Decision in Double N Earthmovers v Edmonton

The Supreme Court handed down a judgment today in Double N Earthmovers Ltd v Edmonton (City), 2007 SCC 3. In a 5-4 decision (Abella and Rothstein JJ. writing, LeBel, Deschamps and Fish JJ. concurring / Charron J. writing dissenting reasons, McLachlin C.J. and Bastarache and Binnie JJ. concurring), the Court dismissed the appeal.

The SCC summary of the case reads as follows:

Commercial law – Contracts – Tendering – Does the law permit a person calling for tenders to terminate his contractual obligations to other bidders simply by awarding the contract of work to one of the bidders – Do negotiations with 2 bidders amount to bid shopping – Does the law permit a person calling for tenders to have an absolute and unfettered discretion in evaluating tenders – Did the trial judge err in his assessment of the damages.

The Respondent City called for tenders to supply machines to move refuse. The contract was awarded to the lowest and apparently compliant bidder, the Respondent Sureway, despite reports by the Appellant to the City that Sureway’s machines did not comply with the tender requirement that all machines be 1980 or newer. After the contract was awarded, City officials discovered that Sureway’s machines were older than 1980. They tried to compel Sureway to comply, but eventually waived the requirement. The Appellant sued for breach of contract, claiming that the City should not have awarded the contract to Sureway without checking compliance with the specifications, and should have ended the contract when it discovered the non-compliance. As the only other compliant bidder, the Appellant sued for damages for lost opportunity equal to the profit it would have made.

The Court of Queen’s Bench of Alberta dismissed Double’s action. The Court of Appeal of Alberta dismissed Double’s appeal and the Respondents’ cross-appeals on whether Double’s bid was unqualified, whether it would likely have been awarded the contract, and on the calculation of damages.