A-1624-83
Best Cleaners and Contractors Ltd. (Appellant).
v.
The Queen in right of Canada (Respondent)
Court of Appeal, Pratte, Mahoney and Hugessen
JJ.—Ottawa, March 14, 15 and 27, 1985.
Evidence — Clerk of Privy Council filing certificate pursu
ant to Canada Evidence Act s. 36.3 objecting to disclosure of
information before Court on ground information confidence of
Queen's Privy Council for Canada — Gist of information
already produced on discovery — S. 36.3 protecting against
compulsion of disclosure of information, not receipt thereof in
evidence if available otherwise — To maintain confidentiality
solely against Court would imply Parliamentary intention to
permit filing of certificate to obstruct justice while serving no
apparent legitimate purpose — Canada Evidence Act, R.S.C.
1970, c. E-10, s. 36.3 (as enacted by S.C. 1980-81-82-83, c.
111, s. 4) — Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, s. 41 (rep. idem, s. 3).
Crown — Contracts — Tenders — Call for two-year con
tract providing for possible two-year extension — After ten
ders opened, government official telephoned competing tender
er to propose four-year contract — Recommendation to award
four-year contract not followed but competing tenderer
awarded two-year contract — Issue whether contract sham,
being for two years in form but for four years in substance —
Trial Judge erred in granting motion for non-suit in view of
evidence two-year contract sham — Interest of justice calling
for new trial — Federal Court Rules, C.R.C., c. 663, R. 339.
The appellant was the unsuccessful tenderer for a contract
for the operation and maintenance of Frobisher Bay Airport. It
was to be a two-year contract, with a possible two-year exten
sion at the price indicated in the tender. After the bids were
received, an official of the Department of Transport contacted
Tower Arctic Limited, the competing tenderer, to propose a
four-year contract, to which Tower agreed. The Department's
recommendation to Treasury Board that a four-year contract
be entered into was not accepted and only a two-year contract
with Tower was authorized even though the appellant's bid for
the first two years was lower. The tender documents did say,
however, that the lowest or any tender would not necessarily be
accepted.
The day before the trial of the action for damages against the
Crown began, the Clerk of the Privy Council filed a certificate
pursuant to subsection 36.3(1) of the Canada Evidence Act
objecting to the disclosure of certain information already dis
closed on discovery, on the ground that it constituted a confi
dence of the Queen's Privy Council for Canada. As a result, the
Trial Judge excluded all this information alleged to be confi
dential and consequently dismissed the action on a motion of
"non-suit".
This is an appeal from that decision.
Held (Pratte J. dissenting), the appeal should be allowed.
Per Mahoney J. (Hugessen J. concurring): In Ron Engineer
ing the Supreme Court of Canada defined the relationship
between the owner and a tenderer for a building contract. Two
contracts are involved: contract A, arising forthwith upon the
submission of the tender and contract B, the construction
contract. Here, we are concerned with contract A pursuant to
which the respondent is under the obligation not to award a
contract except in accordance with the terms of the tender call.
The stipulation that the lowest or any tender need not be
accepted does not alter that. The issue is whether the contract
was a sham, whether it was a two-year contract in form but a
four-year contract in substance.
In order to answer the question of whether the Trial Judge
could properly grant a nonsuit, one must first look at the
evidence and the admissibility of information excluded by the
Trial Judge because of the filing of the certificate. It is clear
that the gist of the information had already and without
objection been produced on discovery. Section 36.3 protects
against the compulsion of disclosure, not the receipt of informa
tion in evidence if it is available otherwise than by court order.
In the present case, everyone with a legitimate interest has it
except the Court. Maintenance of confidentiality against only
the Court in such a case implies a Parliamentary intention to
permit the filing of a certificate to obstruct the administration
of justice while serving no apparent legitimate purpose. The
certificate is not a bar to the admission in evidence of the
documents and information in question.
There was, therefore, evidence tending to establish that the
two-year contract entered into with Tower was a sham. The
Trial Judge erred in construing the pleadings as estopping that
contention. It follows that the Trial Judge erred in granting the
motion for non-suit. As the practice in the case law allows, the
Court finds that the interests of justice here call for a new trial.
Per Pratte J. (dissenting): The Ron Engineering decision is
distinguishable since the Supreme Court there had to deal with
rights and obligations that were clearly stipulated in the tender
documents, whereas in the present case, terms prohibiting the
Crown from negotiating with bidders and changing the terms of
the proposed contract are only implied. They derive from an
obligation to treat all bidders fairly and equally.
There was no allegation and no evidence that this was a
simulated transaction. There were no "illegal" negotiations,
only a request to Tower asking whether it would agree to a
four-year contract, and Tower's affirmative answer.
