



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Budget 
          Rent-A-Car of B.C. Ltd. v. Vancouver International Airport Authority,







2009 
          BCCA 22



Date: 20090123

Docket: CA035349

Between:

Budget 
    Rent-A-Car of B.C. Ltd.

Appellant

(
Plaintiff
)

And

Vancouver 
    International Airport
Authority and Hertz Canada Limited

Respondents

(
Defendants
)




Before:


The 
          Honourable Madam Justice Prowse




The 
          Honourable Mr. Justice Chiasson




The 
          Honourable Madam Justice Neilson








R.G. 
          Ward and E.L. Bosma


Counsel for the Appellant




D. 
          Curtis and A. Borrell


Counsel for the Respondent,
Vancouver International Airport




H.H. 
          Van Ommen and J. Cytrynbaum


Counsel for the Respondent,
Hertz Canada Limited




Place 
          and Date of Hearing:


Vancouver, British Columbia




26 & 27 November 2008




Place 
          and Date of Judgment:


Vancouver, British Columbia




23 January 2009








Written 
          Reasons by
:




The 
          Honourable Mr. Justice Chiasson




Concurred 
          in by:




The 
          Honourable Madam Justice Prowse
The Honourable Madam Justice Neilson



Reasons 
    for Judgment of the Honourable Mr. Justice Chiasson:

Introduction and background

[1]

In 1995, Budget Rent-A-Car of B.C. Ltd. (Budget) and Hertz Canada 
    Limited (Hertz) were granted rent-a-car concessions by the Vancouver International 
    Airport Authority (YVR).  They each entered into concession leases, which 
    provided space in the airport terminal and a land lease on which they were 
    to construct improvements for the operation of their car rental businesses. 
     The land was comprised of Quick Turn Around (QTA) and Service Centre areas. 
     This appeal concerns the latter.

[2]

The leases were for a total of 10 years.  The improvements once constructed 
    were the property of YVR.  Their capital costs were to be amortized over 15 
    years.  YVR could order the removal of a building with no cost to it.  If 
    a concessionaire were not granted a new concession at the expiration of the 
    term of the lease, YVR was obliged to pay the concessionaire one-third of 
    the unamortized capital costs of improvements.  Other than this requirement, 
    concessionaires were not entitled to be compensated for the costs of improvements.

[3]

In late 2004, YVR issued a Request for Proposals (RFP) seeking bids 
    from car rental companies for concessions to replace the existing regime.  
    The bidders were called proponents.  Bids were subject to an evaluation 
    process and successful proponents were ranked, the ranking giving them the 
    right to land in a descending amount of area.

[4]

Both Hertz and Budget were successful proponents.  Hertz ranked second; 
    Budget ranked last.  This meant that Hertz had the right to an increased area 
    of land and Budgets holding was reduced.

[5]

Under their 1995 leases, Budget and Hertz had contiguous properties 
    that fronted on McDonald Road.  At the front of its property, Budget constructed 
    an office building.  In a drawing in the RFP, the building was designated 
    temporary.  It became clear that temporary buildings were to be removed.  
    Budget and Hertz also had permanent buildings on their leased land.  The 
    RFP required them to keep those buildings which determined, in part, where 
    their leased land would be located.

[6]

Hertz decided to expand its area by leasing the front part of Budgets 
    land.  Budget kept the rear portion on which there was a permanent building 
    and obtained a separate parcel which fronted on McDonald Road.

[7]

Budget was required to remove its office building from the front section 
    of its land.  Relying on s. 1.6 of the RFP, Budget claimed $455,151.21, being 
    one-third of the capital costs of the building and one-third of the capital 
    costs of soil and site preparation costs of the land taken over by Hertz.  
    Section 1.6 stated, in part:

The 
    QTA and Service Centre lands have improvements.  During the first five years 
    of the Land Lease, the successful Proponents will not be required to pay any 
    cash rent to [YVR] for the improvements.  If a successful Proponent displaces 
    an existing concessionaire, the successful Proponent shall be required to 
    reimburse the displaced concessionaire an amount equal to one-third the capital 
    cost of those improvements.  This payment must be made before March 1, 2005. 
     Part 3, Schedule F sets out in detail the capital costs of the QTA and Service 
    Centres.  Part 3 also includes drawings of the QTA and Service Centre lands. 
     Proponents are expected to take the cost of such improvements into consideration 
    when making their choice of QTA and Service Centres.

[8]

In its statement of claim, Budget contended it was displaced from its 
    improvements by Hertz and Hertz had a contractual obligation to pay compensation.  
    It also claims YVR had a contractual obligation to require that Budget be 
    compensated by Hertz.

[9]

Budget sought summary judgment pursuant to Rule 18A of the
Rules

of Court
.  Hertz conceded it was liable to pay soil and site 
    development costs less a set-off for over-holding rent.  Based on his construction 
    of the 1995 lease and the RFP and on the fact Budget knew its office building 
    was to be removed before it bid, Mr. Justice Silverman concluded Budget was 
    not entitled to compensation for the loss of its office building.  The chambers 
    judge did not determine whether there was a contract between Budget and Hertz. 
    Taking into account the set-off for over-holding rent, in supplemental reasons, 
    the judge awarded Budget $3,642.25 for the capital costs of soil and site 
    preparation.  The judges principal reasons are indexed as 2007 BCSC 1186; 
    his supplemental reasons are not reported.

