CASUAL LEGAL: Could Judicial Review be Applicable to Tender Disputes?

Attention: AMSC Members – Please distribute to all appropriate personnel

Could Judicial Review be Applicable to Tender Disputes?

By James McTague

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

It is well established that an owner issuing a request for proposals in the tendering process, puts forward two offers: firstly Contract A to consider bids it receives from contractors, then secondly, Contract B to enter into a contract with the contractor to complete the project, once a bid has been accepted.  For the purposes of protecting the integrity of this process, an owner is bound by several requirements including the particulars provided in the tendering documents, the obligation to treat all bidders fairly, and the acceptance of only compliant bids.

A request for proposals often contains one or more clauses such as discretion clauses, limitation of liability clauses, and clauses allowing for substantial compliance. These clauses provide the owner more flexibility as to which contractor the contract is awarded to or to minimize liability for the owner.

Generally in the tendering process, the normal recourse for an unsuccessful bidder when a contract is awarded to a non-compliant bid is for the unsuccessful bidder to commence a court action for breach of contract. 

Recently the Court of Appeal dealt with a case in which a public body issued a request for proposals containing a discretion clause. The Court of Appeal confirmed the policy rationale behind accepting only compliant bids.

In this case, an unsuccessful bidder argued the owner accepted a bid that was not fully compliant. The lower court determined the bid was compliant and in the alternative, the owner could rely upon the discretion clause, which allowed them to waive an irregularity or noncompliance if it was minor or inconsequential, making the bid substantially complaint. The Court of Appeal upheld the lower court’s decision, confirming the principle of substantial compliance does provide for some degree of discretion when awarding a contract. Due to the above clause, recourse in the normal fashion, by way of suing on the breach of contract would not have resulted in a meaningful remedy for the non-compliant bidder. Therefore, the unsuccessful bidder sought judicial review of the tendering process. The Justice of the Court of Queen’s Bench indicated that such a proceeding could have been brought by way of a claim in breach of contract, for the breach in tendering contract A; however, even upon an administrative review, the owner’s decision to accept the winning bid was still held to be reasonable.

The Court of Appeal did not deal with whether judicial review was available in this context, but a key takeaway is that such a case raises the question as to when an administrative law analysis, by way of judicial review is appropriate, especially in situations where the normal procedure would not result in a meaningful and just outcome.

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca, or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.