Federal Court of Appeal Decisions

Date: 20041005

Docket: A-330-04

Citation: 2004 FCA 334

Present:           SHARLOW J.A.

BETWEEN:

                                    H B LYNCH INVESTMENTS INCORPORATED

                                                                                                                                            Appellant

                                                                           and

                          THE MINISTER OF PUBLIC WORKS FOR HER MAJESTY

                              THE QUEEN IN RIGHT OF CANADA as represented by

                                      Public Works and Government Services Canada

                                                                           and

                                       HARBOUR ROYALE DEVELOPMENT LTD.

                                                                                                                                      Respondents

                                        Dealt with in writing without appearance of parties.

                                      Order delivered at Ottawa, Ontario, October 5, 2004

REASONS FOR ORDER BY:                                                                                   SHARLOW J.A.

Date: 20041005

Docket: A-330-04

Citation: 2004 FCA xxx

Present:           SHARLOW J.A.

BETWEEN:

                                    H B LYNCH INVESTMENTS INCORPORATED

                                                                                                                                            Appellant

                                                                           and

                          THE MINISTER OF PUBLIC WORKS FOR HER MAJESTY

                              THE QUEEN IN RIGHT OF CANADA as represented by

                                      Public Works and Government Services Canada

                                                                           and

                                       HARBOUR ROYALE DEVELOPMENT LTD.

                                                                                                                                      Respondents

                                                        REASONS FOR ORDER

SHARLOW J.A.

[1]                This is a motion by the appellant H B Lynch Investments Incorporated (H B Lynch) for an order under section 351 of the Federal Court Rules, 1998, SOR/98-106, to present evidence in this appeal. Rule 351 reads as follows:

[2]                Generally, new evidence will not be admitted on appeal unless (1) the evidence was not discoverable with reasonable diligence before the end of the hearing in the court below, (2) the evidence is credible, and (3) the evidence is practically conclusive of an issue on the appeal: Frank Brunkhorst Co. v. Gainers Inc. [1993] F.C.J. No. 874 (F.C.A.). The Court retains a residual discretion to evidence on appeal, even if one or more of the Brunkhorst tests is not met: see the decision of Sopinka J. in Amchem Products Inc. et al. v. Workers' Compensation Board (B.C.) (1992), 192 N.R. 390, and Brown v. Gentleman, [1971] S.C.R. 501.

Facts

[3]                In April of 2004, H B Lynch submitted two bids, at the invitation of the Crown, to lease to the Crown certain real property in Sydney, Nova Scotia. The tender package provided to the appellant and other bidders set out this condition (paragraph (c) of section 11 of Part 1 of the Lease Documentation Package):

[4]                The tender package also gave this instruction relating to the execution of the offer (section 14 of Part 1 of the Lease Documentation Package):

[5]                In each of H B Lynch's bids, the offer document was signed by Mr. Lynch, the president of H B Lynch, and his signature was witnessed, but no corporate seal was used and H B Lynch did not submit a separate document as proof of his signing authority.

[6]                H B Lynch's bid was found not to be compliant, and it was rejected. The following explanation for the rejection of H B Lynch's bid is set out in a letter dated April 26, 2004, from a Crown official to H B Lynch:

[7]                On April 29, 2004, a lawyer acting for H B Lynch sent a letter to the responsible Crown officials to assert the position of H B Lynch that its bids were compliant, and setting out detailed reasons for that position. The letter also requests reconsideration of the decision to reject the H B Lynch bids. The request was rejected. However, the Crown agreed to delay further steps in the bidding process to allow H B Lynch to commence legal proceedings.

[8]                On May 7, 2004, H B Lynch filed a notice of application for judicial review of the decision rejecting its bid as non-compliant, and seeking a declaration that its bids were compliant and should be considered with all other compliant bids. The application for judicial review was heard on an expedited basis on May 19, 2004. An order dismissing the application was made on May 21, 2004. H B Lynch has appealed that decision. The present motion relates to that appeal.

[9]                On May 25, 2004, the Crown concluded its evaluation of the Harbour Royale bid and found it compliant. The Crown entered into a lease with Harbour Royale on that date. In July of 2004, H P Lynch moved for an extension of time to commence a second application for judicial review in the Federal Court to challenge the decision to qualify the Harbour Royale bid. That proceeding has been discontinued. Therefore, there is no outstanding challenge to the Crown's finding that the Harbour Royale bid was compliant.

[10]            H P Lynch proposes to make a number of arguments in this appeal. One of its arguments is that the standard applied in assessing the compliance of the H P Lynch bids with respect to the execution of the offer documents was incorrect, and it was also more stringent than the standard applied in assessing the compliance of the Harbour Royale bid on the same point. Paragraphs 5 and 6 of the notice of appeal read as follows:

[11]            To provide a factual basis for its argument of unequal treatment, H P Lynch has moved for an order that the Harbour Royale bid be presented as evidence on appeal.