With respect to the Trial Judge's decision to exclude infor
mation on the basis of the certificate, the Court finds that, in
any event, that evidence could not help the appellant. A
recommendation that is not followed is not relevant. Documents
that precede a proper and legal decision are also irrelevant.
Once the decision to enter into a two-year contract had been
made, the alleged irregularity could not conceivably be said to
be prejudicial to the appellant's interests.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. in right of Ontario et al. v. Ron Engineering &
Construction (Eastern) Ltd., [1981] 1 S.C.R. 111; 119
D.L.R. (3d) 267; McCleery v. The Queen, [1974] 2 F.C.
352 (C.A.); Hayhurst v. Innisfail Motors Ltd., [1935] 1
W.W.R. 385 (Alta. C.A.).
REFERRED TO:
Active Construction Ltd. v. Routledge Gravel Ltd.
(1959), 27 W.W.R. 287 (B.C.C.A.); McKenzie et al. v.
Bergin et al., [1937] O.W.N. 200 (C.A.).
COUNSEL:
Michael A. Kelen for appellant.
M. F. Ciavaglia for respondent.
SOLICITORS:
Michael A. Kelen, Ottawa, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
PRATTE J. (dissenting): This is an appeal from a
judgment of the Trial Division [judgment dated
October 25, 1983, T-4417-81, not reported] dis
missing with costs the action for damages brought
by the appellant against Her Majesty.
Early in May, 1981, the Department of Trans
port published a notice inviting tenders for a con
tract in respect of the operation and maintenance
of the Frobisher Bay Airport, in the North-West
Territories. That notice referred to tender docu-
ments which specified, inter alla, that the proposed
contract was for a period of two years but request
ed the tenderers to indicate in their tender, in
addition to their price for that two-year period,
their price for a further period of two years.
Indeed, pursuant to the tender documents, the
proposed two-year contract was liable to be
extended for another period of two years without
any further call for tenders if, four months before
the expiry of the initial two-year period, the par
ties agreed that it be so extended at the condition
mentioned by the contractor in his tender. The
tender documents also stated that Her Majesty
would not be bound to accept any tenders.
The Department received only two tenders: one
from the appellant, the other from Tower Arctic
Limited (Tower). The appellant's bid for the ini
tial two-year period was $948,000, approximately
$4,500 less than Tower's ($952,538); but its price
for the extension period ($1,241,890) exceeded
Tower's ($1,180,000) by more than $60,000.
After the tenders had been opened, an official of
the Department of Transport telephoned the Presi
dent of Tower and asked him whether his company
would agree to enter into a four-year contract at
the condition mentioned in the tender. The answer
was in the affirmative and was later confirmed in
writing in the following terms:
With regard to the above project we are herewith pleased to
confirm that we are ready to enter into a contract for the
duration of four years, starting October 1st, 1981, and ending
September 30th, 1985, and we also confirm that our price as
tendered will remain unchanged.
We understand that the award of such a contract would be
conditional on Treasury Board approval.
The Department then recommended to Treasury
Board that the contract be awarded to Tower for a
period of four years. The appellant heard of that
recommendation. His counsel wrote to the Depart
ment which, in his view, had no right to negotiate
with one of the tenderers for a change in the terms
of the proposed contract. He received an answer
reading in part as follows:
The tender documents for this work provided that tenderers
were to submit firm prices to carry out the specified work for a
two-year fixed term and for a two-year optional term, with the
exercising of the option for the additional two years being
subject to mutual agreement.
In considering the tenders received, it was clear that the offer
made by Tower Arctic Limited was financially advantageous
providing the firm was agreeable to having the option made
effective on award of contract with the effective period of the
awarded contract being for the full four-year period. Failure on
the firm's part to agree to exercising the option immediately
would have the result of the offer by Best Cleaners and
Contractors Limited being the most financially acceptable.
Confirmation was received from Tower Arctic Limited that
they agreed to having the period of the contract extended to the
full four-year term ....
It is considered quite clear that there were no negotiations as to
the pricing or term of this offer, and the Department fails to see
any irregularity in recommending its acceptance as being the
lowest.
The recommendation that the contract be
awarded for a period of four years was not fol
lowed. After having received legal advice, Trea
sury Board approved the award of the contract to
Tower for a period of two years as provided in the
tender documents. At the same time, according to
the President of the appellant, Treasury Board
gave its approval to the eventual extension of that
contract for the additional period of two years.
The appellant commenced its action against Her
Majesty before the award of the contract at a time
when it had reasons to believe that Tower would
be given the contract for a period of four years.
The statement of claim was later amended so as to
take into account the decision of Treasury Board.
In its latest version, the statement of claim alleges
the substance of the facts that I have just related;
it will be sufficient to quote its last three
paragraphs:
9. After the commencement of this action, the Treasury Board
was advised by its counsel that the Department of Transport
recommendation to award the contract to Tower Arctic Lim
ited for a four year period was illegal. Accordingly the Defend
ant awarded the contract to Tower Arctic Limited for a two
year period.
