Bouyahia v The City of Vincent
[2022] WASC 228
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: BOUYAHIA -v- THE CITY OF VINCENT [2022] WASC 228
CORAM: ALLANSON J
HEARD: 6 JULY 2022
DELIVERED : 15 JULY 2022
FILE NO/S: CIV 1273 of 2022
BETWEEN: ISLAM BOUYAHIA
Applicant
AND
THE CITY OF VINCENT
Respondent
Catchwords:
Administrative law - Local government - Where local government called for tenders to lease kiosk in park - Whether proposed lease materially different from that in tender - Turns on facts
Legislation:
Local Government Act 1995 s 3.58
Local Government (Functions and General) Regulations 1996
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Applicant | : | T Houweling |
| Respondent | : | A Sharpe |
Solicitors:
| Applicant | : | Cornerstone Legal |
| Respondent | : | Jackson McDonald |
Cases referred to in decision:
Maxwell Contracting Pty Ltd v Gold Coast City Council [1983] 2 Qd. R 533
Streamline Travel Services Pty Ltd v Sydney City Council (1981) 46 LGRA 168
Swan Foreshore Protection Association Incorporated v City of Melville [2018] WASC 211
ALLANSON J:
Introduction
Hyde Park is a popular park located in the City of Vincent.
In 2021, the City decided to lease a storage shed in the Park for the purpose of a kiosk or café selling food and beverages.
In June 2021, the City called for tenders to lease the space and operate the kiosk.
The City received four tenders. The applicant did not tender.
On 14 December 2021, at an ordinary meeting, the Council of the City resolved to accept a tender submitted by Veggie Mama Pty Ltd, and to approve the City entering into a lease of the kiosk site. The City's solicitors have drafted a lease which is being reviewed by Veggie Mama.
Under the arrangement proposed with Veggie Mama, food vans that had previously traded in the Park will no longer be permitted. The applicant, Islam Bouyahia, operated one of those food vans.
The applicant contended that the contract for the proposed operation of the kiosk by Veggie Mama is different from that which was put to tender. He said that, had he known the terms on which the lease will be granted, he would have tendered.
The applicant sought judicial review of the decision to award the lease and contract to operate the kiosk.[1]
[1] The applicant did not press a further claim for a writ of mandamus to require the City to readvertise the tender request afresh.
The City opposed the application. Veggie Mama was served with the application but did not appear.
Grounds of application
The applicant relied on three interconnected grounds: in substance he argued that the City failed to adhere to the statutory requirement to lease property by public tender because the contract awarded cannot be considered a product of the advertised public tender.
The evidence
The applicant relied on his affidavit, affirmed 8 March 2022.
The respondent read the affidavit of Jeremy Robert Chalmers, affirmed 20 May 2022. Mr Chalmers is employed by the City as the Coordinator of Procurement and Contracts.
The facts are found in the documents adduced by both parties.
The applicant also adduced evidence about his financial position and the effect the decision will have on his business. It is not necessary to set that evidence out in any detail. There can be no doubt that the decision will affect his interests and the City does not challenge the applicant's standing to apply to quash the decision or seek a declaration that it is invalid.
The legislation
Part 3 of the Local Government Act provides for functions of local governments, including legislative and executive functions. By s 3.1(1), the general function of a local government is to provide for the good government of persons in its district.
Part 3, div 3, deals with the executive functions of local government. A local government may do all things 'that are necessary or convenient to be done for, or in connection with, performing its functions under this Act'.[2]
[2] Section 3.18(1).
Relevantly, sub-division 6 provides for a range of executive functions including disposal of property by sale or lease.[3] By s 3.58(2)
Except as stated in this section, a local government can only dispose of property to -
(a) the highest bidder at public auction; or
(b) the person who at public tender called by the local government makes what is, in the opinion of the local government, the most acceptable tender, whether or not it is the highest tender.
[3] Section 3.58.
In ground 3 of the application, the applicant referred also to reg 14 of the Local Government (Functions and General) Regulations. Part 4 div 2 of the Regulations, including reg 14, applies to tenders for providing goods and services pursuant to s 3.57 of the Local Government Act. Although the request for tender, in part, used the language of supply of goods and services, the present matter concerns a disposition of property pursuant to s 3.58 and reg 14 does not apply. Regulations 30 and 31 in pt 6 of the Local Government (Functions and General) Regulations apply, but there is no equivalent to reg 14 where the tender is for disposal of property.
The applicant submitted, correctly, that reg 20, providing for minor variations, also does not apply and there is no equivalent regulation for variation of a tender under s 3.58.
