Digests

Profac Facilities Management Services Inc. v. FM One Alliance Corp.

A-436-01

2001 FCA 352, Evans J.A.

20/11/01

13 pp.

Judicial review of Canadian International Trade Tribunal (CITT) decision property management contracts between Canada Post, applicants new contracts to which NAFTA requirements applied, not renewals of previous contracts-- Canada Post entered into original property management services contracts with applicants in 1994--Subject to renewal clause, contracts to terminate on March 31, 2000--Renewal clause providing "on at least 6 months notice given prior to March 31, 2000" Canada Post shall have right to renew agreements for further term of 5 years--Canada Post not giving such notice as considering expanding range of services to be covered, interested in contracting with single services provider--In February 2000 issuing Request for Procurement (RFP), extending 1994 agreements until February 2001--Later having change of heart--In January 2001 parties agreed to enter second five-year contract on very similar terms to first--When Canada Post withdrawing RFP, FM One Alliance Corp. complained to CITT that in failing to invite bids for these property management services contracts Canada Post in breach of NAFTA obligations respecting procurement process--CITT ordering Canada Post not to enter contracts until complaint disposed of--Holding second five-year contracts into which parties had agreed to enter not proper exercise of renewal clause, because Canada Post had complied with renewal clause by exercising right to renew at least six months before expiry of 1994 documents--Observing that since Canada Post is public authority and contracts "designated contracts" for NAFTA purposes, new contracts should be subject to tendering procedure compliant with NAFTA--Application dismissed--Pragmatic or functional analysis not justifying treating case as rare instance in which appropriate to depart from standard of patent unreasonableness normally applied to questions of law decided by CITT in course of determining procurement disputes--First, in regulating fairness, propriety of procurement process in order to ensure compliance by government institutions with relevant trade regime, CITT performing exercise of considerable legal, factual, business complexity in which has extensive experience--Its work includes scrutiny, construction of contractual documents to determine value of contract, including any optional purchase provisions for purpose of deciding applicability of NAFTA procurement requirements and whether tenders responsive to conditions of participation--Area of expertise indicated by broad statutory mandate to investigate complaints concerning any aspect of procurement process relating to designated contract--Second, impossible to divorce from context of matter before it, CITT's conclusion that, on facts, not open to Canada Post to exercise renewal option when agreed to enter into second five-year contract with applicants--CITT determining complaint by potential bidder that purported renewal attempt to avoid NAFTA requirements on procurement process--As NAFTA circumscribes government institutions' freedom of contract in respect of designated contracts, effect for NAFTA purposes of Canada Post's failure to exercise its renewal option by date prescribed in first contract not necessarily to be equated with rights of private parties whose legal relationship governed by common law of contract--Argument since no provision of NAFTA dealing with contractual renewals, CITT's expertise in trade law not relevant to basis on which decided complaint, not persuasive --NAFTA, chapter 10, dealing with government procurement, seeking to protect regulatory regime created by warning parties not to prepare, design or otherwise structure any procurement contract in order to avoid obligations of this chapter and specifically provides that option clauses shall not be used in manner that circumvents this chapter--Maintaining integrity of regime, bolstered by anti-avoidance provisions such important part of legal context that unrealistic to say CITT dealing primarily with question of general law of contract and thus operating outside area of expertise--Court can only review CITT's decision for patent unreasonableness--In light of factual, legal, regulatory contexts in which made, CITT's decision having some rational basis--Not patently unreasonable for CITT to have decided to hold Canada Post strictly to renewal clause in original contract in order to limit contractual advantages that existing contractors often enjoy over competitors--Not patently unreasonable for CITT to have considered neither application of common law doctrine of waiver nor to have read into temporary extension contracts modifications of latest date for exercise of renewal option in order to keep it effective--North American Free Trade Agreement Implementation Act, S.C. 1993, c. 44.