A little off the topic of construction law. A recent post by Simon Chester at slaw.ca discusses Professor Peter McCormick’s work – specifically his book, Supreme at Last: The Evolution of the Supreme Court of Canada – on the sources of authority cited by the Supreme Court of Canada in their decisions: http://www.slaw.ca/2010/01/27/65-years-of-change-in-what-the-supreme-court-cites/.
Mediation is good business
American construction lawyer Christopher Hill’s latest thoughts have been on the effectiveness of mediation. He gives three good reasons why, in his opinion, mediation works:
- It’s cheaper than litigation,
- Mediated outcomes can be far more flexible than those possible at trial, and
- The parties retain ultimate decision-making control, instead of giving it up to the court.
I agree with him completely, and I have a few things to add.
Put the bucket down
Keeping a handle on workplace practices is rarely on top of the priority list for owners and managers of small and medium-sized companies – there are too many other core tasks to stay on top of in the day-to-day running of the business. Managers at larger companies have the luxury of hiring a staffer to babysit the issue of workplace safety and practices for them.
Unfortunately, when an accident happens the company runs into it like a sunker everybody knew was there, but that nobody was keeping an eye on.
Slackness might cost you
In my pre-law life I spent a lot of time around heavy equipment. And every time I got out of a machine I took the pressure off the hydraulics – leaving a boom or a bucket needlessly hanging in the air always just seemed sloppy and unnecessarily hard on the gear.
Personal preferences notwithstanding, lowering hydraulic booms on parked machinery is also considered safe practice. A recent case from the BC Supreme Court – Slocan Forest Products Ltd. v. Trapper Enterprises Ltd., 2009 BCSC 1175 – is a great example of how much carelessness can cost. (Gary Oakes also commented on this case in the September 18, 2009 issue of The Lawyers Weekly).
Bid Bombing
I was reading through my weekly list of construction law blogs when I noticed this post about “bid bombing.” The post draws attention to a recent article in Engineering News Record.
So-called bid bombs are bids that come in substantially lower than other competing bids. In these situations the other competing bids might be hovering more closely around a particular price range for the project. For example, out of four bidders on a public tender, three come in around $20M while the low tender steals the project for $14 or $15M. I’ve seen this happen, and for the second bidder this can be annoying and frustrating (although bidders are typically annoyed at losing a job anyway).
What the project price ’should’ be
The ENR article makes two central assertions:
- That that there is a “correct” price for a given tender call.
- That unusually low bids are caused by “bad business managers” or “poor bidders.”
Infinity Steel Inc. v. B & C Steel Erectors Inc.
Why contractors and subcontractors should put agreements in writing
There are lots of reasons why it’s important to be clear about the details of an agreement, especially if it’s with a person or company that you don’t regularly deal with. And Infinity Steel Inc. v. B & C Steel Erectors Inc., 2009 BCSC 1053 is a great example of one of those reasons.
Posted in Abandonment, No Contract, Quantum Meruit, Subcontractors Comments closed
Construction Law Terms and Definitions
After receiving some feedback about my first case comments, I realized that for anyone without legal training, even contractors who deal with legal documents on a daily basis, some common legal terms might be foreign in meaning. The obvious solution was to create a quick list of contract and construction law terms and definitions. The list is not exhaustive, but I will modify it as terms come up in the future. And, of course, the definitions are prepared with a view to construction law in Canada and construction law in Newfoundland and Labrador in particular.
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Privilege Clauses and Dalcon Enterprises
I recently commented on Russell (Township) v. Dalcon Enterprises Inc., [2009] O.J. No. 2560 (Ont. S.C.J.) (“Dalcon“), and I indicated that the owner township had every right to exercise a contractual provision giving it “discretion” to award the contract to a bidder other than the lowest bidder. And it did. But I should mention that although they’ve been around for awhile, those types of provisions are controversial. And understandably so. After spending time and money preparing and submitting tender documents, a bidder is generally disappointed to lose the bidding competition. And if the low bidder is snubbed in favour of one of their higher-priced competitors, you’ve got great potential for a great big row.
