International Construction Law Review
UPDATE ON TENDERING*
W DONALD GOODFELLOW, QC, C ARB
Calgary, Alberta, Canada †
Unforeseen circumstances and the privilege clause
The Supreme Court of Canada in MJB Enterprises Ltd
v. Defence Construction Canada
,1
in obiter
, affirmed the British Columbia County Court judgment in Chinook Aggregates Ltd
v. Municipal District of Abbotsford
2
that, if extraordinary or unforeseen circumstances arose, the privilege clause3
allowed the tender-calling authority the right to not accept any tender even if all tenders met all the criteria contained in the call for tenders. Mr. Justice Selby of the British Columbia County Court in Chinook Aggregates
had said that the privilege clause (the lowest or any tender will not necessarily be accepted) allowed the tender-calling authority to either not proceed to award the tender or award the tender to other than the lowest bidder if the lowest bidder was not qualified, if the lowest bidder’s tender was not compliant, if financing fell through or land zoning fell through, or some other extraordinary circumstances arose.
In MJB Enterprises
, Iacobucci J4
confirmed that the privilege clause did allow the tender-calling authority some discretion in awarding the contract. The court stated: “The additional discretion not to award a contract is presumably important to cover unforeseen circumstances, which is not an issue in this appeal.”
Questions then arise as to what are unforeseen circumstances, and can such unforeseen circumstances be self-induced? This interesting issue was before the Saskatchewan Court of Appeal in Wind Power Inc et al.
v. Saskatchewan Power Corporation.
5
In the Wind Power
case, Saskatchewan Power Corporation (SaskPower) decided to examine the feasibility and economic viability of using wind-powered energy. While recognising that this type of renewable energy source could at first be more expensive to produce than other types of non-renewable sources of energy, such as oil or gas, SaskPower and the
* This is a revised version of a paper delivered in May 2003 to the 6th Annual Conference of the Canadian College of Construction Lawyers (of which the author is a Founding Fellow). It has been published in the Canadian Construction Law Reports
and is reproduced with the permission of that publication.
† Mr Goodfellow is a Member of the Law Societies of Alberta, British Columbia, Yukon and the Northwest Territories.
1 (1999) 44 CLR (2d) 163.
2 (1987) 28 CLR 290.
3 A privilege clause is a provision inserted in tendering documents which informs tenderers that the right is reserved not to accept an acceptable or any tender even if the tenders complied with all the tendering requirements [Ed.].
4 (1999) 44 CLR (2d) 163 at 180.
5 (2002) 15 CLR (3d) 291.
Pt 1]
Update on Tendering
103