Court of Appeal Decision of the Week

Can a Municipality Exclude Bids from Contractors Involved in Legal Proceedings Against It?

Case: J. Cote & Son Excavating Ltd. v. Burnaby (City), 2019 BCCA 168 (CanLII)

Keywords: s. 96 of the Constitution Act, 1867; Bids & Tenders; Municipal Law

Synopsis:

The Appellant, J. Cote & Son Excavating Ltd, claims as against the City of Burnaby in relation to a contractual dispute following the collapse of a retaining wall and death of an employee. Although a referee recommends that the City pay the Appellant’s claim, the City declines the recommendation and refuses to submit to binding arbitration of the dispute. Instead, the City implements a clause in its public tender materials, which, in effect, excludes bids from contractors involved in legal proceedings against the City within the preceding two years.

The Appellant brings a summary trial application against the City seeking, inter alia, a declaration that the clause unjustifiably infringes:

  • the “constitutionally protected” rule of law;
  • a Charter right of reasonable access to the courts;
  • access to the courts in a manner inconsistent with s. 96 of the Constitution Act, 1867; and
  • that it is otherwise contrary to public property.

The Appellant also seeks damages pursuant to s. 24(1) of the Charter. The summary Trial Judge dismisses the Appellant’s claim in its entirety. The Court of Appeal subsequently dismisses the Appellant’s appeal.

Importance:

Is there something problematic about a municipality responding to an ongoing dispute with a contractor by effectively freezing them out of future engagement? Here, following the Appellant’s challenge to the constitutionality of the clause in question, the City removed it from its public tender form – opting instead to choose contractors from a pre-qualified list. Was this move an attempt to resolve the problem or perhaps simply to bury it?

In any event, both the Summary Trial Judge and the Court of Appeal declined to find the Clause was of no force and effect. For the Court of Appeal, the reasoning and analysis in Trial Lawyers Association of British Columbia v. British Columbia (Attorney General), 2014 SCC 59 (CanLII) was sufficient to dispose of the Appellant’s appeal. According to this Court of Appeal, s. 96 of the Constitution Act, 1867 was neither engaged nor infringed.

Further, the principle of the rule of law, as derived from the preamble of the Constitution Act, 1867 simply does not provide for an “independent, stand-alone protection of access to the civil courts”. (See para. 22). In arriving at this conclusion, the Court of Appeal noted conflicting jurisprudence from the Québec Court of Appeal – namely, Société de développement de la Baie James c. Compagnie de construction et de développement cris ltée, [2001] R.J.Q. 1726 (C.A.). In that case, the Québec Court of Appeal found that a permanent ban on future bids was unconstitutional because it violated the rule of law. The Court of Appeal in this case declined to adopt this reasoning. (See paras. 24-31).

With respect to s. 96 of the Constitution Act, 1867, the Court of Appeal determined that, since the Clause was merely “…a provision in the City’s tender materials” it was not “…imposed by a law of general application resulting from either the provincial or federal government’s exercise of legislative competence” and so did not engage the section. (See para. 47).

Citing Trial Lawyers Association of British Columbia v. British Columbia (Attorney General), 2014 SCC 59 (CanLII) and distinguishing B.C.G.E.U. v. British Columbia (Attorney General), [1988] 2 SCR 214, the Court of Appeal found:

[T]here is no support for the appellant’s novel proposition that any limitation or restriction is sufficient to infringe the right of access to the superior courts. To the extent B.C.G.E.U. held otherwise, it has been overtaken by Trial Lawyers. At the point of undue hardship, the hearing fees in Trial Lawyers impinged on the core jurisdiction of the s. 96 courts by effectively denying some people access to the powers those courts traditionally exercise: Trial Lawyers at paras. 33, 35–37, 43–45. (See para. 53).

The Court of Appeal accepted the Attorney General’s argument that many contractual provisions are designed to discourage parties from accessing the courts, including arbitration clauses, exclusion clauses, limitation of liability clauses, settlement release clauses. For the Court, to find that the Clause in this case was unconstitutional would have “significant ramifications”. (See para. 62). Furthermore, the Court noted that s. 96 only protects against a denial of access, which did not occur in this case. Absent evidence of bad faith on the part of the City, the Court of Appeal determined the Clause was implemented as part of a valid business decision (See paras. 79-81).

Ultimately, the Court of Appeal concluded the Appellant did not establish a denial of the “limited protection of access” to the Superior Courts provided by s. 96 of the Constitution Act, 1867.

For future reference, we note that a helpful summary of principles was provided by the Court of Appeal at para. 85 of the decision:

  1. Section 96of the Constitution Act, 1867 is the only path to a constitutionally protected right of access to the civil superior courts, but it only applies to protect such access where legislation, for example legislation imposing the court hearing fees in Trial Lawyers, has the effect of denying access and therefore impinges on the core jurisdiction of the superior courts.
  2. There is no specific section of the Charterprotecting a right of access to the civil superior courts. To use the language in Provincial Judges Reference, the “constitutional home” for a violation of the right of access to the courts is  96 of the Constitution Act, 1867: para. 83. The Charter does not prescribe a general right of access to the courts.
  3. The rule of law does not independently protect a right of access to the civil superior courts. But the right protected by 96 of the Constitution Act, 1867 is further supported by the rule of law.

Curiously, the decision did not refer to Windsor (City) v. Canadian Transit Co., [2016] 2 SCR 617, 2016 SCC 54 (CanLII), a decision which may be relevant in setting out an alternative vision of s. 96 in the event the Appellant elects to proceed with an application for leave to appeal to the Supreme Court of Canada.

Counsel for the Appellant: Mike Preston and Chris Moore (McLean & Armstrong LLP, West Vancouver)

Counsel for the Respondent, City of Burnaby: James Silvester (City of Burnaby, Burnaby)

Counsel for the Respondent, Attorney General of British Columbia: Jacqueline Hughes and M. A. Witten (Ministry of the Attorney General (BC), Vancouver)

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Posted: Wednesday, May 22, 2019