CROWN
Torts
Defendant, Public Works and Government Services Canada (PWGSC), requesting proposals, handling tendering process for construction of naval reserve building, HMCS Cabot in St. John’s, Newfoundland—One of original plaintiffs Olympic Construction Limited (Olympic), general contractor, proponent of tender for design, construction of HMCS Cabot, discontinuing action against Crown—Architect, structural consultant, contractors agreeing to work with Olympic in developing, presenting tender as part of “design‑build team”— Olympic design‑build team pre‑qualified by PWGSC, but bid not accepted—Assuming successful bid non‑compliant and Olympic should have received contract, whether remaining plaintiffs had standing in law to also benefit in claim against defendant, in contract, tort, or both, to recover costs or fees, opportunity lost to share in profits of enterprise—Whether PWGSC owed duty, in contract or in tort, to other members of Olympic design‑build team—Plaintiffs arguing defendant owed them duty of care as members of design‑build team when assessing bids submitted on project—In Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860, S.C.C. allowing appeal in tendering case in which Federal Court of Appeal found breach of duty of care under tort principles—Holding any prima facie duty of care in circumstances outweighed by deleterious effects resulting from extension of duty of care into conduct of negotiations—But question of whether duty of care arising between subcontractor, owner not arising in that case—This is as yet undeveloped area of law, little support for plaintiffs’ position in case law—Plaintiffs’ claims not fitting squarely within any of exceptions to common‑law rule against discovery for pure economic loss developed in case law—Although reasonably foreseeable defendant’s negligence in issuing contract to non‑compliant bidder would result in financial loss to plaintiffs, mere foreseeability not enough to establish prima facie duty of care—Plaintiffs must also show proximity, i.e. defendant in close and direct relationship with them, making it just to impose duty of care upon defendant to plaintiffs—“Proximity” meaning circumstances of relationship between plaintiff, defendant of such nature defendant may be said to be under obligation to be mindful of plaintiff’s legitimate interests in conducting affairs—Notwithstanding finding Olympic, team members had not constituted formal joint venture as defined by Statement of Qualifications, Request for Proposal, process adopted by defendant analogous to joint venture—PWGSC’s requirements in pre‑qualification, tendering process creating relationship between it, plaintiffs that meets proximity standard—Case crying out for remedy —By reason of close management of participation of plaintiffs in tendering process, defendant owing plaintiffs duty of care in tort not to award contract to non‑compliant bidder— Providing remedy not raising risk of indeterminate liability because of particular facts of case.
Design Services Ltd. v. Canada (T‑219‑00, 2005 FC 890, Mosley J., judgment dated 23/6/05, 63 pp.)