Australian Business Skills Pty Ltd v State of New South Wales

[2005] NSWSC 1287

CITATION:	Australian Business Skills Pty Ltd v State of New South Wales [2005] NSWSC 1287
HEARING DATE(S):	01/12/2005
JUDGMENT DATE :	13 December 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	McDougall J
DECISION:	See para [67].

CATCHWORDS:	CONTRACT – whether State validly terminated contract with first Plaintiff – whether purported termination applied correct legal test – whether director of first Plaintiff responsible because of acts or omissions for refusal of tender to related company – whether related company actually refused tender – no question of principle.
LEGISLATION CITED:	Evidence Act 1995 Corporations Act 2001
CASES CITED:	Public Service Board of New South Wales v Osmond (186) 159 CLR 656
PARTIES:	Australian Business Skills Pty Ltd Plaintiff State of New South Wales Defendant
FILE NUMBER(S):	SC 5158/2005
COUNSEL:	Mr B De Buse Plaintiff Ms M Allars Defendant
SOLICITORS:	Moloney Lawyers Plaintiff I V Knight, Crown Solicitor Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

Tuesday, 13 December 2005

05158/2005 - AUSTRALIAN BUSINESS SKILLS PTY LIMITED v
STATE OF NEW SOUTH WALES

JUDGMENT

1 HIS HONOUR: The question for decision is whether the defendant (the State) validly terminated a contract made between it and the first plaintiff (ABS) under which ABS undertook to provide training services.

Background and relevant facts

2 The New South Wales Department of Education and Training (the Department) funds the provision of vocational education and training services. Those services are supplied by “Registered Training Providers” (known, somewhat obscurely, by the acronym “RTOs”) that are included on what is called the “Approved Provides List” (known by the acronym “APL”). RTOs tender each year to provide training services during the following year. If a tender is accepted, the RTO enters into a contract with the State, through the Department, known as an “Approved Providers List (APL) Contract for the NSW training market”. The State, through the Department, obtains and pays for training services from RTOs with which such contracts have been made.

3 In October 2003, ABS tendered for the supply of training services for the calendar year 2004. At the same time, an associated company known variously as Amstar Learning Pty Limited or National Training Services Pty Limited (Amstar) tendered for the supply of training services. (The companies were associated because they had, at the time, a common director, the second plaintiff Mr Jain.) Both tenders were accepted.

4 In October 2004, both companies tendered for the provision of training services for the calendar year 2005. ABS’ tender was accepted. Amstar’s was not. The Department informed Amstar of the decision by a letter dated 9 December 2004 which said, relevantly:

“….
Assessment of your organisation’s performance against the selection criteria has determined that the required standard has not been met. Accordingly, the Department has decided not to accept your organisation’s tender for 2005.
Details of the assessment of your organisation’s performance are contained in an attachment to this letter.
If you wish to make representations concerning this decision you will need to write to:
[details were given]
Correspondence will only be accepted up to 5.00pm Friday 7 January 2005.
…”

5 I will set out later in these reasons the relevant terms of the contracts, including the “selection criteria”. At present, it is sufficient to note that the attachment to that letter said, relevantly:

“ APL Selection Criteria – the extent to which the contractor has a completion rate of less than 55% of participants in the last three years:

· The completion rate over three years for delivery under the Apprenticeship and Traineeship Training Program was 17% for 122 enrolments, significantly less than half the contract benchmark of 55%. …”

6 Mr Jain said that on 17 December 2004, he caused Amstar to write to the Department stating that Amstar’s tender “WAS LODGED IN ERROR” and that the tender “is formerly [sic] withdrawn” He said that the letter also stated that:

“…according to our statistics which is [sic] (based on certificates issued) Amstar completion rate is over 50% and not 17%. And the completion rate would have been even higher had Employment National not mismanaged the process which led to two large clients with over sixty trainees withdraw [sic] from the programme, midway.
We are happy to substantiate our claim if required.”

7 For reasons that I shall give, I do not accept Mr Jain’s evidence that he caused a letter in or including those terms to be sent to the Department on 17 December 2004.

8 Mr John Knopman, the officer of the Department with primary responsibility for the administration of the contract between the State and ABS, gave evidence that he had conducted a search of the relevant files and had not found the letter. He also gave evidence

· that he had spoken to the person named in the letter, Mr John Skeen, and had been informed that Mr Skeen did not have the letter. (Because the questions heard by me were formulated for separate and preliminary determination pursuant to UCPR Pt 28 r 28.4, and were therefore of an interlocutory nature, this evidence was admissible pursuant to s 75 of the Evidence Act 1995, and I admitted it accordingly);

· that in any event, notwithstanding the reference to Mr Skeen, the letter would have come to him because by then he was performing the duties formerly performed by Mr Skeen; and

· of the filing system maintained within the Department. Although Mr Knopman, understandably, acknowledged the possibility that the letter had been lost or misplaced (to which I would add, that it might not have been received at all) I accept it so far as it goes.

