v.Construction LFG inc., 2014 QCCA 2034


[9] […] The tenderer's failure to hold the professionalqualification required by both the relevant statutoryprovisions and the notice of invitation to tender doesnot constitute a minor anomaly capable of beingcorrected but ...** Our translation

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Maria (Office municipal d’habitation de) v.Construction LFG inc.

…it creates an unavoidable obstacle to obtainingthe construction contract. In addition, this barrierprevents the application for a guarantee planmade mandatory by the Regulation respecting theguarantee plan for new residential buildings,expressly required by the notice of the call fortenders.

** Our translation

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Maria (Office municipal d’habitation de) v.

Construction LFG inc.

[48] Did the appellant have an obligation to

specify what licenses were required to carry out

the works? The Court gave a negative answer to

that question:

"The City of Chicoutimi did not have an obligation

to expressly include the requirement to hold an

appropriate building contractor license, even

though it would have been prudent to do so".** Our translation

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Tapitec inc. v. Blainville (Ville de), 2017 QCCA 317


Tapitec sued the City following the award of thecontract to another bidder who, according toTapitec, did not meet the experience requirementsimposed by the tender. The Superior Court rejectedTapitec's claim by indicating the bid was suffering aminor irregularity and that the City had the right togo over it and award the contract.

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Tapitec inc. v. Blainville (Ville de)

The Court of Appeal reversed this decision on theground that the bid was non-compliant on a majorelement of the tender.

While the City required the bidder to have aQuebec based establishment for at least the past 5years, it still awarded the contract to a bidder whoonly had 2 of the 5 years.

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While the bidder had only been in existence for two

years, its president had been in business in Quebec

in the area covered by the call for tenders for at

least 25 years.

The Court of Appeal held that, for reasons of

fairness between tenderers, the tenderer's bid

suffered a major irregularity.

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When a call for tenders requires a minimumnumber of years of experience, some companieswill refrain from bidding on the basis that they donot have the required experience. It would then beunfair to those who abstained for the City tocircumvent that requirement and accept a tenderthat does not meet the experience requirement.For this reason, any bid that does not meet thecriterion of minimum experience suffers from amajor irregularity.

1.4 Frequent examplesof drafting errors leading todifficulties

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No bid and / or performance warranty;

Contract renewal option without specifying the

beneficiary of the option;

Poor definition of the total cost to bid when

there is a possibility to renew the contract;

Text not harmonized with the subject of the

contract.

1.4 Frequent examples of drafting errors

leading to difficulties

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leading to difficulties

Modèle d’appel d’offres de services professionnels pour la préparation de plans et devis et la surveillance de travaux pour la réalisation d’infrastructures

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leading to difficultiesMODÈLE

D’APPEL D’OFFRES DE SERVICES PROFESSIONNELS

POUR LA PRÉPARATION DE PLANS ET DEVIS

ET LA SURVEILLANCE DE TRAVAUX

POUR LA RÉALISATION D’INFRASTRUCTURES

NOTE :

CE DOCUMENT DOIT ÊTRE ADAPTÉ PAR LA MUNICIPALITÉ EN FONCTION DE

SES BESOINS PARTICULIERS. LA MUNICIPALITÉ DOIT EFFECTUER TOUTES

LES VALIDATIONS TECHNIQUES ET JURIDIQUES AVANT DE PROCÉDER À SON

APPEL D’OFFRES. DE PLUS, LE DOCUMENT COMPORTE DES COMMENTAIRES

POUR AIDER À LA RÉDACTION DES DOCUMENTS MUNICIPAUX. LES

COMMENTAIRES DEVRONT ÊTRE ENLEVÉS DANS L’APPEL D’OFFRES DE

L’ORGANISME MUNICIPAL.

AFIN DE MAXIMISER LA CONCURRENCE, LA MUNICIPALITÉ DEVRAIT

PROCÉDER À UN APPEL D’OFFRES PUBLIC SANS AUCUNE RESTRICTION DE

TERRITOIRE À L’INTÉRIEUR DU TERRITOIRE DU QUÉBEC, À L’ÉGARD DU LIEU

D’ÉTABLISSEMENT DES FIRMES APTES À SOUMISSIONNER. CE MODÈLE A

ÉTÉ RÉDIGÉ DANS CETTE OPTIQUE.

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Summary

How can we minimize difficulties, costs and

litigation in the execution of municipal

contracts?

By taking into account the reality of each

contract and focusing on adapting the

contracts to each situation.

