International Construction Law Review
AN ANALYSIS OF TERCON CONTRACTORS LTD v. BRITISH COLUMBIA: OR, IF IT WALKS LIKE A DUCK …
R BRUCE REYNOLDS AND SHARON C VOGEL
Partners at Borden Ladner Gervais LLP, Toronto, Canada
Introduction
On 12 February 2010, the Supreme Court of Canada released its much expected decision in Tercon Contractors Ltd v. British Columbia (Transportation and Highways).1 In a five/four decision, the majority found in favour of Tercon, allowing the appeal. Significantly, the court agreed on the appropriate framework for the analysis as to the enforceability of the exclusion provision in issue, but was divided on the applicability of the exclusion provision to the facts at hand.2
The facts of Tercon arose in relation to a tendering contract between Tercon Constructors Ltd (“Tercon”) and Her Majesty the Queen in Right of the Province of British Columbia (the “Province”) which issued the tender call. The key issue in the case was the interpretation of provisions in the contract relating to the eligibility to bid and a waiver of damages, which excluded compensation for damages resulting from participation in the tendering process. The case involved the consideration of common law principles of tendering law established over the past 30 years in Canada. Importantly, these principles apply to both the Canadian public and private sectors.
Essential principles of Canadian tendering law
The starting point for any discussion regarding tendering law in Canada is the 1981 case of The Queen in Right of Ontario v. Ron Engineering & Construction (Eastern) Ltd.3 In this watershed decision, the Supreme Court of Canada developed a “two-contract” conceptual analysis of the tendering process. Pursuant to Ron Engineering, the tendering process consists of:
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1. “Contract A” which arises upon the submission by the contractor of its tender, and without more occurring, which contract is
1 [2010] SCC 4 (“Tercon”).2 See R Bruce Reynolds, “The Common Law Enforceability of Exculpatory Provisions in Canadian Construction Contracts: The Divination of Intent—The Primacy of Commercial Reasonability” [2004] ICLR 402.3 [1981] 1 SCR 111 (“Ron Engineering”).
Pt 3] Tercon Contractors Ltd v. British Columbia285