9 ABS supplied training services during 2005 pursuant to the contract between it and the State that came into existence upon acceptance of its tender. However, on 10 June 2005, the Department wrote to Mr Jain informing him that he fell “within the definition of ‘Unsuitable Person’” (an expression defined in clause 10.1.46 of the 2005 APL contract). The letter continued:

“If you fail to remove yourself from the management of and employment with Australian Business Skills Pty Ltd within sixty (60) days from the date of this letter, the Department will terminate the 2005 APL Contract with Australian Business Skills Pty Ltd.
Accordingly, please advise me in writing when you have removed yourself from the management of and employment with Australian Business Skills Pty Ltd and the date from which it [sic] became effective.”

10 Sixty days from 10 June 2005 expired on 10 August 2005; and if one allows two days for the letter to be delivered, and assumes that the time limit should have run from receipt rather than sending, the time would have expired on 12 August 2005.

11 Mr Jain took no action until 3 August 2005 – a week or a little more before the deadline. On that day, he wrote to the Department making the following points:

(1) Amstar “had withdrawn 2005 tender as the same had been lodged in error.” He attached a copy of the purported letter of 17 December 2005 to which I have referred above.

(2) Amstar “has completed 100% of all ACTIVE trainees” and said that “criteria for assessing performance should only count ACTIVE trainees and NOT all trainees as RTOs have no control over employers.”

(3) He said that “the assessment criteria… is [sic] wrong at LAW as it provides assessment of RTO performance independent of employer and/or employee continuation to the program but who happen to be key party [sic] for successful completion.”

(4) “Narendra Jain has not been controlling director of [Amstar] for bulk of 2004 and ceased to be director with effect from 20 December 2004 before 2005 tender was finalised. As such N. Jain is not responsible for [Amstar’s] performance in 2004.”

12 The letter stated that in view of these matters “we believe your determination needs to be reviewed.”

13 On 5 September 2005, the Department replied. It referred to the request for a review made by the letter of 3 August 2005, stated that the matter had been reviewed “in light of the information you provided in that letter”, but said that “the Department has decided that its original decision remains valid.” Accordingly, the letter concluded:

“As you failed to comply with the abovementioned terms of the 2005 Approved Providers List Contract within the sixty days specified in my letter of 10 June 2005 to you, the 2005 contract with Australian Business Skills Pty Ltd is forthwith terminated with effect from the date of this letter.”

14 That letter was sent by facsimile transmission to Mr Jain at about 11.19am on 5 September 2005. Mr Knopman, the officer of the Department who signed the letter, gave evidence that he had a conversation with Mr Jain at about 11.30am on 5 September 2005. He said that Mr Jain stated that he had received the fax terminating the APL Contract, and that he was going to resign immediately as a director of APS. Mr Knopman said that Mr Jain enquired whether, if he now resigned, the cancellation of the APL Contract would continue to apply. Mr Knopman said that he informed Mr Jain that the contract had already been cancelled, so that it would make no difference if Mr Jain now resigned.

15 Mr Jain did not deny this conversation. He gave no contrary or inconsistent account. Mr Knopman was not cross-examined on his account of it (which was given by reference to a file note that, he said and I accept, he made later that same day). I accept that a conversation occurred between him and Mr Jain at the time and substantially in the terms recorded in the file note, which I have summarised in para [14].

16 Thereafter, there was correspondence between the plaintiffs’ solicitors and the Department. Although, in the main, that correspondence generated more heat than light, it may be noted that in a letter dated 7 September 2005, the plaintiffs’ solicitors said, among other things:

“Pursuant to clause 6.2.1 Australian Business Skills had until 12 August 2005 to take that action [ie, remove Mr Jain from office and employment]. Even taking a more restrictive view of the date upon which the notice was served Australian Business Skills would have had until 10 August 2005 to take that action. Without prejudice to either of our client’s [sic] rights, such steps were taken and Ms Nandini Patel was appointed as the sole director and secretary of Australian Business Skills on 8 August 2005. That matter can be confirmed by reference [sic] the records maintained by [ASIC].”

