Distinguishes Ron Engineering.
FOR EDUCATIONAL USE ONLY
2002 CarswellMan 409
2002 MBCA 125, 32 M.P.L.R. (3d) 1, 28 B.L.R. (3d) 17, 19 C.L.R. (3d) 1, 166 Man. R.
(2d) 285, 222 D.L.R. (4th) 67, [2003] 1 W.W.R. 216, 4 R.P.R. (4th) 28, 278 W.A.C. 285
Mellco Developments Ltd. v. Portage la Prairie (City)
Mellco Developments Ltd. and Newton Enterprises (1983) (Plaintiffs/Appellants)
and The City of Portage la Prairie and Lions Park Housing Inc.
(Defendants/Respondents)
Mellco Developments Ltd. and Newton Enterprises (1983) (Plaintiffs/Appellants)
and Lions Park Housing Inc. and Lions Club of Portage la Prairie
(Defendants/Respondents)
Manitoba Court of Appeal
Scott C.J.M., Kroft, Steel JJ.A.
Heard: June 11, 2002
Judgment: October 1, 2002
Docket: AI 01-30-05134, AI-30-05135
Copyright © CARSWELL,
a Division of Thomson Canada Ltd. or its Licensors. All rights reserved.
Proceedings: affirming 2001 MBQB 236, 2001 CarswellMan 442, 22 M.P.L.R. (3d) 227,
[2001] 11 W.W.R. 282, 11 C.L.R. (3d) 227, 21 B.L.R. (3d) 25 (Man. Q.B.)
Counsel: G.P.S. Riley, J.A. Myers, for Appellants
R.B. McNicol, Q.C., D.G. Giles, for Respondent, City of Portage la Prairie
R.A. Dewar, Q.C., for Respondents, Lions Park Housing Inc. and Lions Club of Portage la
Prairie
Subject: Public; Contracts; Restitution; Civil Practice and Procedure; Torts; Property
Municipal law --- Municipal contracts -- General
City issued request for proposals (RFP) for residential development of land it owned -Two proposals received were made by plaintiffs and defendants -- City determined that
defendants' proposal was most attractive and began negotiations with it -- Plaintiffs
began public and private campaign to oppose negotiations -- When negotiations were
completed and land transferred to defendants, plaintiffs commenced actions against
defendants and city -- Plaintiffs also filed caveat against title to lands and registered
pending litigation order against title, which effectively brought development to standstill - Plaintiffs' actions were dismissed -- Trial judge held plaintiffs' claims were premised on
inappropriate and incorrect interpretation of RFP, which was not simple call for tender or
bid -- Trial judge held RFP was absolutely clear that there was no construction contract
until one was negotiated and agreement reached -- Trial judge found city was seeking
concepts for development of land and maintained wide and absolute discretion to pick
whichever proposal it thought most attractive -- Plaintiffs appealed -- Appeal dismissed -Requirement of good faith and fairness could not be implied where no initial contract
existed, nor is general duty to bargain in good faith enforceable -- Trial judge's
conclusions were confirmed.
Construction law --- Building contract -- Execution of formal contract -- Municipal building
contracts: requisite authority and formalities
City issued request for proposals (RFP) for residential development of land it owned -Two proposals received were made by plaintiffs and defendants -- City determined that
defendants' proposal was most attractive and began negotiations with it -- Plaintiffs
began public and private campaign to oppose negotiations -- When negotiations were
completed and land transferred to defendants, plaintiffs commenced actions against
defendants and city -- Plaintiffs also filed caveat against title to lands and registered
pending litigation order against title, which effectively brought development to standstill - Plaintiffs' actions were dismissed -- Trial judge held plaintiffs' claims were premised on
inappropriate and incorrect interpretation of RFP, which was not simple call for tender or
bid -- Trial judge held RFP was absolutely clear that there was no construction contract
until one was negotiated and agreement reached -- Trial judge found city was seeking
concepts for development of land and maintained wide and absolute discretion to pick
whichever proposal it thought most attractive -- Plaintiffs appealed -- Appeal dismissed -Requirement of good faith and fairness could not be implied where no initial contract
existed, nor is general duty to bargain in good faith enforceable -- Trial judge's
conclusions were confirmed.
Construction law --- Breach of terms of contract -- Damages -- Penalties and liquidated
damages -- Application of damages provisions
City issued request for proposals (RFP) for residential development of land it owned -Two proposals received were made by plaintiffs and defendants -- City determined that
defendants' proposal was most attractive and began negotiations with it -- Plaintiffs
began public and private campaign to oppose negotiations -- When negotiations were
completed and land transferred to defendants, plaintiffs commenced unsuccessful actions
against defendants and city claiming wording of RFP required city to negotiate and
contract with plaintiffs and not defendants -- Plaintiffs also filed caveat against title to
lands and registered pending litigation order against title, which brought development to
standstill -- Defendants' counterclaim for declaration that plaintiffs had no interest in land
and for general and exemplary damages for losses caused by plaintiffs hindering and
delaying development of land was allowed -- Trial judge held defendants were entitled to
declaration sought and to immediate discharge of caveat and pending litigation order
from title -- Trial judge held plaintiffs' registration of caveat and pending litigation order
after title had been transferred to club was unreasonable and actionable and any
damages were recoverable -- Trial judge awarded defendants general damages of
$35,000 having regard to interest costs and likelihood of increased development and
construction costs by reason of two year delay and exemplary damages of $10,000 -Defendants appealed quantum of punitive damages -- Appeal dismissed -- Plaintiffs had
no reasonable claim to interest in land to support filing of caveat and pending litigation
order -- Assessment of damages by trial judge was somewhat arbitrary but not
unreasonable -- Award of punitive damages was not so inordinately low as to warrant
interference.
Restitution --- General principles -- Bars to recovery -- No deprivation corresponding to
enrichment
City issued request for proposals (RFP) for residential development of land it owned -Two proposals received were made by plaintiffs and defendants -- City determined that
defendants' proposal was most attractive and began negotiations with it -- Plaintiffs
began public and private campaign to oppose negotiations -- When negotiations were
completed and land transferred to defendants, plaintiffs commenced actions against
defendants and city -- Plaintiffs also filed caveat against title to lands and registered
pending litigation order against title, which effectively brought development to standstill - Plaintiffs claimed that inappropriate conduct on part of city and defendants and
misrepresentations by defendants to city caused city to negotiate and contract with
defendants when it was obligated in law to negotiate and contract with them -- Plaintiffs
claimed that defendants had been unjustly enriched at their expense -- Action was
dismissed -- Trial judge held economic evidence indicated that it was far from certain
there would be any enrichment of defendants at all from development -- Trial judge
found there was no corresponding deprivation to plaintiffs, since city merely found their
proposal less attractive than defendants' proposal -- Plaintiffs appealed -- Appeal
dismissed -- No unjust enrichment occurred in favour of defendants to detriment of
plaintiffs -- No justification for constructive trust in favour of plaintiffs existed.
Damages --- Damages in contract -- Loss of profits consequent to breach -- Commercial
losses
City issued request for proposals (RFP) for residential development of land it owned -Two proposals received were made by plaintiffs and defendants -- City determined that
defendants' proposal was most attractive and began negotiations with it -- Plaintiffs
began public and private campaign to oppose negotiations and when negotiations were
completed and land transferred to defendants, plaintiffs commenced unsuccessful actions
against defendants and city claiming wording of RFP required city to negotiate and
contract with plaintiffs and not defendants -- Plaintiffs also filed caveat against title to
lands and registered pending litigation order against title, which brought development to
standstill -- Defendants' counterclaim for declaration that plaintiffs had no interest in land
and for general and exemplary damages for losses caused by plaintiffs hindering and
delaying development of land was allowed -- Trial judge held defendants were entitled to
declaration sought and to immediate discharge of caveat and pending litigation order
from title -- Trial judge held plaintiffs' registration of caveat and pending litigation order
after title had been transferred to club was unreasonable and actionable and any
damages were recoverable -- Trial judge awarded defendants general damages of
$35,000 having regard to interest costs and likelihood of increased development and
construction costs by reason of two year delay and exemplary damages of $10,000 -Defendants appealed quantum of punitive damages -- Appeal dismissed -- Plaintiffs had
no reasonable claim to interest in land to support filing of caveat and pending litigation
order -- Assessment of damages by trial judge was somewhat arbitrary but not
unreasonable -- Award of punitive damages was not so inordinately low as to warrant
interference.
Cases considered by Scott C.J.M.:
Aitken v. Trainor, 2002 CarswellOnt 2421 (Ont. S.C.J.) -- referred to
B.G. Schickedanz (Peel) Inc. v. Salna, 1997 CarswellOnt 2389, 14 C.P.C. (4th) 253 (Ont.
Gen. Div.) -- considered
Becker Developments Ltd. v. Alberta, 2 R.P.R. (3d) 23, 185 A.R. 20, 1996 CarswellAlta
317 (Alta. Master) -- considered
Best Cleaners & Contractors Ltd. v. Canada, [1985] 2 F.C. 293, 58 N.R. 295, 1985
CarswellNat 45, 1985 CarswellNat 45F (Fed. C.A.) -- considered
Boult Enterprises Ltd. v. Bissett (1985), 67 B.C.L.R. 273, [1986] 1 W.W.R. 385, 21 D.L.R.