The request for tender
The request for tender contained 8 parts:
1.Conditions of Tendering
2.Specification
3.General Conditions of Contract
4.Special Conditions of Contract
5.Tenderer's Offer
6.Contractor's[4] Occupational Safety and Health Questionnaire
7.Tenderer's Safety Record
8.Project Reference Sheet
[4] Contractor is defined in cl 1.1 as the Tenderer whose response is accepted by the City will stop to the Tender: Annexure IB-1 to the affidavit of Islam Bouyahia sworn 8 March 2022, 14.
Clause 1.2 identified the tender documents (basically corresponding to the eight parts of the tender), but also including, 'Addenda and any other special correspondence issued to Tenderers by the City'.
Clause 1.5 provided for a non-mandatory site inspection, which was, incorrectly, said to be scheduled for Friday, 25 July 2021. The error was, or should have been, obvious: 25 July 2021 was after the closing time for submission of tenders and was a Sunday. The correct date was 25 June 2021.
Clause 1.5 further provided that questions on the day of the site inspection were to be recorded in writing and a response would be sent out as an addenda notice to all Tenderers.[5]
[5] Tenderer was defined to include a person who intends to submit a response to the request for tenders.
Clause 1.16 deemed Tenderers to have specified information, including 'other circumstances having an effect on their Response which is obtainable by the making of reasonable enquiries'.
Clause 1.17 also provided for alterations.
The Specification in pt 2 called for tenders 'to lease a portion of the Western storage shed at Hyde Park (approximately 34 m² of internal space) as a commercial Kiosk for a term up to but not exceeding five years. For a café use, the storage shed will require upgrading to food service standards of at least a warm kitchen'. In background information (cl 2.2) the request for tenders advised that the proposed Kiosk was used as a storage shed and was attached to a toilet block. The food van approved area was directly adjacent to the proposed Kiosk. The request stated:
Whether food vans are allowed to continue operating in the Park following the Kiosk opening will be determined by Council following this tender process, and depends on the food and beverage offerings proposed by the preferred tenderer. A future investigation is required to determine whether the food vans and the Kiosk work well together, or whether they conflict. It is proposed the outcome of this investigation will be reported to the Council along with the result of the public tender.
Clause 2.3 set out the specific requirements of the contract, requirements largely related to the provision of a high quality food and beverage service.
Clause 2.5 simply provided that there would be a monthly lease fee paid by the successful tenderer to the City, 'subject to a commercial lease arrangement'.
Part 3 contained General Conditions of Contract. Relevantly, the period of contract is a 'maximum period of 5 years' with an option to extend in the absolute discretion of the City, and with the tenderer to propose a period of contract.
None of the Special Conditions of Contract in pt 4 bear on the issues in this application.
At the same time as the request for tender, the city published a notice inviting tender submissions.[6] Relevantly, the notice stated:
For a café use, the storage shed will require upgrading to food service standards. The cost of upgrades will be the responsibility of the successful respondent. The City recommends that the kiosk be limited to warm kitchen facilities and should not require any external work to the storage shed or surrounding areas within the park.
[6] IB-2. Notice 'Inviting tender submissions-Operator for Hyde Park kiosk', dated 10 June 2021.
On 5 July 2021, following the site inspection, the City published an addenda notice to the request for tender.[7] The notice included the City's formal responses to questions it had received, an internal fit out plan, and notice that the closing time and date for submission of tenders had been extended to 19 July 2021.
[7] IB-7.
The answers to questions included a description of what was included in a 'warm kitchen'. It set out that the City would be providing an electrical switchboard with power points in one corner of the leased space. It further stated:
The City will be ensuring that the space will be [compliant] with health regulations to serve food. The City will, as per the proposed plan, provide a double tub sink and hand wash basin, inset in a stainless bench. The floor will be tiled under this area and the backsplash tiled to regs. The walls will be dry lined and painted and ceiling lights fitted to Code. A sub-board with three-phase power up to 60A will be provided, the connection to instant hot water will be provided, the connection to sewer will be provided however a grease trap will not. A modification of the tenant's choice to the existing roller door will be made. Further floor and wall treatments, additional benches and any other non-fixed assets will be the responsibility of the tenant.
Another answer confirmed that power, sinks and a bench would be provided by the City with the successful respondent responsible for paying for additional items.
The Addenda also advised of a proposed plan to upgrade the toilets, with those works still in the planning stage.