[10]

Budget appealed, contending the judge erred in his construction of 
    the documents and miscalculated the amount of soil and site preparation costs 
    because he refused to consider evidence relevant to it.

[11]

For the reasons that follow, I would allow the appeal to the extent 
    of increasing the payment to Budget from Hertz for reimbursement of soil and 
    site preparation capital costs to $48,876.78 and otherwise would dismiss this 
    appeal.

Relevant provisions

[12]

I set out and paraphrase relevant provisions of the 1995 lease and 
    the RFP in order to place the chambers judges decision into context.

[13]

Pursuant to s. 3.4 of the 1995 lease, Budget agreed to design, install 
    and construct on the Service Centre Land, such improvements as may be necessary 
    for [its] operations.  Section 10.2(a) specified that [a]ll fixtures, alterations, 
    additions, improvements and buildings installed or constructed on the land 
    immediately became the property of YVR without compensation to Budget, subject 
    only to the provisions of s. 3.5.

[14]

Section 3.5 of the 1995 lease stated:

If 
    the Tenant has duly performed all of its obligations under this Lease and 
    the Concession Lease and if, within six months following the expiration of 
    the Term, the Landlord has not granted to the Tenant a new vehicle rental 
    concession at the Airport the Tenant shall transfer to the Landlord the Improvements, 
    free and clear of all liens, charges and encumbrances (save those in favour 
    of the Landlord) and the Landlord shall pay to the Tenant an amount equal 
    to the unamortized portion of the Initial Capital Cost. For the purposes of 
    this Section 3.5, the Initial Capital Cost shall be amortized on a straight 
    line basis over a 15 year term, or the useful life of the improvement, whichever 
    is less, all as determined by the Airport Authority, and shall include interest 
    capitalized during the construction period of the Improvements in accordance 
    with generally accepted accounting principles at a rate not to exceed eight 
    percent (8%) per annum.

The 
    language of the section is curious in that it speaks of Budget transferring 
    to YVR improvements it already owns, but nothing turns on this.

[15]

Section 10.2(b) of the 1995 lease gave YVR the right to require Budget 
    by notice to remove any fixture, alterations, additions, improvements or buildings 
    at its expense.

[16]

Notice was required to be in writing pursuant to s. 14.12(a).  The 
    section also provided for permissive modes of delivery of notice.

[17]

Section 1.6 of the RFP has been quoted above.

[18]

Section 7.4 of the RFP stated that successful proponents that had existing 
    permanent buildings were required to take their own buildings.

[19]

Other provisions will be addressed in my recapitulation of the judges 
    reasons and in my discussion of the issues.

The reasons of the chambers judge

[20]

The judge began by referring to Budgets argument that YVR was bound 
    contractually to ensure Hertz paid compensation to it and because Hertz had 
    not paid, YVR was obliged to do so.  Budget also contended Hertz was liable 
    directly to it.

[21]

The judge noted that Hertz conceded it was liable to pay Budget for 
    soil and site preparation costs.  In para. 34, the judge observed that, apart 
    from quantum, he expressly was not addressing the soil and site preparation 
    costs claim.

[22]

In para. 26, the judge set out the core of the building costs compensation 
    issue:

Budget 
    argues that, having taken over the lands, Hertz had the option of occupying 
    Budgets facilities or of having them removed.  Hertz disagrees, and argues 
    that Budget had a contractual obligation to remove its facilities and Hertz 
    had no contractual obligation to keep them, unless it chose to enter into 
    an agreement to that effect with Budget.  It did not choose to enter into 
    such an agreement, and had no contractual or other kind of obligation to do 
    so.

[23]

In para. 27, the judge made a finding of fact that YVR gave Budget 
    notice to remove its office relying on the terms of the 1995 lease and that 
    such notice was acknowledged and understood by Budget prior to its submitting 
    its bid on or about December 23, 2004.

[24]

It was costly and time consuming to remove the office building which 
    resulted in Budget delaying turning over the property to Hertz.  This was 
    the basis of the over-holding rent claim by Hertz.

[25]

The judge discussed a number of the provisions of the 1995 lease and 
    the RFP and then addressed the distinction between temporary and permanent 
    facilities.  Budget had adduced evidence its principals considered the office 
    building to be permanent and expert evidence on the point.  Budget also 
    relied on its course of dealings with YVR to establish the building was permanent.

[26]

On the basis of evidence and argument, the judge concluded in para. 
    60 that Budget was not entitled to compensation for the capital cost of its 
    office.  He stated in para. 61 that Budget based its claim for compensation 
    on s. 3.5 of the 1995 lease and the Compensation Clause, s. 1.6, of the 
    RFP.

[27]

In para. 66 the judge stated:

One 
    reason Budget is not entitled to compensation is as previously stated, that 
    is, the clear wording of s. 3.5 of the 1995 Lease prohibits compensation in 
    the circumstances where they have been granted a new concession.

[28]

The judges second reason was that Budget had accepted the designation 
    of its office as temporary and knew it had to be removed before it bid (para. 
    67).  In this context, the judge reviewed the section of the RFP that required 
    proponents to advise YVR of any errors in the RFP and that stated proponents 
    accepted the provisions of the RFP.  This latter proviso was expressed also 
    in the 2005 lease.

