Ipex ITG Pty Ltd (in liq) (recs apptd) & Anor v State of Victoria

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2011 0034

IPEX ITG PTY LTD (ACN 007 433 623) (In liquidation) (Receivers appointed)
	First Appellant
and
TAKAPANA INVESTMENTS PTY LTD	Second Appellant
v
STATE OF VICTORIA	Respondent

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JUDGES:	WARREN CJ, MANDIE JA and CAVANOUGH AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	31 May 2012
DATE OF JUDGMENT:	29 August 2012
MEDIUM NEUTRAL CITATION:	[2012] VSCA 201
JUDGMENT APPEALED FROM:	Ipex ITG Pty Ltd (in liq) v State of Victoria [2010] VSC 480 (Sifris J)

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CONTRACT — Tender process agreement — Alleged breach — Whether tenders assessed in accordance with the tender process agreement — Whether implied obligation to deal fairly and in good faith complied with — Whether misleading and deceptive conduct

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr A W Sandbach with Mr D B Clough	AJH Lawyers
For the Respondent	Mr J D Elliott SC and Ms G L Schoff SC with Ms R L Enbom	Victorian Government Solicitor’s Office

WARREN CJ
MANDIE JA
CAVANOUGH AJA:

The first-named appellant (‘Ipex’), which was the plaintiff at trial, brought a proceeding in the Trial Division claiming damages, inter alia, on the basis of breach of contract. The second-named appellant (‘Takapana’) is the holding company of Ipex and was affected by the order for costs contained in para 2 of the judgment below made on 22 February 2011. The respondent, State of Victoria, was the defendant and was sued as the representative of the Parliament of Victoria pursuant to Part II of the Crown Proceedings Act 1958 (Vic). The trial judge dismissed the claims made by Ipex.[1]
[1]Ipex ITG Pty Ltd (in liq) v State of Victoria [2010] VSC 480 (‘Reasons’).

Background

On 2 June 2002, Ipex tendered for a contract for the provision of ‘system integration services’ for the Parliament of Victoria in response to a Request for Tender in writing (‘the RFT’) issued on 20 May 2002 by the respondent relating to a project for computer services known as the Parlynet 2002 Project.

The RFT[2] had been prepared by KPMG Consulting (‘KPMG’) on behalf of the respondent. A tender evaluation plan (‘Evaluation Plan’)[3] reflecting the terms of the RFT was also prepared by KPMG at the same time as the RFT. The Evaluation Plan was not made available to the tenderers. It was provided for internal use. The Evaluation Plan set out, inter alia, the principles to be followed by the people involved in the selection process and the criteria by which they were to evaluate the tenders.
[2]The relevant terms of the RFT are set out in para [16] below.
[3]This was a document entitled ‘Parliament of Victoria, Parlynet 2002 Project Evaluation Plan’.

The Evaluation Plan set out criteria with weightings, in substance as follows:

- Supplier evaluation (40) comprising:
·Soundness (10)
·Track Record (20)
·Strategic and Cultural Fit (10)

- Service evaluation (60) comprising:
·Parliament (user) requirements (10)
·Technical requirements approach (15)
·Financial issues approach (10)
·Acceptance of contract (5)
·Project management approach (20)

The Evaluation Plan then set out a scoring system in a table:

Assessment

Score

Description

Significantly exceeds requirements

5

Solution significantly exceeds the defined standard

Exceeds requirements

4

Solution exceeds the defined standard

Fully Complies

3

Solution fully meets the defined standard

Mostly Complies

2

Minor changes or compromise required to meet the defined standard

Partially Complies

1

Major changes or compromise required to meet the defined standard

Does Not Comply

0

Unable to satisfy the defined standard – no evidence offered

The Evaluation Plan then indicated that, broadly, weighted scores were to be derived by multiplying the above allocated weights by the respective scores given.

A project evaluation team (‘PET’) was formed comprising officers, employees or agents of the respondent as follows. There was a ‘core team’ comprising Denis Street of KPMG (‘Street’), Michael Purdy (IT manager), Harry Acaster (Business System) and Joe Raciti (Help Desk). There was also a ‘technical panel’, a ‘supplementary panel’ and a ‘reference panel’. The role of Street was to review assessments and issues, whereas the other members of the PET were involved in detailed ‘hands on’ assessment and documentation of scores, issues and questions.

When tenders closed on 7 June 2002, the respondent had received seven tenders including that of Ipex.

The RFT provided for two stages of evaluation. Stage 1 was essentially formal. One of the tenderers was eliminated at Stage 1, leaving six. Stage 2 involved assessing the tenderers’ compliance with detailed evaluation criteria. This was carried out by the PET.

A document entitled Parlynet 2002 Project Evaluation Report dated 1 July 2002 was produced by KPMG (‘Evaluation Report’). The document analysed the tenders. At page 12 of the document, it is noted that with six active proposals the subsequent evaluation focussed on the need to select a smaller number (2-3) for detailed assessment.