10. The decision to award the contract to Tower Arctic Limited
for a two year period was made in bad faith in that the officers
of the Defendant chose the fender of Tower Arctic Limited not
upon the basis of the relative merits of the tenders or the
relative abilities of the Plaintiff and Tower Arctic Limited to
perform the contract work, but upon the "illegal" negotiations
with Tower Arctic Limited for the two year extension period
price.
11. The Plaintiff therefore claims from the Defendant as
follows:
(a) damages;
(b) a declaration that the contract was awarded to Tower
Arctic Limited upon improper considerations;
(c) the costs of this action; and,
(d) such other relief as this Court deems fit.
The action was tried at Frobisher Bay at the end
of September, 1983, approximately a year after
counsel for the appellant had examined a repre
sentative of the Crown for discovery and obtained
from him documents and information relating to
the decision of the Treasury Board and the recom
mendation made by the Minister of Transport,
Mr. Jean-Luc Pépin. On the eve of the trial, the
Clerk of the Privy Council filed in the Registry of
the Court in Ottawa a certificate pursuant to
section 36.3 of the Canada Evidence Act [R.S.C.
1970, c. E-10 (as enacted by S.C. 1980-81-82-83,
c. 111, s. 4)] whereby:
(a) he certified that "a Submission dated July
21, 1981 from Jean-Luc Pépin to the Min
isters of the Treasury Board and a Treasury
Board Précis prepared by Treasury Board
officials for consideration by Treasury
Board Ministers dated September 14,
1981," were documents containing "infor-
mation constituting confidences of the
Queen's Privy Council for Canada"; and
(b) he objected to the disclosures of those
"documents and the information contained
therein."
As a result of the filing of this certificate,
counsel for the appellant was prevented by the
Trial Judge from adducing in evidence information
and documents that had been voluntarily given to
him during the examination for discovery. He
nevertheless established the facts that I have sum
marized; he also proved that the ability of the
appellant to perform the contract had never been
questioned. Once counsel for the appellant had
closed his case, counsel for Her Majesty elected
not to adduce any evidence and presented a motion
of "non-suit". The Trial Judge granted the motion
and dismissed the action with costs.
Counsel for the appellant first argued that, on
the basis of the evidence adduced at the trial, the
Trial Judge should have dismissed the motion of
"non-suit" and given judgment in the appellant's
favour. His second and subsidiary contention was
that, in any event, a new trial should be ordered
because the Trial Judge had, following filing of the
certificate of the Clerk of the Privy Council,
wrongly excluded evidence that should have been
taken under consideration. Counsel therefore
raises two questions: did the appellant establish his
case at trial and, if he did not, was he prevented
from doing so by the exclusion of evidence that
should have been admitted?
Before answering these questions, it is necessary
to determine the legal basis of the appellant's
action. That action, according to appellant's coun
sel, is based on the judgment of the Supreme
Court of Canada in R. in right of Ontario et al. v.
Ron Engineering & Construction (Eastern) Ltd.,
[1981] 1 S.C.R. 111; 119 D.L.R. (3d) 267. He
said that the Supreme Court had decided in that
case that, once a bid is received in answer to a call
for tenders by an owner, a unilateral contract is
formed between the owner and the bidder under
which the owner is under an obligation to award
no other contract than the one described in the
tender documents and to award that contract on
the sole basis of the information contained in the
tenders without negotiating with any of the con
tractors. That is, in my view, a wrong interpreta
tion of the decision of the Supreme Court. That
decision was rendered in a case where a contractor
had answered a call for tenders and, as required by
the owner, accompanied his tender with a deposit
of $150,000. The condition of the call for tenders
which required that deposit also specified the cir
cumstances in which it could be recovered by the
contractor. After realizing that, by mistake, he
had mentioned in his tender a price which was
much too low, the contractor withdrew his bid and
sued the owner for the return of the deposit.
Pursuant to the condition of the call for tenders,
the circumstances were not such as to entitle the
contractor to recover his deposit. The Ontario
Court of Appeal nevertheless decided in his favour
for the reason that, as he had made an error in
determining the amount of his tender, that tender
was incapable of being accepted so as to form a
valid contract; no contract having been entered
into by the parties, nothing prevented the return of
the deposit. The Supreme Court reversed that
judgment. It held that the right of the contractor
to the recovery of the deposit arose from a unilat
eral contract that had come into being automati
cally upon the submission of the tender. That
unilateral contract, which clearly specified the cir
cumstances in which the contractor was entitled to
the return of the deposit, was different from the
construction contract for which the tenders had
been called and could, therefore, come into exist
ence even if the contractor had committed an error
preventing the formation of that construction
contract.
