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Contracts |
Groupe Axor Ingénierie--Construction Inc. v. Canada
T-127-00
2003 FCT 797, Lemieux J.
27/6/03
37 pp.
Action claiming sum of $582,775.04 composed of, inter alia, deduction of $442,775.04 by Defence Construction Canada (DCC) pursuant to certain contractual provisions between DCC and plaintiff group Axor Ingénierie-- Construction Inc.--Question whether in its two bids of June 18, July 31, 1996 on DCC calls for tenders, Axor required to take into account public announcement made on April 23, 1996 by Minister of Finance of Canada--Announcement Canada had signed memorandum with governments of Nova Scotia, New Brunswick and Newfoundland, designed to harmonize sales taxes of those provinces with federal system --Answer to principal question depended on interpretation of term "public notice" in clause 22.4 of General Conditions of contract prescribed by DCC--On July 31, 1996 Axor filed bid with DCC to design and construct medical clinic at Armed Forces base at Gagetown in New Brunswick--Axor was lowest bidder and received contract on August 27, 1996--On same day it also received DCC contract for design and building of mess at Canadian Armed Forces Base at Greenwood in Nova Scotia--At December 2, 1996 Minister tabled Bill C-70 on harmonization in House of Commons-- This legislation became effective on April 1, 1997 [S.C. 1997, c. 10]--Noting tax change implemented by Parliament, DCC invoked provisions of clause 22.3 against Axor, as it felt it was entitled to benefit from 3% reduction imposed on building materials delivered to Gagetown and Greenwood sites after April 1, 1997--In Axor's view, it was clause 22.4 of contractual clauses that applied--Crown argued public announcement on April 23, 1996 not public notice within meaning of clause 22.4 of General Conditions, since that announcement simply mentioned memorandum of understanding on harmonization with view to arriving at final agreement--Application of Federal Court of Appeal judgment in Hervé Pomerleau inc. v. Canada (2000), 6 C.L.R. (3d) 1-- Rule of interpretation relied on by Axor was intent of parties, namely, what they had in mind when considering clause 22 of General Conditions--Axor also relied on contra proferentem rule of interpretation that contract drafted by one party must be interpreted against it if any doubt arising--Purpose of clause 22 of General Conditions to establish some stability in costs, but also to protect parties against fiscal change while contract in effect--Pomerleau decisive in case at bar-- Favours position taken by DCC on interpretation of public notice in clause 22.4, but operates against it in implementation of contra proferentem rule--Concept of public notice in clause 22.4 should be interpreted in parliamentary context--Clause 22.4 exceptional in nature since creates presumption fiscal change, even one occurring after bid submitted, deemed to have occurred before date on which submitted--Recognition of this exceptional aspect of clause 22.4 requiring high degree of certainty as to probability of fiscal change announced--No doubt uncertainty reigned where method of applying clause 22.4 concerned--On evidence, Axor in fact took into account 3 % PST reduction on building materials delivered to site after April 1, 1997 and DCC obtained benefit of this when Axor adjusted overall price of its two bids--Deductions made by DCC unlawful in their contractual context and Axor justified in claiming sum of $442,775.04 from Crown in right of Canada--Axor entitled to interest before and after judgment as of date of these two deductions by DCC.