At page 14 of the Evaluation Report there was a table headed ‘Each bid was subjected to a qualitative assessment’. The table recorded, for each tenderer, the weighted scores given in relation to the criteria set out in the Evaluation Plan (which in turn reflected the criteria set out in the RFT). Not all of the criteria are dealt with by the table but the evidence showed that the non-listing of those criteria was ultimately of no significance, as we will explain in due course. With respect to the criterion of Supplier Evaluation, Ipex scored the worst of all tenderers. With respect to the criterion of Solution Evaluation (so called in the RFT, but, in the Evaluation Plan, called Service Evaluation), Ipex fared better but still below the leading tenderers, Compaq and Computer Support and Maintenance (NT) Pty Ltd (‘CSM’). A number of notes are appended to the table, including the following:

·No single bid hit the ‘sweet spot’ in satisfying all requirements sought by Parliament
·The scores show a clear distinction between Compaq and CSM, and DiData, Fujitsu, Gen-I and Ipex
·CSM was the strongest in meeting Parliament’s requirements and offered the better operational solution
·Compaq presented as the strongest supplier
·CSM presented as the better ‘size and fit’ for this project for Parliament
·CSM and DiData presented better training proposals (using qualified trainers — others were proposing to use technicians)
·Compaq and Fujitsu presented as stronger businesses financially because of their size
·Compaq and DiData presented the better track records
·DiData, Fujitsu, Gen-I and Ipex presented much weaker solutions
·This assessment points to two proposals for detailed examination —Compaq and CSM

The next section of the Evaluation Report dealt with financial analysis and the following section entitled ‘Value for Money’ at page 24, under a heading ‘When functional assessments and costs are combined a picture emerges’, contained a graph which related ‘costs as proposed by vendors’ to ‘ability to deliver’. The graph showed the costs represented by the Ipex tender as the lowest of all tenders[4] but showed Ipex, in terms of the ability to deliver, as well below Compaq and CSM. A number of notes were appended to the graph as follows:

·On the basis of the functional evaluation the CSM and Compaq proposals are significantly better than the proposals from DiData, Fujitsu, Gen-I and Ipex which did not demonstrate a good understanding of what Parliament was seeking under the project
·The lower costs of the DiData, Fujitsu, Gen-I and Ipex proposals reflect this assessment and these proposals would require major compromise on the part of Parliament - they do not represent value for money, even at their lower costs
·DiData, Fujitsu, Gen-I and Ipex were therefore removed from further consideration
·Compaq and CSM represent better value for money and were subjected to further detailed evaluation

[4]Ipex’s tender price of $2,791,098 was the lowest of those tendered whereas, for example, CSM’s tender price was $7,805,950.

From the foregoing, it can be seen that the PET considered that the Ipex tender did not demonstrate a good understanding of what Parliament was seeking under the project and did not represent value for money despite representing a much lower cost and its tender was therefore removed from further consideration.

Ipex’s tender was thus unsuccessful. The contract was awarded to CSM and Ipex was so informed on 16 July 2002.

The trial judge held, and on appeal it was common ground, that there was a binding contract (‘the tender process agreement’) between Ipex and the respondent the express terms of which were contained in the RFT. Ipex’s primary claim for damages was based upon alleged breaches of the tender process agreement.

The most significant express terms of the tender process agreement as contained in the RFT were as follows:[5]
[5]Underlining added.

1 INTRODUCTION AND BACKGROUND
1.1. Introduction
The Parliament of Victoria invites Tenders for the provision of Systems Integration Services under the terms and conditions outlined in the document.
Proposals are sought from organisations wishing to provide systems integration services to the Parliament of Victoria to:
-     Design, build and implement a new desktop SOE (or range of SOE s) for the Parliament of Victoria based on the Microsoft 2000/XP and Lotus Notes 5.0 technology
-     Replace workstation, server, printer and scanner equipment at metropolitan and country locations.
The services are required to be provided by 1^st November 2002.
1. 2 Overview of the Selection Process
Parliament intends to manage the evaluation and selection process in two key stages:
1.2.1 Process Stages
Stage 1 – Compliance with Essential Criteria
Responses will be reviewed to assess compliance with essential selection criteria. Responses not satisfying these criteria will be eliminated from further evaluation. These essential criteria are:
(a table listed the essential criteria which related, inter alia, to the correct completion of schedules, the accreditation of the tenderer and prior experience)
Stage 2 – Compliance with Detailed Evaluation Criteria
Responses that comply with essential criteria will be subjected to detailed assessment via two separate process streams:
Evaluation Criteria – Complying responses will be evaluated and scored against the supplier and technical evaluation criteria to determine ranking on the basis of the solutions offered. Company presentations, discussions and visits to company premises may be utilised as part of the ranking process for the purpose of clarification and validation.
Comparison of Costs – an evaluation of costs will be carried out independently of the supplier and technical evaluations.
1.2.2 Evaluation Criteria
Each response to an RFT question will be related to a number of evaluation criteria and grouped and weighted according to the relative importance of the criteria. The major groupings to be used are as follows:
Supplier Evaluation
Soundness
Track Record
Contract, Strategic and Cultural Fit
Solution Evaluation
Parliament Requirements
Technical Requirements
Financial Responses (not costs)
Privacy and Legal
Project Management
1.2.3 Analysis of Costs
Solutions must be priced to take into account all charges and all costs to Parliament of Victoria for the proposed solution. Costings should clearly differentiate between ‘one-off’ project costs and annual expenditures.
Tendered price information will be kept separate from the assessment against the evaluation criteria until the final decision point.
Parliament of Victoria will favour Tenderers whose proposal contains a minimum of assumptions, constraints or caveats.
…
1.4 Acceptance Options
The Parliament of Victoria reserves the right to:
-     …
-     Not accept the lowest quotation, or any Tender, for all or part of the solution being proposed
-     …
-     Not accept any Tender
-     Continue to contract negotiation stage with one or more selected Tenderers.
-     …
-     At any stage during the evaluation process Parliament of Victoria may;
o   Request further clarification on any aspect of the Tender
o   Request a Tenderer to supply further information to support their Tender.
o   Compile a statement of requirements supplementary to this RFT as a result of matters raised by this evaluation or subsequent reference site checks.
o   Request respondents to resubmit their Tender based on any resulting clarification of requirements that may be issued.
o   Decide that a satisfactory agreement cannot be reached with the preferred Tenderer and may decide to enter into negotiations with another Tenderer.
o   Exclude high risk or technically incomplete solutions

