Birtz Bastien Beaudoin Laforest Architectes c. Centre hospitalier de l’Université de Montréal, 2021 QCCS 795
In a March 10, 2021 decision, Honourable Jeffrey Edwards, J.C.S. of the Superior Court of Quebec ruled in favour of an application by two consortia of architects (“BPYA”) and engineers (“BPTH”) seeking damages for breach of contract by the defendant (the “CHUM”), alleging that the CHUM violated their contractual rights and engaged in an unreasonable and excessive application of the contract’s modification clause.
BPYA/BPTH had entered into service agreements with the CHUM as ‘’master teams’’ in the architecture and mechanical-electrical engineering for the construction of its new hospital, following their proposal submissions to a public request for applications by the CHUM. At the time of the request, the mode of realization of the construction, either by conventional mode (i.e. fixed-price company contract) or in Public-Private Partnership, had not yet been made. In either case, BPTH/BPYA’s mandates would include, among other things, the design of the project, which included the preparation of preliminary plans and specifications.
However, during the project, the CHUM unilaterally modified BPYA/BPTH’s agreements by transferring the design of the project to external professionals mandated by the private partners retained by the CHUM. In doing so, the CHUM modified the essential parameters of BPYA/BPTH’s mandates and reduced BPYA’s mandate by 71% and BPTH’s by 66.4%. While BPTH/BPYA continued to be the ‘’master teams’’ responsible for the design of the project, their mandate was reduced to the mere role of advisers. Despite this, BPTH/BPYA remained bound by the exclusivity clauses and many other constraints contained in their contract.
Upon review, the Court concluded the following:
- the contracts concluded between the applicants BPTH/BPYA and the CHUM, following a public call for tenders, constitute adhesion contracts;
- the CHUM knew that the applicants’ mandates were going to be reduced, or even transferred to third parties, and did not inform them, thus failing in its duty to inform and collaborate;
- in the absence of a clear contractual clause, the CHUM could not partially terminate the mandate of the applicants;
- the modification clause provided for in the contracts did not allow the CHUM to alter the nature of the applicants’ mandates;
- the unilateral modifications imposed by the CHUM exceeded what was permitted by the modification clause (i.e. incidental “changes” or ‘’changes’’ of a secondary nature);
- the CHUM abused its contractual rights by insisting on strict compliance of certain contractual provisions (e.g. exclusivity of services) despite the substantial reduction of the applicants’ mandates;
- in any case, the abusive conduct of the CHUM constituted a ’fin de non-recevoir’’ (similar to the common law doctrine of estoppel) to the application of the modification clause; and
- the CHUM demonstrated “manifest bad faith” and ‘’institutional bad faith’’.
The Court ultimately ordered the CHUM to pay $7,512,433.30 to BPYA and $4,824,454.50 to BPTH in damages, plus interest and fees, as well as expert’s fees.
Miller Thomson advised the applicants in the case with a team comprising of Guy Gilain, Gerry Argento, Jasmin Lefebvre, Stephan Trihey, Tania Pinheiro, and Karine Carrier (Construction Litigation).