(4th) 730, 1985 CarswellBC 322 (B.C. C.A.) -- considered
Cable Assembly Systems Ltd. v. Dufferin-Peel Roman Catholic Separate School Board,
2000 CarswellOnt 538, 1 C.L.R. (3d) 143 (Ont. S.C.J.) -- considered
Cable Assembly Systems Ltd. v. Dufferin-Peel Roman Catholic Separate School Board,
2002 CarswellOnt 334, 155 O.A.C. 139, 13 C.L.R. (3d) 163 (Ont. C.A.) -- referred to
Canada (Attorney General) v. Fontaine, 104 Man. R. (2d) 219, 1995 CarswellMan 542
(Man. Q.B.) -- considered
Canada (Attorney General) v. Fontaine, 110 Man. R. (2d) 77, 118 W.A.C. 77, 1996
CarswellMan 79 (Man. C.A.) -- referred to
Canada Square Corp. v. Versafood Services Ltd., 34 O.R. (2d) 250, 15 B.L.R. 89, 130
D.L.R. (3d) 205, 1981 CarswellOnt 124 (Ont. C.A.) -- considered
Canadian Pacific Hotels Ltd. v. Bank of Montreal, 77 N.R. 161, [1987] 1 S.C.R. 711, 21
O.A.C. 321, 41 C.C.L.T. 1, 40 D.L.R. (4th) 385, 1987 CarswellOnt 760, 1987 CarswellOnt
962 (S.C.C.) -- referred to
Captain Developments Ltd. v. Nu-West Group Ltd., 45 O.R. (2d) 213, 30 R.P.R. 190, 6
D.L.R. (4th) 179, 1 O.A.C. 132, 1984 CarswellOnt 570 (Ont. C.A.) -- considered
Cedar Group Inc. v. Stelco Inc., 1995 CarswellOnt 3896 (Ont. Gen. Div.) -- considered
Cedar Group Inc. v. Stelco Inc., 1996 CarswellOnt 4335 (Ont. C.A.) -- referred to
Chinook Aggregates Ltd. v. Abbotsford (Municipal District) (1989), 40 B.C.L.R. (2d) 345,
[1990] 1 W.W.R. 624, 35 C.L.R. 241, 1989 CarswellBC 203 (B.C. C.A.) -- considered
Cimaroli v. Pugliese, 25 C.P.C. (2d) 10, 1987 CarswellOnt 555 (Ont. H.C.) -- considered
ConAgra Ltd. v. Universal Grain Systems Inc., 1998 CarswellMan 333, 130 Man. R. (2d)
281 (Man. Master) -- referred to
Coronation Insurance Co. v. Taku Air Transport Ltd. (1991), [1992] 1 W.W.R. 217,
[1991] 3 S.C.R. 622, 61 B.C.L.R. (2d) 41, 85 D.L.R. (4th) 609, 131 N.R. 241, [1992]
I.L.R. 1-2797, 4 C.C.L.I. (2d) 115, 6 B.C.A.C. 161, 13 W.A.C. 161, 1991 CarswellBC 270,
[1992] R.R.A. 470, 1991 CarswellBC 926 (S.C.C.) -- considered
Eastwalsh Homes Ltd. v. Anatal Development Corp., 29 C.P.C. (2d) 266, 1988
CarswellOnt 462 (Ont. H.C.) -- considered
Empress Towers Ltd. v. Bank of Nova Scotia (1990), 50 B.C.L.R. (2d) 126, [1991] 1
W.W.R. 537, 14 R.P.R. (2d) 115, 48 B.L.R. 212, 73 D.L.R. (4th) 400, 1990 CarswellBC
226 (B.C. C.A.) -- referred to
First Canadian Land Corp. v. Rosinante Holdings Ltd., 62 B.C.L.R. 262, 1985 CarswellBC
111 (B.C. C.A.) -- considered
G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CarswellOnt 219, 47 R.P.R. (3d) 169, 58
O.R. (3d) 87, 155 O.A.C. 305 (Ont. C.A.) -- followed
Griffin Steel Foundries Ltd. v. C.A.I.M.A.W. (1977), [1978] 1 W.W.R. 35, 5 C.P.C. 103, 80
D.L.R. (3d) 634, 1977 CarswellMan 103 (Man. C.A.) -- considered
Hilltop Group Ltd. v. Katana, 2002 CarswellOnt 2058 (Ont. S.C.J.) -- considered
Hornsby v. Bone (Trustee of), (sub nom. Hornsby v. Bone (Bankrupt)) 113 Sask. R. 1, 52
W.A.C. 1, 1993 CarswellSask 515 (Sask. C.A.) -- considered
Hughes Land Co. v. Manitoba, 1998 CarswellMan 489, 167 D.L.R. (4th) 652, [1999] 3
W.W.R. 483, 131 Man. R. (2d) 202, 187 W.A.C. 202 (Man. C.A.) -- considered
International Corona Resources Ltd. v. Lac Minerals Ltd., 6 R.P.R. (2d) 1, 44 B.L.R. 1, 35
E.T.R. 1, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) 69 O.R.
(2d) 287, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) 61 D.L.R.
(4th) 14, 101 N.R. 239, 36 O.A.C. 57, (sub nom. LAC Minerals Ltd. v. International
Corona Resources Ltd.) [1989] 2 S.C.R. 574, (sub nom. LAC Minerals Ltd. v. International
Corona Resources Ltd.) 26 C.P.R. (3d) 97, 1989 CarswellOnt 126, 1989 CarswellOnt 965
(S.C.C.) -- referred to
J & P Goldfluss Ltd. v. 306569 Ontario Ltd., 4 C.P.C. 296, 1977 CarswellOnt 282 (Ont.
H.C.) -- considered
Labrador Airways Ltd. v. Canada Post Corp, 2001 CarswellNfld 30, 198 Nfld. & P.E.I.R.
116, 595 A.P.R. 116 (Nfld. T.D.) -- considered
Lundy v. Powell, [1921] 3 W.W.R. 335, 14 Sask. L.R. 459, 60 D.L.R. 607, 1921
CarswellSask 152 (Sask. K.B.) -- considered
L'Unita Development Corp. v. 505369 Ontario Ltd., 2001 CarswellOnt 3217, 44 R.P.R.
(3d) 303 (Ont. S.C.J.) -- considered
M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 170 D.L.R. (4th) 577, 237
N.R. 334, 44 C.L.R. (2d) 163, 232 A.R. 360, 195 W.A.C. 360, 1999 CarswellAlta 301,
1999 CarswellAlta 302, [1999] 1 S.C.R. 619, [1999] 7 W.W.R. 681, 69 Alta. L.R. (3d)
341, 3 M.P.L.R. (3d) 165, 49 B.L.R. (2d) 1, 15 Const. L.J. 455, 2 T.C.L.R. 235 (S.C.C.) -considered
Mannpar Enterprises Ltd. v. Canada, 173 D.L.R. (4th) 243, 121 B.C.A.C. 275, 198 W.A.C.
275, 1999 CarswellBC 768, 67 B.C.L.R. (3d) 64 (B.C. C.A.) -- considered
Martel Building Ltd. v. R., 2000 SCC 60, 2000 CarswellNat 2678, 2000 CarswellNat 2679,
36 R.P.R. (3d) 175, (sub nom. Martel Building Ltd. v. Canada) 193 D.L.R. (4th) 1, (sub
nom. Martel Building Ltd. v. Canada) 262 N.R. 285, 3 C.C.L.T. (3d) 1, 5 C.L.R. (3d) 161,
186 F.T.R. 231 (note), (sub nom. Martel Building Ltd. v. Canada) [2000] 2 S.C.R. 860
(S.C.C.) -- considered
Meadowfield Ventures Inc. v. Kennedy, 1990 CarswellOnt 1858 (Ont. H.C.) -- considered
Micro Carpets Ltd. v. De Souza Developments Ltd., 29 O.R. (2d) 77, 19 C.P.C. 118, 112
D.L.R. (3d) 178, 1980 CarswellOnt 442 (Ont. H.C.) -- considered
Naylor Group Inc. v. Ellis-Don Construction Ltd., 17 B.L.R. (3d) 161, 2001 SCC 58, 2001
CarswellOnt 3340, 2001 CarswellOnt 3341, 10 C.L.R. (3d) 1, 55 O.R. (3d) 312 (headnote
only), 204 D.L.R. (4th) 513, 277 N.R. 1, 153 O.A.C. 341, [2001] 2 S.C.R. 943 (S.C.C.) -considered
Penvidic Contracting Co. v. International Nickel Co. (1975), [1976] 1 S.C.R. 267, 4 N.R.
1, 53 D.L.R. (3d) 748, 1975 CarswellOnt 299, 1975 CarswellOnt 299F (S.C.C.) -considered
Powder Mountain Resorts Ltd. v. British Columbia, 1999 CarswellBC 1889, 47 C.L.R. (2d)
32, [1999] 11 W.W.R. 168 (B.C. S.C.) -- considered
Powder Mountain Resorts Ltd. v. British Columbia, 2001 BCCA 619, 2001 CarswellBC
2225, 94 B.C.L.R. (3d) 14, [2001] 11 W.W.R. 488, 159 B.C.A.C. 14, 259 W.A.C. 14, 8
C.C.L.T. (3d) 170 (B.C. C.A.) -- considered
R. v. Canamerican Auto Lease & Rental Ltd., (sub nom. Canamerican Auto Lease & Rental
Ltd. v. Canada (Minister of Transport)) 77 N.R. 141, 37 D.L.R. (4th) 591, (sub nom.
Canamerican Auto Lease & Rental Ltd. v. Canada) [1987] 3 F.C. 144, 1987 CarswellNat
174F, 1987 CarswellNat 174 (Fed. C.A.) -- referred to
R. v. Ron Engineering & Construction (Eastern) Ltd., 13 B.L.R. 72, 119 D.L.R. (3d) 267,
[1981] 1 S.C.R. 111, (sub nom. Ron Engineering & Construction (Eastern) Ltd. v.
Ontario) 35 N.R. 40, 1981 CarswellOnt 109, 1981 CarswellOnt 602 (S.C.C.) -distinguished
Ribic v. Weinstein (1982), 140 D.L.R. (3d) 258 (Ont. H.C.) -- considered
Ross v. Acorn, 31 Sask. R. 87, 1984 CarswellSask 222 (Sask. Q.B.) -- considered
Ross v. Acorn, 46 Sask. R. 69, 1986 CarswellSask 454 (Sask. C.A.) -- referred to
Siemens Westinghouse Inc. v. Canada (Minister of Public Works & Government Services),
2000 CarswellNat 1398, 260 N.R. 367 (Fed. C.A.) -- considered
Silver Lake Farms Inc. v. Saskatchewan, 2001 SKQB 515, 2001 CarswellSask 763, 212
Sask. R. 177, 46 R.P.R. (3d) 66 (Sask. Q.B.) -- referred to
Soulos v. Korkontzilas, 212 N.R. 1, 1997 CarswellOnt 1489, 9 R.P.R. (3d) 1, 46 C.B.R.
