Non-profit Organizations and Tax Exemptions - A New and Clearer but More Restrictive System

May 1, 2001

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May 23, 2018

No municipal tax reductions for mining companies

What is a mine’s equipment? What does it include? What is considered an access road to a mining operation? These are, you might think, simple, perhaps even banal questions. Think again: the answer to these questions represents the difference between millions of dollars in property taxes pouring into the coffers of municipalities and mining companies across Québec holding on to them. The Administrative Tribunal of Québec (Immovable Property Division) (hereinafter “TAQ”) was confronted by these questions as part of an appeal lodged by Bloom Lake General Partner Limited against the City of Fermont1. The underlying principle is simple: municipal taxation is essentially applied as a function of the values entered on the property assessment roll. It is the responsibility of the assessor2 to determine the composition of each assessment unit, what immovables are to be entered on the property assessment role and what their value is. The law3 provides that certain immovables are not to be entered on the role. Accordingly, their value has no impact on the taxes that can be collected by municipalities. Among the immovables excluded from the role: “galleries, shafts, excavations, tunnels the equipment of underground or open mines”4 “an access road to forest or mining operations”5. Hence the importance of the questions asked above. With respect to a mine’s equipment, Bloom Lake argued that the equipment of a mine should be taken to refer to all the steps in the operation of a mine, from the extraction of the ore to its marketing and including its processing. Instead, the TAQ adopted a more limited interpretation of the concept of mine equipment that included only the equipment used to extract the ore. As for the concept of an access road to a mining operation, Bloom Lake claimed that it included all the roads located within the mining operation, i.e. all the roads used by vehicles in the mining operation. Again here, the claim was not accepted by the TAQ, which instead circumscribed this concept to the road linking the public road to the entry gate of the mining operation. If the TAQ had accepted the Bloom Lake interpretation, it could have had a serious financial impact for mining companies, which would have had a large part of their immovables that are included in their mining operation excluded from the assessment role.6 2018 QCTAQ 04461 Also called Municipal Body Responsible for Assessment” or “MBRA”, sections 19 ff. of the Act respecting municipal taxation. Act respecting municipal taxation (AMT), ss. 63 to 68. In this case, the relevant paragraphs are 65 para 1 (4) and 65 para 1 (8). Section 65 para 1 (4) AMT. Section 65 para1 (8) AMT. It should however be noted that at the time of this writing, the time period for appealing the TAQ decision had not yet expired.

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January 12, 2018

Bill 162: An Act to amend the Building Act and other legislative provisions mainly to give effect to certain Charbonneau Commission recommendations

Tabled on December 1, 2017 by Lise Thériault, the Minister responsible for Consumer Protection and Housing, the main purpose of Bill 162 is to give effect to certain recommendations contained in the final report of the Commission of inquiry on the awarding and management of public contracts in the construction industry. Amendments to the Building Act Firstly, the Bill amends the definition of "officer" contained in the Building Act so as to include any shareholder of a partnership or corporation holding 10% or more of the voting rights attached to its shares, particularly for purposes of the assessment by the Régie du bâtiment du Québec (the "Board") of an undertaking’s integrity. The notion of "guarantor" is added to the Building Act to describe a natural person who, by applying for a licence on behalf of a partnership or legal person, or by holding such a licence himself or herself, becomes responsible for managing the activities for which the licence is being issued. In addition, the Board's powers of inquiry, verification and inspection are expanded. Finally, the Act provides for immunity from civil proceedings and protection from reprisals for any person who communicates information in good faith to the Board regarding any act or omission which he or she believes constitutes a violation or offence under the Building Act. Certain penal provisions have also been added for the purpose of sanctioning any person who takes reprisals in response to the disclosure of such information, or who submits false or misleading information to the Board. Additions to the Building Act Secondly, a conviction for certain offences, which already previously warranted restricted access to public contracts, will now lead to a refusal by the Board to issue a licence, and may result in the cancellation or suspension of an existing licence. Furthermore, where such a conviction leads to a person's imprisonment pursuant to a sentence, a licence can only be issued to the person once five years have passed following the end of the said term of imprisonment. The Board will be required to cancel a licence where the licence holder, or any officer of an undertaking holding a licence, is convicted of an offence or any indictable offence referred to in the Building Act, where the said person was already convicted of such an offence or indictable offence within the five preceding years. The Board is given new grounds pertaining to the integrity of undertakings to refuse to issue, suspend or cancel a licence, particularly where the corporate structure of the entity enables it to evade the application of the Building Act. In this regard, the Board is obliged, by regulation, to require any contractor to provide either a performance bond or security for wages, materials and services for the purpose of ensuring construction work continues, or the payment of creditors, in the event of the cancellation or suspension (in certain cases) of a licence. Lastly, a new penal offence for the use of "prête-noms" (nominees) is being added, and the prescription period in penal matters is being extended from one year to three years from the date on which the prosecutor had knowledge of the offence, without however exceeding seven years from the date of commission of the offence. Conclusion This Bill, which notably implements four recommendations of the Charbonneau Commission, will be worth watching when parliamentary proceedings resume in the National Assembly on February 6, 2018.