In Ron Engineering, the Supreme Court had to
deal with rights and obligations that were clearly
stipulated in the tender documents. Here, the sit
uation is different. The tender documents con
tained no express provision prohibiting the Crown
from entering into negotiations with the bidders
and changing the terms of the proposed contract.
If the Crown was nevertheless prohibited from
doing those things, the source of that prohibition
could only be found in some implied terms of the
unilateral contract resulting from the making of
the tender. Those implied terms were not the
subject of the Supreme Court's decision. In my
opinion, they do nevertheless exist. I would not
however describe them in the same manner as
counsel for the appellant. In my view, they simply
impose on the owner calling the tenders the obliga
tion to treat all bidders fairly and not to give any
of them an unfair advantage over the others.
The first argument put forward on behalf of the
appellant was that the Trial Judge, on the evidence
before him, should have given judgment in the
appellant's favour. I see no merit in that conten
tion. In my opinion, there was nothing in the
evidence that could have justified a judgment for
the appellant. The statement of claim alleged and
the evidence established that the contract had been
awarded for a period of two years. There was no
allegation and no evidence that this was a simulat
ed transaction. In this respect, the fact that Tow
er's offer of a four-year contract was not expressly
rejected by the Crown is without significance since
that offer was impliedly rejected when the Crown
entered into a two-year contract. Moreover, con
trary to what was argued by counsel for the appel
lant, the allegation contained in paragraph 10 of
the statement of claim is not an allegation of
sham. It is merely an allegation that the decision
to award the two-year contract to Tower was
based upon an improper consideration because it
was made on the basis of something that trans
pired during the "illegal" negotiations with Tower.
That allegation becomes meaningless once it is
known that, as the evidence shows, these illegal
negotiations were nothing more than a request to
Tower (asking whether it would agree to a four-
year contract) and Tower's affirmative answer.
The appellant's subsidiary submission was that,
in any event, the judgment under attack must be
set aside on the ground that the Trial Judge erred
in excluding evidence relating to the documents
mentioned in the certificate filed by the Clerk of
the Privy Council. I would also reject that
argument.
I am ready to assume, for the sake of discussion,
that the decision of the Trial Judge to exclude
documentary and other evidence on the basis of
the certificate was wrong. In my opinion, that
evidence could not help the appellant. It related to
the two documents mentioned in the certificate. I
do not see how the recommendation made by the
Minister of Transport could be relevant since it is
common ground that it was not followed. As to the
document prepared by Treasury Board officials, it
is also irrelevant in my opinion since what matters
is the decision that was actually made by Treasury
Board, which decision, it is common ground, was
to approve the award of a two-year contract to
Tower.
In my opinion, this appeal cannot succeed for a
reason that can be shortly put. The only irregulari
ty allegedly committed by the respondent was to
elicit from Tower, behind the back of the appel
lant, an offer of a four-year contract. However, the
respondent did not accept that offer but chose,
instead, to enter into a two-year contract. Once
that decision had been made, the alleged
irregularity could not conceivably be said to be
prejudicial to the appellant's interests.
I would dismiss the appeal with costs.
* * *
The following are the reasons for judgment
rendered in English by
MAHONEY J.: This is an appeal from a decision
of the Trial Division which dismissed the appel
lant's action with costs on a motion of "non-suit",
entertained on condition that the respondent would
call no evidence. The appellant had been the
unsuccessful tenderer for a contract entitled
"Operation and maintenance of the Frobisher Bay
Airport, Frobisher Bay, North-West Territories."
Cerain documents had been produced by the
respondent on the examination for discovery of its
designated officer and questions regarding them
had been answered, all without objection or reser
vation. The trial began in Frobisher Bay at 10:00
a.m., September 28, 1983. On September 27, at
5:00 p.m., the Clerk of the Privy Council filed, in
the Court's Registry at Ottawa, a certificate pur
suant to subsection 36.3(1) of the Canada Evi
dence Act, in respect of information disclosed on
discovery. As a result, the learned Trial Judge
refused to receive in evidence certain documents
and the questions and answers on discovery that
dealt with them.
The appellant submits that the learned Trial
Judge erred in dismissing its action and that, on
the evidence, the motion for non-suit should have
been dismissed and judgment given for it. In the
alternative, it submits that he erred in excluding
all or, in the further alternative, some of the
evidence tendered by the appellant on the author-
ity of the certificate. Finally, it submits that he
erred in his assessment of damages.
The tender documents provided in their material
parts:
2.2 PERIOD OF CONTRACT
The contract for operation and maintenance of Frobisher
Airport, Frobisher, N.W.T., will be for a period of two (2)
years starting at 00:01 hours, August 1, 1981.