(3d) 1, 32 O.R. (3d) 716 (headnote only), 146 D.L.R. (4th) 214, 100 O.A.C. 241, 17
E.T.R. (2d) 89, [1997] 2 S.C.R. 217, 1997 CarswellOnt 1490 (S.C.C.) -- followed
Texas Industries Ltd. v. Unicon Environmental Planning Ltd., 16 A.R. 234, 1978
CarswellAlta 404 (Alta. T.D.) -- considered
Thompson v. Yockney, 25 W.L.R. 602, 23 Man. R. 571, 14 D.L.R. 332, 1913 CarswellMan
120 (Man. C.A.) -- considered
Thorman v. Parnes, 73 O.R. (2d) 149, 11 R.P.R. (2d) 182, 1990 CarswellOnt 538 (Ont.
H.C.) -- considered
Tilden Rent-A-Car Co. v. Clendenning, 18 O.R. (2d) 601, 83 D.L.R. (3d) 400, 4 B.L.R. 50,
1978 CarswellOnt 125 (Ont. C.A.) -- considered
United States v. Friedland, 1996 CarswellOnt 5566 (Ont. Gen. Div.) -- considered
Vachon Construction Ltd. v. Cariboo (Regional District), 28 C.L.R. (2d) 145, 136 D.L.R.
(4th) 307, 78 B.C.A.C. 43, 128 W.A.C. 43, 24 B.C.L.R. (3d) 379, 1996 CarswellBC 1466
(B.C. C.A.) -- considered
Walford v. Miles, [1992] 2 A.C. 128 (U.K. H.L.) -- considered
Wallace v. United Grain Growers Ltd., 152 D.L.R. (4th) 1, 219 N.R. 161, 1997
CarswellMan 455, 1997 CarswellMan 456, 123 Man. R. (2d) 1, 159 W.A.C. 1, 97 C.L.L.C.
210-029, [1997] 3 S.C.R. 701, 36 C.C.E.L. (2d) 1, 3 C.B.R. (4th) 1, [1999] 4 W.W.R. 86,
[1997] L.V.I. 2889-1 (S.C.C.) -- considered
Whiten v. Pilot Insurance Co., 2002 SCC 18, 2002 CarswellOnt 537, 2002 CarswellOnt
538, [2002] I.L.R. I-4048, 20 B.L.R. (3d) 165, 209 D.L.R. (4th) 257, 283 N.R. 1, 35
C.C.L.I. (3d) 1, 156 O.A.C. 201 (S.C.C.) -- referred to
Winnipeg Paint & Glass Co. v. Lackman, [1923] 3 W.W.R. 361, 1923 CarswellMan 67
(Man. K.B.) -- considered
Wong v. Di Grazia (1963), 386 P.2d 817 (U.S. Ala. S.C.) -- considered
Wood v. Grand Valley Railway (1913), 30 O.L.R. 44, 16 D.L.R. 361 (Ont. C.A.) -- followed
11 Suntract Holdings Ltd. v. Chassis Service & Hydraulics Ltd., 36 O.R. (3d) 328, 1997
CarswellOnt 4804, 15 R.P.R. (3d) 201 (Ont. Gen. Div.) -- considered
830356 Ontario Inc. v. 156170 Canada Ltd. (March 14, 1995), Doc. 89556/95 (Ont. Gen.
Div.) -- considered
Statutes considered:
Court of Queen's Bench Act, R.S.M. 1987, c. C280
s. 58(2) -- considered
s. 58(4) -- referred to
Real Property Act, R.S.M. 1988, c. R30
s. 160 -- referred to
s. 195 -- considered
Rules considered:
Queen's Bench Rules, Man. Reg. 553/88
R. 20 -- referred to
R. 39.01(6) -- considered
R. 42.02(1) -- referred to
APPEAL by plaintiffs from judgment reported at 2001 CarswellMan 442, 2001 MBQB 236,
22 M.P.L.R. (3d) 227, [2001] 11 W.W.R. 282, 11 C.L.R. (3d) 227, 21 B.L.R. (3d) 25
(Man. Q.B.), which dismissed plaintiffs' actions and allowed defendants' counterclaim;
CROSS-APPEAL by defendants from quantum of punitive damages.
Scott C.J.M.:
1
When the respondent, the City of Portage la Prairie (the city), issued a request for
proposals (RFP) for the sale and development of 31.2 acres of city-owned land, did it
constitute a tender document intended to create a binding contractual relationship
between the city and the successful proposer, or was the process -- as found by the trial
judge -- more in the nature of a "beauty contest," intended merely to be a non-binding
invitation to enter into negotiations? This is the central question to be decided on this
appeal.
The Facts
2
The RFP, which was issued in March 1998, identified "an exciting opportunity"
consisting of development of a combination of single- and multi-family dwellings on a
large piece of land ideally located "just south of downtown Portage la Prairie . . . within
the shortest time frame possible, to be sold and developed . . . ." The lands in question
had been used as an agricultural research station for many years and was transferred to
the city in early 1998. Mellco Developments' owners, who were experienced local real
estate promoters and developers, lived adjacent to the subject property and had been
anxious to acquire the property for many years. The lands were the last available large
tract available for development within the limits of the city. There was evidence that
efforts had been made by Mellco's principals to dissuade the federal government from
selling the lands to the city. Once the sale was made to the city and it became known
that the city was likely to proceed with its development initiative by way of a RFP, Mellco
formed a partnership with Newton Enterprises (Newton), a well-known building materials
supplier and contractor, for the purposes of responding.
3
The city initially retained consultants to assist in preparing the RFP package. To this
end, they developed weighting criteria "for internal use only" to assist city council in
evaluating the anticipated responses to the RFP. Prior to delivery of the RFP, council
decided not to utilize the weighting criteria developed by the consultant, preferring more
broadly based considerations.
4
The RFP was issued in March 1998. One of the reasons that the city proceeded by
way of proposal was a concern that the property should develop on a timely basis rather
than simply being held as inventory by the successful proposer. Since the city had just
acquired the land and was looking for new ideas and concepts, it wanted to control
development of the lands beyond what would ordinarily be the case in a land
development relationship. The city officials were well aware of the differences between a
RFP and a call for tenders.
5
The RFP was an extensive document containing a description of the "development
opportunity," information about the subject property, terms and conditions of the RFP,
and two appendices including an offer to purchase form. The stated intent of the city was
to "expedite the sale and development of these lands within the shortest time frame
possible." The "successful proponent" was to initiate a plan to permit single-family or
multiple-family dwellings on the land, including "townhouses but not walk-up
apartments." The RFP called for "concept plans for new residential areas" and stated that
a re-zoning of the subject lands was required.
6
Paragraph 4.2 provided inter alia that:
• "This is an invitation for proposals and not a tender call." The first internal draft of the
RFP (not seen by the proposers), unlike the final version given to the proposers,
contained a provision that the "highest, or in fact any proposal, will not necessarily be
accepted by the vendor."
• The city would negotiate with the applicant that presented the "most attractive
proposal." In the event the sale transaction did not close, the city would then negotiate
with the next most attractive applicant.
• The proposals were to remain open for a minimum period of 90 days and were to close
within 90 days of written acceptance of the offer.
• Upon closing, a development agreement was to be completed and registered against
the title to the property. The agreement was to be entered into "to the satisfaction of the
City of Portage la Prairie outlining development conditions."
• "City of Portage la Prairie Council shall have final authority on all matters relating to the
development of the subject property."
7
Paragraph 4.1, entitled "The Request for Proposals," stated in subsec. 3:
Proposals must include and will be evaluated based on the following:
• the purchase price along with any conditions attached thereto such as partial bids or
time payment period;
• the Proponent's previous land assembly and land development experience, including a
list describing these development projects and their gross value wherein the Proponent
has been the Principal;
• a conceptual subdivision design involving the subject property, complete with proposed
residential land uses, number and size of lots, servicing requirements, on-site amenities
(e.g. parks, open space, linkage trails), and a development phasing strategy, if
appropriate;
• the requisite security deposit;
• a completed Proponent Declaration Form provided in Appendix A; and
• a completed Offer To Purchase Form provided in Appendix B.
8
Although a significant number of RFP packages were sent out by the city, only two
proposals were received; one from Lions (for convenience, "Lions" will refer to both Lions
Park Housing Inc. and Lions Club of Portage la Prairie) and one from the plaintiffs.
9
There can be no doubt that the plaintiffs endeavoured to comply with the letter of
the RFP. They proposed a "gated adult community which will focus on the growing
demand for this type of lifestyle," and included a conceptual design for the subject
property. The plaintiffs made an unconditional offer to pay the proposed purchase price
($316,000) in full by August 7, 1998. They concluded their proposal by stating that they
"hoped that this proposal will be the one the city chooses." There was evidence that the
plaintiffs' proposal package would have been awarded 97 out of 99 points, given a
reasonable application of the internal weighting criteria. The city described the plaintiffs'
proposal as "very well done."
10
The Lions' proposal was much less precise. Bill Coady, a real estate developer,
essentially prepared the document for Lions. It included an assisted-living centre and a
clubhouse, and was based on an innovative non-profit, life-lease housing concept. Lions
offered to pay $425,000 for the property. In a number of respects the Lions' proposal
deviated from the requirements of the RFP. Closing was made conditional on a number of
conditions, including re-zoning of the property, the existence of sufficient pre-leases to
indicate the feasibility of the project, and on the ability to delay closing of the sale for up
to 210 days after acceptance. Lions provided an uncertified cheque which, upon being
presented for payment some time later (October 9, 1998), was dishonoured and had to
be replaced. Other technical requirements of the RFP were not met. For example, the
Lions' design did not comply with the requirements of an addendum to the RFP
concerning the minimum lot width and servicing requirements were not discussed.