17 An ASIC record relating to ABS reveals that on 5 September 2005, ASIC received notice under s 484E of the Corporations Act, dealing with the change in directorships. The record purports to show that Mr Jain resigned his office as a director on 8 August 2005, and to record that as the “Effective Date” of the change.

Mr Jain’s credibility

18 Mr Knopman’s account of his conversation with Mr Jain on 5 September 2005 (which account, I have said, I accept) is inconsistent with Mr Jain’s having resigned on 8 August 2005.

19 In an affidavit sworn on 27 September 2005, Mr Jain, having referred at para 15 (the second paragraph of that number, following paragraph 17) to the letter of 3 August 2005 from the Department, said in para 18:

“18. Notwithstanding that I believed that the Department had acted in error declaring me to be an “Unsuitable Person” as set forth in their letter 10 June 2005 I took steps to resign as a director of the first plaintiff company so as to protect its interests pending the resolution of that issue. My resignation as a director took place on 8 August 2005.”

20 It is a possible, although not an obvious, reading of that paragraph that Mr Jain was intending to suggest that he resigned with effect from, rather than on, 8 August 2005. However, he made it clear in cross-examination that what he meant was that he had resigned in fact, and not just with retroactive effect, on 8 August 2005. Indeed, he gave what purported to be corroborative detail of his resignation:

“Q. You, at the time you received that letter [ie, the letter of 3 August 2005], had still done nothing about removing yourself as a director of Australian Business Skills, had you?
A. No, I had removed myself as a director. I was still involved in the management of the company.

Q. At what date do you say you removed yourself as a director, Mr Jain?
A. From 8th of August.

Q. And do you say that you removed yourself on 8 August by arranging for the appropriate form to be lodged with ASIC indicating a change of directors?
A. No, that decision was made and lodging to the AIFIA is done by our accountant and he would have lodged electronically. There was no forms or anything involved.

Q. Do you say that you ceased to be a director simply by virtue of your having resigned for the purposes of the company's arrangements?
A. Yes.

Q. And on what date do you say you did that?
A. I removed myself as a director of the company from 8 August but I continued with the management of the company and I am still associated with the management of the company, even today.

Q. Is there any formal company record of your resignation being --
A. There would be meetings and company records. They would all be with our accountant.

Q. You have not provided that in your exhibit, have you?
A. I don't think, basically I was advised by our solicitors. Whatever document was asked for, I have given them.

HIS HONOUR: Q. How do you say you removed yourself, Mr Jain.
A. As a director of the company.

Q. Yes. How do you say you did that?
A. There was a resolution passed whereby I ceased to be the director and another person was appointed as a director.

Q. A resolution of the company?
A. Yes, at the meeting.

Q. And you say there was a meeting of the company and the Minutes were kept?
A. Yes.

Q. And that the Minutes record your resignation and the appointment of someone else?
A. Yes and they will all be with our accountant.

Q. Did you prepare and give to the company a letter of resignation?
A. There is a consent.

Q. I am sorry?
A. There was a consent basically that I tender my resignation.

Q. No, was there a letter or other document whereby you tendered your resignation?
A. I think a two-line statement sort of thing, not a letter, which was prepared by our accountant that I ceased to be director.

Q. And when did the accountant prepare that?
A. It would have been done on 8 August.

Q. Who was the accountant who prepared it?
A. Roger J Huntington.”

21 None of the matters to which he referred – minutes, documents of resignation of the like – were produced in evidence; nor was ABS’ accountant called to prove the matters alleged by Mr Jain.

22 Accepting, as I do, Mr Knopman’s account of his conversation with Mr Jain on 5 September 2005, it cannot be the fact that Mr Jain actually resigned as a director of ABS on 8 August 2005. Had he done so, he would not have told Mr Knopman that he would resign later during the day 5 September 2005; he would have told Mr Knopman that he had already resigned.

23 I do not accept Mr Jain’s evidence as to his purported resignation on 8 August 2005. I think it is a fabrication. As a result, given what I find is his preparedness to fabricate evidence (and, in cross-examination, elaborate with corroborative detail) on what was seen, at the time, to be a critical issue, I do not accept him as a witness on whose evidence generally I could rely. I rely also on the matter referred to in para [43] below. I have come to the conclusion that I should not accept his evidence on any contested matter of fact, unless (and to the extent that) it is corroborated by independent acceptable evidence. Thus, as I have said, I do not accept his otherwise uncorroborated evidence as to the purported letter of 17 December 2004.