Finally, with regard to rent and charges, the addenda stated:
The public tender requests that the potential kiosk operate orders provide a proposed lease fee along with other lease terms. Based on surrounding commercial tenancy values, it is estimated that the rent per annum would be between $30,000 and $60,000. All outgoing charges (including water and electricity) will be included in the rent. The tenant will be required to pay Council rates. When the lease is in effect, the City will arrange a Gross Rental Valuation…to calculate what the rates and charges will be.
The City gave public notice of the request for tender from 9 June 2021 by notices on noticeboards outside its main administration building and library; by email and letter to various recipients including all food businesses within 500 m of the kiosk site as well as some mobile food vendors operating in the area; on the City's Facebook page and main website; by notice published in a weekly newspaper distributed in Perth and surrounding suburbs; and by signs erected at the kiosk site.[8] The date for public inspection was correctly given as 25 June 2021 in the notification on the City website. The Addenda Notice was also uploaded to the Tenderlink portal.
[8] Affidavit of Jeremey Robert Chalmers affirmed 20 May 2022, [18].
The proposed lease
At the ordinary meeting of the Council of the City on 14 December 2021, the Council approved a recommendation to enter into a lease of the kiosk with Veggie Mama on the terms set out in the recommendation. Relevantly, the lease would be for an initial term of five years with two options. The leased area was that described in the request for tender. Proposed rent was $30,000 a year with annual CPI rent reviews. Utilities (water and electricity) were included in the rent.
Item 3.10 of the recommendation provided for the tenant to be responsible for further capital upgrade and capital expansion of all assets 'after completion of the City's Initial Premises fit out'.
Item 3.14 set out three special conditions:
·First, the lease was subject to and conditional upon approval under the Land Administration Act 1997.
·Second,
The City agrees not to permit the use of any space within Hyde Park to any tenant or other occupant which sells food or beverage items during the term of the Lease. This does not apply to vendors who have received a City of Vincent Stallholder's permit.
·Third, the tenant was to be entitled to a rent-free period of three months from the Commencement Date to facilitate undertaking the necessary fit outs to the premises.
A note to the resolution recorded that mobile food fenders would only be permitted to operate as part of approved events but would not be issued 'Vending Vincent' permits to operate permanently in Hyde Park for the duration of the lease.
The Council further resolved by absolute majority to allocate a budget of $55,000 for the required works to convert the shed area to a commercial kiosk.
The recommendation was carried with some amendments, including a request for the Administration to review and amend the Vending Vincent Policy to consider a maximum period of trade within a single location. A second amendment provided for confirmation of the fit out costs before the Mayor and Chief Executive Officer were authorised to execute the lease. Third, the provision for the inclusion of utilities in the rent was confined to the initial term.
The tender for fit out
On 5 February 2022, the café fit out was put to tender as part of a tender which included refurbishment of the adjacent toilet block.[9] The request for tender contained the following Specification of Works:
… the refurbishment of the existing public toilets and fit out of the gardeners shed to a café at the Hyde Park West ablutions building in accordance with the supplied design plans and addenda and all current Australian Standards and BCA requirements.
[9] Annexure JC-12 to Affidavit of Jeremey Robert Chalmers affirmed 20 May 2022.
The proposed refurbishment of the toilet block included structural alterations to remove parts of the external walls and create a verandah. From the plans that were adduced in evidence,[10] those structural changes do not extend to the leased area where the café will be located. I was not able to determine on the evidence adduced whether some of the items referred to in the refurbishment tender, for example the external finish to brickwork, included the leased premises as well as the toilet block.
[10] See JC-12 at 112.
The applicant's case
The applicant submitted that its complaint was not about a failure to comply with all processes required under s 3.58 of the Local Government Act. At least in part, this was to distinguish the present case from an earlier decision in Swan Foreshore Protection Association Incorporated v City of Melville,[11] where I held that notices published by the respondent did not comply with s 3.58, but that failure did not affect the validity of its decision to enter into a lease. I expressed the opinion that s 3.58 was not directed to whether a disposition that did not comply with the section was legally effective; the section was concerned not with power but with regulating process.
[11] Swan Foreshore Protection Association Incorporated v City of Melville [2018] WASC 211.
Counsel for the applicant submitted that the complaint in the present case is not about process but about whether there has been a tender at all. He submitted that the property the subject of the lease must be that which was put to tender, and that has not occurred in this case. In effect, he submitted, there were two contracts conceived by the City: that which was the subject of a tender process and was not commercially viable for the applicant; and that which was awarded and which was commercially viable only by significant adjustment from what was described in the tender request.
