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Court declines to quash “bid ban” imposed by City on paving company for safety and other reasons

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A recent Ontario court decision illustrates the serious business implications that Occupational Health and Safety Act compliance issues or disputes can have on a company.

The City of Sudbury banned a paving company, Interpaving, from bidding on City contracts for four years. The City gave three reasons for the ban.  According to the City: (1) Interpaving had sued the City in relation to five City projects or contracts; (2) Interpaving violated health and safety legislation, and (3) Interpaving had “a significant history of abusive behaviour and threatening conduct” toward City employees.

With respect to safety issues, the City noted an incident in 2015 in which a pedestrian was struck and killed by a construction vehicle as she entered a construction zone in which Interpaving was working.  The Ministry of Labour issued compliance orders against Interpaving and the City. Interpaving took the position, in appeals of those orders, that the City and not Interpaving was the constructor under the OHSA. The City claimed that Interpaving failed to understand its obligations under the OHSA including its role as constructor and failed to cooperate with the City on safety matters.

Interpaving asked the court to overturn the bid ban. It argued that the City had not followed a fair process in coming to the decision to impose the bid ban. The majority of the court disagreed. The majority decided that although the City had initially breached its obligation of procedural fairness (by not giving Interpaving notice of its intention to debar, the City’s grounds for debarring, a description of the potential penalties and an opportunity to respond), the City had “cured” that breach through its “reconsideration and process which gave Interpaving full opportunity to be heard.

The Court stated:

In the Debarment Letter, the City made reference to “numerous orders in relation to projects that Interpaving has been involved in for the City…including seven orders in relation to the City’s Elgin Street Project issued by the Ministry of Labour”. The reference to OHSA orders was also made under the heading “Poor Contract Performance”.  Contrary to the assertion made by Interpaving, there is nothing unreasonable in the consideration of OHSA orders in connection with the quality oflnterpaving’s contract performance. [emphasis added]

Interpaving stated that it employed 200 people in the city and an additional 200 in the summer.  This type of “debarment” decision by public entities can have a serious impact on businesses.  The Court decision indicates that Interpaving’s road paving business is primarily in the City of Greater Sudbury.

Interpaving Limited v. City of Greater Sudbury, 2018 ONSC 3005 (CanLII)