



COURT OF APPEAL FOR ONTARIO

CITATION: Graillen Holdings Inc. v. Orangeville (Town), 2017
    ONCA 520

DATE: 20170621

DOCKET: C62340

Simmons, Rouleau and Roberts JJ.A.

BETWEEN

Graillen Holdings Inc. and Region of Huronia
    Environmental Services Ltd.

Appellants (Plaintiffs)

and

The Corporation of the Town of Orangeville

Respondent (Defendant)

P. David McCutcheon and Chloe A. Snider, for the
    appellants

John R. Hart and Effie Lidakis, for the respondent

Heard: May 3, 2017

On appeal from the judgment of Justice David Stinson of
    the Superior Court of Justice, dated June 3, 2016, with reasons reported at
    2016 ONSC 3687.

REASONS FOR DECISION

[1]

The appellants appeal from the dismissal of their action for damages
    arising out of the respondent Towns 2010 tendering process and the termination
    of an agreement of purchase and sale, in relation to the disposal of the
    respondents biosolids waste.

[2]

From 2002 to 2010, the appellant, Region of Huronia Environmental
    Services Ltd. (Rohe), together with the related company, the appellant,
    Graillen Holdings Inc. (Graillen), provided collection, haulage, storage and
    disposal services to the Town for its biosolids waste. In 2010, the Town
    decided to put these services out for tender.  It also entered into an
    agreement of purchase and sale with Graillen to purchase its lagoons for
    storage of the Towns biosolids waste.  The agreement of purchase and sale
    contained a termination clause that the Town could exercise at its sole
    discretion after due diligence investigations of the purchases financial
    impact and economic viability and advisability.

[3]

In response to its 2010 tendering process, the Town received the bids of
    Rohe and Entec Waste Management Inc.  Entecs bid proposed a new form of
    dewatering process, which would obviate the Towns need for storage of its
    biosolids waste, and, as a result, the Towns reason to purchase Graillens
    lagoons.  Entecs bid was also slightly less expensive than Rohes bid.  The
    Town awarded the contract to Entec and terminated the agreement of purchase and
    sale with Graillen.

[4]

The trial judge found that the Entec bid was non-compliant because it
    had failed to include certain documents and that, by accepting Entecs bid, the
    Town had thereby breached the 2010 tendering process.  However, the trial judge
    determined that the appellants were not entitled to damages for the Towns
    breach, because they had failed to demonstrate that they would have been
    awarded the contract by the Town.  The trial judge concluded that the Town
    would have instead re-tendered the contract.

[5]

Assuming without deciding that the Entec bid was in fact non-compliant,
    we reject the submission that the trial judge erred in concluding that the tender
    contract would not have been awarded to Rohe, as the compliant bidder.  The
    trial judge found that the appellants did not meet their onus to show on a
    balance of probabilities that the contract would have been awarded to Rohe.  The
    trial judge explained that it was more probable that the Town would have
    re-tendered the contract.  It was open to the trial judge on the evidence to
    reach this conclusion.

[6]

In particular, the 2010 tendering process had disclosed to the Town that
    its preferred option of adopting a dewatering process was viable and therefore
    could be the subject of a new and different tendering process.  In addition,
    after opening the tenders, it became clear that Rohes tender, while compliant,
    suffered from similar problems to those which had occurred during the Towns
    2005 tendering process and that had led to the re-tendering of the 2005 contract. 
    Those problems included the fact that the appellants representatives sought to
    renegotiate the length of the contract with Town council, as well as a lack of
    clarity regarding the price and volume in the Rohes bid as submitted.

[7]

Moreover, the Town had the time to re-tender.  Its contract with the
    appellants did not expire until the end of November 2010, and the appellants
    indicated that they were agreeable to an extension beyond that date.  In any
    event, the Town had waste storage capacity until the end of January 2011.

[8]

In these circumstances, we agree with the trial judges conclusion that
    it would have been open to the Town to reject the bids, cancel the tendering
    process, and re-tender with different specifications for the legitimate purpose
    of ensuring that the new bids met its needs:  see
Kamloops Office Systems
    Ltd. v. Kamloops/Thompson
, 2003 BCSC 619, at para. 53.

[9]

With respect to the appellants submissions that the Town did not
    specifically plead that it would have re-tendered had it known that Entecs bid
    was non-compliant, in our view, it was unnecessary that this be specifically
    pleaded in the circumstances of this case.  The appellants asserted that the
    Town would have awarded the contract to Rohe and, initially in their statement
    of claim, sought specific performance of the contract as a remedy.  The Town
    expressly denied the appellants claim that it would have awarded the contract
    to Rohe.

[10]

The
    evidence, as set out above, left it open to the trial judge to conclude that
    the Town would not have awarded the contract to Rohe and that, accordingly, the
    appellants had failed to meet their onus of demonstrating that they would have
    been the successful bidder.

[11]

With
    respect to the agreement of purchase and sale, the trial judge found that the
    Town reasonably and in good faith terminated the agreement of purchase and
    sale, and ordered that the appellants return the Towns deposit.

[12]

Once
    the Town had decided to adopt the dewatering process, the purchase of the
    Graillen property was no longer required and made no economic sense. 
    Accordingly, in all the circumstances, the Towns exercise of its option to
    terminate the agreement was made for legitimate business reasons and in good
    faith, with the understanding at that time, that the Entec bid was compliant. 
    We see no basis to interfere.

[13]

We
    reject the appellants argument that the trial judge should have inferred from
    the evidence that Town staff knew and did not disclose to Town council that the
    Entec bid was non-compliant.  This is a difficult inference to draw on the
    trial record.  It is apparent from his reasons that the trial judge did not
    draw it.  We see no error in the trial judge not drawing this inference.

[14]

Accordingly,
    the appeal is dismissed.  As the respondent acknowledged, it is therefore unnecessary
    that we address the cross-appeal.

[15]

As
    agreed, the respondent, as the successful party, shall have its partial
    indemnity costs in the amount of $45,000, inclusive of disbursements and HST.

Janet
    Simmons J.A.

Paul Rouleau
    J.A.

L.B. Roberts J.A.