Relevant contractual provisions

24 The APL contract for 2005 is a lengthy and, in some respects unhappily drafted, document. I set out the provisions to which reference was made in argument:

“1.3.1 The contractor must nominate a responsible person to liaise directly with the Department in all matters relating to the APL Contract and keep the Department advised of any changes to the name and contact details of its representative.
2.2.1 The selection criteria to be used in the evaluation of tenders for inclusion on the APL Contract or continuation during 2005 are set out below.
2.2.2 The selection criteria are to ensure that the contractor satisfies the Department’s requirements in the most efficient and effective manner as measured by the Department. The evaluation will take into account:
…

· the extent to which the contractor has a completion rate of less than 55% of participants in the last three (3) years

…

· whether and to what extent the contractor’s operations involve or have in the past involved the use, directly or indirectly, of Unsuitable Persons

…

6.2.1 The Department may, by giving notice in writing to the contractor, forthwith terminate the APL Contract in whole or in part if the contractor:

…

· fails to notify the Department of changes to the contractor’s secretaries, directors, managers or senior staff within thirty (30) days

· where any secretary, director manager or staff member of the contractor is or is found to be an Unsuitable Person, fails to remove that person within sixty (60) days

10.1.46 “Unsuitable Person” means a person who, if a corporation:
a) was refused an APL contract
b) had an APL Contract terminated prior to its expiration date, or
c) had its registration under the Vocational Education and Training Accreditation Act 1990 or similar legislation withdrawn or suspended,
or, if an individual:
d) was refused an APL Contract
e) had an APL Contract terminated prior to its expiration date
f) had his or her registration under the Vocational Education and Training Accreditation Act 1990 or similar legislation withdrawn or suspended, or
g) was responsible, because of his or her acts or omissions, for any of the above happening to another person or corporation.”

25 In addition, Ms Allars of counsel, who appeared for the State, referred to:

(1) Clause 3.8.2 (which permits sub-contracting only with the prior consent of the Department and where it does not involve “Unsuitable Persons being involved in the provision of training”); and

(2) Clauses 5.5 and 5.6 (which deal respectively with “monitoring and contractual performance audits” and “desk audits”).
The acceptances

26 An APL contract comes into existence when, a tender being accepted (and the Department notifying the RTO thereof) a “Declaration of Acceptance” is executed by the RTO acknowledging that it accepted the conditions of the relevant contract. Those procedures were essentially similar in 2004 (relating to Amstar’s and ABS’ contracts) and 2005.

27 A Declaration of Acceptance is signed by or on behalf of the RTO. The RTO binds itself, among other things, to the conditions of the form of contract on which it had tendered. Further, for the purposes of clause 1.3.1, a Declaration of Acceptance nominates “The Contractors’ Representative (ie the person responsible for liaising with the Department on all contractual matters)” (Those are the words for 2004; the words for 2005 are slightly, but in no significant way, different.) For ABS and Amstar, the person nominated for 2004 and 2005 was Mr Jain. Mr Jain also signed each Declaration of Acceptance on behalf of the relevant company and, by signing, warranted that he was “authorised to make this declaration on behalf of and so as to bind” the company.

The claims for relief

28 By their Summons filed on 27 September 2005, the plaintiffs sought, relevantly:

“ 1. A declaration that the purported termination of the 2005
Approved Providers List (APL) Contract for the New South Wales Training Market between the first plaintiff and the defendant dated 13 December 2004 on 5 September 2005 is invalid.

2. A declaration that the second plaintiff is not, within the meaning of clause 10.1.46 of the 2005 Approved Providers List (APL) Contract for the New South Wales Training Market, an “Unsuitable Person”.

3. ….

(b) The defendant be restrained from refusing to accept the tender by the first plaintiff for inclusion on the 2006 Approved Providers List (“APL”) based upon the purported termination of the first plaintiff and the facts and circumstances relied upon by the defendant for the purported termination referred to in order 1 above.
…”

29 On 14 October 2005, an order was made pursuant to UCPR Pt 28 r 28.2 “that the following question be determined separately in these proceedings:

“Are the plaintiffs entitled to the relief sought in paras 1, 2 and 3(b) of the Summons?””

30 I heard that separate question on 1 December 2005. As argued, two issues were raised:

1. Whether Mr Jain, in the language of cl 10.1.46(g) of the 2005 APL Contract, “was responsible, because of his….acts or omissions” for Amstar being “refused an AFL Contract”.