11
At trial, the plaintiffs claimed that the Lions' RFP contained a misrepresentation
concerning market demand for the Lions' concept in that the true public interest was
significantly less than that required to demonstrate the economic viability of the
innovative concept contained in the proposal. Further, given the arrangements made by
Lions with architects and an experienced general contractor to construct the project on
their behalf, the Lions' proposal was not in reality the "non-profit approach" extolled by
Lions.
12
The two proposals were considered by the city without the assistance of
consultants. In an internal document, the city observed: "The primary difference between
the two proposals was total cash value for the lands and overall development concept."
Note was made of Lions' innovative concept. The city manager and the city director of
economic and community development separately evaluated the proposals. Both
attempted to use the weighting criteria initially contemplated by the consultant, but
found that they did not assist. The director of economic and community development
testified that the Lions' proposal, "Certainly had more detail in terms of what they were
prepared to propose and was very well done." The city manager considered the plaintiffs'
proposal to be vague and lacking in detail.
13
The city decided to accept the Lions' proposal as being "the most attractive to the
city." In its letter to the plaintiffs, the city stated that:
. . . should a sales transaction not occur, Council might commence negotiations with the
next most attractive proposals and/or reject all proposals. Your offer therefore remains
open until 4:00 p.m. August 06, 1998 as submitted.
14
Following notification that Lions' proposal had been accepted, the plaintiffs' signed
offer to purchase and certified deposit cheque were retained by the city. When the
plaintiffs complained about the decision to negotiate with Lions, the city replied on June
2, 1998:
. . . should the sales transaction not close with the lead proponent, the City will contact
the next most attractive proposal for negotiation. . . . As previously indicated to you,
your proposal remains open to the City for 90 days from the date of receipt . . . .
15
The city signed an agreement with Lions on June 15, 1998. The plaintiffs' deposit
cheque was returned on August 6, 1998.
16
Matters did not end there. The plaintiffs asserted that Lions continued to
misrepresent the number of interested applicants in the pre-lease concept which was a
central feature of the Lions' proposal. The city and Lions presented evidence that the
plaintiffs, after September 1998, engaged in a concerted campaign to scuttle the Lions'
project, which included an attempt to prevent the zoning changes that were required in
order for the Lions' project to proceed.
17
Eventually, the city agreed to Lions' request that closing occur only upon re-zoning,
which did not take place until April 1999. On September 20, 1999, the plaintiffs offered to
purchase the lands for the sum of $425,000, equal to the price offered in the Lions'
proposal. When this was not accepted, the plaintiffs sued. Only after the plaintiffs
commenced proceedings was the sale between the city and Lions completed. Lions paid
$425,000 to the city on January 6, 2000.
18
When the city transferred title to Lions on February 24, 2000, the plaintiffs filed a
caveat against the title to the lands. When that was challenged, the plaintiffs commenced
a second action against Lions claiming a constructive trust of the lands and filed a
pending litigation order (PLO). The Lions' motion to set aside the PLO was dismissed by
Mykle J. on May 3, 2000.
19
The lengthy trial commenced on October 30, 2000, and was completed on
December 3, 2000. At the time the trial commenced a number of essential contractual
arrangements with Lions, such as a development agreement and approved plan of
subdivision, had not yet been completed.
20
In his reasons for decision delivered September 17, 2001, Clearwater J. dismissed
the plaintiffs' claim with costs, and granted judgment in favour of Lions for $35,000 in
compensatory damages and $10,000 in exemplary damages.
21
The plaintiffs' position at trial (and subsequently before this court) was that the
Lions' proposal should not have been considered by the city given the magnitude of the
non-compliance in the Lions' proposal, and that the city was legally obliged to accept the
plaintiffs' conforming bid as mandated by the terms of the RFP itself. Alternatively, had
the weighting criteria as set forth in para. 4.1-3 of the RFP been used, the plaintiffs'
proposal was clearly the better of the two and should have been accepted. It was
asserted that the city, in failing to adhere strictly to the requirements of para. 4.1-3 of
the RFP, applied standards as to "detail and concept" that had not been communicated to
the proposors and breached an important term of the RFP.
22
An alternative claim was that Lions breached fiduciary duties to the plaintiffs and
therefore held the lands in a constructive trust for them.
23
As to the first issue, the trial judge held (at para. 26):
. . . that the plaintiffs' claims are premised (and have been premised since their opening
salvo to City council following initial consideration of the only two responses received by
the City to its RFP) on an inappropriate and incorrect interpretation of the RFP.
24
Recognizing the distinction between a formal tendering document and a request for
proposal, he concluded that there were good and valid reasons for the city's desire to use
a RFP. He accepted "Mr. Lyle's evidence that the City honestly wanted to obtain as many
different concepts and ideas as it could for the development of this land" (at para. 28),
and found that (ibid.):
. . . new concepts or ideas for this parcel of land, together with timely development of
the lands and obtaining a reasonable price (but not necessarily the highest possible price
in the marketplace) were important to the City.
He went on to point out (at para. 30):
. . . this RFP is explicitly not a simple call for a tender or a bid (notwithstanding the
Nickarts' [two principal officers and directors of Mellco] opinions to the contrary). At the
every [sic] least, this clause should have immediately alerted any reasonably experienced
developer and his advisers that the City is not issuing a tender call. The plaintiffs simply
ignore it.
25
He accepted the city's testimony in this respect. Furthermore, he observed (at
para. 31):
It never was (and is not) the intention of the City to sell this land or any part of it unless
and until it received an acceptable "concept" or "proposal" and, most importantly,
completed negotiation and finalization of a development agreement on terms satisfactory
to it (not necessarily satisfactory to any developer or proponent). . . . . It would be
absolutely wrong for the court to impose the terms of a development agreement on the
City and any developer; . . . .
26
In the result, he concluded that the city was entitled to prefer the proposal of Lions.
All the plaintiffs were entitled to (at para. 32(1)):
. . . was to have the City consider their proposal fairly and, in that regard, I am satisfied
that the City gave fair consideration to both proposals in coming to its conclusion that the
Lions' proposal was the most attractive.
27
Since no enforceable contracts were formed by the RFP (at para. 32(2)):
. . . it is immaterial as to whether either or both of the proposals were "compliant" or
"non-compliant" with the express or implied terms and conditions of the RFP . . . .
28
If he had been obliged to apply a strict legal interpretation of the RFP as the
plaintiffs urged, he was of the opinion that neither proposal was totally compliant. He
argued that the RFP process adopted in this instance was in essence a "beauty contest"
and concluded that while the RFP "is clearly not worded as well as it may have been," the
city "at best, [is] obliged to enter into good faith negotiations" (ibid.). In this regard
(ibid.):
The plaintiffs' evidence does not come close to establishing that their proposal did not
receive fair consideration either by the City staff or by the City council. Nor can they say
they did not receive "a fair hearing." If anything, they received an exhaustive hearing
(some might say overly exhaustive).
29
As to the imposition of a constructive trust, he concluded that Lions had not been
unjustly enriched to the detriment of the plaintiffs. Applying the decision of the Supreme
Court in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 (S.C.C.), he was not persuaded that
the plaintiffs were entitled to the imposition of a constructive trust "as a response to a
wrongful acquisition of property" (at para. 32(4)).
30
He accepted the evidence of the principal witnesses of Lions as being accurate and
credible, while finding that the plaintiffs' evidence (at para. 51):
. . . falls far short of establishing a "sham" [between Lions and the city]; it also falls far
short of establishing any unfair treatment or any improper collusion between the City and
the Lions which resulted in the Lions buying the lands to the exclusion of the plaintiffs.
31
Clearwater J. made a provisional award of damages in favour of the plaintiffs (at
para. 47):
Having concluded that $225,000 is a realistic assessment of the plaintiffs' loss of profit if
it had purchased these lands in 1998 for $316,000 as proposed, the value of the
plaintiffs' lost opportunity by reason of the City's failing to negotiate, particularly in light
of the plaintiffs' views on the economic viability of the project that the City wanted on
these lands, requires a significant discount. I would assess this category of damages at
$50,000.
32
As to the Lions' counterclaim, he "reluctantly" held (at para. 55):
. . . notwithstanding the aggressive (and sometimes misleading) conduct and actions of
the Nickarts (Mellco) in publicly and privately opposing and effectively delaying the
necessary amendments to the City's by-laws, that this conduct and the resulting delay is
not actionable.
33
However, he concluded that registrations of the caveat and the PLO were "not
'reasonable"' (see sec. 58(4) of The Court of Queen's Bench Act, C.C.S.M., c. C280), that
the plaintiffs' conduct in encumbering the Lions' title had "caused unnecessary loss and
expense to the Lions" (at para. 56). Doing the best he could (at para. 60):
In the absence of better evidence as to specific increased costs attributable to the
wrongful registration of the caveat and the pending litigation order, the court must
approach the assessment of damages conservatively. I would award general damages to
the Lions and the Lions Club, having regard to interest costs and the likelihood of
increased development and construction costs by reason of the passage of time (at least
two years delay), at $35,000.
34
He found that the plaintiffs' conduct in registering the caveat and PLO was
"deliberate, oppressive, and high-handed" (at para. 61) and assessed punitive damages
at $10,000.
35
The plaintiffs appeal and Lions cross-appeals for an increase in the award of
exemplary or punitive damages.
Summary Of Legal Principles
36
The essential principles to be applied if the RFP is a formal tender document cannot
be doubted. In R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111
(S.C.C.), the Supreme Court introduced the concept of a "Contract A/Contract B
structure" to tenders. Simply stated, Ron Engineering & Construction (Eastern) Ltd.
decided that when issuing a call for tenders the offeror makes an offer to all potential
bidders. Contract A (the initial contract) comes into being upon each bidder's submission
of a tender in conformity with the call for tenders. Contract A is distinguished from the
construction contract itself, Contract B, which is entered into once the tender is accepted.
