Highway Construction Pty Ltd v Commissioner of Main Roads

[2001] WASC 261

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HIGHWAY CONSTRUCTION PTY LTD -v- COMMISSIONER OF MAIN ROADS [2001] WASC 261

CORAM:   MASTER SANDERSON

HEARD:   28 AUGUST 2001

DELIVERED          :   24 SEPTEMBER 2001

FILE NO/S:   CIV 2597 of 2000

BETWEEN:   HIGHWAY CONSTRUCTION PTY LTD (ACN 009 160 007)

Plaintiff

AND

COMMISSIONER OF MAIN ROADS
Defendant

Catchwords:

Practice and procedure - Application to strike out statement of claim - Turns on own facts

Legislation:

Nil

Result:

Statement of claim struck out

Category:    B

Representation:

Counsel:

Plaintiff:     Mr L E James

Defendant:     Mr W S Martin QC & Ms K Perry

Solicitors:

Plaintiff:     Kott Gunning

Defendant:     Blake Dawson Waldron

Case(s) referred to in judgment(s):

Aircraft Systems International v Air Services Australia (1997) 146 ALR 1

Commissioner of Main Roads v Highway Construction Pty Ltd [2001] WASCA 158

Highway Constructions Pty Ltd v Commissioner of Main Roads [2000] WASC 275

Case(s) also cited:

Nil

1. MASTER SANDERSON:  This is the defendant's application to strike out the plaintiff's statement of claim.  In earlier proceedings the plaintiff applied for leave under the provisions of the Limitation Act to commence these proceedings:  Highway Constructions Pty Ltd v Commissioner of Main Roads [2000] WASC 275. Leave to bring these proceedings was granted and from that decision the defendant appealed. The appeal was dismissed: see Commissioner of Main Roads v Highway Construction Pty Ltd [2001] WASCA 158. At first instance and on appeal the facts giving rise to the plaintiff's claim were considered in some detail. I will adopt the outline of facts contained in the two decisions without repeating them.

2. The first two paragraphs of the statement of claim identify the parties.  No objection is taken to them.

3. Paragraph 3 sets out a series of contracts which, it is said, have involved the plaintiff and the defendant "in contractual relations".  None of these contracts bear any relationship to the matters forming the subject of this dispute.  Nor does any other aspect of the pleading relate to matters set out in par 3.  It may be, in certain circumstances, material which is irrelevant, is inoffensive and not liable to be struck out.  It may even be the case that on some occasions irrelevant material can be regarded as contextual.  Although the pleading of such material may offend the rules of pleading, no purpose would be served by striking out such paragraphs.  But that is not the case here.  Paragraph 3 does not put any of the subsequent paragraphs of the statement of claim in context and it does not explain in any way at all any aspect of the plaintiff's claim.  In my view it ought be struck out.

4. Paragraph 4 through to par 9 deal with what is known as "pre‑qualification".  Pre‑qualification is a process whereby a party wishing to contract with the defendant can pre‑qualify so that it will automatically be considered when tenders are called.  It is common ground between the parties that the tender the subject of this action required that all parties tendering be pre‑qualified.  There is also no dispute that the plaintiff had pre‑qualified.  In that circumstance par 4 through to par 9 are irrelevant.  They add nothing at all to the plaintiff's claim either in a contextual sense or otherwise.  All of these paragraphs ought be struck out.

5. By par 9 it is pleaded that since being granted pre‑qualification rating the defendant has awarded the plaintiff 10 contracts which are particularised.  Paragraph 10 pleads that between tender and the award of contracts referred to in par 9, where the plaintiff was the lowest tenderer, the defendant asked for more information if it was satisfied the plaintiff had not provided sufficient information.  It is said that this was "the defendant's invariable practice".  Paragraph 31 of the statement of claim dealing with the question of estoppel pleads what is described as "the first assumption".  It is said that the actions of the defendant pleaded in par 10 gave rise in part to the first assumption:  see par 31(b).  The plea in par 10 is picked up again in par 32(b) which deals with the plaintiff's entitlement to rely upon the first assumption.  Although it is not easy to put either par 9 or par 10 in context, given its position in the pleading and the failure of either par 31 or par 32 to refer to par 10 specifically, it nonetheless seems to me to both paragraphs are proper and relevant and should remain.

