This article is an excerpt from Government Procurement, which is available for purchase.
In its April 2012 decision in Lindhorst v. Collingwood (Town), the Ontario Superior Court of Justice granted a municipality’s application for summary dismissal of a claim launched by an unsuccessful bidder in a municipal land sale. The case dealt with the tax sale of two properties in the Town of Collingwood, Ontario. The plaintiff submitted bids on both properties but they were rejected in favour of bids that offered more money for the land. The plaintiff launched a legal challenge, arguing that the better bids should be rejected as non-compliant. The Town brought a motion for summary dismissal. The court agreed that the irregularities relating to the labelling of the bid envelopes and the use of the submission forms were inconsequential and did not render the selected bids invalid:
The Envelopes
Mr. Lindhorst’s strongest argument is that the envelopes submitted by Mr. Oppedisano do not conform with Rule 6(c) and should have been rejected by the treasurer pursuant to Rule 9(3)(b). Mr. Lindhorst has used this same argument in other tax sale litigation: see Lindhorst v. The Corporation of the Town of Kingsville, 2007 CanLII 41435 and Lindhorst v. The Corporation of the City of Cornwall, 2010 ONSC 3882. His position is that the Rules are very clear and any deviation from them must result in a rejection of a tender. He says the treasurer has no discretion to deviate from the Rules.
Recall that Rule 6(c) requires that tenders must be “submitted in a sealed envelope which indicates on it that it is a tax sale and provides a short description or municipal address of the land sufficient to permit the treasurer to identify the parcel of land to which the tender relates.”
There is no dispute that Mr. Oppedisano provided a description of the lands sufficient to permit the treasurer to identify the parcels in issue. The dispute arises because of the absence of the words “tax sale” on Mr. Oppedisano’s envelopes. But, to be clear, the Rule does not require the use of the exact phrase “tax sale”. It merely provides that the envelope has to indicate that it is a tax sale. In this instance, the envelopes were marked “tender bid”, addressed to the treasurer and setting out the description of the very lands that were subject to the tax sale. This was the only tax sale being conducted at the time by Collingwood and in fact they had not done a sale prior to this since 2001. In my view, the envelope was sufficiently descriptive to identify it as a tender for a specific tax sale.
I have identified the object of the Rules as ensuring the land owner receives just and fair process in the sale of his or her lands. Ensuring that tender envelopes are properly marked, serves a dual purpose in furtherance of that object. First, it enhances the likelihood that all tenders are received into the right hands – those of the treasurer – and all are taken into consideration at the time of the opening of the envelopes. At the same time, those parties who do not properly mark their envelopes will not have cause to complain if their tender ends up on the wrong desk and is not included in the process.
In this case, the envelopes were sufficiently clearly marked so as to comply with Rule 6(c) and to ensure that the purpose and intent of the Rule was met. In my view, Collingwood was right not to reject Mr. Oppedisano’s bids on the basis of any alleged irregularity with his envelopes.
Use of Form 7
Rule 6(1) provides that all tenders must be in Form 7. In this instance, Mr. Oppedisano’s tenders were, in form and content, in accordance with Form 7, save that the form was entitled Form 8. There is no dispute that Form 8 as used in this case was the same in substance as the prescribed Form 7. In my view, it would be a perverse finding to conclude that Mr. Oppedisano’s bids were invalid because the form he used said “Form 8” instead of “Form 7”, where the content was the same as that prescribed by the Rules, and where Mr. Oppedisano completed the very form provided to him by Collingwood.
The purpose of using a prescribed form is to ensure that every tenderer includes the same information, in the same format, making comparisons between tenders clear and easy. That purpose was not in any way subverted by the use of a document marked Form 8, where the content was the same as the prescribed Form 7.
Lindhorst v. The Corporation of the Town of Kingsville, as above, was a case involving a tax sale in June 2004. Mr. Lindhorst had submitted a tender on Form 8. The Rules were amended in May 2003, changing Form 8 to Form 7. Mr. Lindhorst did not complain about his own or anyone else’s use of Form 8 in that case, even though, as here, Rule 6(1) prescribed the use of Form 7. The presiding judge, Justice Aston, found that the use of Form 8 was not fatal to any tender bid using it. I agree. It is nothing more than an insignificant irregularity.
Alterations to Form 7
Similarly, the use of the Step Headings in the tender form circulated by Collingwood does not undermine the integrity of the form. It remains, in substance, the same form as prescribed by the Rules. The Step Headings are, in my view, a deviation from the prescribed form, not affecting its substance or calculated to mislead. As such, the deviation does not vitiate the form.
Again, it would be a perverse result for Collingwood to reject a bid based on the use of a form prepared and circulated by Collingwood itself. (paras. 40-49)
As this case illustrates, the issue of tender compliance can attract legal challenge by unsuccessful bidders. In this instance, the alleged non-compliance was seen as immaterial by the court and the defendant was able to obtain a summary dismissal of the bidder’s lawsuit. Purchasing institutions often conduct their bidding processes under close scrutiny, however. They should therefore be careful to strictly follow and enforce their process rules in order to mitigate the risk of looming legal challenges.