[29]

The judge turned to the issue whether Budget was displaced.  He concluded 
    in paras. 79 and 80 that Budget was displaced, but not by Hertz because [t]he 
    Compensation Clause is intended to provide compensation for displacement from 
    facilities, not from land.

[30]

The judge stated it did not make commercial sense to require Hertz 
    to pay Budget for a building Hertz did not want and did not use.  He considered 
    that this would be a penalty to Hertz and a windfall to Budget.

[31]

The judge left the parties to try to agree on the quantum of compensation 
    for soil and site preparation costs.  They did not do so and the judge addressed 
    that issue in supplemental reasons released November 13, 2007.

[32]

In its statement of claim, Budget stated it claimed one third of its 
    capital costs "as set out in Schedule F to the RFP".  In its statement 
    of defence, Hertz stated it was obliged to pay only one third of the capital 
    cost of soil and site preparation as set out in Schedule F.  The judge held 
    in para. 11 that the amount based on Schedule F was $33,789.20.

[33]

Budget sought to rely on the affidavit of its accountant, Mr. Cummings, 
    to explain its actual soil and site costs.

[34]

In para. 16, the judge stated the evidence did not allow him to conclude 
    it was known by the parties that there were capital costs not in Schedule 
    F.  He declined to consider the affidavit of Mr. Cummings.  The judge determined 
    that Budget should be held to its pleadings and its claim constrained by the 
    content of Schedule F (para. 17).  Deducting for over-holding rent resulted 
    in a net award to Budget of $3,642.25.

Positions of the parties

[35]

In its factum, Budget contends the judge erred by holding it was not 
    displaced by Hertz:

in the sense 
    that the word is used in [s. 1.6 of the RFP] on the basis that:

A.         
    The Compensation Clause was intended to provide compensation for displacement 
    from facilities, not from land;

B.         
    Section 3.5 of the 1995 Lease prohibits compensation in circumstances where 
    a proponent is granted a new concession;

C.        
    YVR gave notice to Budget that it was required to remove Budgets administration 
    Buildings prior to Budget submitting its bid;

[36]

It asserts the judge erred by refusing to award compensation for soil 
    and site preparation costs in the amounts set out in Schedule F to the RFP. 
     Budget also states the judge erred in concluding there was no contract between 
    it and YVR.

[37]

Hertz contends the RFP is not a contract and does not give rise to 
    contractual obligations between it and Budget.  It also states the judge did 
    not err in his conclusion Budget was not displaced by Hertz or in his determination 
    of compensation for soil and site preparation costs.

[38]

YVR asserts the judge did not err concluding Budget was not entitled 
    to compensation for the removal of its office, deciding Budget was limited 
    to the amounts in Schedule F for recovery of its soil and site preparation 
    costs or in finding there was no contract between YVR and Budget.

Discussion

Introduction

[39]

The chambers judge did not determine whether there was a contract between 
    Hertz and Budget.

[40]

The judge stated the claim advanced by Budget against YVR was that 
    YVR was bound contractually to ensure Hertz paid compensation to Budget and 
    because Hertz had not paid, YVR was obliged to do so.  That is the position 
    taken by Budget on this appeal.

[41]

In his supplementary reasons, when discussing soil and site improvement 
    costs, the judge stated, while YVR was obliged to require Hertz to pay Budgets 
    costs, it was not obliged to be successful .  The judge concluded YVRs 
    obligation was met by YVR requiring Hertz to pay displaced proponents in 
    its contract between YVR and Hertz, and in correspondence and documentation 
    between YVR and Hertz (para. 35).  I take the reference to contract to 
    be a reference to the 2005 lease between YVR and Hertz, which in s. 4.9(a) 
    contained a requirement to pay to a displaced tenant one third of the unamortized 
    capital costs of improvements.

[42]

The judge also considered whether YVR was directly contractually bound 
    to Budget without consideration of whether  Hertz has paid  and stated 
    there is no basis in the evidence for concluding that such a contract exists 
    (para. 37).

[43]

The judge appears to have concluded YVR had a best efforts contractual 
    obligation.  Although he did not state on what basis this obligation arose, 
    having decided it was met by the provisions of the lease, the obligation only 
    could arise out of the RFP, which is the position advanced by Budget on this 
    appeal.

[44]

I begin by considering whether the RFP was a contract between Budget 
    and YVR.  I next shall consider whether it was a contract between Budget and 
    Hertz.

RFP − whether a contract between Budget and YVR

[45]

In its factum, Budget cites no authority to support its contention 
    the RFP was a contract between it and YVR, but relies on provisions of the 
    RFP.  In oral argument, counsel for Budget relied on
M.J.B. Enterprises 
    Ltd. v. Defence Construction (1951) Ltd.
, [1999] 1 S.C.R. 619, and 
    asserted that when the process of submitting proposals closed, a contract, 
    contract A, was formed.  The terms of the contract were said to be those of 
    the RFP.