SECTION 2CONTRACTUAL FREEDOM

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Are municipalities required to follow strict

models or frameworks for all clauses of their

contracts or tenders?

2.1 Does contractualfreedom exist?

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2.1 Does contractual freedom exist?

SECTION 298 - CIVIL CODE OF QUEBEC

" Legal persons are endowed with juridical personality.

Legal persons are established in the public interest or

for a private interest."

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SECTION 300 – CIVIL CODE OF QUEBEC

" Legal persons established in the public interest are

primarily governed by the special Acts by which they are

constituted and by those which are applicable to them;

legal persons established for a private interest are primarily

governed by the Acts applicable to their particular type.

Both kinds of legal persons are also governed by this Code

where the provisions of such Acts require to be

complemented, particularly with regard to their status as

legal persons, their property or their relations with other

persons."

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SECTION 1376 - CODE CIVIL DU QUÉBEC

"The rules set forth in this Book apply to the State andits bodies, and to all other legal persons established inthe public interest, subject to any other rules of lawwhich may be applicable to them. "

Confirmed by Canada’s Supreme Court Prud’homme v.Prud’homme, [2002] 4 RCS663

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“With no legislative constraints on the terms of the

tender, there is nothing to limit the agreements

that the parties can freely negotiate. “**Our translation

Compagnie de jouets Feuille d’érable ltée v.

Association montréalais d’action récréative et

culturelle, C.A. 1989. J.E. 89-75

2.2 Contractual freedomexceptions

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Specific laws, such as the Municipal Code and the

Cities and Towns Act, establish some of the

exceptions to contractual freedom.

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2.2 Contractual freedom exceptions

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2.2 Contractual freedom exceptions

Sections of specific laws

CITIES AND TOWNS ACT MUNICIPAL CODE

Sections 573 to 573.4 Sections 934 to 953

SECTION 3WRITING A CONTRACT

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Is it necessary to draft a contract as anadditional document to the call for tenders?

Call for tenders

+

Tenderer’s bid

+

Council’s resolution

=

Contract

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3 WRITING A CONTRACT

If it becomes necessary to draft a contract as anadditional document to the tender document,certain risks may arise such as:

Problems of harmonizing the terms betweenthe specifications of the tender and thecontract;

Problems of contradictions between the clausesof the tender and contract specifications;

Adding new provisions affecting the conditionsof performance of the contract which were notprovided for in the invitation to tender.

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It is essential but sometimes difficult to harmonize

the terms of the tender documents, its

administrative clauses and the technical

specifications with those of a contract that

complements all these provisions.

In bulky tenders, the multiplication of terms to

identify similar situations can be problematic and

the drafting of the contract will have to pay

particular attention to the use of words in all

documents, that is to say from the tender notice

to the contract.

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The tender document and the contract can be

important sources of contradictions when they are

not drafted as a whole.

Beyond problems of harmonization of terms,

contradictions can sometimes arise in different

clauses that make the interpretation between the

tender documents and the contract difficult and

contentious.


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A contract serving as an additional document to thetender specifications should not, under anycircumstances, add conditions that affect theperformance of the contract.

Not only could such changes result in a bidder nolonger wanting to carry out the contract, but couldalso induce unsuccessful bidders to allege that theywould have submitted a different award if they hadknown the new contract conditions.


Conclusion

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Conclusion

Case law demonstrates that mere drafting errors

in contracts may be the source of unfortunate

litigation.

It is therefore justified to grant the necessary

time for the drafting of municipal contracts to

consider all the needs of the municipality and to

prevent any problems that may arise.

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Contact us

Montréal1, Place Ville Marie

Bureau 4000Montréal (Québec) H3B 4M4

Téléphone : 514 871-1522Télécopieur : 514 871-8977

Québec925, Grande-Allée Ouest

Bureau 500Québec (Québec) G1S 1C1Téléphone : 418 688-5000

Télécopieur : 418 688-3458

Trois-Rivières1500, rue Royale

Bureau 360Trois-Rivières (Québec) G9A 6E6

Téléphone : 819 373-7000Télécopieur : 819 373-0943

SherbrookeCité du Parc

95, boul. Jacques-Cartier SudBureau 200

Sherbrooke (Québec) J1J 2Z3Téléphone : 819 346-5058

Télécopieur : 819 346-5007

*** All rights reserved

Any use of this text is prohibited without theconsent of Lavery, de Billy. The texts do notconstitute a legal opinion. Readers should not act onthe sole belief of the information contained therein.

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