However, the Department reserves the right to extend the
contract for an additional period of two (2) years, subject
to the following conditions:
1) The extending agreement being mutually agreed to and
duly executed by both parties four (4) months prior to
original expiration of the contract.
2) Retention of the terms and conditions of the original
contract.
(1) CONTRACT EXTENSION
The contract for the operation and maintenance of the
Frobisher Bay Airport, Frobisher Bay, North-West Terri
tories, will be for a period of two (2) years commencing
August 1st, 1981. However, the Department reserves the
right to extend the contract for an additional period of two
(2) years.
Such extension to the contract shall materialize in accord
ance with the conditions stipulated in Article 2.2 of the
specification document attached herewith, only if both the
Department and the Contractor reach an agreement to
that effect. In view of a possible extension for two (2)
years tenderers shall indicate their tender prices for this
additional period, on pages 5A to 5F.
In the event that an agreement is reached upon by both
parties pertaining to an extension for 1983-84 and 1984-
85, the prices inserted on pages 5A to 5F shall be used to
amend the original contract only these prices shall be used.
Furthermore, all other terms and conditions of the original
contract shall remain unchanged and in force for all
duration of the contract extension, if any.
It was also stipulated that:
The lowest or any tender will not necessarily be accepted.
There were two bidders, the appellant and
Tower Arctic Limited, the incumbent contractor,
hereinafter "Tower". Their bids were:
Appellant Tower
Contract period $ 948,600 $ 952,538
Extension period $1,241,890 $1,180,000
Total $2,190,490 $2,132,538
After the bids were received, the Ministry of
Transport negotiated with Tower and obtained the
following commitment, signed by Tower's Presi
dent:
... we are herewith pleased to confirm that we are ready to
enter into a contract for the duration of four years, starting
October 1st, 1981 and ending September 30th, 1985 and we
also confirm that our price as tendered will remain unchanged.
We understand that the award of such a contract would be
conditional on Treasury Board approval.
The Ministry recommended to Treasury Board
that a four-year contract be entered into with
Tower. Treasury Board, in fact, only authorized a
two-year contract with Tower. Tower's commit
ment as to the extension period was never revoked.
The Ministry acknowledged that, had Tower not
agreed to a full four years at its bid price, the
appellant's bid would have been "the most finan
cially acceptable". The appellant's ability to per
form the contract appears never to have been in
question and the Trial Judge so found. It appears
that, at the date of trial, the initial two-year
contract had not expired and that no tenders for a
future contract had been published. The appel
lant's counsel stated, in argument before this
Court, that Tower is presently, in fact, performing
the contracted services. The only evidence as to the
basis upon which it may be doing so is that elicited
from the appellant's President during cross-exami
nation by the respondent's counsel and the learned
Trial Judge.
BY MR. CIAVAGLIA:
Q. ... what were you advised by Transport with respect to
the decision of the Treasury Board?
THE COURT: Could you give us the answer to that?
THE WITNESS: Yes.
THE COURT: What were you told?
THE WITNESS: I was told that Treasury Board did not accept
the recommendation to avoid the contract for four years to
Tower Arctic. However, in their wisdom, they decided to
authorize a contract for two years, and set aside funds for the
next two years based on the prices quoted by Tower for the next
two-year period and permitted Department of Transport to
negotiate a further extension based on the money available
now, if and when the time for that point was suitable, or
whatever.
THE COURT: You were told that the Treasury Board had
advised Transport that they would not give the contract ...
THE WITNESS: For four years.
THE COURT: ... to the present incumbent for a period of
four years.
THE WITNESS: For four years.
THE COURT: But in lieu of that...
THE WITNESS: They said, "We will allow—we will give the
contract to the incumbent for two years."
THE COURT: Yes.
THE WITNESS: And then they also immediately set aside
funds equal to the amount set out in years three and four on the
Tower bid ...
THE COURT: Yes.
THE WITNESS: ... and permit Transport to either—in their
wisdom, to negotiate then the affirmation of the option and go
into a second two-year contract, or, if that wouldn't material
ize, instructed Transport to retender in a competitive manner.
The witness was then referred to a document
apparently produced by the respondent on discov
ery which, the transcript indicates, was the source
of his information. Counsel were prepared to have
it marked as an exhibit immediately, but the Judge
refused in the light of the respondent's undertak
ing to call a witness who would be able to identify
it properly. In view of the successful motion to
non-suit, that witness was never called and the
document is not on the record.
The learned Trial Judge made no finding what
ever as to credibility. He made no express finding
as to the weight to be given the foregoing evidence.
In its second amended statement of claim, the
appellant pleaded:
9. After the commencement of this action, the Treasury Board
was advised by its counsel that the Department of Transport
recommendation to award the contract to Tower Arctic Lim
ited for a four year period was illegal. Accordingly the Defend
ant awarded the contract to Tower Arctic Limited for a two
year period.