2. Whether Amstar had in fact been refused an APL Contract.

31 The plaintiffs did not submit that the purported termination was invalid because the Department did not advise them of the outcome of the review before the date of termination, or did not extend the time for compliance limited by the letter of 10 June 2005 so as to enable the plaintiffs to consider and act upon the outcome of the review.

32 The second issue involved a number of separate strands:

1. Whether the letter of 9 December 2004, stating that “the Department has decided not to accept” Amstar’s tender, amounted to a refusal of an APL Contract for the purposes of cl 10.1.46(a);

2. Whether any “refusal” communicated by the letter was final, or provisional only;

3. Whether any refusal communicated by the letter was effective until the expiry of what the parties referred to variously as the appeal or the review period, namely 7 January 2005.

4. Whether, in the event that the refusal was provisional only, the tender was withdrawn before any refusal became final.

33 Up until the morning of the hearing, the plaintiffs advanced a third ground: namely, that Mr Jain had resigned as a director on 8 August 2005, within the sixty day period fixed by the letter of 10 June 2005. Mr De Buse of counsel, who appeared for the plaintiffs, said that this ground was withdrawn because the letter of 10 June 2005 required more than simply resignation as a director, and that the plaintiffs accepted that Mr Jain had continued in a management role after 8 August 2005. I mention this ground to show that the fabricated evidence of Mr Jain to which I have referred above was given, at least in his affidavit, in relation to a live and apparently crucial issue in the proceedings. Whether or not Mr Jain appreciated that the issue was no longer alive when he was cross-examined is a matter upon which the evidence does not permit me to express a conclusion.

First Issue: Clause 10.1.46

34 For the plaintiffs, Mr DeBuse submitted that the concept of responsibility in para (g) extended to more than that indicated by cl 1.3.1. He submitted that in cl 10.1.46(g) a person would only be “responsible” if, by act or omission, the person was the effective cause of any of the events described in paras (a) to (f) happening to another person or corporation. Mr DeBuse submitted that, even accepting that Amstar was refused an APL Contract because its completion rate had been substantially less than the contract benchmark, Mr Jain could not said to have been “responsible”.

35 I should make two points clear. The first is that Mr DeBuse did not submit that there was no contractually binding benchmark of the kind referred to and relied upon by the Department in its letter of 9 December 2004. The second is that Mr DeBuse did not submit that it was open to the Court to review on its merits the decision taken by the Department as recorded in the letter of 9 December 2004. Rather, his argument was twofold:

(1) that the Department had no evidence at all upon which it could found a conclusion of “responsibility” (to adapt the language of cl 10.1.46(g)); or
(2) that it had applied a wrong construction of paragraph (g) in coming to that conclusion. .

“responsible, because of … acts or omissions”

36 I think that there is a difference between being a “responsible person” nominated pursuant to cl 1.3.1, and being “responsible, because of ….acts or omissions, for..the..happening” of any of the matters described in para 10.1.46(a) - (f). In other words, I think, a person is not “responsible” within cl 10.1.46(g), for the happening of something falling within one of the antecedent paragraphs simply because that person has been nominated as the “responsible person to liaise directly with the Department” etc for the purposes of cl 1.3.1.

37 Except insofar as the letter of 10 June 2005 discloses them, the reasons why the Department concluded that Mr Jain was an Unsuitable Person are not known. The State’s evidence did not set out, either directly or by reference to documents, the basis upon which, or the material by reference to which, the Department reached that conclusion. I do not mean to suggest that the State was required to do so. The application to me was not one for or requiring a merits review of the decision. Nonetheless, between the less than satisfactory drafting of the 2005 APL Contract on the one hand and the less than complete precision of the letter of 10 June 2005 on the other, it is difficult to understand the exact basis upon which the Department reached its decision; and, therefore, to understand whether the Department applied a correct view of para (g) in doing so.

38 To some extent, acceptance of Mr DeBuse’s submissions on this point requires an acceptance of Mr Jain’s evidence as to what, he says, are the various causes of a failure to achieve the required completion rate. My inability to accept Mr Jain’s evidence as reliable, based on my inability to accept him as a witness of truth, means that the submissions cannot be accepted insofar as they depend on Mr Jain’s evidence. Nonetheless, that does not completely dispose of the first issue.

39 I think that the concept of responsibility embodied within para (g) requires more than that the person said to have been responsible was a director or other officer of the corporation (where the question of responsibility arises in the context of an event within the preceding paragraph having happened to a corporation). Thus, I think, if the Department had decided that Mr Jain was an unsuitable person because he was responsible for Amstar’s having been refused an APL Contract, and that his responsibility arose purely, and only, because he was a director of Amstar (ie, without considering what were his relevant acts or omissions in that capacity), then the decision would have been made upon an incorrect basis.