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May 25, 2017

A bid’s nonconformity to the eligibility criteria set out in a call for tenders, such as minimum experience, constitutes a major irregularity

When it comes to presenting a bid in response to a call for tenders made by a public body, two major questions are of interest to businesses concerned, namely “What is the nature of the contract?” and “Does my business conform to the conditions of the call for tenders, for example, those concerning the experience required of tenderers?” Absent the necessary skills in the field contemplated by the call for tenders or the years of experience required to comply with the conditions set out in the invitation to tender, businesses will refrain, obviously, from devoting time to a tender process they know they have no chance of winning. But what happens when a public body fails to comply with the conditions it itself deemed “essential”, whether explicitly or implicitly? Traditionally, courts would analyze such situations by attempting to characterize the default of the bid impugned for not respecting all the tender conditions as a “minor” or a “major” irregularity. However, in two consecutive decisions handed down within three months of each other, the Québec Court of Appeal repositioned the debate on different elements that are to be considered when analyzing the conformity of a bid. In its most recent decision, it even innovated by adding a new dimension to the manner in which the concept of “fairness among tenderers” is to be considered when analyzing the conformity of tenders. This text proposes a combined analysis of the decisions in Ville de Matane c. Jean Dallaire, architectes & EBC inc. 1 and Tapitec inc. c. Ville de Blainville 2 rendered by the Court of Appeal on November 25, 2016 and February 24, 2017, respectively. Ville de Matane c. Jean Dallaire, architectes & EBC inc. The City of Matane invited tenders for the building of a sports complex. One of the fundamental conditions of the call for tenders was that tenderers have experience in connection with at least three projects of comparable scale and complexity. This condition was characterized as “essential” in the invitation to tender. Despite this requirement, the City awarded the contract to a business that did not possess the required experience and that, to the City’s knowledge, only had experience in small-scale residential and institutional projects. EBC Inc., another bidder, sought to have the resolution awarding the contract annulled on grounds of the successful bidder’s lack of experience vis-à-vis the condition set out in the invitation to tender. The City of Matane tried to persuade the Court that the default was a minor irregularity inasmuch as the winning bidder undertook, subsequently to the opening of tenders, to have personnel on its team with sufficient experience to meet the requirement relating to the three projects of comparable scale and complexity set out in the invitation to tender. The Court of Appeal rejected the City’s argument and confirmed that the winning bid’s default did constitute a major irregularity. Indeed, through its own characterization as essential of the condition relating to experience on three projects of comparable scale and complexity, the City of Matane created a mandatory requirement with which compliance had to be demonstrated at the time of tendering. Allowing the winning bidder to prove its experience differently after filing its bid would amount to circumventing the City’s own requirement and would be contrary to the contract as well as to the principle of fairness between bidders. The requirement relating to the experience of tenderers set out in an invitation to tender must therefore be complied with and applied straightforwardly. Once a requirement of an invitation to tender is characterized as “essential”, the public body may not consider a default in relation thereto a “minor irregularity”. On the contrary, such a default necessarily constitutes a major irregularity. Tapitec inc. c. Ville De Blainville In this case, the City of Blainville was looking to have a sports field built with a synthetic grass surface. As it wished to find a highly specialized contractor familiar with the laying of this type of surface, the City of Blainville decided to proceed by way of a qualitative assessment of tenders received rather than automatically awarding the contract to the lowest bidder. As one of its conditions, the City required that tenderers have had a place of business in Québec for at least the past five years. Despite this requirement, the City awarded the contract to a business that had opened a place of business in Québec only two years previously. The Court of Appeal quashed the City’s decision and confirmed that the failure to meet a condition relating to a bidder’s experience, even if such condition is not explicitly characterized as essential, will automatically disqualify a bid, when the circumstances so warrant. This was the case in the City of Blainville’s tender documents which, although they did not contain words such as “essential”, “automatic disqualification” or “fundamental”, set out a condition of having had a place of business in Québec for at least five years, which condition was, according to the Court of Appeal, essential in that it resulted in limiting the number of bidders by imposing mandatory experience or qualification criteria. The Court insists on the effect of such conditions on businesses in their decision of whether or not to tender. As a result, a public body cannot consider such a default as merely a minor irregularity. Hence, the Court of Appeal clearly states that the obligation to accept only a conforming bid is owed as much to parties participating in the tender process as to those who refrained from so doing because they did not conform to the requirements set out in the invitation to tender. By limiting the pool of tenderers through the imposition of an experience requirement, the public body must absolutely reject any bid that does not comply with such requirement. Otherwise, the public body will breach the principle of fairness between bidders, which constitutes a major irregularity and renders its decision challengeable. The requirement relating to the experience of tenderers set out in an invitation to tender is therefore, where the circumstances so warrant, an essential condition from which the public body may not depart. Obviously, each case turns on its facts and a detailed analysis of the tender specifications will be necessary to determine whether the experience requirement is an essential condition. What can be gathered from these two decisions? These two judgments forcefully assert the principle of equality between bidders and the idea that by limiting the number of persons allowed to tender a bid through the imposition of criteria relating to experience or professional qualifications, public bodies make it their duty to abide by such criteria. A requirement characterized as essential in an invitation to tender can never be circumvented and any default in conforming to any such requirement appearing in a bid must automatically result in the disqualification of same. Failing this, bidders who were wrongly passed over will be entitled to claim damages for any injury suffered. Although the question is one to be determined on a case-by-case basis of whether or not a requirement relating to the experience or professional qualifications of bidders is essential, we note that the Court of Appeal seems to be encouraging certain public bodies to reconsider their manner of analyzing the conformity of the bids they receive, taking into account both other bidders and those contractors who may have forgone participation in a process they believed they had no chance of winning. Matane (Ville de) c. Jean Dallaire, Architectes, 2016 QCCA 1912. Tapitec inc. c. Ville de Blainville, 2017 QCCA 317.