Failure of either party to then enter into Contract B will be treated as an actionable
breach of Contract A.
37
As explained in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999]
1 S.C.R. 619 (S.C.C.) (at para. 19):
What is important, therefore, is that the submission of a tender in response to an
invitation to tender may give rise to contractual obligations, quite apart from the
obligations associated with the construction contract to be entered into upon the
acceptance of a tender, depending upon whether the parties intend to initiate contractual
relations by the submission of a bid. If such a contract arises, its terms are governed by
the terms and conditions of the tender call.
38
The labels or names attached to the documents are not the determining factor,
rather it is the substance and terms of the contract that govern. See Hughes Land Co. v.
Manitoba (1998), 131 Man. R. (2d) 202 (Man. C.A.). One of the best ways to protect the
integrity of the formal bidding process is to insist on conformity with the mandatory
requirements of the call for tenders. See Siemens Westinghouse Inc. v. Canada (Minister
of Public Works & Government Services) (2000), 260 N.R. 367 (Fed. C.A.).
39
Finally, as also stated in Hughes Land Co. (at para. 16): "It can now be said with
confidence, as a matter of law, that government will be held to a duty of fairness in the
tendering process" (emphasis added).
Argument In This Court
40
As at trial, the plaintiffs' "combined" argument was that the city breached its
contract by considering the Lions' non-complying proposal at all, then compounded the
error by failing to evaluate the proposals only in accordance with the RFP criteria, para.
4.1-3 (set forth in para. 7 of these reasons). The failure of the Lions' "offer" to meet the
pre-closing conditions went beyond mere irregularities and resulted in Lions obtaining a
significant commercial advantage. The city was in error in abandoning the conditions in
para. 4.3-1 and treating it all as just a "beauty contest." The city was bound to accept
the best compliant proposal assessed under the criteria of 4.1-3 alone and was not
entitled to treat Lions as a "special case" (for example, by permitting Lions to close only
after zoning had been achieved), thus giving Lions enormous commercial advantage.
41
The plaintiffs fully complied, they say, and Lions did not.
42
The trial judge was also in error in equating a minor case of non- compliance by the
plaintiffs (relating to lot sizes) with the multiple and serious examples of non-compliance
by Lions. When the non-compliance in a tender is minor, and non-essential, it is
permissible:
. . . to leave for determination during the course of performance of a contract
insignificant details necessarily incidental to the carrying out of the work involved. The
fact that the parties fail to reach agreement on a severable and collateral aspect of their
negotiations will not preclude enforcement of a concluded agreement with respect to
transfer of an interest in property.
[7 C.E.D. (Western) (3d) Basis of Contract, § 8]
43
The plaintiffs rely on Canada Square Corp. v. Versafood Services Ltd. (1981), 130
D.L.R. (3d) 205 (Ont. C.A.), where the court (at p. 224) adopted with approval the
American decision of Wong v. Di Grazia, 386 P.2d 817 (U.S. Ala. S.C. 1963) at 827:
A minor possible ground of disagreement in an otherwise complete agreement will not
render the agreement uncertain. "Where the matters left for future agreement are
unessential, each party will be forced to accept a reasonable determination of the
unsettled point . . . " (City of Los Angeles v. Superior Court (1959) 51 Cal.2d 423, 433,
[333 P.2d 745].)
44
To similar effect is Boult Enterprises Ltd. v. Bissett (1985), 21 D.L.R. (4th) 730
(B.C. C.A.) at 735, where Esson J.A. suggests that an unresolved matter that is not vital
to an arrangement may, if necessary, be severed from an otherwise valid and
enforceable agreement.
45
Finally, say the plaintiffs, the trial judge erred in concluding that because further
negotiations were required, no enforceable contract could exist. It is now recognized,
they submit, that there is a general duty to negotiate fairly in both the tendering or
proposal process. In Cable Assembly Systems Ltd. v. Dufferin-Peel Roman Catholic
Separate School Board (2000), 1 C.L.R. (3d) 143 (Ont. S.C.J.) (confirmed on appeal at
Cable Assembly Systems Ltd. v. Dufferin-Peel Roman Catholic Separate School Board,
[2002] O.J. No. 379 (Ont. C.A.)), Kent J. held (at para. 6):
In the present case, the submission of a proposal on the terms and conditions set out in
the RFP left alive the possibility of negotiation as can be seen in the definition of proposal
set out above. There is also case law support for the proposition that negotiation can
occur after proposals have been received in response to a request. See Socanav Inc. v.
Northwest Territories (Commissioner), [1993] N.W.T.R. 369 (N.W.T.S.C.), at 375. It
cannot, therefore, be said that either Cable or the Board intended that the submission of
a proposal or bid would constitute either the initiation of contractual relations or the
creation of contractual obligations [nonetheless] the circumstances were not such that
Cable was entitled to more than serious consideration of its bid and fair treatment in
subsequent negotiations.
Strong emphasis was placed on Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73
D.L.R. (4th) 400 (B.C. C.A.).
46
At trial, the city manager acknowledged that in evaluating the proposals he looked
at "price, concept and detail," thereafter arriving at a "personal . . . subjective opinion"
as to what was best for the city. In effect, it was argued, the city manager had
substituted his own view of the appropriate criteria and weighting, and had followed
neither the requirements of para. 4.1-3 of the RFP nor the internal weighting criteria. In
short, the city had not dealt with the plaintiffs in good faith.
Constructive Trust
47
Not only did the city fail to bargain in good faith, there were misrepresentations by
Lions which make it fair and appropriate, it is argued, that a constructive trust be
declared in their favour over the lands now owned by Lions.
48
Strong reliance is placed upon the following remarks of McLachlin J., as she then
was, in Soulos v. Korkontzilas (at para. 34):
. . . a constructive trust may be imposed where good conscience so requires. The
inquiry into good conscience is informed by the situations where constructive trusts have
been recognized in the past. It is also informed by the dual reasons for which
constructive trusts have traditionally been imposed: to do justice between the parties and
to maintain the integrity of institutions dependent on trust-like relationships.
49
The maintenance of the integrity of market-driven institutions is a legitimate
objective of constructive trusts. The defendants (in particular Lions) owed fiduciary duties
to the plaintiffs which were breached, entitling the plaintiffs to a declaration of a
constructive trust. All four criteria for the imposition of a constructive trust as enunciated
in Soulos v. Korkontzilas are met on the facts of this case (at para. 45):
(1) The defendant must have been under an equitable obligation, that is, an obligation of
the type that courts of equity have enforced, in relation to the activities giving rise to the
assets in his hands;
(2) The assets in the hands of the defendant must be shown to have resulted from
deemed or actual agency activities of the defendant in breach of his equitable obligation
to the plaintiff;
(3) The plaintiff must show a legitimate reason for seeking a proprietary remedy, either
personal or related to the need to ensure that others like the defendant remain faithful to
their duties and;
(4) There must be no factors which would render imposition of a constructive trust unjust
in all the circumstances of the case; e.g., the interests of intervening creditors must be
protected.
50
It would not be unjust to order the lands conveyed to the plaintiffs since Lions has
not invested much money to get the project going and fee payments to the city have
been minimal.
51
The plaintiffs submit that the trial judge made arbitrary decisions with respect to
the plaintiffs' damages. They do not quarrel with the initial assessment of damages in
favour of the plaintiffs in the amount of $225,000, but say there is no evidence to
support the "arbitrary reduction" to $50,000 as concluded by the trial judge.
52
As for the amount of damages in favour of Lions, given Mykle J.'s earlier decision
not to set aside the PLO -- and the essential finding that the filing of the caveat and the
PLO were not unreasonable -- Clearwater J.'s decision amounts to a collateral attack on
Mykle J.'s order. There is no justification for the award of exemplary damages especially
given the circumstance that Mykle J. did not see fit to set aside the PLO.
The City's Argument
53
Counsel for the city agrees that what is important is the substance and terms of the
document and not the labels used. Applying this principle, the RFP was clearly only a
concept document. This is made plain by the wording of the RFP, especially the
unequivocal statement "[T]his is an invitation for proposals and not a tender call." It is
well known in the industry that there is a real difference between a RFP and a tender call.
As testified to by the city's representatives, the city deliberately left it open to be able to
consider all options to create an attractive and unique project.
54
It was always the intention of the city to maintain a complete and unfettered
discretion to determine what was "most attractive" to it. As correctly found by the trial
judge, it is submitted there were many important details that needed to be negotiated
with the successful applicant in the "beauty contest" before a development agreement
could be entered into. At most the RFP represented an opportunity for the plaintiffs and
others to submit a proposal which, if found to be "attractive," would provide the ability to
attempt to negotiate a development agreement. The trial judge was absolutely right
when he concluded that it would be wrong to impose the terms of the final agreement
(contract B), given the many important details yet to be agreed upon.
55
There are a number of recent cases that highlight the distinction between a true
request for proposals and an invitation for tender. See, for example, Powder Mountain
Resorts Ltd. v. British Columbia, [1999] 11 W.W.R. 168 (B.C. S.C.); aff'd Powder
Mountain Resorts Ltd. v. British Columbia , 2001 BCCA 619 (B.C. C.A.).
56
Particularly apt for our purposes is the following quotation from Tysoe J. at trial (at
para. 112):
The invitation for proposals appears to have been an invitation to negotiate or, in other
words, an invitation to treat. It appears unlikely that the intention of the parties was that
a submission of a proposal would initiate contractual relations between the parties. It
appears more likely that the intention was to initiate negotiations which, if mutually
satisfactory, would lead to contractual relations.
57
Newbury J.A., in affirming the trial judge's conclusions, noted (at para. 72):
There was nothing approaching an invitation to tender, or a tender for work or materials
of a certain scope, that could have given rise to a contract. In the absence of a contract,
no free-standing enforceable duty of fairness arises.