6. The position of par 11 is more problematical.  By par 11(a) it is pleaded that it was the defendant's "general practice" to award contracts to the lowest tenderer provided the tender conformed with the requirements of the tender document.  However, the conditions of tendering which appear as annexure "MJR1" to the affidavit of Murray John Robinson sworn 2 November 2000, contains as cl CT10 the following:

   "Main Roads shall not be bound to accept the lowest or any Tender or part of a Tender."

7. What the plaintiff pleads by par 11 and subsequently in par 31(a) and par 32(a) is that the tender would be awarded to the lowest tenderer.  As it is pleaded, that claim cannot be sustained.  Paragraph 11(a), along with par 31(a) and par 32(a) should be struck out.  By par 11(b), it is pleaded that in the plaintiff's experience the defendant generally interviewed the two lowest tenderers prior to awarding the tender.  This plea is picked up obliquely in par 32(c).  Although it is somewhat difficult to see how this general practice could give rise to an estoppel, at least it does not run counter to the express provisions of the Conditions of Tendering and in the circumstances, the plea should stand.

8. By par 11(c) the plaintiff pleads that it was the defendant's "invariable practice" to include in its conditions of tendering a pink "alert sheet" which indicated to tenderers any special conditions or change to the usual practice or procedure in assessing tenders.  This plea is picked up in par 31(d).  This may form the basis of a claim in estoppel and I would permit par 11(c) to stand.

9. Paragraph 12 pleads that in May 1998 the plaintiff was the only contractor on the defendant's list with pre‑qualification status "R20".  As I read the pleading, par 12 is irrelevant and as the pleading will require significant amendment, it should be struck out.  I would add that I do not regard par 12 as offensive to the point where I would have struck it out, were it not for the fact that the pleading will have to be substantially recast in any event.

10. Paragraph 13 pleads that in May 1998 tenders were called for the construction of certain road works in Loftus Street, North Perth and that certain tender documents were issued by the defendant.

11. Paragraph 14 pleads specific clauses to be found in the conditions of tendering.  Paragraph 15 pleads that as a consequence of the matters pleaded in par 13 and par 14 and of the plaintiff submitting a tender, a contract defined as "the Tender Contract" arose.  With respect, what is pleaded is clearly not enough to give rise to what is generally described as a tender process contract.

12. This is not the occasion to consider in detail the nature of tender process contracts.  It is enough if I quote from what was said by Finn J in Hughes Aircraft Systems International v Air Services Australia (1997) 146 ALR 1 at 25 ‑ 26:

    "A party calling for tenders may do no more than issue an invitation to treat. … But equally the steps taken by it may result in the making of contractual commitments in relation to the whole or parts of the tendering process. … The growing body of case law in which pre‑award contracts have been alleged merely demonstrates that each case turns on its own facts."

13. The question then in this case is what documents referred to in par 13 and par 14 (because each of the two paragraphs refers only to documents and not any other facts or matters) give rise to contractual commitments in relation to the whole or parts of the tendering process.  The answer is none.  The two specific clauses of the conditions of tendering referred to in par 14 impose no obligations on the defendant and, in my view, could not be said to give rise to any contract.

14. During the course of the hearing it was conceded by counsel for the defendant as he had conceded on the application for leave to commence proceedings and during the course of the appeal in relation to that decision, that in certain circumstances a tender process contract could arise as between this plaintiff and this defendant.  But at present the plaintiff has not pleaded material facts which could be said to give rise to such a contract.  On that basis par 13, par 14 and par 15 should be struck out. 

15. Having reached that conclusion, par 16 through to par 24 (including par 22A), par 29 and par 30 ought also be struck out.  However, a number of these paragraphs were criticised in other grounds by the defendant and for the sake of completeness, I will deal with those criticism.