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May 19, 2017

A bid’s nonconformity to the eligibility criteria set out in a call for tenders, such as minimum experience, constitutes a major irregularity

When it comes to presenting a bid in response to a call for tenders made by a public body, two major questions are of interest to businesses concerned, namely “What is the nature of the contract?” and “Does my business conform to the conditions of the call for tenders, for example, those concerning the experience required of tenderers?” Absent the necessary skills in the field contemplated by the call for tenders or the years of experience required to comply with the conditions set out in the invitation to tender, businesses will refrain, obviously, from devoting time to a tender process they know they have no chance of winning. But what happens when a public body fails to comply with the conditions it itself deemed “essential”, whether explicitly or implicitly? Traditionally, courts would analyze such situations by attempting to characterize the default of the bid impugned for not respecting all the tender conditions as a “minor” or a “major” irregularity. However, in two consecutive decisions handed down within three months of each other, the Québec Court of Appeal repositioned the debate on different elements that are to be considered when analyzing the conformity of a bid. In its most recent decision, it even innovated by adding a new dimension to the manner in which the concept of “fairness among tenderers” is to be considered when analyzing the conformity of tenders. This text proposes a combined analysis of the decisions in Ville de Matane c. Jean Dallaire, architectes & EBC inc. 1 and Tapitec inc. c. Ville de Blainville 2 rendered by the Court of Appeal on November 25, 2016 and February 24, 2017, respectively. Ville de Matane c. Jean Dallaire, architectes & EBC inc. The City of Matane invited tenders for the building of a sports complex. One of the fundamental conditions of the call for tenders was that tenderers have experience in connection with at least three projects of comparable scale and complexity. This condition was characterized as “essential” in the invitation to tender. Despite this requirement, the City awarded the contract to a business that did not possess the required experience and that, to the City’s knowledge, only had experience in small-scale residential and institutional projects. EBC Inc., another bidder, sought to have the resolution awarding the contract annulled on grounds of the successful bidder’s lack of experience vis-à-vis the condition set out in the invitation to tender. The City of Matane tried to persuade the Court that the default was a minor irregularity inasmuch as the winning bidder undertook, subsequently to the opening of tenders, to have personnel on its team with sufficient experience to meet the requirement relating to the three projects of comparable scale and complexity set out in the invitation to tender. The Court of Appeal rejected the City’s argument and confirmed that the winning bid’s default did constitute a major irregularity. Indeed, through its own characterization as essential of the condition relating to experience on three projects of comparable scale and complexity, the City of Matane created a mandatory requirement with which compliance had to be demonstrated at the time of tendering. Allowing the winning bidder to prove its experience differently after filing its bid would amount to circumventing the City’s own requirement and would be contrary to the contract as well as to the principle of fairness between bidders. The requirement relating to the experience of tenderers set out in an invitation to tender must therefore be complied with and applied straightforwardly. Once a requirement of an invitation to tender is characterized as “essential”, the public body may not consider a default in relation thereto a “minor irregularity”. On the contrary, such a default necessarily