Contracting Out Of A Duty Of Fairness - Fair Play? -Tercon Revisited

Can a public owner contract out of any liability for a failure to follow its own directives, policies and, indeed, its own terms and conditions of a procurement process, including a duty of fairness? Although that issue was largely resolved in the Supreme Court of Canada case of Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, a variation of that question was front and center again in a very recent decision from the Court of Appeal of Yukon in Mega Reporting v. Yukon (Government of), 2018 YKCA 10. In Mega Reporting, the court addressed the thorny issue of whether a clearly written and unambiguous exclusion clause could assist the Yukon Government ("Yukon") to avoid liability for breach of, among other things, a duty of fairness.

The facts of the case are relatively straightforward. Yukon sought to reduce costs on court reporting services by replacing live court reporters with a digital recording system and transcribing those recordings later, as necessary. As such, Yukon issued an RFP seeking bids for a one year contract for court transcription services. The bidding process was governed by both the Yukon Contracting and Procurement Regulation and the Contracting and Procurement Directive. Essentially, the principles in the Directive provided, among other things, that the Government would act with "fairness, openness and transparency" in its public procurements. However, the RFP included a form of exclusion clause purporting to waive Yukon's liability for any costs associated with unfairness in the RFP process. Two proponents responded to the RFP. It appears from the decision that the process in awarding the contract was somewhat flawed but there was no contemporaneous record of the decision, which was made regarding the rejection of Mega Reporting Inc. ("Mega")'s proposal.

After meeting with Yukon officials to receive feedback on why its proposal was not successful, Mega filed a Statement of Claim alleging breach of duty by Yukon to fairly review its proposal. The trial court allowed the claim and concluded that the evaluation committee acted unfairly to Mega on a number of grounds. The court went further and concluded that the exclusion clause did not bar Mega's claim and held, relying on Tercon, that public policy reasons justified refusing to enforce the clause. It concluded that to give effect to the exclusion clause would allow Yukon to represent to the public that it engages in fair procurement...