10. The decision to award the contract to Tower Arctic Limited
for a two year period was made in bad faith in that the officers
of the Defendant chose the tender of Tower Arctic Limited not
upon the basis of the relative merits of the tenders or the
relative abilities of the Plaintiff and Tower Arctic Limited to
perform the contract work, but upon the "illegal" negotiations
with Tower Arctic Limited for the two year extension period
price.
After reciting paragraph 9 above, but not 10, the
learned Trial Judge held:
In answer to this the defendant pleaded in paragraph 8:
8. In response to paragraph 9 of the second amended state
ment of claim, he says that Transport Canada and Treasury
Board were advised that the contract should be awarded for
the initial two-year period only in order to comply with the
terms and conditions of the tender documents and
specifications.
This pleading by the plaintiff acquiesced in by the defend
ant's pleading estops each of the parties from now contending
otherwise. It follows from this that the Treasury Board never
acted on any recommendation contrary thereto. If the commit
tee of Lanthier, Imbeault and St. Pierre breached any obliga
tion to the plaintiff by asking Tower if it would undertake to
abide by the figures it had placed in its tender for the third and
fourth year, that was a factor which caused no harm to the
plaintiff because the Treasury Board refused to act on it and
awarded the contract to Tower for a two-year period only.
With respect, the appellant's pleading that a two-
year contract was awarded has been taken by the
Trial Judge in complete isolation from its context:
the allegation of bad faith. That is an allegation
with which he simply did not deal.
In R. in right of Ontario et al. v. Ron Engineer
ing & Construction (Eastern) Ltd., [1981] 1
S.C.R. 111; 119 D.L.R. (3d) 267, the Supreme
Court of Canada dealt with the relationship be
tween the owner and a tenderer for a building
contract. I see no distinction arising out of the
subject matter of the contract in issue here. Estey
J., for the Court, referred, at pages 121-122
S.C.R.; 274 D.L.R., to "Contract A (being the
contract arising forthwith upon the submission of
the tender)" and to "Contract B (the construction
contract, the form of which is set out in the
documents relating to the call for tenders)". Here,
as there, we are concerned with contract A. The
respondent's obligation under contract A was not
to award a contract except in accordance with the
terms of the tender call. The stipulation that the
lowest or any tender need not be accepted does not
alter that. The respondent might award no con
tract at all or it might award contract B to Tower,
but it was under a contractual obligation to the
appellant not to award Tower something other
than contract B.
The evidence established clearly that the Minis
ter of Transport, on the advice of his officials,
recommended to Treasury Board that the respond
ent breach contract A by awarding Tower a four-
year contract. The pleadings established that a
two-year contract had been entered into in fact.
What is in issue is whether that two-year contract
was entered into in good faith, that is to say:
whether it was a sham, whether it was a two-year
contract in form but a four-year contract in
substance.
Section 36.3 of the Canada Evidence Act,
R.S.C. 1970, c. E-10, as amended by S.C. 1980-
81-82-83, c. 111, s. 4, Schedule III provides:
36.3 (1) Where a Minister of the Crown or the Clerk of the
Privy Council objects to the disclosure of information before a
court, person or body with jurisdiction to compel the production
of information by certifying in writing that the information
constitutes a confidence of the Queen's Privy Council for
Canada, disclosure of the information shall be refused without
examination or hearing of the information by the court, person
or body.
(2) For the purpose of subsection (1), "a confidence of the
Queen's Privy Council for Canada" includes, without restrict
ing the generality thereof, information contained in
(a) a memorandum the purpose of which is to present
proposals or recommendations to Council;
(b) a discussion paper the purpose of which is to present
background explanations, analyses of problems or policy
options to Council for consideration by Council in making
decisions;
(c) an agendum of Council or a record recording delibera
tions or decisions of Council;
(d) a record used for or reflecting communications or discus
sions between Ministers of the Crown on matters relating to
the making of government decisions or the formulation of
government policy;
(e) a record the purpose of which is to brief Ministers of the
Crown in relation to matters that are brought before, or are
proposed to be brought before, Council or that are the
subject of communications or discussions referred to in para
graph (d); and
(J) draft legislation.
(3) For the purposes of subsection (2), "Council" means the
Queen's Privy Council for Canada, committees of the Queen's
Privy Council for Canada, Cabinet and committees of Cabinet.
The exceptions of subsection 36.3(4) are not in
play. The Treasury Board is a committee of the
Queen's Privy Council for Canada: the Financial
Administration Act, R.S.C. 1970, c. F-10, subsec
tion 3(1). The documents specified are documents
described in paragraph 36.3(2)(a).