The applicant relied on the decision in Maxwell Contracting Pty Ltd v Gold Coast City Council,[12] where the Queensland Supreme Court was considering s 19 of the Local Government Act 1936 (Qd). Section 19 provided, subject to limited exceptions, that before a specified contract was entered into by a local authority, that local authority 'shall three weeks at least before entering into such contract notify its intention to make and invite tenders for such contract by public notice'.
[12] Maxwell Contracting Pty Ltd v Gold Coast City Council [1983] 2 Qd. R 533.
Derrington J held that the section did not require exact compliance, but substantial compliance. His Honour said, in a passage relied upon by the applicant:
In order to achieve [substantial compliance] it is not necessary that a local authority should advertise in advance all possible variations it may negotiate afterwards with those who tender, for quite clearly such a course would either be excessively taxing upon the imagination of the authority on the one hand or, on the other, productive of an inflexibility damaging to the performance of local government in this field. There are a multitude of reasons why it would be impractical and undesirable that a Council should be required to re-advertise its call for tenders upon any variation it may seek to make to the original Conditions of Tendering, no matter how trivial, on the basis that, if the original Conditions had been in the varied form, more tenders may have been received. Conversely, it is possible that a variation may be so significant as to constitute a new contract, so different from the original that it would be unfair to those who did not tender, and detrimental to the public funds of the local authority in that more favourable tenders may very well be received on re-advertising. [13]
[13]Maxwell Contracting Pty Ltd v Gold Coast City Council 538 - 539.
His Honour characterised the matter as one of degree: 'the variation should need to be so marked that the parties would be put upon serious enquiry with the opportunity of reasonable determination as to whether the contract can be justified'.[14]
[14] Maxwell Contracting Pty Ltd v Gold Coast City Council 539.
Derrington J referred to the decision in Streamline Travel Services Pty Ltd v Sydney City Council, where, on similar facts, Kearney J identified the relevant question: 'whether the variation involved a matter of form so that the substantial identity of the original tender remained intact, or the variation involved a radical departure from the substance of the original tender'.[15]
[15] Streamline Travel Services Pty Ltd v Sydney City Council (1981) 46 LGRA 168, 175 - 176.
Even on the basis of the test advanced by the applicant, I am not satisfied that the facts support the conclusion for which he contends.
In his affidavit the applicant identified the following matters which he contended were deviations from the terms of the tender:
(a)the City to cover the cost of the initial fit out;
(b)the City to provide a three month rent free period;
(c)electricity and water costs included in the rent for five years; and
(d)the monopoly given to the kiosk with no food trucks permitted to trade.
The tender process followed by the City included the initial request for tender but also the later addenda. The tender information included:
(a)the monthly lease fee was subject to arrangement;
(b)the Council would determine whether food vans would be permitted to continue following the tender process;
(c)the City would provide an upgrade of the premises, as set out in the addenda;
(d)there were proposed plans to upgrade the toilet block;
(e)an estimate of rent per annum, with water and electricity included in the rent.
The City's intention to provide the initial fit out, and the inclusion of utilities in the rent, were expressly part of the tender as amended.
The applicant's complaints regarding the rent free period are without substance. The amount of rent was always subject to negotiation. A short rent free period while the lessee was doing its fit out and unable to trade is within a reasonable negotiation of rent payable.
The applicant further referred to the fit out outlined in the tender request of 5 February 2022, including the creation of the verandah, changes to the toilet cubicles, the provision of a new brushed concrete path for the existing perimeter path, and the comprehensive renovation of the toilet block. First, the applicant has not shown that the fit out within the leased area is materially different from that described in the tender. Second, the refurbishment of the toilet block and paths are not within the area leased, and are not part of the lease contract approved in the Council decision of 14 December 2021. While they will affect the amenity of the area in which the kiosk is located, they do not alter the property disposed of by the grant of the lease. The essential character of the leased property has not significantly changed from that described in the tender.
The prospect that the kiosk would have exclusive rights to trade was foreshadowed in the request for tender. The City has power to permit trading activities in the park; it has agreed not to permit the use of space within the park to any tenant or occupant which sells food or beverage. That is not itself a disposal of property by the City. As a term of the agreement granting the lease, it creates an additional right in the lessee but does not alter the character of the property transferred.
I am not satisfied that there has been such a material change from the tender, as amended by the addenda before the final date for submissions, that the decision by the Council of 14 December 2021 should be held to be beyond its powers.
The application should be dismissed.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
TB
Associate to the Honourable Justice Allanson
15 JULY 2022
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