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Crown law - Government contracts - Tendering process - Minister rejecting Appellant’s bid for the construction of a highway and accepting another contractor’s bid - Whether the law permits a person calling for tenders to use a no claims clause as a license to breach the duty of fairness - Whether there is an implied term in Contract A that a person calling for tenders is required to evaluate tenders fairly and in good faith - Whether the law permits government, by private law of contract, to use a no claims clause to make decisions unfairly and contrary to the provisions of the governing legislation.

In 2000, the Ministry issued a Request for Expression of Interest (“RFEI”) and later a Request for Proposals (“RFP”) for the construction of 25 kilometres of highway over very challenging terrain from Greenville to Kincolith in British Columbia. Six proponents, including Tercon and its competitor, Brentwood Enterprises Ltd. (“Brentwood”) responded to the RFEI. In the subsequent RFP, the Minister stipulated that only the six RFEI proponents would be eligible to submit proposals, with the contract for the project to be awarded to the lowest bidder. It also contained a clause precluding the proponents from making a claim for damages relating to their participation in the RFP process. On its own, Brentwood did not have the capacity to complete the project, so it reached an agreement with Emil Anderson Construction Co. (“EAC”), a leader in the road-building industry, to submit a proposal as a joint venture. Brentwood believed that a joint venture proposal might be ineligible under the terms of the RFP as EAC was not a qualified proponent, so it made inquiries with the Ministry’s project director to obtain prior approval. It was advised that the proposal had to be in Brentwood’s name, but that the make up of their team would be reviewed at the evaluation stage. Brentwood and EAC signed a jointly prepared proposal which reflected their equal sharing arrangement, and submitted it in Brentwood’s name, with EAC described as a major member of the team. The two lowest bids were submitted by Brentwood at approximately $24 million and Tercon at approximately $26 million. All proposals were evaluated by a project evaluation panel (“PEP”) appointed by the Ministry and then by an Independent Review Panel (“IRP”). Throughout the six-step evaluation process, the 50-50 joint venture structure of Brentwood’s proposal was identified and confirmed. This was also reflected in the PEP report that was presented to the IRP. After Brentwood was identified as the preferred proponent, concern was expressed at a meeting with Ministry officials that its bid might be ineligible as a joint venture. It was agreed that all references to EAC and the joint venture would be deleted from the PEP and IRP reports. In addition, no reference to EAC or the joint venture was made in the letter that was sent to Brentwood, advising it that it was the successful proponent, copies of which were also sent to the unsuccessful proponents. Ministry officials decided that the award would be made in the name of Brentwood alone and any contract B would also be in the Brentwood name. Brentwood and EAC would conclude a separate agreement to formalize their joint venture. Tercon brought an action seeking damages, alleging that the Ministry had accepted a tender from an ineligible bidder, fundamentally breaching its Contract A obligations to Tercon.