[46]

In
M.J.B. Enterprises
, Iacobucci J., for the Court, stated 
    at para. 15 that any discussion of contractual obligations and the law of 
    tendering must begin with this Courts decision in [
Ontario v. Ron Engineering 
    & Construction (Eastern) Ltd.
, [1981] 1 S.C.R. 111].  In that 
    case, Estey J. held that the tendering process involved two contracts: contract 
    A, which was formed when a tender was submitted in response to a call for 
    tenders; contract B, the contract that was entered into as a result of the 
    acceptance of a tender.  He described contract A as a unilateral contract.  
    As noted in
Elite Bailiff Services Ltd. v. British Columbia
,

2003 BCCA 102, Iacobucci J. expressly did not endorse that characterization 
    of contract A (para. 18).  He affirmed that the submission of a tender can 
    give rise to contractual obligations, but stated whether such obligations 
    arise depends on the terms and conditions of the call for tenders.  The inquiry 
    is whether the parties intended to initiate contractual relations by the 
    submission of a bid in response to the invitation to tender (para. 23).

[47]

In
M.J.B Enterprises
, the Court determined a contract 
    had been formed, stating at para. 23:

In 
    the present case I am persuaded that this was the intention of the parties.

At a minimum, the respondent offered, in inviting tenders through a formal 
    tendering process involving complex documentation and terms, to consider bids 
    for Contract B. In submitting its tender, the appellant accepted this offer.  
    The submission of the tender is good consideration for the respondents promise, 
    as the tender was a benefit to the respondent, prepared at a not insignificant 
    cost to the appellant, and accompanied by the Bid Security.

[48]

In
Ron Engineering
, the Court concluded contract A had 
    been formed, stating at 119:

There 
    is no question when one reviews the terms and conditions under which the tender 
    was made that a contract arose upon the submission of a tender between the 
    contractor and the owner.

[49]

The gloss that Iacobucci J.

put on the decision in
Ron 
    Engineering

was explained in
Martel Building Ltd. v. 
    Canada
, 2000 SCC 60, [2002] 2 S.C.R. 860:

80.       In
M.J.B. Enterprises Ltd. v. 
    Defence Construction

(1951) Ltd.,
[1999] 1 S.C.R. 619, this Court 
    confirmed that
Contract A also 
    imposes obligations on the owner. It further explained that
Ron Engineering
does not stand for the proposition that
Contract A will always be formed, nor that the irrevocability 
    of the tender will always be a term of such contract.
Whether the tendering 
    process creates a preliminary contract is dependant upon the terms and conditions 
    of the tender call
.

[Emphasis added]

[50]

These comments lead to a consideration of the terms and conditions 
    of the RFP.

[51]

The parties rely on various provisions of the RFP to support their 
    respective positions.  In my view, the answer is in s. 13.1(a) which states:

This 
    RFP does not constitute an offer.  No agreement shall result upon submission 
    of Proposals. [YVR] shall not be under obligation to enter into any agreement 
    with anyone in connection with this RFP and responses received.  [YVR] will 
    not have any obligation to anyone in connection with this RFP unless [YVR] 
    executes and delivers an agreement in writing approved by [YVRs] senior management.

This 
    section tracks the analysis in
M.J.B. Enterprises
.  It is difficult 
    to see how the draft-person could have made the intention of YVR more clear.

[52]

It is asserted that the last sentence of s. 13.1(a) imposes RFP obligations 
    on YVR because it entered into a lease with Budget.  I do not agree.  While 
    the word agreement is not defined, it must be construed in the context in 
    which it is being used.  It is an agreement to be bound by obligations in 
    connection with the RFP.  The proviso is not met by entering into the lease 
    unless the lease contains an agreement to the terms of the RFP, which it did 
    not.

[53]

In my view, the RFP was not a contract between Budget and YVR.  Section 
    1.6 has no contractual force between these parties.

RFP − whether a contract between Budget and Hertz.

[54]

Prima facie
, it is difficult to conceive that the RFP could be a 
    contract between Budget and Hertz when it is not a contact between Budget 
    and YVR.  As is stated in s. 1.1, [t]he purpose of the RFP is to assist [YVR] 
    in selecting proponents for the operation of  Vehicle Rental Concessions.  
    The thrust of the document is to inform proponents what may be available to 
    them and what they must do to be eligible for consideration as concessionaires.

[55]

Budget relies on
The Satanita
, [1895] P. 248 (C.A.), 
    affd [1897] A.C. 59 (H.L.), and cases that have applied the so-called community 
    of interest doctrine.

[56]

The Satanita
arose out of a collision between two racing yachts.  
    It was a claim for damages unrestricted by the English
Merchant Shipping 
    Act
limitation on quantum based on the tonnage of a vessel.  The Court 
    held there was a contract between each of the owners of the yachts based on 
    their individual agreement with the organizers of the race to abide by prescribed 
    racing rules.  The rules included a commitment to compensate for any damages 
    that ensued as a result of a violation of the rules.

[57]

The Court of Appeal stated there was a relationship between each competitor 
    and the race committee when the competitor signed-up for the race.  Lord Esher 
    M.R. described this as a relation (p. 255).  Lopes L.J. stated there probably 
    was a contract with the [race] committee in certain cases (p. 260).  Rigby 
    L.J. held a contract arose with the committee at the moment that the yacht 
    owner signed the document, which it was necessary to sign in order to be a 
    competitor (p. 262).

[58]

All judges stated there was no contract between the competitors when 
    they signed-up for the race, but a contract arose when they began racing under 
    the rules.