16. By par 16 it is pleaded that the effect of cl CT2 and cl CT5 of the conditions of tendering is to bind both parties to the Code of Practice of the Western Australian Building and Construction Industry and the Australian Standard Code of Tendering AS4120‑1994.  Reference to the two clauses in the conditions of tendering shows this not to be the case.  The tenderers are bound to the Code of Practice and the Australian Standard referred to, but not the principle.  The particulars provided of par 16 are not properly construed particulars at all.  If there is an implied term in the agreement between the parties then that must be specifically pleaded.  If the two clauses are to be construed as alleged, then some material facts need to be pleaded which derogate from what appears on any reading of the two clauses to be the express intention of the conditions of tender.

17. I would accept as pleaded in par 17 that there may be implied into any tender process contract, if one arose, that the tendering process would be conducted fairly, honestly and reasonably.  The difficulty, of course, is, as I have said, I am not satisfied that any contract between the parties has been properly pleaded.

18. In relation to par 18, provided that the Code of Practice for the Western Australian Building and Construction Industry can be seen as part of the contractual arrangement between the parties, then cl 2.2.1 of that Code speaks for itself.  Whether the clause as pleaded has any operation in the light of the tender documents, is something that can be examined in the context of a revised pleading.  The same comments apply with respect to par 19. 

19. Paragraph 20 pleads part, although not all, of cl CT9 from the conditions of tendering.  It is unexceptional.

20. Paragraph 21 is, I think, central to the plaintiff's claim.  Clause CT9 of the conditions of tendering sets out the criteria on which tenders will be assessed.  Clause CT9(g) refers to "Details and logic of the Tender Program".  At the heart of the plaintiff's claim is the allegation that the contract in question was awarded to a tenderer who had provided far more in the way of details of the construction program than was required by the tender.  As I understand the plaintiff's claim, it is alleged that in accepting a tender which was far more detailed than the plaintiff was led to believe was necessary, the defendant had breached the terms of a tender process contract which had arisen between the plaintiff and the defendant.  As I say, I understand this to be the plaintiff's main argument.  It has not clearly emerged from either of the two versions of the statement of claim, or with respect, from the written or oral submissions filed in opposition to this application.  But I think on a proper analysis, that is the plaintiff's position. 

21. By par 21, it is said that par CT9(g) was "clarified" in cl 8.4.6 of the conditions of tendering.  That clause of the conditions of tendering is then pleaded in full.  It is not clear what is meant by the use of the word "clarified".  If cl CT9(g) was varied by cl 8.4.6 of the conditions of tendering, then that should be pleaded.  If the plaintiff is contending for a construction of the contract which requires cl CT9(g) to be read and construed consequent upon what is contained in cl 8.4.6 of the conditions of tendering, then that should be pleaded.  But the form of the pleading at the moment is embarrassing and it should not stand.  This is an area of the pleading which requires careful consideration.

22. By cl 22 it is pleaded that arising from matters pleaded in par 16 to par 21 inclusive, the defendant should have assessed the tenders in accordance with its "Contract Manual for Major Works 1711/001".  Reference to par 16 to par 21 does not indicate any basis at all upon which it could be said that there was an obligation on the defendant to assess the tenders with reference to this manual.  The manual is not mentioned.  Some material fact must be pleaded to justify the claim that the defendant was obliged to refer to the manual.  Paragraph 22 cannot stand.  Nor can par 23, which simply quotes particular clauses of the manual.  Paragraph 24 adds nothing at all to the pleading and is redundant, if not actually offensive.

23. Paragraph 25 pleads the submission of the tender.  Paragraph 26 pleads that in August 1998 the plaintiff was advised it was one of a list of nine tenderers which were being considered. 

24. Paragraph 27 pleads that on 31 August 1998 the plaintiff was orally advised by the defendant that its tender had been unsuccessful.  Paragraph 27 goes on to plead written advice to that effect in January 1999.  The reference to the written advice is irrelevant if inoffensive. 

25. Paragraph 28 pleads that the plaintiff was the lowest tender.  None of these paragraphs in their terms (save with respect to the criticism I have made of par 27), is offensive.

26. Paragraph 29 pleads how it is said the defendant breached the tender contract.  This paragraph was subject to detailed and trenchant criticism by counsel for the defendant.  Many of the points made by counsel were well made.  However, in my view there is little to be gained in analysing par 29 in detail when there is no proper plea that could amount to a tender contract.  It is only when, and if, such a plea is properly formulated that allegations of its breach can be considered.  While I would strike out par 29 I would do so at present simply on the basis that it cannot stand in the light of other paragraphs which have been struck out. 