58
The law is correctly summarized in the following passage from G.H.L. Fridman,
Q.C., The Law of Contract in Canada, 4th ed. (Scarborough: Carswell, 1999) (at p. 42):
Although Ron Engineering is firmly ensconced, it is also clear that not every invitation to
submit tenders will be capable of producing a contract when a tender is submitted. That
case did not emasculate the law of contract so as to create in every tendering process a
preliminary or initial contract. The effect of such a submission will depend on the precise
language and intention of the invitation to tender . . . .
59
Where a request for proposals expressly leaves open the possibility of further
negotiation, a court may well conclude:
It cannot, therefore, be said that either Cable or the Board intended that the submission
of a proposal or bid would constitute either the initiation of contractual relations or the
creation of contractual obligations.
[Cable Assembly Systems, at 1 C.L.R. (3d) 143, para. 6]
60
While agreeing that the courts may in certain circumstances infer an obligation to
bargain in good faith, Canadian courts have consistently adopted the position that the law
will not enforce a contract to enter into a contract or an agreement to negotiate.
61
See the apt comment of Lord Ackner in Walford v. Miles, [1992] 2 A.C. 128 (U.K.
H.L.) at 138) (referred to with approval in Cedar Group Inc. v. Stelco Inc., [1995] O.J.
No. 3998 (Ont. Gen. Div.) at para. 4; aff'd (Ont. C.A.)):
The reason why an agreement to negotiate, like an agreement to agree, is unenforceable,
is simply because it lacks the necessary certainty. The same does not apply to an
agreement to use best endeavours. . . . . How can a court be expected to decide
whether, subjectively, a proper reason existed for the termination of negotiations? The
answer suggested depends upon whether the negotiations have been determined "in
good faith." However the concept of a duty to carry on negotiations in good faith is
inherently repugnant to the adversarial position of the parties when involved in
negotiations. . . . . -- how is a vendor ever to know that he is entitled to withdraw from
further negotiations? How is the court to police such an "agreement"? A duty to negotiate
in good faith is as unworkable in practice as it is inherently inconsistent with the position
of a negotiating party. . . . . Accordingly a bare agreement to negotiate has no legal
content. (emphasis in the original)
62
As to the existence of a constructive trust, what in reality the plaintiffs are seeking
is the remedy of specific performance for a contract that does not exist. See Becker
Developments Ltd. v. Alberta, [1996] A.J. No. 341 (Alta. Master).
63
Finally, the city argues, the trial judge did not err in the assessment of damages.
Lions' Argument
64
Lions' submission was confined to the issues that particularly impact upon it.
65
It is argued that Clearwater J. correctly interpreted the decision of the Supreme
Court in Soulos v. Korkontzilas and rightly concluded that the imposition of a constructive
trust was unwarranted on the facts of this case, given the conduct of the plaintiffs,
particularly with respect to the filing of the caveat and PLO.
66
There is no authority that supports the proposition that there is a duty between
competing tenderers, and no public policy reason to create one. Lions has strong findings
of fact and credibility by the trial judge in their favour.
67
As to the filing of the caveat and PLO, the caveat contained misrepresentations as
to the amount of the claim, the claim to an interest in lands and the allegation that there
was a contract between the city and the plaintiffs. The registration of a caveat or PLO is a
significant event, which in this case was done as a short-cut attempt to avoid the proper
procedure, namely, an application for an interim injunction that would have required the
giving of an undertaking as to damages, and perhaps the posting of security. The recent
Ontario Court of Appeal decision of G.P.I. Greenfield Pioneer Inc. v. Moore, [2002] O.J.
No. 282 (Ont. C.A.), makes it clear that the decision of Mykle J. not to set aside the PLO
on a preliminary motion is of no consequence at trial. The caveat and PLO, we are urged,
were false and ought to be set aside.
68
As to damages, Lions argues that the quantum of compensatory damages in its
favour is entirely reasonable and represents approximately four percent of the money of
the Lions that has been effectively tied up since the litigation commenced. As to punitive
damages, relying on the very recent decision in Whiten v. Pilot Insurance Co., 2002 SCC
18 (S.C.C.), the sum of $10,000 is an unduly minimal expression of punitive damages. It
simply represents a small cost to the plaintiffs of conducting business in an entirely
reprehensible and improper way. It ought to be increased to the sum of $50,000.
Decision Of The Court
Was the RFP a Binding Tender Document Obliging the City to Enter Into a
Development Agreement with the Plaintiffs?
69
It is fundamental to appreciate that the normal principles of contractual intention
apply in determining the answer to this question.
70
In addition to the quotation earlier referred to in M.J.B. Enterprises Ltd., Iacobucci
J. summarized the principle in this way (at paras. 22-23):
Both parties in the present appeal agree with the Contract A/Contract B analysis outlined
in Ron Engineering and that the terms of Contract A, if any, are to be determined through
an examination of the terms and conditions of the tender call. . . . .
As I have already mentioned, whether or not Contract A arose depends upon whether the
parties intended to initiate contractual relations by the submission of a bid in response to
the invitation to tender.
71
More recently the point was touched upon again in Naylor Group Inc. v. Ellis-Don
Construction Ltd., [2001] 2 S.C.R. 943, 2001 SCC 58 (S.C.C.), where Binnie J., writing
for the court, wrote (at para. 35):
The Court took the opportunity on that occasion [in M.J.B. Enterprises] to affirm that
Contract A does not automatically spring into existence upon the making of a tender, and
if it does, its terms must be ascertained as with any other contract, and not be derived
from some abstract legal paradigm.
72
This crucial distinction is plainly drawn by Paul Sandori and William M. Pigott,
Bidding and Tendering: What is the Law?, 2nd ed. (Toronto: Butterworths, 2001) (at p.
239):
The owner that wants submissions from interested parties but does not wish to create
Contract A, may choose to issue a request for proposals (RFP). Properly drawn, an [sic]
RFP asks parties for expressions of interest and sets out the owner's intention to consider
those expressions of interest and then to undertake negotiations with one or more parties
whose proposal(s) appeal to the owner.
73
When these principles are applied to the facts before us, I have no difficulty in
concluding that the RFP was not intended to create a binding contractual relationship
between the city and the "winning bidder." A simple examination of para. 4.2 of the RFP
(see para. 6 of these reasons) provides many examples of the city's intention to
negotiate rather than to enter into a binding agreement with the successful proponent.
This case is akin to the decisions in Powder Mountain Resorts Ltd. v. British Columbia,
Cable Assembly Systems Ltd. v. Dufferin-Peel Roman Catholic Separate School Board,
and Silver Lake Farms Inc. v. Saskatchewan (2001), 46 R.P.R. (3d) 66, 2001 SKQB 515
(Sask. Q.B.). The fact that the proposal reads in para. 4.2-1 that "[T]his is an invitation
for proposals and not a tender call" is not a statement made in isolation. It is but one of
the many factors militating against the applicability ofRon Engineering & Construction
(Eastern) Ltd. on the facts before us.
74
As we have seen, where the final terms of the contract are contained in the bid (i.e.
there is no need for negotiation), courts will readily find a valid tender and not a mere
invitation to treat. See, for example, R. v. Canamerican Auto Lease & Rental Ltd. (1987),
37 D.L.R. (4th) 591 (Fed. C.A.). But these are not the facts before us. It is not possible to
identify the terms of any Contract B. As set forth in the RFP, subsequent discussions and
negotiations were required respecting fundamental detail. Cases such as this do not fall
to be decided under the law of tenders as articulated in Ron Engineering & Construction
(Eastern) Ltd.
75
It is my conclusion that Clearwater J. was entirely correct in his decision as to
liability.
Implied Terms
76
In M.J.B. Enterprises Ltd., the Supreme Court, on the facts of that case, found
there to be an "implied term" not to accept non-compliant bids. Should such a term be
implied in this case, as implicitly argued by the plaintiffs? In M.J.B. Enterprises Ltd.,
Iacobucci J., relying on Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R.
711 (S.C.C.), and based on the presumed intention of the parties, found there to be an
implied term that only compliant tenders would be accepted, the focus being on the
intentions of the actual parties as opposed to the intention of "reasonable parties."
77
In coming to his conclusion on the facts before him, Iacobucci J., at para. 38,
stressed the importance "that the respondent did not invite negotiations over the terms
of either Contract A or Contract B"; indeed, the instructions to tenderers made it clear
that the bidder was "not at liberty to negotiate over the terms of the tender documents"
(at para. 40). Because of this, "it is reasonable to infer that the respondent would only
consider valid tenders" (ibid.). These, of course, are the very opposite of the facts before
us where negotiations formed the backbone of the process the city envisioned when they
initiated the RFP process.
78
It must be recognized, of course, that in a formal tendering process it would be a
rare case in which a term as to compliant bids would not be implied, depending again on
the presumed intention of the parties. See Martel Building Ltd. v. R., [2000] 2 S.C.R.
860, 2000 SCC 60 (S.C.C.). But, there is no basis in circumstances such as those before
us, for implying a term to reject non-compliant bids in the face of contemplated
negotiations. See Labrador Airways Ltd. v. Canada Post Corp, [2001] N.J. No. 28 (Nfld.
T.D.). Whether Lions' or the plaintiffs' proposals were compliant or not is not decisive.
The contemplated negotiations gave ample opportunity to resolve any difficulties inherent
in the initial proposal so as to achieve the city's goal of accepting the "most attractive
proposal."
Fairness And Good Faith
79
Can a bidding process that is something less than one intended to involve the
formation of Contracts A and B invoke the obligation of fair bargaining in good faith that
is now firmly established in formal tendering cases?