That’s what happened in Dalcon, except the contract was not actually awarded prior to the submission of an application to court. Again, see my post if you’re interested.
Can They Do That?
The question always asked when an owner passes over a low bidder by relying on a provision purporting to give them the power to do so is: Can they do that? The answer is: Maybe.
Law Blogs
Several of the law blogs that I’ve posted links to on my links page are American in origin, especially those law blogs specifically focused on construction law. This a partly because the legal community in the U.S. is necessarily larger than that in Canada, and it might make more sense for a lawyer there to concentrate specifically on a particular practice area. But, I feel compelled to point out that Canada has produced some very good legal web logs. Many of them are listed on the Canadian Law Blogs List. Two that I personally like are Slaw, which is a very good cooperative law blog, and Law21 by Jordan Furlong, which is consistently interesting (even if it has little to do with construction law). For an international law blog directory, have a look at Blawg.
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Russell (Township) v. Dalcon Enterprises Inc.
Public sector owners like federal and provincial departments and large municpalities often have no qualms about throwing their weight around in the event of a contractual dispute. For that matter even smaller municipalities often have no reservations about getting into a racket with a contractor depending on the collective personality of their public officials. But, sometimes, smaller public owners with less commercial expertise and fewer resources at their disposal might approach contracting companies with more trepidation.
Not to say that this was exactly the case with the Township of Russell, ON. But, this past spring, the Township issued an invitation to tender for an expansion to its Lagoon. The tender closed on May, 21, 2009, and of six bids received the two lowest were by Dalcon and Robert. An engineering consultant hired by the Township reviewed the bids and recommended that Dalcon’s be rejected because of some issues with the bid documents, and that the contract be awarded to Robert. In early June, both low bidders having gotten wind of the potential to gain or lose the project, Dalcon and Robert each threatned to sue the Township for damages if they were not found to be the successful bidder.
Rather than make the call and deal with one or the other threatened actions, the Township decided to head both actions off at the pass and brought an application to court to seeking a judicial order confirming the Township’s contractual ability to select a bidder without incurring liability to the unsucessful bidders.
But, the tender documents themselves provided at three points for the owner to exercise discretion in the final selection of a successful bidder. Justice Ray dismissed the application, saying that where the Township’s own contract documents gave it discretionary power, there was no room for the court to “make the decision for Russell Township.” That is, make your decision, and if there’s a legal dispute subsequently, that’s when you come to court.
See Russell (Township) v. Dalcon Enterprises Inc., [2009] O.J. No. 2560 (Ont. S.C.J.).
This is an interesting little case, although it doesn’t really set out any ground-breaking ratio. The moral of the story is that it doesn’t matter who’s threatening what in the way of a legal action, or how bad and mad they are, a contractual right pursuant to an agreed-to provision – assuming that the provision is enforceable – is what it is: a contractual right.
So, for smaller public owners everwhere, the general rules of engagement for tender contracts equally apply, including: (i) Make sure your tender contract documents are well-drafted, (ii) make sure you know what you can and can’t do under the contract, and (iii) if you can do it, and you need to do it, don’t be afraid put a provision into action.
Posted in Breach by Owner, Compliance with Tender Terms, Contract Terms Tagged Bidding Process, Invitation to tender or bid Comments closed
Proposed National Infrastructure Bank for US
President Obama has proposed the creation of a US $4B “national-infrastructure fund” in an effort to get away from “the federal government’s traditional approach of giving grants to specific states and localities for infrastructure spending”: WSJ.
At least one well-known American construction attorney, John Ahlers, thinks that the fund is a good idea, providing of course that it is properly managed.
It seems like a sensible idea to me too for financing similar types of large-scale infrastructure projects.
I immediately wondered how something like that would work in Canada. Although our constitutional structure would change the character of a project like that to some extent, would a similar institution in fact encourage interprovincial collaboration on, say, a high speed rail link or improved energy infrastructure? What’s the closest thing we have to a Canadian analogue at the moment? Are there any reasons why this wouldn’t work or else would not yield any significant benefits?