[59]

The focus of the House of Lords was on the applicability of the statutory 
    limitation on quantum.  All Lords agreed it did not apply and all agreed, 
    with limited analysis, that there was a contract between each of the competitors.

[60]

In the context of building schemes and shopping centres, courts have 
    developed the so-called doctrine of community of interest.  In
Salmon 
    Arm Pharmacy Ltd. v. R.P. Johnson Construction Ltd.
(1994), 94 B.C.L.R. 
    (2d) 169 at paras. 23-24, 46 B.C.A.C. 249, Finch J.A., as he then was, stated:

[23]      
    The doctrine of "community of interest" appears to be an exception 
    to the fundamental rule that only the parties to a contract have standing 
    to enforce its terms (privity of contract). The doctrine does not appear to 
    afford a basis for creating or imposing substantive obligations or enforcing 
    a contract against a stranger to the contract.

[24]      
    The doctrine of "community of interest" apparently derives from 
    the English common law relating to "building schemes":  see
Scharf 
    v. Mac's Milk Ltd
., [1965] 2 O.R. 640 (C.A.) at pp. 645-647, and applied 
    in more recent times to shopping-centre leases. Consideration as to whether 
    or not the doctrine is applicable seems to arise only where:

(a)        one tenant seeks to enforce a 
    contractual obligation owed by another tenant to the landlord;

(b)        both tenants have restrictive 
    covenants in their leases which limit the use to which the tenants can put 
    their premises; and

(c)        both tenants have the benefit of restrictive covenants 
    by which the landlord promises not to allow the use of any portion of the 
    shopping centre for a purpose which competes with that of another tenant.

The 
    doctrine of "community of interest" appears to allow one tenant 
    to insist that another tenant live up to its contractual obligations because, 
    although there is no privity of contract between the tenants, each has made 
    parallel contractual commitments which are designed for their common advantage.

The 
    Court declined to apply the doctrine because the contractual commitments were 
    not parallel.

[61]

In
Scharf v. Macs Milk Ltd.
, [1965] 2 O.R. 640 (C.A.), 
    the Ontario Court of Appeal referred to
Elliston v. Reacher
, 
    [1908] 2 Ch. 374, affd [1908] 2 Ch. 665 (C.A.), for the proposition that 
    participants in a building scheme could enforce against each other covenants 
    each had with the common vendor of the land.  At 646, Schroeder J.A. quoted 
    from
Elliston
:  the plaintiffs would in equity be entitled 
    to enforce the restrictive covenants entered into by the defendants or their 
    predecessors with the common vendor .  In
Scharf
, the trial 
    judge and the Court of Appeal stated the covenant inured for the benefit of 
    the plaintiff.  There was no discussion whether there was a contract between 
    the participants.

[62]

In
Progas Ltd. 
    v. AEC West Ltd.
, 2001 ABQB 549, Clark J. referred to the House of 
    Lords decision in
The Satanita
and to this Courts decision 
    in
McCannell v. Mabee-McLaren Motors Ltd.
, [1926] 1 D.L.R. 282 
    (B.C.C.A.), when discussing implied contracts and to the building scheme and 
    shopping centre cases in his discussion of community of interest.

[63]

In
McCannell
, 
    this Court held that a contract between Studebaker and one of its automobile 
    dealers also brought about a contractual relationship between each of the 
    dealers. The contract stated in part:

It 
    is understood and agreed that this paragraph shall be construed as an agreement 
    between dealer and all other Studebaker dealers who have signed a similar 
    agreement and that nothing herein contained shall be construed as a liability 
    on the part of Company to dealer for territorial infringement by any other 
    dealer.

[64]

Hertz and YVR state this clause in
McCannell

distinguishes 
    the case from cases like
The Satanita
, but it is clear from 
    a reading of the judgments that while the Court was well aware of the provision, 
    it did not base the decision on it.  At 286, MacDonald J.A. quoted Lopes L.J. 
    in
The Satanita
:

I 
    have no doubt that there was a contract. Probably a contract with the committee 
    in certain cases, but also a contract between the owners of the competing 
    yachts amongst themselves, and that contract was an undertaking that the owner 
    of one competing yacht would pay the owner of any other competing yacht injured 
    by his yacht all the damages arising from any infringement or disobedience 
    of the rules. In my opinion, directly any owner entered his yacht to sail, 
    this contract arose and it is clear that the owners of the
Valkyrie
and the
Satanita
did enter their respective yachts and did sail.

[65]

The community of interest doctrine appears to have been applied in 
    the context of preventing a participant in a venture like a building scheme 
    or shopping centre from taking steps unfairly to compete with another member 
    of the venture when the participants have agreed not to do so.  Equity intervenes.
The Satanita
principle is based on contract and provides a right 
    of recovery to which the participants have agreed each is entitled.

[66]

I agree with the respondents position that an examination of the authorities 
    suggests that obligations and the right to enforce them arises out of the 
    contracts between participants and the organizer, be it vendor of land, 
    owner of a shopping centre or racing committee.  In this case, whether the 
    analysis is based on equity or contract, rights and obligations do not derive 
    from the RFP.