40 If, however, the Department had not regarded itself as bound to reach the conclusion that it did simply because Mr Jain was a director, but had considered all the material available to it, bearing on the question of acts or omissions, then I think it would not have decided on an incorrect basis. Further, I think, there was material available to it that was sufficient to enable it to conclude, as it did, that Mr Jain had the requisite degree of responsibility. Thus, if the Department applied the correct test, there is no basis upon which the Court should intervene: because the Court is not concerned with the merits of the decision.

First basis – no evidence

41 The contract benchmark completion rate was fixed by cl 2.2.2 of the 2004 APL Contract between Amstar and the State. The State’s evidence showed that the Department maintained substantial records relating to completion rates, and that, for the 2004 year, Amstar’s completion rate was as set out in the letter of 9 December 2004. That evidence in terms was not challenged, and I accept it. The plaintiffs’ response was that completion rates could be affected by many factors, some within the control of an RTO but many outside it. In the latter category, according to Mr Jain, there were decisions by employers and employees to withdraw from, or abandon, the training scheme. This, he suggested both in correspondence and in his affidavit evidence, was a significant cause of Amstar’s falling below the relevant rate. As I have said, I do not accept that evidence. In any event, whether or not Amstar was so far below the contract rate as to warrant the action that was taken is a matter for the Department, not a matter for the Court. In this context, it might be noted that some internal records of the Department (to which I return in para [59] below) suggested that a rate below 30% might be regarded as sufficient, at least provisionally, to warrant refusal of a tender; Amstar’s rate, according to the Department, was almost half as low again. I think it would be open to me to infer that both the relatively low benchmark completion rate of 55% selected and the even lower benchmark of 30% indicate that the Department was well aware of, and made allowance for, factors beyond the control of the RTO. But as I have said, this is not a merits review and I do not need to express a concluded view.

42 The evidence showed that Mr Jain had executed the declaration of acceptance on behalf of Amstar and that he was, during 2004, the only director and secretary of Amstar. Amstar had been in administration for a relatively brief period, 30 March to 27 April, 2004. I accept that Mr Jain’s powers as director had been suspended during that period: see s 437C of the Corporations Act. Mr Jain did not refer to the administration in his affidavit, but did refer to it in cross-examination. The fact and duration of the administration were proved by the ASIC record to which I have already referred. Mr Jain sought to say in cross-examination that the administrator had not relinquished control of the company for some months after his retirement. There was no corroboration of that; it is inherently unlikely; and in any event, given what I have said about Mr Jain’s credibility, I do not accept that evidence.

43 In this context, it is worth reflecting on para 4 of Mr Jain’s letter of 3 August 2005. I have set that out in para [10(4)] above. He said that he had “not been controlling director of [Amstar] for bulk of 2004”. The clear implication from that is that there was someone else who was “controlling director…for bulk of 2004”. I am satisfied that Mr Jain meant to convey that very impression in his letter. It was false: as the ASIC records show, and as Mr Jain admitted, there was no other director until after his resignation on 20 December 2004. It is I think inescapable that Mr Jain sought deliberately to mislead the Department in relation to a matter of extreme significance. To the extent that it is necessary to do so, I rely upon this also in my assessment of his credibility.

44 There was no acceptable evidence that, between 1 January and 29 March, and 28 April and 20 December 2004, anyone other than Mr Jain controlled, supervised, managed or administered the affairs of Amstar. Mr Jain gave some generalised evidence which, despite its source, I am prepared to accept, that the actual teaching services provided by Amstar were provided by persons other than him. But there was no evidence that those people acted independently, or that Mr Jain lacked power to control and direct them. In terms of cl 10.1.46(g), if Mr Jain was not responsible for whatever befell Amstar up until 20 December 2004 (with the exception of events occurring during the administration) then no one was.

45 To the extent that the question falls to be decided by reference to years before 2004, there is no significant difference. Mr Jain was the sole director and secretary of Amstar from 22 October 2001 until, as I have said, 20 December 2004. There was no evidence to suggest that any different situation, in relation to his involvement in and responsibility for the company’s business and performance, was any different in earlier years to what it was in 2004.

46 Thus, as I have said, I conclude that it was open to the Department to reach the conclusion that Mr Jain was responsible for Amstar’s having been refused an APL Contract, because he was responsible, by act or omission, for Amstar’s having failed to deliver services of a quality sufficient to enable it to achieve the requisite completion rate. I therefore reject the first basis on which the plaintiffs argued the first issue (see para [35(1)] above).