The full text of the certificate follows:
1, the undersigned, Gordon Francis Osbaldeston, public ser
vant, residing in the City of Nepean in the Regional Municipal
ity of Ottawa-Carleton in the Province of Ontario, do certify
and say:
1. 1 am the Clerk of the Privy Council for Canada and the
Secretary to the Cabinet.
2. 1 have personally examined and carefully considered a
Submission dated July 21, 1981 from Jean-Luc Pépin to the
Ministers of the Treasury Board and a Treasury Board Précis
prepared by Treasury Board officials for consideration by
Treasury Board Ministers dated September 14, 1981, for the
purpose of determining whether they contain information con
stituting confidences of the Queen's Privy Council for Canada.
3. 1 certify to this Honourable Court pursuant to subsection
36.3(1) and 36.3(2)(a) of the Canada Evidence Act R.S.C.
1970, c. E-10, as amended by 1980-81-82 (Can.) c. 1l1, that
the documents referred to and described in paragraph 2, above,
contain information constituting confidences of the Queen's
Privy Council for Canada and I object to the disclosure of the
documents and the information contained therein.
The record is not clear whether the submission
and précis had, themselves, actually been produced
on discovery. Their gist certainly had, and without
objection. Other documents actually produced
were:
(a) memorandum, dated June 30, 1981, from
the Ministry's regional office to its head office
said by respondent's counsel to contain "ver-
batim reproductions from the Treasury Board
submission";
(b) memorandum dated July 8, 1981, to the
Minister from an official which conveyed to him
the contents of memorandum (a);
(c) the third paragraph of a letter dated July 30,
1981, from the Ministry to the appellant's coun
sel advising him of the gist of the Minister's
submission to Treasury Board; and
(d) a letter, dated September 30, 1981, from the
Deputy Secretary of Treasury Board, presum
ably to the Minister or Ministry, communicating
Treasury Board's decision.
The learned Trial Judge also refused to receive
extracts from the examination for discovery deal
ing with any of the documents and the information
they contain.
Document (d) is the document which was to
have been introduced by the witness the respond
ent undertook to call. The information contained
in it might have been amenable to a proper certifi
cate referring to the decision by virtue of para
graph 36.3(2)(c). No objection was, however,
taken to the disclosure of the Treasury Board's
decision and, accordingly, on that ground alone,
document (d) was admissible. That it was not
received in evidence may have been due to confu
sion rather than an intention to exclude it.
As to documents (a) and (b), I have consider
able difficulty accepting that documents antedat
ing the submission can be said to contain "ver-
batim reproductions from the Treasury Board
submission". If anything, the reverse may be true.
The question is whether the information contained
in memoranda prepared by officials with the intent
that their contents form the basis of a Minister's
submission, whether the memorandum is directed
to the Minister or by one official to another, ought
to be characterized as "information contained in a
memorandum the purpose of which is to present
proposals or recommendations to Council". In my
view, it ought to be so characterized. However,
unless its purpose appears on its face, it will be
difficult to establish that purpose. There must be a
myriad of memoranda circulated among the public
service not directed at the presentation of pro
posals or recommendations to Council whose infor
mation is not protected from disclosure by section
36.3.
There is no doubt that document (c) does con
tain "information contained in the Treasury Board
submission". An uncensored copy of the letter
appears in the Appeal Book.
In so far as the information of the two docu
ments specified in the certificate and documents
(a), (b) and (c) is concerned, the issue now
becomes whether, in the circumstances, the certifi
cate is effective to bar its receipt in evidence by the
Court. We are not, here, considering information
which has been improperly or illegally disclosed by
or to anyone. We are considering information
which could, and perhaps should, have been kept
confidential but, as between the parties to this
action, it was not. The information in document
(c) was an admission made knowingly to the
appellant's solicitor by a responsible official of the
Ministry on September 30, 1981, after the action
had been commenced. Documents (a) and (b)
were certainly disclosed on discovery in the action.
I am unaware of any authoritative decisions
respecting section 36.3. We were referred to none.
With a single exception, I found the judgments
dealing with the repealed section 41 of the Federal
Court Act [R.S.C. 1970 (2nd Supp.), c. 10 (rep.
by S.C. 1980-81-82-83, c. 111, s. 3)] and the
English decisions singularly unhelpful except in
their articulation of the public policy rationale for
non-disclosure, whether based in statute or
common law. Section 36.3 and its companion sec
tions present a new and comprehensive statutory
scheme.
The exception is the decision in McCleery v. The
Queen, [1974] 2 F.C. 352, when this Court was
asked to restrict public access to documents in
respect of which privilege might have been
claimed, but was not, under subsection 41(1). The
documents had been delivered to the Court's
Registry, under a "Top Secret" classification, as
part of a tribunal's record in a section 28 applica
tion. The Court, at page 356, said:
... it will be a rare case in which the Court will ever have
occasion of its own motion to hold any of such documents
privileged from production upon grounds of public interest,
especially where, as here, the documents in question have
already been disclosed to the opposite party.