80
I agree with counsel for the plaintiffs that the question of the duty to negotiate in
good faith with respect to bids (be they a tender or proposal), is a form of continuum. At
one end are the formal tender cases invoking the principles of Ron Engineering &
Construction (Eastern) Ltd. At the other end are cases where, for example, an owner
requests a simple quote. There is obviously a lot of territory between these two
extremes. The fact situation before us falls somewhere in between the two extremes. On
the one hand, there is a detailed request for proposals mandating that they must contain
a security deposit and remain open for a length of time. Conversely, the RFP does not
create Contracts A or B and envisions continuing negotiations with the "lead proponent"
that submits the most "attractive proposal."
81
Within the continuum, in the instant case there was, in my opinion, an obligation on
the part of the city to conduct itself fairly and in good faith. Without some fairness in the
system proponents could incur significant expenses in preparing futile bids which could
ultimately lead to a negation of the process. In circumstances such as those before us,
there must be enough fairness and equality in the procedures to ensure its integrity and
openness.
82
As has been earlier noted, in a formal tendering context there is now ample
authority for the proposition that bidders should be treated fairly, equitably, and in good
faith. Conveniently the cases are reviewed in Martel Building Ltd. per Iacobucci and Major
JJ. Implying such a term is justified based on the presumed intentions of the parties. As
noted by Peter Devonshire, Contractual Obligations in the Pre-Award Phase of Public
Tendering, (1988), 36:2 Osgoode Hall L.J. 203, it may be that the content of fairness will
simply be defined by the parties' reasonable expectations. See as well International
Corona Resources Ltd. v. Lac Minerals Ltd., [1989] 2 S.C.R. 574 (S.C.C.).
83
In the formal tendering process these expectations include the obligation of the
owner to disclose any preference or criterion that may affect selection. See Chinook
Aggregates Ltd. v. Abbotsford (Municipal District) (1989), 40 B.C.L.R. (2d) 345 (B.C.
C.A.), to accept only conforming bids and to refrain from the wording of a form of
contract that is materially different from Contract B. See Vachon Construction Ltd. v.
Cariboo (Regional District) (1996), 24 B.C.L.R. (3d) 379 (B.C. C.A.) and Best Cleaners &
Contractors Ltd. v. Canada, [1985] 2 F.C. 293 (Fed. C.A.).
84
But this is not a formal tendering situation. As we have seen, the principles of
fairness and good faith are not determined in a vacuum, but rather are implied based on
the intentions and expectations of the parties. In a Ron Engineering & Construction
(Eastern) Ltd. type of tendering process, the requirement of good faith and fairness is a
term that is implied into Contract A. But there is no Contract A in this case. It is merely a
request for proposals opening up a process of negotiation. Even if the absence of a
Contract A is not an obstacle to finding some duty of good faith and fairness, I am not at
all persuaded that the plaintiffs were treated unfairly or that the city acted in bad faith.
Even if the city manager arrived at a "personal subjective opinion," as asserted by the
plaintiffs, in arriving at his opinion he looked at "price, concept and detail," factors which
reflect the wide wording of the written criteria and the stated desire to find the most
"attractive proposal." The wording of the RFP makes it clear to all proponents that the
city was searching for a broad variety of innovative and original proposals and that
creative concepts and designs were to be considered. A purely objective evaluation in
such circumstances was impossible. Furthermore, the process under consideration in this
case calling for "attractive proposals" followed by "negotiations" with the lead proponent
stands in stark contrast to the formal bidding process in which bids are meticulously
scrutinized for conformity. The duty to refrain from awarding a form of contract that is
significantly different than Contract A has no application to the situation calling for
proposals only.
85
There was ample evidence to support the conclusion of Clearwater J., reproduced at
para. 26.
Fairness And Good Faith With Respect To Contractual Negotiations Generally
86
It should not be thought from the earlier discussion about the duty of fairness in
the tendering or proposal process, that all contractual negotiations will invariably contain
a requirement for fairness and good faith. While there can be little doubt that there is a
growing tendency for courts and academics to refer to principles of good faith and
fairness in contractual relationships, the trend, if it be one, is confined at the moment to
certain unique or special contracts or existing contracts and the performance or renegotiation of them. Examples of special contractual relationships are employment
contracts, see Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 (S.C.C.) (the
unique circumstances setting employment contracts apart from ordinary commercial
contracts including the unequal bargaining power and vulnerability of the employee to the
employer), the relationship of insurer and insured (Coronation Insurance Co. v. Taku Air
Transport Ltd., [1991] 3 S.C.R. 622 (S.C.C.)) (because of a disparity in access to
information), contracts of adhesion (Tilden Rent-A-Car Co. v. Clendenning (1978), 83
D.L.R. (3d) 400 (Ont. C.A.) (the party in whose favour a standard form contract is made
must treat the other side with good faith), and tenders.
87
Empress Towers Ltd. v. Bank of Nova Scotia (1990), 73 D.L.R. (4th) 400 (B.C.
C.A.), is relied on by the plaintiffs as supporting the bold statement in its factum that
"courts have enforced the obligation to negotiate in good faith." This is not a correct
statement of the law. Empress Towers Ltd. is entirely distinguishable from the facts
before us in that there was an original contract between the parties. The majority in the
British Columbia Court of Appeal held that the requirement in the original leasehold
agreement for mutual agreement on the renewal market rent did not give the landlord a
unilateral right to stipulate the terms of any renewal. The agreement rather was subject
to an implied term that the landlord would negotiate in good faith and that consent would
not be unreasonably withheld. Other decisions have also concluded that there is no
general duty to negotiate in good faith. See Mannpar Enterprises Ltd. v. Canada (1999),
173 D.L.R. (4th) 243 (B.C. C.A.). The reasons for this conclusion are best summarized by
the comments of Lord Ackner in Walford v. Miles, referred to at para. 62 of these
reasons.
88
Finally, there is the following definitive comment of the Supreme Court in Martel
Building Ltd. (at para. 73):
As noted by the courts below, a duty to bargain in good faith has not been recognized to
date in Canadian law. These reasons are restricted to whether or not the tort of
negligence should be extended to include negotiation. Whether or not negotiations are to
be governed by a duty of good faith is a question for another time.
Constructive Trust
89
This issue can be dealt with in short order. As the trial judge aptly put it, there was
no unjust enrichment in favour of the defendants to the detriment of the plaintiffs. There
was no wrongful acquisition of property by Lions. In reality, the plaintiffs' claim for a
constructive trust is wholly bound up in their contention that the RFP was a binding
tender document (and not simply a "beauty contest") entitling the plaintiffs, so they
argued, to the land itself. Having lost on this issue, there is no justification for the
imposition of a constructive trust in favour of the plaintiffs.
The Award Of Damages In Favour Of Lions As A Result Of The "Unreasonable"
Filing Of The Caveat And PLO
90
By way of preliminary comment, I make two observations. Firstly, contrary to the
submissions by the plaintiffs, the refusal by Mykle J. to set aside the PLO (and caveat)
does not render the issue res judicata. I am in entire agreement with the reasons for
decision of Borins J.A. in G.P.I. Greenfield Pioneer Inc. v. Moore which disposes of this
issue.
91
Secondly, strong findings of fact were made against the plaintiffs which are
significant factors, both in considering this issue and the award of exemplary or punitive
damages in favour of Lions.
92
While there are differences between a caveat and a PLO (it can be argued, for
example, that the tests to vacate a caveat and PLO are somewhat different), both are
now founded on an assertion of an interest in land. The application before Mykle J.
requested the removal of both the caveat and the PLO. In his reasons the motions court
judge dealt only with the PLO, but in the end, as we shall see, this omission is of no
consequence for the purposes of the decision on this appeal.
93
The threshold test with respect to whether the caveators are entitled to maintain
their caveat is if they have made out a prima facie case for the claimed interest in land.
See Canada (Attorney General) v. Fontaine (1995), 104 Man. R. (2d) 219 (Man. Q.B.);
aff'd (1996), 110 Man. R. (2d) 77 (Man. C.A.), and Hornsby v. Bone (Trustee of) (1993),
113 Sask. R. 1 (Sask. C.A.). On the other hand, the test to vacate a PLO, as noted in
G.P.I. Greenfield Pioneer Inc. v. Moore, is analogous to the test under Rule 20 summary
judgment application, namely, whether there was a triable issue that the plaintiffs had a
reasonable claim to the interest in land claimed. See as well ConAgra Ltd. v. Universal
Grain Systems Inc. (1998), 130 Man. R. (2d) 281 (Man. Master), and Aitken v. Trainor,
[2002] O.J. No. 2855 (Ont. S.C.J.).
94
While the initial purpose for which certificates of lis pendens were filed differed
from that of a caveat, the same claim to an interest in land can now support both a lis
pendens (PLO) and caveat. See Winnipeg Paint & Glass Co. v. Lackman, [1923] 3 W.W.R.
361 (Man. K.B.). Both prevent any dealing with the property in question without taking
into account the alleged interest. In summary, regardless of whether it is a caveat or a
PLO that is under consideration, if the claimant has no interest in land, then both will
rightly be discharged.
95
Did the plaintiffs have a reasonable claim to an interest in land? The short answer
is no. While it is true that any right conferred by a contract is capable of constituting a
sufficient interest in land for the purposes of justifying the filing of a caveat or PLO, as we
have seen there never was an enforceable contract between the plaintiffs and the city.
See Thompson v. Yockney (1913), 23 Man. R. 571 (Man. C.A.). This being so, the
allegation in the caveat and statement of claim to that effect was incorrect both in law
and in fact.
96
This brings me to a discussion of what seems to be a flaw in the process
traditionally followed in Manitoba for the granting of a lis pendens (now PLO) in the Court
of Queen's Bench.
97
When a moving party brings an ex parte motion, it has long been recognized that
there is a duty on that party to make full and frank disclosure of all material facts. United
States v. Friedland, [1996] O.J. No. 4399 (Ont. Gen. Div.), and Griffin Steel Foundries
Ltd. v. C.A.I.M.A.W. (1977), 80 D.L.R. (3d) 634 (Man. C.A.). There is no principled
reason why these rules should not apply to ex parte motions for certificates of pending
litigation as they do now with respect to injunctions. See B.G. Schickedanz (Peel) Inc. v.