Second basis: - the correct test?

47 If the Department applied the correct test (or did not apply an incorrect test) the first issue must be decided against the plaintiffs. As I have said, the test that it applied must be discerned, if it can, from the letter of 10 June 2005. Indeed, I think, the remaining question on the first issue can be framed more closely: unless the letter of 10 June 2005 (or other material in evidence) discloses that the Department applied the wrong test, the first ground must fail. The parenthesised exclusion can be put to one side, because there was no other material that could lead to the conclusion that the Department applied the wrong test.

48 The letter of 10 June 2005 sets out the relevant contractual framework. It refers first to cl 6.2.1, including the bullet point that deals with the situation where a director etc is or is found to be an Unsuitable Person.

49 It then sets out the definition of Unsuitable Person. Having done that, it states:

“It has been determined that you are Director and Secretary of Australian Business Skills Pty Ltd, and that you were Director and Secretary of Amstar Learning Pty Ltd which was refused a 2005 APL Contract.
As a consequence, it is considered that you fall within the definition of “Unsuitable Person” as quoted above.”

50 The last paragraph that I have quoted, taken in isolation, might suggest that the Department had concluded that Mr Jain was an Unsuitable Person simply because he was a director and secretary of Amstar, in circumstances where Amstar had been refused an APL Contract. However, I do not think that it is appropriate to take the paragraph out of its context. Nor do I think that it is appropriate to subject the letter to the kind of textual analysis to which Acts of Parliament, and occasionally judgments of appellate Courts, are subjected.

51 The context in which the paragraph appears – indeed, to which it is a conclusion – includes a recital of the relevant contractual conditions. I repeat that the contractual provisions recited include cl 10.1.46. Thus, in context, it is clear that the decision maker appreciated that the question was whether Mr Jain was an Unsuitable Person because, in terms of para (g), he was responsible, because of his acts or omissions, for Amstar’s having been refused an APL Contract.

52 Making every allowance, it has to be said that the letter is less than clear. The relevant matters that lead to the conclusion that Mr Jain is an Unsuitable Person seem to be the definition of that expression in cl 10.1.46 and the facts (“determined” by the decision maker) that Mr Jain is “Director and Secretary of” ABS and was “Director and Secretary of” Amstar, and that Amstar was refused a 2005 contract. The first matter “determined” - that Mr Jain is a director and secretary of ABS – is irrelevant to the question, whether he is an Unsuitable Person. It is relevant to the exercise of the power to give notice conferred by the provision of cl 6.2.1 quoted earlier in the letter.

53 It is of course relevant to the categorisation of Mr Jain as an Unsuitable Person that Amstar was refused its 2005 APL Contract. However, that could only lead to a conclusion of unsuitability if Mr Jain was responsible for that having happened because of his acts or omissions. The letter gives no indication that any acts or omissions on the part of Mr Jain, relevant to the question of his responsibility, were considered. Rather, it indicates that the question of responsibility was decided because he was “Director and Secretary of” Amstar. There is no indication in the letter that the decision maker made any attempt to consider the acts or omissions of Mr Jain, in his capacities as director and secretary of Amstar, that led to the decision that he had the relevant responsibility for the refusal of Amstar’s 2005 APL Contract.

54 The plaintiffs did not submit that the decision maker was required to give reasons; and, in general, no such obligation should be implied: see Public Service Board of New South Wales v Osmond (1986) 159 CLR 656. But where reasons are given, I think that they may be analysed to see whether the decision maker approached the question for decision on a correct basis. In the present case, I approach the reasons on the basis that it is inappropriate to undertake a detailed and technical analysis for defects of expression. The question is whether on a fair reading (bearing in mind that fairness requires a consideration of the interests of the person affected by the decision as well as those of the decision maker) the reasons given demonstrate relevant error in the performance of the requisite task. In the present case, reminding myself that I am not construing an act of Parliament or seeking to analyse and apply the words of an appellate Court, I am nonetheless forced to conclude that the decision maker determined the question simply by reference to Mr Jain’s status as director and secretary of Amstar, and not by reference to the correct question, namely his responsibility, either flowing from or independent of that status and whether by act or omission, for Amstar’s being refused the 2005 APL Contract.

Conclusion on first issue

55 I therefore conclude that the first ground of challenge has been made good: not because the decision reached was unsupportable (far less, that it was “wrong” on the merits), but because it was reached by the application of the incorrect legal test or by a failure to apply the correct legal test.

