What's In A Name?: BCCA Holds That A Bid Made In The Name Of A Related Company Is Non-Compliant

The recent case of M.G. Logging & Sons Ltd. v. British Columbia (Forests, Lands & Natural Resource Operations), 2015 BCCA 526 emphasizes the strict standards required for compliance in the tendering context, highlights the benefits and drawbacks of a discretion clause, and holds that owners do not have an obligation to resolve ambiguities in non-compliant bids.

Background

The case arose out of a tender process established by the Ministry of Forests, Lands and Natural Resource Operations (the "Ministry") for a license to harvest timber on Crown land. Only a registered BC Timber Sales Enterprise ("BCTSE") was eligible to bid for the license. Each registered BCTSE has a unique registration number.

Mr. Goncalves elected to bid for the license. He was the principal of two related companies: M.G. Logging & Sons Ltd. ("Sons", a party to this case) and M.G. Logging Ent. Ltd. ("Enterprise"). Sons is a registered BCTSE, but Enterprise is not. Mr. Goncalves mistakenly submitted a bid in Enterprise's name without including an incorporation number, but included Sons' unique BCTSE registration number.

The Ministry initially announced that Sons was the successful bidder, but quickly changed course and refused to award it the license on the basis that the tender application was in the name of Enterprise, an ineligible bidder. Sons sued for breach of contract. The parties agreed to proceed by way of summary trial and the Ministry also applied for summary judgment. The trial judge held that the case was not suitable for summary determination due to credibility concerns about whether the Ministry knew Sons was the intended bidder. Both parties appealed and submitted that the trial judge erred by not summarily deciding the case in their favour.

Discretion Clauses & Bid Compliance

In determining whether or not the bid was compliant, the Court reviewed some general principles of the law of tendering. The Court began by emphasizing that the unique and stringent framework designed to protect the tendering process must not be disregarded in favour of what might appear reasonable in any one particular case and that doing so would create unfairness and uncertainty in the tendering process.

The Court then discussed discretion clauses. Most owners insert a discretion clause into their tendering documents, thereby enabling them to accept a bid containing minor omissions or defects that are not material. In the absence of a discretion clause, strict compliance is...