Page ContentIn its decision dated September 7, 2005 (as amended by Addendum dated November 18, 2005), the Ontario Court of Appeal allowed the appeal of Toronto Transit Commission (TTC), and held that a bidder, Gottardo Construction Company (Gottardo), who makes a mistake in its bid remains bound unless the mistake is visible on the face of the tender. TTC called for tenders for the construction of the Birchmount Bus Garage, and shortly after the bids were publicly opened, the low bidder (Gottardo) advised TTC that it had made a mistake and that its bid should have been higher, and asked to be let out of its bid. When the TTC proceeded with the next step of the tender process, and requested additional documentation from the three lowest bidders, including a cost breakdown summary of the bid prices, Gottardo failed to submit most of the documents and tried to rely on (i) its failure to submit the additional documents as rendering its bid non-compliant, and (ii) the higher bid amount in its cost breakdown summary as evidencing the mistake, thus preventing the TTC from accepting it. TTC took the position that because the initial bid appeared to be in order, and no error was visible on its face, Gottardo was bound to perform the work at the price bid. When Gottardo refused, TTC retained the next-lowest bidder to do the work, and sued Gottardo and CGU Insurance Company of Canada (CGU), the company that issued its bid bond, for the difference. Relying on the landmark case of Ontario v. Ron Engineering&Construction (Eastern) Ltd.,  1 S.C.R. 111 (S.C.C.), TTC argued that Contract A (the contract between a bidder and the party calling for bids that governs the tender process) was formed when Gottardo submitted its initial bid. Gottardo and CGU took the position that, in a case where bidders are required, by the terms of the tender call, to submit additional documentation, Contract A is not formed until all required documents have been submitted. The Court of Appeal applied the test in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd.,  1 S.C.R. 619 to hold that Contract A comes into existence when the parties exhibit the intention to create legal relations, which in this case was on submission of the initial bid. Contract A bound Gottardo to keep its bid open for acceptance for 120 days, and to enter into Contract B (the construction contract) if selected as the winning bid. Gottardo’s failure to submit the additional documents was a breach of Contract A, but did not relieve Gottardo from the requirements of Contract A. Further, Gottardo could not rely upon the different total tender price in its cost breakdown summary to establish an error on the face of its tender and avoid its obligations under Contract A. The Court of Appeal also overruled the trial judge’s obiter finding that equity should intervene to grant rescission of Contract A in light of the financial hardship to Gottardo as a consequence of its mistake. Where the TTC was unaware of the bidder’s mistake when Contract A was formed and did not act fraudulently or contribute to the error, equity would not intervene. Gottardo and CGU have applied for leave to appeal the decision to the Supreme Court of Canada. CGU was represented by Matthew Alter of Borden Ladner Gervais LLP in Toronto.