56 I have not overlooked that in the relevant bullet point of cl 6.2.1, the condition is that a director etc “is or is found to be an Unsuitable Person”. The State laid stress on the second limb – “is found to be” – of this test. Ms Allars submitted that, regardless of whether in fact Mr Jain was an Unsuitable Person, he had been found to be one. However, in circumstances where that finding, or determination, is infected by the error to which I have referred, I do not think that it dictates a conclusion different to that which I have reached.

Second Issue: “refused”

57 In case I am wrong in what I have said, I will set out my conclusions on the second ground.

58 The letter of 9 December 2004 stated in terms that “the Department has decided not to accept [Amstar’s] tender for 2005.” On any fair reading, that is a statement that the Department will not – refuses to - enter into a 2005 APL Contract with Amstar.

59 I do not think that the decision is provisional; nor do I think that it was suspended, or executory, up until 5.00pm on Friday 7 January 2005. It is correct to say that Amstar was given an opportunity “to make representations concerning [the] decision”. On any fair reading, that means that Amstar was given an opportunity to persuade the Department to change its mind. It does not mean that the decision was provisional.

60 Amstar relied on the minutes of a meeting of a “Joint Review Committee for the Approved Providers List” held on 8 November 2004. The statutory and administrative scheme is that the actual decision is made by a “Delegate”. Tenders are reviewed by the committee to which I have referred. The committee makes recommendations to the Delegate. The Delegate then makes a decision. The plaintiffs relied on a statement in an attachment to the minutes that “against a contractual benchmark of 55% completion rate, any RTO with a less than 30% completion rate over three years was provisionally deemed as having performed unsatisfactorily.” However, the submission took that statement out of context. The context showed that any RTO so provisionally assessed was then individually assessed, and that the recommendation (for acceptance or non-acceptance) were made on the basis of the individual assessment. Thus, contrary to the plaintiffs’ submission, there was no provisional character in the actual recommendation made by the committee to the Delegate. In terms, the recommendation was that the Delegate “decline eighty tenderers for the 2005 approved providers list indicated in the list at attachment C”: a list that included Amstar.

61 In any event, the relevant decision was that of the Delegate and not that of or recommended by the committee. It is apparent from the letter of 9 December 2004 that the Delegate had decided not to accept, ie to refuse, Amstar’s tender. That decision is not to be construed, let alone conditioned, by reference to whatever it was that the assessment committee may have said.

62 Finally on this point, and conclusively, I reject Mr Jain’s evidence that he sought to withdraw Amstar’s tender by his letter of 17 December 2005. As I have said, the only evidence that that letter was sent comes from Mr Jain; no trace of it appears in the Department’s records. My inability to accept Mr Jain’s uncorroborated evidence means that I do not accept his evidence that the letter was sent, and means in turn that there is no evidence that Amstar’s tender was withdrawn.

Discretion

63 The State did not submit that, if I concluded that the plaintiffs had made out their claim for relief, relief should be refused on discretionary grounds. There was, however, some discussion as to the precise form of relief that should be granted: a question to which I now turn.

Relief

64 It is appropriate to make a declaration in terms of prayer 1 of the Summons. It is not appropriate to make a declaration in terms of prayer 2. I have not found (nor could I) that Mr Jain is not an Unsuitable Person. I have found only that the determination that he was is fatally flawed. If some declaration is sought, it would need to be more limited than that sought by prayer 2.

65 Nor is it appropriate to make an order in terms of prayer 3(b). If my decision stands, the State will be bound by the declaration that I will make in accordance with prayer 1 of the Summons. It is therefore bound not to take into account the purported termination of ABS’ 2005 APL Contract, or (at least without reassessing the question) the determination that Mr Jain is an Unsuitable Person. If my decision stands, I would expect the State, as a responsible litigant, to act appropriately. But it would be open to the State (for example) to re-examine the question, whether Mr Jain is an Unsuitable Person. If it does so according to law, and concludes that he is, it would be open to the State to rely upon that in the consideration of ABS’ tender for a 2006 APL Contract.

66 In all the circumstances, I think that the appropriate course is to stand the proceedings over to enable the parties to bring in short minutes of order to give effect to my reasons. If there is to be a dispute about the precise form of relief, or as to costs, I will deal with it when the short minutes of order are brought in.

Orders

67 (1) I direct the plaintiffs to bring in short minutes of order to give effect to these reasons, upon a date to be arranged with my Associate on or before 16 December 2005.

(2) I stand the proceedings over accordingly.

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