[67]

In summary, the RFP is not a contract.  This conclusion is based 
    on construing the RFP in light of the tendering cases and
The

Satanita
.  The analysis mandated by those cases does not 
    stop with merely looking at the relationship involved  yachts in a race; 
    proponents or bidders seeking a contract.  As in all matters of contract 
    the core inquiry is the intention of the parties.  In this case, the 
    proponents were competing for concessions at the Vancouver Airport.  
    None of them was guaranteed a concession even if its bid was ranked high.  
    The terms of any lease of the airport lands was subject to negotiation.  
    The RFP envisioned a commitment for compensation if improvements were lost 
    because an existing concessionaire was displaced by another proponent, but 
    the draft lease contained a specific proviso, s. 4.9, dealing with that.  Although 
    the language and substance of  s. 1.6 of the RFP and s. 4.9 was not identical, 
    it is clear to me that if there were any community of interest among the successful 
    proponents it arose, not from the RFP, but from the leases into which they 
    all entered and which legally obliged each to compensate displaced concessionaires. 
    Section 1.6 has no contractual force.

Alternative

[68]

My conclusions there is no contract obliging Hertz to compensate Budget 
    for the capital cost of its removed office building and no contract obliging 
    YVR to compensate Budget for the costs of the removed building or soil and 
    site preparation costs disposes of this aspect of the appeal, but because 
    the case was argued and decided by the judge on the construction of the RFP 
    and 1995 lease, I provide my analysis of the relevant provisions of each.  
    In addition, while agreeing with the judges conclusion that Budget was not 
    entitled to compensation for the loss of its building, I do not agree with 
    his reasons for reaching that conclusion.

[69]

The 1995 lease, which had a ten-year term, obliged Budget to construct 
    facilities to enable it effectively to carry on business.  These improvements 
    were the property of YVR once constructed.  Budget could be directed to remove 
    an improvement with no cost to YVR.  The capital costs of improvements were 
    amortized over 15 years.  Apart from s. 3.5, Budget was not entitled to compensation 
    for its capital costs.  That section provided for reimbursement of the unamortized 
    capital costs of improvements if Budget were not granted a replacement concession.

[70]

The judge gave two reasons for dismissing Budgets claim:  one, Budget 
    was not entitled to compensation under s. 3.5 of the 1995 lease; two, before 
    Budget made its proposal, it knew the office building had to be removed.  
    In my view, neither reason adequately addressed the issue before him.

[71]

It is common ground Budget was granted a replacement concession, which 
    disentitled it from compensation under s. 3.5.  Budget did not claim under 
    the 1995 lease.  The judges discussion of that lease was helpful background, 
    but could be nothing more.  In this case, it could not be a basis for denying 
    Budget recovery.

[72]

In my view, whether Budget knew its office building had to be removed 
    before it delivered its proposal is irrelevant to the proper construction 
    of s. 1.6 of the RFP.  If Budget were entitled to compensation, the fact it 
    knew its building was to be removed would not alter that fact.

[73]

Budget based its claim on s. 1.6 of the RFP, which for convenience 
    I again reproduce in part:

The 
    QTA and Service Centre lands have improvements.  During the first five years 
    of the Land Lease, the successful Proponents will not be required to pay any 
    cash rent to [YVR] for the improvements.  If a successful Proponent displaces 
    an existing concessionaire, the successful Proponent shall be required to 
    reimburse the displaced concessionaire an amount equal to one-third the capital 
    cost of those improvements.  This payment must be made before March 1, 2005.  
    Part 3, Schedule F sets out in detail the capital costs of the QTA and Service 
    Centres.  Part 3 also includes drawings of the QTA and Service Centre lands.  
    Proponents are expected to take the cost of such improvements into consideration 
    when making their choice of QTA and Service Centres.

[74]

In drawing D of the RFP, buildings were marked as temporary building 
    or simply as building.  It became apparent during the RFP process that buildings 
    marked temporary were to be removed at no cost to YVR.  Minutes dealing with 
    questions and answers make this clear.

[75]

Evidence was adduced at the chambers hearing and argument advanced 
    whether Budgets building which was marked as temporary was in fact a temporary 
    building.  It my view, this line of inquiry was irrelevant.  YVR had the right 
    to direct that improvements be removed at no cost to it.  In the context of 
    analyzing the rights of the parties, labelling buildings as temporary merely 
    identifies them for removal whether they were in fact temporary or permanent.

[76]

Similarly, there was considerable discussion on the meaning of the 
    word displace.  In paras. 79 and 80, the chambers judge had this to say:

[79]      
    YVRA gave Budget notice, as it was entitled to do pursuant to s. 10.2(b) of 
    the 1995 Lease, to remove its facilities.  Budget was contractually required 
    to comply.  Therefore, it is correct to say that it was forced to vacate by 
    virtue of its contract with YVRA, and by virtue of YVRAs notice given under 
    that contract.  However, it is not correct to say that it was displaced by 
    Hertz or by Hertz status as a successful proponent.

[80]      
    The Compensation Clause is intended to provide compensation for displacement 
    from facilities, not from land.  Hertz status as a successful proponent entitled 
    it to take possession of and lease the land around and under Budgets facilities.  
    But it did not entitle it to take possession of or lease the facilities themselves.  
    Therefore, by leasing the land under Budgets facilities, Hertz did not displace 
    Budget as that term is used in the Compensation Clause.

With 
    respect, I do not agree entirely with these comments.