[12]            In support of its motion, H P Lynch has submitted the affidavit of Mr. Sowerby executed on July 29, 2004. Paragraph 12 of that affidavit describes as follows the execution of the offer document in the Harbour Royale bid:

The record does not indicate that Mr. Sowerby was cross-examined on his affidavit. Neither respondent has submitted evidence that contradicts these statements.

Analysis

[13]            I will consider the three Brunkhorst tests in turn.

(a) Due Diligence

[14]            Both respondents argue that H P Lynch could with due diligence have caused the Harbour Royale bid to be produced in the Federal Court proceedings. However, the affidavit of William A. Murphy executed on September 16, 2004, submitted by the Crown in opposition to the new evidence motion, states that if a representative of H P Lynch had asked to inspect the Harbour Royale bid prior to May 25, 2004, he would not have been allowed to do so. Thus, the Crown's own evidence establishes that H P Lynch could not have obtained the H P Lynch bid documents from the Crown before the completion of the Federal Court proceedings.

[15]            According to an affidavit submitted by Harbour Royale in opposition to the new evidence motion, H P Lynch did not ask Harbour Royale to see a copy of its bid. However, there is no evidence that Harbour Royale had in its possession a document that was capable of establishing how its final bid documents were executed. Nor is there any evidence that Harbour Royale would have acceded to any request by H P Lynch to see its bid documents before May 25, 2004.

[16]            The Crown also argues that H P Lynch cannot be heard to say that it could not have obtained access to the Harbour Royale documents for the Federal Court hearing, because it deliberately waived its right to obtain from the Crown a "certified record". The implication apparently is that if H P Lynch had insisted on a certified record, the Harbour Royale documents would have been included. However, there is no evidence as to what documents the Crown would have seen fit to include in a "certified record", if H P Lynch had insisted on having one produced in the Federal Court.

[17]            The Crown also argues that, in the Federal Court, H P Lynch resisted the attempts of Harbour Royale to be added as a party. That argument also seems to me to be irrelevant because, at that stage, the Harbour Royale bid had not been evaluated.

[18]            Fundamentally, the respondents' opposition to the new evidence motion is based on a misapprehension of the point that H P Lynch is attempting to make. As indicated above, H P Lynch wishes to argue that the Crown's evaluation of the Harbour Royale bid did not employ the same "strict compliance" standard as the Crown purported to apply to the H P Lynch bids. Evidence of the factual foundation for that argument could not have been obtained in time for the Federal Court proceedings, because it did not exist until May 25, 2004, when the evaluation of the Harbour Royale bid was completed. That was four days after the conclusion of the Federal Court proceedings.

[19]            In my view, the due diligence test is met.

(2) Credibility

[20]            There is no issue as to the reliability of the evidence sought to be presented. The document itself will contain all of the relevant facts about its execution.

(3) Practically conclusive

[21]            In this context, evidence is practically conclusive if it could reasonably be expected to have affected the result: BC Tel v. Seabird Island Indian Band (C.A.), [2003] 1 F.C. 475. A significant part of the case in the Federal Court deals with the appropriate standard to be applied by Crown officials in deciding whether a bid is compliant. At least two standards, "strict compliance" and "substantial compliance", were proposed in argument. If the Harbour Royale document had been part of the record in the Federal Court, the Judge would have had before him a bid that the Crown considered compliant with respect to the execution of the offer. In my view, that could have influenced his understanding of the standard that was, or should have been, applied to the H P Lynch bid. While it is not certain that he would have reached a different conclusion on the application for judicial review, it is reasonable to expect that he might have done so.

Conclusion

[22]            I am satisfied that the three Brunkhorst tests are met, and that the new evidence motion should be granted.

[23]            As the Court record now includes evidence that the Harbour Royale bid was the only bid that was found to be compliant and was the winning bid (both respondents have submitted such evidence in response to this motion), the order granting the new evidence motion should also permit evidence of those facts, which may be in the form of an affidavit.

[24]            I have not ignored the argument that the Harbour Royale bid documents are not relevant to the specific arguments made in the Federal Court in the application for judicial review. In the circumstances of this case, it seems to me to be preferable to reserve the question of relevance for the panel hearing the appeal, if it is raised by one or both respondents.

[25]            Nor have I ignored the argument of the Crown that if the new evidence motion is granted, I should make directions as to the "permissible issues on this appeal" and "directions as to the purpose(s) for which the new evidence may be used". I will not make any such directions. Those issues are matters for argument for the consideration of the panel. The Crown has also requested an opportunity to "file further evidence in response". If the Crown has other evidence that it considers relevant, it may have recourse to Rule 351.

             (s) "K. Sharlow"       

J.A.

                                                  FEDERAL COURT OF APPEAL

                            NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-330-04

STYLE OF CAUSE:               H B LYNCH INVESTMENTS INCORPORATED

                                                and THE MINISTER OF PUBLIC WORKS FOR

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

as represented by PUBLIC WORKS AND GOVERNMENT SERVICES CANADA

                                                                             

MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES

REASONS FOR ORDER BY:                                              SHARLOW J.A.

DATED:                                                                                  October 5, 2004

WRITTEN REPRESENTATIONS BY:

SOLICITORS OF RECORD: