Federal Court of Appeal Decisions

30.16 (1) Subject to the regulations, the Tribunal may award costs of, and incidental to, any proceedings before it in relation to a complaint on a final or interim basis and the costs may be fixed at a sum certain or may be taxed.

(2) Subject to the regulations, the Tribunal may direct by whom and to whom any costs are to be paid and by whom they are to be taxed and allowed.

[5] This is one of several cases in this Court where the Attorney General argues that the Tribunal has unlawfully denied the Crown its costs on the basis of perceived defects in the procurement process that did not vitiate the procurement, but were trivial in nature and unrelated to either the failure of the complainant's bid or its decision to pursue a complaint before the Tribunal. The decision of this Court in Canada (Attorney General) v. Georgian College of Applied Arts and Technology, [2003] 4 F.C. 525, 2003 FCA 199, is an important part of the background of these cases. [6] In Georgian College, the Court held that the Tribunal's refusal to award costs to the Crown in that case was an unlawful exercise of its statutory discretion. The Court stated (at paras. 25-28) that the Tribunal's power to award costs is exercisable on essentially the same principles as those governing the award of costs by the courts, including the principle that, in the absence of exceptional circumstances, the successful party is normally awarded its costs. Consequently, the Court held (at para. 37), the Tribunal erred when it refused costs to the Crown pursuant to a general policy of encouraging unsuccessful bidders to complain to the Tribunal about alleged defects in the procurement process.

[7] According to counsel for the Attorney General, the Tribunal has awarded the Crown its costs in 4 out of the 13 cases in which the Crown was successful before the Tribunal since this Court decided Georgian College. On the basis of these statistics and of the general principle, applicable to the Tribunal, that costs follow the event, it would seem that, for reasons that the Tribunal has not made explicit in this case, it is reluctant to award the Crown its costs when a complaint is dismissed.

[8] However, in the absence of an explanation by the Tribunal, it is idle to speculate on the reasons for this apparent reluctance. Counsel for the Attorney General did not press the argument that the refusal of costs in this case was part of a consistent pattern of conduct by the Tribunal. Accordingly, we must consider this case on its own facts, but not forget entirely the broader context. Hence, patent unreasonableness is the standard of review applicable to the Tribunal's exercise of discretion: Georgian College at para. 19.

[3]                    These remarks are equally applicable to the present case. I turn now to consider the facts before us. EDUCOM-RAND jointly bid on a contract to supply an automated archiving software solution for the Department of Fisheries and Oceans. After their bid was rejected as non-compliant with the request for a proposal ("RFP") issued by Public Works and Government Services Canada ("PWGSC"), EDUCOM-RAND complained to the Tribunal about the procurement process. The complaint contained three grounds, each of which the Tribunal rejected.

[4]                    First, EDUCOM-RAND alleged that PWGSC had wrongly declared its bid non-compliant because it did not include an outline for a two-day training plan as required by Article B.3.8 in the RFP. However, no such Article existed and, in any event, the complainant stated, the RFP did not require such a training plan to be included with the bid.

[5]                    The Tribunal rejected this ground, saying that the RFP did require the inclusion of an outline of a two-day training plan and that it was obvious that the reference in the RFP to Article B.3.8 was a typographical error for the next provision, Article B.3.9. The Tribunal concluded:

In the Tribunal's view, such a mistake does not relieve EDUCOM-RAND from complying with the mandatory requirement to include a two-day training plan with its bid.

Consequently, the Tribunal is of the opinion that, although PWGSC made an error in referring to Article B.3.8 instead of Article B.3.9, this error was of a de minimis nature and did not result in PWGSC acting in a manner that was contrary to the provisions of the RFP in its determination that EDUCOM-RAND'S proposal was non-compliant for failing to contain a two-day training plan.

[6]                    Second, EDUCOM-RAND complained that its bid was found non-compliant because it did not contain a software publisher's letter as required by Article A.11.4 certifying that it is an authorized reseller of the software component that it proposed to use for the contract. However, EDUCOM-RAND said, Article A.11.4 did not apply to it, since the item in question was not a software component and EDUCOM-RAND was not a "reseller".

[7]                    The Tribunal ruled that PWGSC was correct to characterise the item as a software component and that Article A.11.4 had been amended, and the amendment duly published, before the closing date for the submission of bids. The publisher's letter referred to in Article A.11.4, as amended, was required from bidders who were not also the manufacturers of a software component, a category that clearly included EDUCOM-RAND.

[8]                    However, the Tribunal added, it was unfortunate that, in its correspondence with EDUCOM-RAND, PWGSC continued to refer to the original software publisher's letter which contained the term "reseller". Nonetheless, the Tribunal held that, since Article A.11.4 had been validly amended and EDUCOM-RAND's bid did not contain the required letter, PWGSC was correct to have found its bid to be non-compliant.

[9]                    Third, EDUCOM-RAND alleged that PWGSC erred in concluding that, even if its bid was found to be compliant, EDUCOM-RAND would be "unwilling or unable" to remove certain provisions in the terms of use for the proposed solution, which PWGSC might find unacceptable. The Tribunal rejected this as a proper ground of complaint since PWGSC did not reject EDUCOM-RAND's bid on this ground.

[10]                 Having concluded that none of the grounds relied on by EDUCOM-RAND constituted a valid complaint, a decision that EDUCOM-RAND has not challenged, the Tribunal nonetheless returned to them when considering the Crown's request for costs. Thus, it said:

However, the Tribunal notes that, while minor in nature, the reference to Article B.3.8 was an error. Further, even after the software publisher's certification letter required by Article A.11.4 had been amended, PWGSC continued to refer to the original version of the letter. This too was an error on the part of PWGSC that may have led to some confusion on the part of the bidder.

Further, the final ground of complaint regarding PWGSC's determination that EDUCOM-RAND was unable to negotiate any provision of the EULA [End User License Agreement], which the Tribunal found to be invalid, resulted from statements made in PWGSC's letter of rejection to EDUCOM-RAND. In the Tribunal's view, since PWGSC was the author of the statement that led to this complaint, as well as the author of the above errors that led to some confusion on the part of the bidder, PWGSC should bear the costs of defending any complaint resulting from these errors. Therefore, the Tribunal will not award any costs in relation to this complaint.

[11]                 The general principle that costs follow the event applies to the Tribunal's discretion over costs conferred by subsection 30.16(1). The Tribunal may depart from the general principle if the conduct of the successful party was in some way responsible for the failure of the complainant to submit a compliant bid or for inducing the complainant to file a complaint with the Tribunal. However, there must be some evidence rationally capable of supporting such findings: speculation is not sufficient. Merely to identify a minor error in the procurement documentation or process is not sufficient to deny the Crown its costs when a complaint is rejected.

[12]                 The Tribunal found that, despite the erroneous reference in the RFP to the non-existent Article A.3.8, it should have been clear to bidders that the RFP required them to include an outline of a two-day training programme. In view of this, it seems illogical for the Tribunal to have concluded for the purposes of costs that PWGSC was responsible for causing EDUCOM-RAND's mistake. As to whether the typographical error induced EDUCOM-RAND to complain to the Tribunal, I would note that EDUCOM-RAND also submitted that, apart from the typographical error, the RFP, when properly construed, did not make the inclusion of a two-day training programme mandatory.

[13]                 There was no defect in the RFP to support the second ground of complaint, which concerned the publisher's letter that the RFP required from bidders who were not the manufacturers of the software components that they proposed to use. As the Tribunal found, the original letter contained in the RFP was duly amended, and the amendment published, before the closing date, so as to broaden the categories of bidders whose bids had to include a publisher's certification letter.

[14]                 Consequently, the post-bid correspondence with PWGSC in which it mistakenly referred to the original letter can, at most, have induced EDUCOM-RAND to complain. However, EDUCOM-RAND was apprised by PWGSC's response to the complaint that the letter was not only required from "resellers" of software components. It could therefore have withdrawn this ground of complaint early in the process. Further, EDUCOM-RAND had also relied on another basis for complaining that its bid had been wrongly disqualified for non-compliance with Article 11.4: the product in question was not a "software component" to which the Article applied.