[77]

In my view, displacement clearly refers to the land.  The buildings 
    were owned by YVR.  Budget leased the land.  Hertz was being granted a lease 
    over part of that land.  When Hertz obtained the legal right to occupy that 
    land, Budget was displaced from the land.  If that displacement resulted in 
    Budget losing an improvement, it was entitled to compensation from Hertz.

[78]

This leads to a consideration of the construction of s. 1.6.  In my 
    view, on a plain reading of the provision:

·

the first sentence advises proponents 
    that there are improvements on the lands;

·

the second sentence envisions 
    a new concessionaire using existing improvements, but not being obliged to 
    pay rent for the first five years; obviously this assumes there are existing 
    improvements on the land;

·

the third sentence requires a 
    new concessionaire to pay one-third of the capital costs of existing improvements 
    to the previous concessionaire; again, this obviously assumes there are existing 
    improvements on the land;

·

if there are no improvements 
    on the land, the new concessionaire does not have to pay rent and does not 
    have to pay anything to the previous concessionaire.

Construed 
    in this way, the issue becomes:  was Budgets office building on the land 
    when Budget was displaced from the land?

[79]

The judge concluded Budget was given notice to remove its office building 
    late in 2004. Budget challenges this conclusion.  It my view, it is amply 
    supported by the evidence, but it is common ground that, at a minimum, written 
    notice was given in correspondence in mid-February 2005.  Budgets lease expired 
    and Hertzs lease began at the end of February.  In my view, that is the date 
    when Budget was displaced.  Prior to the end of February it had the legal 
    right to occupy the land.  By that time, notice to remove the office building 
    had been given and Hertz was not obliged to compensate Budget for it.

[80]

It was Budgets position that the scheme of the 1995 lease and 2004 
    RFP entitled it to recover the capital costs of improvements either through 
    amortization based on use or by compensation if it were to lose the use of 
    the improvement.  Budget asserts that the policy of s. 3.5 of the 1995 lease 
    was carried into the RFP and it would be unconscionable for it not to recover 
    its capital cost once it lost the use of the office building.

[81]

Budget states, correctly in my view, that even if notice of removal 
    was given under the 1995 lease and the office building removed, if it were 
    to meet the criterion of s. 3.5  no renewed concession  it would be entitled 
    to recover the unamortized capital cost of its office building.  Counsel for 
    Budget extended this proposition and asserted that notice to remove was completely 
    irrelevant to Budgets claim under the RFP.  He contended that even if the 
    building were removed a considerable time before the RFP was issued, although 
    as a successful proponent Budget could not claim compensation from YVR under 
    s. 3.5 of the 1995 lease, it would be entitled to compensation from Hertz 
    under the RFP.  In my view, this ignores the full scheme of the 1995 lease 
    and RFP.

[82]

Compensation under s. 3.5 of the 1995 lease occurs when a leaseholder 
    loses its position as a concessionaire:  it has no building and has no concession.  
    It recovers the unamortized costs of the building it lost.  If it were compensated 
    under s. 3.5 of the 1995 lease, it would not be entitled to be compensated 
    under s. 1.6 of the RFP.  Section 1.6 provides for reimbursement and the leaseholder 
    would have used or recovered all of its capital cost.

[83]

While Budget was displaced from a portion of the land it occupied, 
    it was not entitled to compensation under s. 3.5 because it obtained a new 
    concession.  Any perceived unfairness in not being compensated for one-third 
    of the capital cost of the office building must take into account the advantage 
    of continuing to do business at the Vancouver Airport.  There is no unfairness 
    or lack of business sense in the scheme.

[84]

In my view, on a proper construction of s. 1.6 of the RFP, Hertz was 
    not obliged to compensate Budget for the loss of its office building.

Liability for soil and site preparation costs

[85]

In its statement of claim, Budget alleged a contract between it and 
    Hertz, partly oral and partly in writing.  Insofar as it was in writing, Budget 
    stated the agreement was comprised of the RFP, Budgets proposal and Hertzs 
    proposal.  Hertzs proposal was not in evidence.

[86]

Budget claimed compensation, stating:

It 
    was a material term of the Hertz Agreement that to the extent that Hertz displaced 
    Budget from any improvements by taking possession of land which had previously 
    been in Budgets possession, Hertz would compensate Budget pursuant to the 
    figures set out in Schedule F.

[87]

As noted, in its statement of defence, Hertz stated it was obliged 
    to pay only one third of the capital costs of soil and site preparation as 
    set out in Schedule F.

[88]

In its statement of defence and at trial, Hertz provided no legal basis 
    for the concession.  In its factum and at the hearing, Hertz based its concession 
    on s. 4.9 of the 2005 lease between it and YVR which states:

If the Tenant:

(a)        
    takes over a QTA or Service Centre facility from a previous tenant, the Tenant 
    shall pay to the displaced tenant one third of the unamortized capital cost 
    of the improvements by such method as agreed by the parties before the Tenant 
    takes possession of the QTA or Service Centre leasehold; or ...

[89]

Although Budget did not claim compensation based on the 2005 lease, 
    I am prepared to take Hertzs concession as given and do not opine on the 
    construction of s. 4.9.