27. Paragraph 30 pleads loss and damage.  Clearly this plea cannot be made good unless and until it is established that there was a tender process contract and that it was breached.  Counsel for the plaintiff submitted that it should be possible for particulars of any alleged loss and damage to be provided as part of any revised pleading.  I think the question of whether or not that is possible is dependent upon the nature of the contract pleaded and the alleged breaches.  I would, however, suggest that some consideration be given to formulating the damages claim now rather than the matter being left to some future date.

28. Paragraph 31 through to par 40 deal with the estoppel plea.  Counsel for the defendant conceded that it is possible in circumstances such as prevailed in this case to imagine a situation where some action, based on estoppel, could be open to the plaintiff.  It was counsel's submission that at present any estoppel claim was not properly pleaded.  I have already referred to par 31(a) and par 32(a).  These two paragraphs run directly counter to the pleaded contractual position and could not form the basis of any claim in estoppel.  The question is whether the remaining parts of paragraphs and paragraphs can stand.  Based upon what I have said in relation to par 10 and par 11, I think par 31(b), par 31(c), par 31(d) and par 32(b) and par 32(c) can stand.

29. Paragraph 33 is unexceptional.  Paragraph 34 is a plea, necessary in an estoppel claim that the plaintiff acted to its detriment in reliance upon representations made by the defendant.  Paragraph 34(b) is not a particular of par 34 and should be struck out. 

30. Paragraph 35 pleads what is referred to as "the second assumption".  This second assumption is said to arise as a consequence of matters pleaded in par 26 of the statement of claim and par 11 to par 21 inclusive and par 32.  Paragraph 26 is the plea that the plaintiff was advised it was one of nine tenderers being considered by the defendant.  I will not go through the other paragraphs referred to as I have covered them all in some detail.  I have some hesitation that based upon par 26, even as conditioned by other paragraphs, the circumstances exist to give rise to an estoppel.  However, the nature of the plaintiff's case on this point is clear and on a pleading summons I would not be prepared to strike out par 35.

31. Paragraph 36 through to par 40 detail what followed from the plaintiff's reliance upon the alleged representations of the defendant.  I note in passing that par 39 appears to be a carry over from an earlier version of the statement of claim where injunctive relief was sought.  The terms of that paragraph require further attention.  It is also difficult to see how par 40 is relevant.  This goes to the question of what relief flows from the alleged estoppel and this requires further careful consideration by the plaintiff.

32. Paragraph 41 through to par 46 plead a claim in misleading and deceptive conduct under the provisions of the Fair Trading Act.  As a general comment I have some doubt whether such a claim can lie.  If there is a tender process contract which has been breached, then the plaintiff has a cause of action.  Given the way in which such contracts arise, it is difficult to see that, if there is no such contract in this case, there could nonetheless be a finding that representations were made and that the plaintiff relied upon those representations.

33. Having said that I would not shut out the plaintiff from repleading a claim in misleading and deceptive conduct.  I say repleading because par 41 at present relies upon par 11 to par 24 of the statement of claim.  Given that some of these paragraphs have been struck out, further consideration will need to be given to the claim as pleaded.  I would, however, make one point.  By par 41(b) it is pleaded that there was a representation to the effect that the contract would be awarded to the lowest tenderer.  In the light of cl CT10 of the conditions of tender which is pleaded to be part of the contract between the plaintiff and the defendant, no such representation could arise.  It should not be repeated in a future version of the statement of claim.

34. In all the circumstances I think the proper course is to strike out the statement of claim in its entirety.  Counsel for the defendant submitted that any leave to replead should be limited to the right to plead the tender process contract.  However, it seems to me that claims could arise both in estoppel and under the provisions of the Fair Trading Act.  In the circumstances I think the proper order should be that there be leave to replead generally.  I will hear the parties as to the precise form of the order.  I think the plaintiff should pay the defendant's costs of this application, including the reserved costs.