This article is an extract from the 5th edition of Government Procurement.
In its May 2019 decision in Reaction Distributing Inc. v. Algonquin Highlands (Township), the Ontario Court of Appeal found a municipality liable for disqualifying a bidder over the failure to label the outside of its bid as required by the tender call rules. The rejected bidder submitted its bid in a three-ring binder enclosed within an unlabelled box. The municipality rejected that bid and was found liable for $71,063.60 in lost profit damages after the trial court determined that the bid was substantially compliant and should have been accepted. The municipality appealed the decision, but the Court of Appeal upheld the trial ruling, stating that the trial judge’s decision was “a factual one that is not to be interfered with absent palpable and overriding error, of which there is none here.” In coming to its decision, the Court of Appeal noted that the municipality failed to provide any reasons regarding why it was not prepared to waive the non-compliance. In other words, the Court of Appeal found that a purchasing institution’s reserved right to accept substantially compliant bids were actually a positive legal duty that required the acceptance of substantially compliant bid unless a reason for rejecting that bid could be provided.