constitutes a major irregularity. Tapitec inc. c. Ville De Blainville In this case, the City of Blainville was looking to have a sports field built with a synthetic grass surface. As it wished to find a highly specialized contractor familiar with the laying of this type of surface, the City of Blainville decided to proceed by way of a qualitative assessment of tenders received rather than automatically awarding the contract to the lowest bidder. As one of its conditions, the City required that tenderers have had a place of business in Québec for at least the past five years. Despite this requirement, the City awarded the contract to a business that had opened a place of business in Québec only two years previously. The Court of Appeal quashed the City’s decision and confirmed that the failure to meet a condition relating to a bidder’s experience, even if such condition is not explicitly characterized as essential, will automatically disqualify a bid, when the circumstances so warrant. This was the case in the City of Blainville’s tender documents which, although they did not contain words such as “essential”, “automatic disqualification” or “fundamental”, set out a condition of having had a place of business in Québec for at least five years, which condition was, according to the Court of Appeal, essential in that it resulted in limiting the number of bidders by imposing mandatory experience or qualification criteria. The Court insists on the effect of such conditions on businesses in their decision of whether or not to tender. As a result, a public body cannot consider such a default as merely a minor irregularity. Hence, the Court of Appeal clearly states that the obligation to accept only a conforming bid is owed as much to parties participating in the tender process as to those who refrained from so doing because they did not conform to the requirements set out in the invitation to tender. By limiting the pool of tenderers through the imposition of an experience requirement, the public body must absolutely reject any bid that does not comply with such requirement. Otherwise, the public body will breach the principle of fairness between bidders, which constitutes a major irregularity and renders its decision challengeable. The requirement relating to the experience of tenderers set out in an invitation to tender is therefore, where the circumstances so warrant, an essential condition from which the public body may not depart. Obviously, each case turns on its facts and a detailed analysis of the tender specifications will be necessary to determine whether the experience requirement is an essential condition. What can be gathered from these two decisions? These two judgments forcefully assert the principle of equality between bidders and the idea that by limiting the number of persons allowed to tender a bid through the imposition of criteria relating to experience or professional qualifications, public bodies make it their duty to abide by such criteria. A requirement characterized as essential in an invitation to tender can never be circumvented and any default in conforming to any such requirement appearing in a bid must automatically result in the disqualification of same. Failing this, bidders who were wrongly passed over will be entitled to claim damages for any injury suffered. Although the question is one to be determined on a case-by-case basis of whether or not a requirement relating to the experience or professional qualifications of bidders is essential, we note that the Court of Appeal seems to be encouraging certain public bodies to reconsider their manner of analyzing the conformity of the bids they receive, taking into account both other bidders and those contractors who may have forgone participation in a process they believed they had no chance of winning. Matane (Ville de) c. Jean Dallaire, Architectes, 2016 QCCA 1912. Tapitec inc. c. Ville de Blainville, 2017 QCCA 317.

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