



COURT OF APPEAL FOR ONTARIO

CITATION: Weinmann Electric Ltd. v. Niagara (Regional
    Municipality), 2016 ONCA 990

DATE: 20161230

DOCKET: C60955

Doherty, Brown and Huscroft JJ.A.

BETWEEN

Weinmann Electric Ltd.

Plaintiff (Appellant)

and

The Regional Municipality of Niagara

Defendant (Respondent)

David Levangie, for the plaintiff (appellant)

Paul DeMelo and Alexandra DeGasperis, for the defendant
    (respondent)

Heard: December 22, 2016

On appeal from the judgment of Justice Joseph W. Quinn of
    the Superior Court of Justice, dated August 6, 2015.

ENDORSEMENT

[1]

The appellant electrical contractor appeals from the decision of the
    trial judge dismissing its action against the respondent regional municipality
    alleging a failure to follow its bylaws governing contracting for the provision
    of goods and services. The consequence of the failure, according to the
    appellant, was that it was denied the opportunity to provide electrical work
    for the region for over 10 years.

[2]

The procedure governing contracting is set out in a series of four
    consecutive bylaws. The bylaws established different and more onerous
    requirements that must be met as the value of the goods and services being
    purchased increased. Broadly speaking, department staff were authorized to
    issue a simple purchase order for procurements of less than $10,000, whereas
    purchases above that amount required the use of increasingly more formal
    quotation processes.

[3]

The region maintained a list of pre-qualified contractors, who provided
    a fixed price for particular services for a two-year period. The list was open
    to all interested contractors. The appellant was on the list for much, but not
    all, of the relevant period.

[4]

From 2006 onwards, the bylaws prohibited contract-splitting as
    follows:

No Contract for Goods and Services may be divided into two (2)
    or more parts to avoid the requirements of this By-law (s. 34(b)).

[5]

At trial, the appellant argued that the region breached its bylaws by
    contracting with a competitor, Regional Trenching, without following the
    competitive purchasing processes set out in the bylaws, and by a pervasive
    practice of contract-splitting. The appellant alleged that Regional Trenching
    wrongly obtained approximately $11 million in contracts from the region over a
    10-year period.

[6]

On appeal, the appellant argues that the trial judge erred in law in
    interpreting the bylaws and that the trial judge made palpable and overriding
    errors of fact in concluding that the regions conduct did not violate the
    bylaws.

The interpretation of the bylaws

[7]

The trial judges interpretation of the bylaws is a question of law that
    is subject to review for correctness. We are satisfied that the trial judge
    made no errors in interpreting the bylaws.

[8]

The appellant submits that the prohibition on contract-splitting
    required the total project or annual requirement to be considered in applying
    the graduated procurement process. Given that the value of the work performed
    on an annual basis was approximately $750,000 per annum, it defies logic that
    the region was unable to determine that its project or annual requirements
    would exceed the $10,000 threshold.

[9]

We note that this submission was not put before the trial judge. In any
    event, the difficulty with this submission is that it is based on a provision
    in the 2004 bylaw that was deleted from successor bylaws and replaced by the
    prohibition against contract-splitting in 2006. There is no basis for the old
    provision to modify the interpretation of the subsequent bylaws.

[10]

Although the bylaws (since 2006) prohibit contract-splitting, they do
    not specify the scope of work that a contract must cover. On a reading of the
    plain language of the bylaws, the region is free to determine the scope of the work
    encompassed by any contract it enters into  it can define a contracts scope
    of work to cover as little or as much of a particular project as it considers
    appropriate and consistent with the objectives of the bylaws.

[11]

The various purposes, goals, and objectives of the bylaws cannot all be
    realized in respect of every contracting decision. The bylaws are designed to
    offer a variety of Purchasing methods, and to use the most appropriate method
    depending on the particular circumstances of the acquisition. As well, they
    seek to maximize savings for taxpayers. At the same time, the bylaws seek to
    encourage competitive bidding and, to the extent possible, to ensure
    openness, accountability and transparency while protecting the best interests
    of the [region] and [its] taxpayers.

[12]

The trial judge concluded that the bylaws do not restrict the amount of
    work that may be procured from a single supplier and do not prevent the region
    from using a task-oriented approach in completing projects rather than a
    contract-based approach. The trial judge concluded, further, that the prohibition
    on contract-splitting applied only to contracts, not to tasks.

[13]

We see no error in the trial judges interpretation. We are mindful of
    the concern that the prohibition on contract-splitting should not be
    circumvented by subterfuge, but the trial judge found no evidence of any
    wrongdoing on the part of the region. On the contrary, the trial judge found
    that the regions task-oriented approach was both sensible and economic.

Did the trial judge make palpable and overriding errors?

[14]

The trial judge carefully reviewed the evidence in a detailed and
    considered decision that addressed all 40 issues raised by the appellant. He
    found as follows:

·

There was no evidence that the appellant was treated unfairly or
    differently than other bidders or those who were pre-qualified suppliers (and
    pre-qualified suppliers were not entitled to be provided with work in any
    event).

·

There was no credible evidence that the region had engaged in
    contract-splitting to avoid the procurement regime set out in the bylaw.

·

There was no evidence that the regions invoicing was a sham
    designed to avoid compliance with the bylaw. On the contrary, Regional
    Trenching was reasonably priced, if not the least expensive contractor, was reliable,
    and did good work.

·

There was no evidence that the region directed contracts to
    Regional Trenching or did anything improper in purchasing goods and services
    from Regional Trenching.

[15]

The appellant invites the court to infer that its inability to obtain
    work from the region could be explained only by the regions disregard and/or
    manipulation of the contracting bylaws. According to the appellant, the sheer
    scale of the monthly invoicing by Regional Trenching should remove any doubt
    that the region was not following the procurement process set out in the
    bylaws.

[16]

However, in our view, there is no basis to draw this inference. The
    trial judges findings to the contrary are supported on the record that was
    before him, and they are fatal to the appeal.

Damages

[17]

Even assuming that the appellant could succeed in establishing a violation
    of the bylaws, the appellant failed to establish any damages. The argument that
    it would have obtained contracts if competitions in accordance with the bylaws
    higher value purchases quotation procedures had been held is speculative. The
    trial judge concluded as follows:

There is no evidence that the plaintiff would or should have
    been successful in obtaining work from the defendant in the years it was on the
    pre-qualified list (and there certainly is no evidence that the plaintiff would
    or should have been successful in obtaining such work in the years it was not
    on the list).

[18]

The appellant did not argue in its
    factum that the trial judge erred concerning damages. However, in oral argument,
    the appellant submitted that damages could be calculated based on its success
    rate in bidding for work against the same contractors and a profit margin
    suggested by its damages expert.

[19]

The trial judge rejected this
    submission as irrelevant and not established by evidence in any event. Further,
    the trial judge concluded that the evidence of the damages expert was
    undermined by his failure to use financial information relating to the
    plaintiff, and the fact that his evidence was based on a single project for
    which he failed to obtain back-up information.

[20]

The trial judge made no error in
    this regard. In short, the appellant simply failed to prove damages.

Disposition

[21]

The appeal is dismissed.

[22]

The respondent is entitled to costs on the appeal of $20,000, inclusive
    of taxes and disbursements.

Doherty J.A.

David Brown J.A.

Grant Huscroft J.A.