[90]

It was not suggested that YVRs obligation to ensure that Hertz paid 
    compensation derived from the 2005 lease.  My conclusion the RFP did not constitute 
    a contract between Budget and YVR disposes of Budgets claim that YVR is obliged 
    to ensure the Budget is compensated by Hertz.  There is no such obligation 
    on either a best efforts or stand-alone basis.

Compensation for soil and site preparation costs

[91]

Because the legal basis for Hertzs obligation to compensate Budget 
    for soil and site preparation costs was not articulated, presumably relying 
    on the pleadings, the parties and the judge proceeded on the basis the recoverable 
    costs were as set out in Schedule F to the RFP.  There was no finding the 
    RFP contractually bound Budget and Hertz and I have concluded it did not do 
    so.  Section 4.9 of the 2005 lease, which is the legal basis on which Hertz 
    concedes it is liable, does not refer to Schedule F.

[92]

The judge appears to have been of the view that Budget sought the capital 
    cost of soil and site improvements not contained in Schedule F and based on 
    the pleadings and submissions of both parties, concluded Budget should be 
    limited to costs in that document, which he concluded totalled $33,789.20.  
    This was based on the first page of Schedule F, which is entitled Service 
    Centre Soil and Site Preparation.

[93]

The judge appears to have concluded Budget should be held to its pleadings 
    because it was not common knowledge that there were soil and site preparation 
    costs not stated in Schedule F.  Hertz contends it relied on Schedule F and 
    would be prejudiced if Budget were entitled to recover for costs not in the 
    Schedule.

[94]

On the assumption Schedule F is relevant to the claim as now being 
    considered, there is some merit to Hertzs position because s. 1.6 of the 
    RFP states that the capital costs are set out in detail in Schedule F.  On 
    the basis the claim now being considered, it is questionable whether Schedule 
    F is a controlling document, but, in any event, the simple answer is that 
    Budget does not claim costs not included in Schedule F.  This is made clear 
    in the affidavit of Gary Cummings.

[95]

I do not opine on whether Schedule F is controlling.  Although it is 
    somewhat legally unorthodox to rely on Schedule F in the circumstances of 
    the claim as it now is being considered, I am prepared to do so because it 
    was the basis on which the parties advanced the case in chambers and on appeal.

[96]

Because of the conclusion he reached, the judge did not consider the 
    evidence of Mr. Cummings.  In my view, he erred, but I am not at all certain 
    it was made clear to him that Mr. Cummings was not adding costs, but merely 
    providing guidance on the content of Schedule F.

[97]

Mr. Cummings is a Certified General Accountant who has been employed 
    by Budget as a general ledger accountant since 1992.  In response to a May 
    10, 2004 request, Mr. Cummings provided capital costs information to YVR which 
    was to be included in the RFP and which was reproduced in Schedule F.  After 
    Budget was displaced, Mr. Cummings reviewed Schedule F and the invoices that 
    supported the numbers in it.

[98]

Mr Cummings identified the capital cost of the office building from 
    numbers on the second page of Schedule F, which was entitled:  Other Service 
    Centre Construction Costs.  He identified the capital cost of soil and site 
    improvements from numbers on both the first and second pages of Schedule F.  
    These numbers were presented for payment to Hertz.  They totalled $425,374.96 
    made up of $90,290.61 for the soil and site cost and $335,084.35 for the capital 
    cost of the office building.

[99]

Taking into account additional information and correcting some errors, 
    Mr. Cummings reviewed his calculation prior to the hearing before Silverman 
    J.  He provided two calculations for soil and site preparation based on the 
    inclusion or non-inclusion of a fire-access road.

[100]

In my view, it is appropriate to take into account the fact Budget 
    uses the access road.  Based on Mr. Cummings calculations, doing so gives 
    a soil and site preparation capital cost of $79,023.73, from which must be 
    deducted over-holding rent of $30,146.95, resulting in $48,876.78 being the 
    amount payable by Hertz to Budget.

[101]

At the hearing of the appeal, Budget asserted that the numbers on the 
    first page of Schedule F referred only to common site costs, essentially pre-loading 
    the site, and that numbers on page two had to be taken into account as was 
    done by Mr. Cummings.  Hertz contended this could not be true because the 
    per-square-metre figures differed among the concessionaires.  Counsel for 
    Budget stated this issue had not been explored previously and had no explanation 
    for the differences.

[102]

I am not prepared to draw any conclusions from the differences.  They 
    appear not to have been dealt with in the evidence.  There may be an explanation: 
     for example, there might have been different volumes of pre-load material 
    and different compaction required at different places on the site.  I accept 
    the uncontradicted evidence of Mr. Cummings.

Conclusion

[103]

In my view, the RFP was not contractually binding on either YVR or 
    Hertz and Budget was not entitled to compensation based on s. 1.6.  Alternatively, 
    if the RFP were contractually binding, on a true construction of s. 1.6 in 
    the circumstances of this case, Budget was not entitled to compensation for 
    the loss of its office building.  Based on the concession of Hertz, Budget 
    was entitled to compensation for its soil and site preparation capital costs 
    in the amount of $48,876.78.

[104]

I would increase the award to Budget to $48,876.78 and otherwise dismiss 
    this appeal.

The 
    Honourable Mr. Justice Chiasson

I agree:

The Honourable Madam Justice Prowse

I agree:

The Honourable Madam Justice Neilson