Salna (1997), 14 C.P.C. (4th) 253 (Ont. Gen. Div.), and Eastwalsh Homes Ltd. v. Anatal
Development Corp. (1988), 29 C.P.C. (2d) 266 (Ont. H.C.).
98
Indeed, in Ontario this is precisely the practice, and has been so for many years.
See J & P Goldfluss Ltd. v. 306569 Ontario Ltd. (1977), 4 C.P.C. 296 (Ont. H.C.), and
830356 Ontario Inc. v. 156170 Canada Ltd., [1995] O.J. No. 687 (Ont. Gen. Div.). In
addition, the Ontario cases indicate that not only must an affidavit be filed, but it should
spell out the positions of both parties. Illustrative of this practice is the decision in L'Unita
Development Corp. v. 505369 Ontario Ltd. (2001), 44 R.P.R. (3d) 303 (Ont. S.C.J.).
99
There is in fact an obligation on the part of counsel to "highlight" in the body of the
affidavit the relevant information. Failure to do so constitutes material non-disclosure.
See Cimaroli v. Pugliese (1987), 25 C.P.C. (2d) 10 (Ont. H.C.). This is entirely consistent
with Queen's Bench Rule 39.01(6) which reads as follows:
Where a motion or application is made without notice, the moving party or applicant shall
make full and fair disclosure of all material facts, and failure to do so is in itself sufficient
ground for setting aside any order obtained on the motion or application.
100
There can be no doubt that there was no affidavit evidence filed before the court
when the ex parte motion was made to obtain the PLO. This appears to be the settled
Manitoba practice. See ConAgra. It may be that this practice developed due to the
historical background and long perceived view that a lis pendens was merely notice of a
claim. But, as we have seen, this is no longer the case -- it constitutes a lien and charge
upon the property in question. See sec. 58(2) of The Court of Queen's Bench Act,
C.C.S.M., c. C280.
101
In my opinion, it is time for the Queen's Bench Rules Practices Committee to
reconsider this practice. In my view, it can no longer be justified given the true purpose
of a PLO and its potential effect on the rights of the landowner. Without the process being
changed, there are ample opportunities for abuse, of which this case is a striking
example. At a minimum, the applicant for a PLO should be obliged to file an affidavit
which indicates in a reasonable manner the positions known or likely to be taken by the
party or parties opposite. It is ironic that there is a higher standard imposed on an
applicant for a caveat inasmuch as sec. 195 of The Real Property Act, C.C.S.M., c. R30,
gives the document requesting a caveat the status of an affidavit.
The Counter-Claim For Damages
102
Was the "unreasonable" filing of the caveat (see sec. 160 of The Real Property Act
and sec. 58(4) of The Court of Queen's Bench Act), and the PLO (see Queen's Bench Rule
42.02(i)) compensatable?
103
Not every case in which the plaintiff is found not to have an interest in land
attracts an award of damages. See Captain Developments Ltd. v. Nu-West Group Ltd.
(1984), 45 O.R. (2d) 213 (Ont. C.A.), Thorman v. Parnes (1990), 73 O.R. (2d) 149 (Ont.
H.C.), and Meadowfield Ventures Inc. v. Kennedy, [1990] O.J. No. 295 (Ont. H.C.). What
then is the test to be applied in determining if the filing was so "unreasonable" as to
justify an award of damages? Is underlying malice or some other wrongful purpose
necessary for a court to make an award of damages when a caveat or PLO is removed to
trial? This issue appears not to have been considered in Manitoba. There seems to be no
consensus in other jurisdictions as to the test. In Ontario, there must be some sort of
"unseemly" conduct to support a claim for damages. In Micro Carpets Ltd. v. De Souza
Developments Ltd. (1980), 29 O.R. (2d) 77 (Ont. H.C.), the necessary conduct was
described as "spurious." Other cases have described the necessary actions as being
"frivolous or vexatious." See Ribic v. Weinstein (1982), 140 D.L.R. (3d) 258 (Ont. H.C.).
In Captain Developments Ltd. v. Nu-West Group Ltd., the court found that the plaintiff
had not acted "in bad faith" in registering its caution against the lands. Still other cases
have opined that the statutory cause of action "does not appear to require malice." See
11 Suntract Holdings Ltd. v. Chassis Service & Hydraulics Ltd., [1997] O.J. No. 5003
(Ont. Gen. Div.), and Hilltop Group Ltd. v. Katana, [2002] O.J. No. 2461 (Ont. S.C.J.).
Courts in some other provinces, applying somewhat different legislation, seem to require
a finding that the process was invoked for improper purposes collateral to the ostensible
purpose of the proceeding, before damages will be awarded. See First Canadian Land
Corp. v. Rosinante Holdings Ltd. (1985), 62 B.C.L.R. 262 (B.C. C.A.). In Saskatchewan
and Alberta, damages have been awarded for the filing of caveats without the necessity
of proof of malice. See Ross v. Acorn (1984), 31 Sask. R. 87 (Sask. Q.B.); varied(1986),
46 Sask. R. 69 (Sask. C.A.), and Texas Industries Ltd. v. Unicon Environmental Planning
Ltd. (1978), 16 A.R. 234 (Alta. T.D.).
104
While it is not necessary to decide the point for the purposes of these
proceedings, I am inclined to the view that while malice is not an essential ingredient for
a finding of "unreasonable filing" justifying an award of damages, a finding that the filing
was done deliberately for a collateral improper purpose is required.
105
Determining what is reasonable is a virtually impossible task unless it is looked at
in the context of the facts of the particular proceedings before the court. Once this is
done, it is hard to disagree with the conclusions of Clearwater J. that "the registration of
the caveat and the pending litigation order by the plaintiffs was not 'reasonable' and that
damages caused by these registrations are recoverable" (at para. 56). By whatever test,
Clearwater J. was amply justified on the basis of the evidence and the facts as found to
conclude that the filing of both the caveat and the PLO were demonstrably unreasonable
and hence compensatable.
106
I also note that abuse of process was pled but not argued in this court. However,
nothing needs to be said about this subject in light of our affirmation of the trial judge's
finding respecting the "unreasonable filing" of the caveat and PLO.
The Assessment Of Damages
107
Admittedly, the assessment of damages by the trial judge in the amount of
$35,000 appears to be somewhat arbitrary. But making an award of damages in complex
commercial cases such as this is always a difficult task. Trial judges in such
circumstances have an obligation to do the best they can with the evidence available,
provided they are satisfied, as Clearwater J. clearly was, that damage has been suffered
and that the difficulty lies not in entitlement, but in its calculation. In the oft-quoted
decision of Penvidic Contracting Co. v. International Nickel Co. (1975), [1976] 1 S.C.R.
267 (S.C.C.), a unanimous Supreme Court confirmed that the mere fact there are
difficulties in proving the amount of a claim does not relieve the court from the
responsibility to do its best to estimate the loss. The court approved the following
statement from Wood v. Grand Valley Railway (1913), 30 O.L.R. 44 (Ont. C.A.) (at pp.
279-80):
It was clearly impossible under the facts of that case to estimate with anything
approaching to mathematical accuracy the damages sustained by the plaintiffs, but it
seems to me to be clearly laid down there by the learned judges that such an
impossibility cannot "relieve the wrongdoer of the necessity of paying damages for his
breach of contract" and that on the other hand the tribunal to estimate them whether
jury or judge must under such circumstances do "the best it can" and its conclusion will
not be set aside even if the amount of the verdict is a matter of guess work.
This is such a case. I see no reason to interfere with the assessment of damages.
108
There is a long history of cases that have awarded exemplary or punitive damages
in cases involving a cloud on title. See Lundy v. Powell (1921), 60 D.L.R. 607 (Sask.
K.B.), and Ross v. Acorn. This is another issue that falls to be determined by the specific
findings, well supported by the evidence, that the plaintiffs had engaged in conduct that
was "deliberate, oppressive, and highhanded." From that conclusion, an award of punitive
damages is fully justified. See Whiten v. Pilot Insurance Co., at paras. 66-76. While
$10,000 is a modest amount given the overall conduct of the plaintiffs it is not so
inordinately low as to award appellate interference.
109
In the result, this court has affirmed all the findings and conclusions of the trial
judge. These reasons are of necessity extensive due to the importance and complexity of
the multitude of issues raised by this appeal; but for this, this court could just have easily
have said, "This is one of those cases where the trial judge got it entirely right," and left
it at that.
110
In the result, the appeal and cross-appeal are dismissed with costs to Lions.
Appeal dismissed; cross-appeal dismissed.
END OF DOCUMENT
History
(Showing 3 documents)
Direct History
1
Mellco Developments Ltd. v Portage la Prairie (City), [2001] 11 W.W.R. 282, 2001
CarswellMan 442, 167 Man. R. (2d) 161, 21 B.L.R. (3d) 25, 22 M.P.L.R. (3d) 227,
11 C.L.R. (3d) 227, 2001 MBQB 236 (Man. Q.B. Sep 17, 2001)
Affirmed by
2
KeyCited Citation:
Mellco Developments Ltd. v Portage la Prairie (City), 222
D.L.R. (4th) 67, [2003] 1 W.W.R. 216, 2002 CarswellMan 409,
166 Man. R. (2d) 285, 28 B.L.R. (3d) 17, 32 M.P.L.R. (3d) 1, 278
W.A.C. 285, 19 C.L.R. (3d) 1, 2002 MBCA 125, [2002] M.J. No.
381, 4 R.P.R. (4th) 28 (Man. C.A. Oct 01, 2002)
Leave to appeal refused by
3
Mellco Developments Ltd. v Portage la Prairie (City), 313 N.R. 194 (note), 2003
CarswellMan 106, 2003 CarswellMan 107, 180 Man. R. (2d) 321, 310 W.A.C. 321,
[2002] S.C.C.A. No. 502 (S.C.C. Mar 27, 2003)
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