[15]                 The Tribunal did not consider the third ground of complaint to be proper since PWGSC did not disqualify EDUCOM-RAND's bid because of an alleged inability or unwillingness on the part of EDUCOM-RAND to negotiate a provision in its licence agreement with the manufacturer. The Tribunal made no finding as to whether PWGSC's reference to this consideration in the letter of rejection was erroneous.

[16]                 Since counsel for the Attorney General abandoned the argument that the Court should regard the Tribunal's refusal to award costs as raising a general question of law, the Tribunal's exercise of discretion on the facts of this case is reviewable on the standard of patent unreasonableness: Georgian College at paras. 19-22. This highly deferential standard should be difficult for an applicant to establish.

[17]                 Despite the broad and unstructured discretion conferred on the Tribunal over the award of costs, the discretion is subject to implied limits. As with the power over costs given to other administrative tribunals, the Tribunal's power must be exercised "judicially", which I take to mean in this context, not in an arbitrary manner, but in light of the particular facts of the case and in accordance with the general principles governing the award of costs by courts. I would note, too, that in reviewing a decision for unreasonableness, whether simple or patent, a court must look to the tribunal's reasons for decision: see Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748 at para. 57; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20 at para. 54.

[18]                 Neither of the minor defects in the procurement process identified by the Tribunal with respect to the first two grounds of complaint can or should have caused EDUCOM-RAND to submit a non-compliant bid. The only possibility therefore is that they induced EDUCOM-RAND to complain. However, the Tribunal never addresses this issue explicitly, nor provides any supporting evidence. Indeed, with respect to the first ground of complaint, it merely speculates that the error "may have led to some confusion on the part of the bidder" (the emphasis is mine). Since the Tribunal did not make any finding on the third ground of complaint, it should not have taken it into account, as it seems to have done, when determining costs.

[19]                 In my opinion, this is one of those comparatively rare cases in which a decision of a specialist administrative tribunal is so obviously defective that it cannot withstand an even minimally probing analysis. The Tribunal's reasons plainly do not provide any kind of a rational basis for its departing from the general principle that costs follow the event. They do not assert, much less substantiate, a causal link between PWGSC's minor errors and EDUCOM-RAND's failure either to comply with the RFP or to complain to the Tribunal.

[20]                 Counsel for EDUCOM-RAND suggested that, in the world of procurement, minutiae matter and the Tribunal was therefore entitled to deny costs on the basis of apparently trivial errors. However, this argument proves too much. If counsel is right to say that the Tribunal attaches the highest importance to ensuring that the procurement process is free of even small errors, then the errors relied on in this case to deny the Crown its costs must really have been minuscule because they were too trivial to vitiate the process.

[21]                 For these reasons, I would allow the application for judicial review, set aside the Tribunal's decision respecting costs and, in view of the highly unusual context of this litigation, remit the matter with a direction that the Tribunal award the Crown its reasonable costs.

                       "John M. Evans"               

                                                                                                    J.A.                       

"I agree

    Gilles Létourneau J.A."

"I agree

    B. Malone J.A."FEDERAL COURT OF APPEAL

             NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                                                                                                    A-391-03

STYLE OF CAUSE:                                                             ATTORNEY GENERAL OF CANADA v. EDUCOM TS INC. ET AL.

PLACE OF HEARING:                                                                                                                         Ottawa, Ontario

DATE OF HEARING:                                                                                                    March 17, 2004

REASONS FOR JUDGMENT BY:                                     Evans J.A.

CONCURRED IN BY:                                                             Létourneau and Malone JJ.A.

DATED:                                                                                                                                                        March 29, 2004

APPEARANCES:

Ms. Suzanne Pereira                                                                         for the Applicant

Mr. R. Benjamin Mills                                                                                                       for the Respondents

SOLICITORS OF RECORD:

Mr. Morris Rosenberg                                                                                                       for the Applicant

Deputy Attorney General of Canada

McCarthy Tétrault LLP                                                             for the Respondents

Ottawa, Ontario