Construction Law – Tendering – Uncertain Bid Price – Non-Compliant Bid
Matthew Alter and Dan Boan for Maystar General Contractors

Maystar brought an application for a declaration that the Defendant Town of Newmarket had breached its contract with Maystar by improperly conducting the tender process for a recreation facility. Maystar had submitted the lowest bid on its face but the Town, on discovering that another bidder (Bonfield) had improperly calculated GST, treated Bonfield's bid as lower and awarded it the contract. Maystar alleged that Bonfield's bid was incapable of being accepted because (1) its bid price was uncertain, since it contained two inconsistent prices as a result of the improper GST calculations, (2) by revising Bonfield's bid totals the Town had improperly modified a bid, which the tender documents did not allow it to do, and (3) Bonfield's contact with the Town after bid opening but prior to acceptance was improper negotiation (the Vice President and General Manager of Bonfield had contacted the Town to confirm that its bid price was in fact lower than that which was read out on the bid opening day). The Town denied all of Maystar's allegations and argued as an alternative that even if Bonfield's bid was non-compliant the terms of the tender allowed it to accept it regardless.

The court reiterated the principles established by the Supreme Court of Canada in Ron Engineering that submission by a contractor of a compliant bid creates Contract A between the contractor and the tender issuer, and that Contract A is governed by the terms of the tender documents, though terms may be implied in some circumstances. The court also made note of the requirements that owners only accept a compliant bid (though substantial compliance will be sufficient) and to treat bidders fairly and equally. The parties agreed that Maystar's bid was compliant and thus Contract A was created between it and the Town. The court also found that Bonfield's bid price was uncertain because the GST calculation errors were such that the Town could not determine which was the correct price. The Town's own evidence confirmed that its representatives were unclear on which was the correct price. The court concluded that the case was akin to Ottawa (City) Non-Profit Housing v. Canvar Construction in that, though the source of the error could not be ascertained, there was a clear error on the face of Bonfield's bid which made it incapable of acceptance. Because of this clear error, the Town could not amend the bid nor could the error be remedied by further communication from Bonfield. The court granted the declaration sought and ordered a trial to determine damages.

In a further decision, the court awarded Maystar $65,000 in substantial indemnity costs despite protest from the Town that Maystar had spent too many resources. The costs award was made without prejudice to Maystar's ability to argue for increased costs after conclusion of the trial to assess damages, since it had made an offer to settle during the proceedings.