Municipalities liberty in the drafting of municipal contracts · 2019-12-05 · 1.1 Contracts whose...
Transcript of 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
2
Jurisprudence examples where simple drafting
and planification mistakes led to disputes.
1.1 Contracts whosedrafting has causeddisputes havingdisadvantaged theMunicipality
3
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
4
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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
5
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
Blanchette SAMN inc. v. Preissac (Municipalitéde), 2015 QCCQ 3979
Monetary stakes: $3 494,07
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.
6
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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.
7
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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
8
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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.
9
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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.
10
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
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.
11
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
L.A. Hébert ltée v. St-Mathieu-de-Laprairie
(Municipalité de), 2012 QCCQ 14934
Monetary stakes: $9 851,05
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.
12
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
13
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.
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
14
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.
1.1 Contracts whose drafting has
caused disputes having
disadvantaged the Municipality
15
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
16
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.
17
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.
18
1.2 Well written contracts having
favored the Municipality
Distribution Jean Blanchard inc. v. Régie de gestion des matières résiduelles de Manicouagan, 2016 QCCS 4417;
Monetary stakes: $163 867
« [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
19
1.2 Well written contracts having
favored the Municipality
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.
20
1.2 Well written contracts having
favored the Municipality
Camions Carl Thibault inc. v. Nicolet (Ville de), 2016 QCCQ 8941
Monetary stakes: $39 500
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.
21
1.2 Well written contracts having
favored the Municipality
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.
22
1.2 Well written contracts having
favored the Municipality
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.
23
1.2 Well written contracts having
favored the Municipality
1.3 Bid complianceanalyzes that have causeddisputes
24
1.3 Bids compliance analyzes that
have caused disputes
Construction TRB inc. v. Québec (Procureur
général), 2015 QCCS 1300;
Monetary stakes: $64 500
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.
25
1.3 Bids compliance analyzes that
have caused disputes
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.
26
1.3 Bids compliance analyzes that
have caused disputes
EBC inc. v. Matane (Ville de), 2014 QCCS 5067
Confirmed by the Court of Appeal, see 2016 QCCA 1912
Monetary stakes: $714 991
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.
27
1.3 Bids compliance analyzes that
have caused disputes
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.
28
1.3 Bids compliance analyzes that
have caused disputes
Paul Pedneault inc. v. Saguenay (Ville de), 2012 QCCS 4700
Monetary stakes: $21 800
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.
29
1.3 Bids compliance analyzes that
have caused disputes
Excavations Marchand & Fils inc. v. Sources
(Municipalité régionale de comté des), 2015 QCCS
1010
Monetary stakes: $83 150
[36] The applicant acknowledges not to have
provided the documentation referred to in
sections 3.3 and 3.4.** Our translation
30
1.3 Bids compliance analyzes that
have caused disputes
Excavations Marchand & Fils inc. v. Sources
(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
31
1.3 Bids compliance analyzes that
have caused disputes
Excavations Marchand & Fils inc. v. Sources
(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
32
1.3 Bids compliance analyzes that
have caused disputes
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
33
1.3 Bids compliance analyzes that
have caused disputes
Maria (Office municipal d’habitation de) v.Construction LFG inc., 2014 QCCA 2034
Monetary stakes: $156 665
[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
34
1.3 Bids compliance analyzes that
have caused disputes
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
35
1.3 Bids compliance analyzes that
have caused disputes
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
36
1.3 Bids compliance analyzes that
have caused disputes
37
Tapitec inc. v. Blainville (Ville de), 2017 QCCA 317
Monetary stakes: $78 389
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.
38
1.3 Bids compliance analyzes that
have caused disputes
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.
39
1.3 Bids compliance analyzes that
have caused disputes
Tapitec inc. v. Blainville (Ville de)
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.
40
1.3 Bids compliance analyzes that
have caused disputes
Tapitec inc. v. Blainville (Ville de)
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
41
42
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
43
1.4 Frequent examples of drafting errors
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
44
1.4 Frequent examples of drafting errors
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.
45
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
46
Are municipalities required to follow strict
models or frameworks for all clauses of their
contracts or tenders?
2.1 Does contractualfreedom exist?
47
48
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."
49
2.1 Does contractual freedom exist?
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."
50
2.1 Does contractual freedom exist?
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
51
2.1 Does contractual freedom exist?
“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
52
Specific laws, such as the Municipal Code and the
Cities and Towns Act, establish some of the
exceptions to contractual freedom.
53
2.2 Contractual freedom exceptions
54
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
55
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
56
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.
57
3 WRITING A CONTRACT
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.
58
3 WRITING A CONTRACT
59
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.
3 WRITING A CONTRACT
60
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.
3 WRITING A CONTRACT
Conclusion
61
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.
62
63
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.
LAVERY.CA