The application to restrict public access was
refused. The principle is not entirely impertinent in
the present circumstances.
Section 36.3 is predicated on the notion that
Her Majesty's Privy Council for Canada will be
astute in not divulging information it deems confi
dential and that it requires a statutory right to
maintain confidentiality only in the face of "a
court, person or other body with jurisdiction to
compel the production of information". On a fair
reading of the section, it is the compulsion of the
disclosure of the information that is protected
against, not the receipt of the information in evi
dence if it is available otherwise than by exercise
of the tribunal's power to compel its production.
There is a large measure of unreality in the
proposition that the filing of a certificate has the
effect of undoing the disclosure of information
already lawfully disclosed to the opposing party in
a legal proceeding. Everyone with a legitimate
interest in the information has it except the Court.
Maintenance of confidentiality against only the
Court in such a case implies a Parliamentary
intention to permit the filing of a certificate to
obstruct the administration of justice while serving
no apparent legitimate purpose. No such intention
is expressed by Parliament; to infer it is repugnant.
In my opinion, the certificate filed in this action
is not a bar to the admission in evidence of docu
ments (a), (b), (c) or (d), nor to the admission of
the documents specified in the certificate if they
were, in fact, produced on discovery, nor to the
admission of the examination for discovery dealing
with such of those documents as are admissible.
The evidence that Treasury Board approved
funding for the third and fourth years and gave the
Ministry of Transport permission, in its discretion,
to negotiate a firm contract for the third and
fourth years on the basis of Tower's outstanding
commitment is to be weighed in light of the recom
mendation the Minister of Transport actually
made to Treasury Board and the absence of any
apparent reason for awarding a two-year contract
to the high bidder. The respondent had the right to
do that arbitrarily but, if it did, it departed from
the norms of its published guidelines. In my opin
ion, there was evidence tending to establish that
the two-year contract entered into with Tower was
a sham. The learned Trial Judge erred in constru
ing the pleadings as estopping that contention. It
follows that, in my opinion, the learned Trial
Judge erred in granting the motion for non-suit.
A motion for non-suit in a civil non-jury trial
strikes me as a rather odd procedure. Nevertheless,
there is precedent for it, although none I have
found reported in the past several years. The only
reference to non-suit in the Rules of Court [Feder-
al Court Rules, C.R.C., c. 663] appears to be in
Rule 339 and it is of no assistance here. Likewise
the two cases referred to in argument before the
Trial Judge are not particularly pertinent. In
Active Construction Ltd. v. Routledge Gravel Ltd.
(1959), 27 W.W.R. 287, the British Columbia
Court of Appeal was dealing with the right of the
defendant to call evidence when its motion to
non-suit had been refused and the condition that it
not later call evidence had not been imposed. In
McKenzie et al. v. Bergin et al., [1937] O.W.N.
200 (C.A.), the non-suit had been granted in a
jury trial.
The Alberta Court of Appeal, in Hayhurst v.
Innisfail Motors Ltd., [1935] 1 W.W.R. 385,
dealt with a non-suit in a non-jury civil trial. All of
the defendants moved for and were granted a
non-suit. In the result, the Court of Appeal held
that the non-suit had been properly granted in
respect of all defendants except one. The Court,
unanimous on the point, adopted what it identified
as the practice in Ontario, as stated by the Chief
Justice at page 391:
... for the future when a defendant applies for a dismissal at
the close of the plaintiffs case he does so at the risk of not
having the right to give any evidence on his own behalf for if
the trial Judge grants his application and the Appellate Court
comes to the conclusion that he was wrong it will feel itself at
liberty to finally dispose of the case on the evidence already
given and will do so unless in its discretion it considers that in
the interests of justice some other course should be taken.
A new trial was ordered as to the one defendant.
In my view, the interests of justice here call for
a new trial.
It is a matter of sheer speculation whether the
motion for non-suit would have been made or
granted had the learned Trial Judge appreciated
the effect properly to be given the certificate. His
errors in that respect were probably in large part
attributable to its intrusion at the last possible
moment. It is obvious from the record that Frobi-
sher Bay afforded no adequate library, that coun
sel for the appellant was taken by surprise and that
reality, mainly geographic, rendered impractical
an adjournment to permit all concerned adequate
ly to consider its effect.
I would allow the appeal with costs of the appeal
and costs thrown away in the trial to be taxed and
payable forthwith as between solicitor and client.
Other costs in the Trial Division should be in the
discretion of the judge presiding at the new trial.
In the circumstances, it is unnecessary to consider
the appeal against the assessment of damages.
HUGESSEN J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.