Court Of Appeal Rules On Alleged Ambiguities In Tender Documents

The question of whether alleged ambiguities existed in tender documents for a construction contract was central to a recent Quebec Court of Appeal decision¹ in which our team² successfully represented the Agence métropolitaine de transport ("AMT³").

A. TRIAL DECISION

I. FACTS

The AMT launched a call for tenders for the simultaneous delivery of two projects on Highway 10. The first project provided for the construction of a dedicated bus lane and a new exit ramp for the AMT, whereas the second provided for surfacing the highway, funded by the Ministère des Transports du Québec ("MTQ").

Following the opening of tenders, Sintra Inc. ("Sintra"), a road infrastructure builder, was the lowest bidder. However, the AMT rejected its bid because Sintra proposed different unit prices for certain items set out in the Price and Quantity Schedule (the "Schedule"), whereas such prices were required to be the same for any work that was to be carried out in both the MTQ and AMT projects. In accordance with article 6.0 of the Schedule, the unit prices of repeat items with the suffixes a and b (e.g., 004a and 004b) had to be identical.

Sintra challenged its bid's rejection, arguing in particular that the tender documents were ambiguous and that the AMT's requirements resulted in forcing bidders to submit unbalanced prices, a prohibited practice. In its action, Sintra claimed $708,292 from the AMT in compensation for lost profits.

ii. AT ISSUE

1. Was Sintra's bid compliant with the tender requirements? If not, did this non-compliance result from ambiguity in the tender documents?
2. Alternatively, was this non-compliance a minor irregularity which did not prevent the AMT from awarding the contract to Sintra?

iii. TRIAL JUDGE'S REASONS

The trial judge upheld Sintra's argument that the wording of clause 6.0 had misled it, prompting it to file a bid in which certain unit prices for items of the Schedule separated into a and b were not identical.

The judge based this decision on Sintra's argument that the nature and conditions for carrying out the work described in each of the items divided into sub-items a and b were different under the AMT and MTQ projects.

The judge added that this practice by Sintra was warranted bearing in mind its stated consideration of refraining from submitting unbalanced prices, which was prohibited in the bid instructions provided by the AMT.

Lastly, although Sintra's bid contained a major irregularity as it bore on equality among bidders, the court found that Sintra was entitled to $708,292 in compensation for lost profit, plus interest and an additional indemnity.

B. COURT OF APPEAL DECISION⁴

i. ERRORS FLAGGED BY THE AMT

In its appeal, the AMT faulted the trial judge with the following two errors:

1. The judge clearly and determinatively erred in concluding that article 6.0 of the Schedule's guidelines was ambiguous and had misled the respondent such that the AMT was unable to validly reject its bid.
2. The judge clearly and determinatively erred in concluding that the respondent had proven its damages.

In support of its contentions, the AMT maintained that clause 6.0 is abundantly clear. It is written using the same precise language that is common in road construction tender documents and with which contractors in general and Sintra in particular are familiar.

Lastly, in the AMT's view, bidders who find an error or contradiction in the tender documents have a duty to inquire about it and dispel any ambiguity.

ii. COURT OF APPEAL DECISION

On appeal, the AMT saw its contentions endorsed by the court, and the trial judgment was set aside.

Contrary to the trial court's position, the Court of Appeal found that article 6.0 of the Schedule's guidelines was not ambiguous and, in fact, had not misled Sintra.

Had Sintra perceived any contradiction in the tender documents prior to submitting its bid, it failed to submit its questions or comments about such irregularities to the AMT in a timely manner.

The Court of Appeal also stated that the trial judge's characterization of a major irregularity in Sintra's bid was inconsistent with the damages awarded to it. Since the trial judge ruled that the bid contained a major irregularity, it could not at the same time order that Sintra be compensated, as the major non-compliance left the AMT no choice but to reject the bid.

This judgment provides an important reminder: bidders have an obligation to inquire, which is the corollary of the tendering body's obligation to inform. Accordingly, if a bidder finds any ambiguities or irregularities in the tender documents before submitting its bid, it is bound to inquire about them with the client. If it fails to do so, it cannot then complain of having been the victim of an ambiguity that could have been clarified before submitting its bid.

Footnote

1 Sintra inc. c. Agence métropolitaine de transport, 2022 QCCS 4971.

2 The Agence métropolitaine de transport was represented by Mtres. Jasmin Lefebvre and Camille Beaudry.

3 Now ARTM: the Autorité régionale de transport métropolitain.

4 Agence métropolitaine de transport c. Sintra inc., 2024 QCCA 500.

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