- The conclusion of an agreement with any Tenderer is subject to various approvals outside the scope of this evaluation process and Parliament of Victoria reserves the right not to accept any Tender Proposal.
…
2.12 Compliance and Innovative Solutions
…
The RFT explicitly seeks Tenderers ideas on innovations and alternative solutions. All alternative options tendered should address the same issues and provide the same pricing information as for a conforming tender.
…
Tenderers should note that those Tenders, which in the Parliament of Victoria’s assessment have insufficient or unclear information to comparatively evaluate the tender will be excluded from further consideration.
2.13 Inquiries Regarding the RFT
…
Verbal explanations or clarifications given to Tenderers prior to the acceptance of a Tender shall not be binding and shall only be used to provide a basis for a formal written enquiry that shall be responded to in writing by the Parliament. Any clarification issued will also be issued to all other Tenderers.
…
Canvassing by a Tenderer and/or his agents of any employee of the Parliament of Victoria or any Contractor or consultant currently employed by the Parliament of Victoria with respect to any matter pertaining to this RFT or the selection process shall be considered grounds for absolute rejection of that Tenderers proposal.
…
(The RFT referred to the ‘existing business environment’including:)
3.2.4 Electorate Offices
Electorate Offices can be thought of as independent small businesses rather than extensions of Parliament. Each of the 128 physical offices (132 logical offices) located throughout Victoria has a small full/part time staff whom, together with the MP, service constituents using local electorate office facilities and resources provided by the Parliament. Members are highly mobile and require access anywhere /anytime to Parliament’s resources.
Each electorate office is provided with a standard Kit of equipment consisting of desktop computers, printers, scanner and network devices. A detailed list of these products can be found in Schedule D.
…
4.4.2 Training
The delivery of appropriate training to all users and support personnel affected by the new SOE environment is a key factor in the success of the project.
Tenderers are to clearly outline their proposed approach to training and to provide the relevant cost information at Schedule A.

The main breaches of contract alleged by Ipex were of various provisions contained in cl 1.2 of the RFT, together with breaches of alleged implied terms, including a term requiring the respondent, its servants and agents to deal fairly and in good faith with all tenderers, in particular in assessing tenders in accordance with the tender process agreement.

Reasons of trial judge

The judge, as we have said, concluded that the parties had entered into a legally binding tender process agreement. The judge said that cl 1.2 of the agreement was ‘decisive’ and went on to say[6]:

… It contains detailed evaluation criteria that Parliament said ‘will’ or ‘must’ be applied. This clause and others suggests a commitment, promissory in nature, to abide by a process particularly in relation to the evaluation of tenders.
In my opinion the clauses referred to by the defendant – which confer a wide discretion on the defendant in relation to various matters associated with the tender - do not detract from this conclusion although may be of some assistance to the defendant in other respects, particularly in relation to performance under the Tender Process Agreement.

[6]Reasons [45]-[46].

In relation to the terms of the agreement and their alleged breach, the judge said:[7]

The critical terms alleged by Ipex are that the defendant was obliged to act fairly and reasonably and in good faith and of course comply with the criteria and approach referred to in the RFT as promised. The defendant has conceded that it was obliged to act fairly, reasonably and in good faith but has submitted that such obligations do not arise ex contractu.
Accordingly, the next question is to determine whether Parliament did act fairly and reasonably and in good faith and complied with the criteria and approach referred to in the RFT. This requires a detailed analysis of the conduct of Parliament and is dealt with in the next section. If Parliament did so comply that is the end of the matter and it will not be necessary to determine the legal basis of the agreed obligations. If Parliament did not it may be necessary to decide whether such terms as pleaded do in fact arise ex contractu. Clearly the obligation pre-award to comply with the criteria and approach referred to in the RFT was a term of the Tender Process Agreement.
D. Conduct of the defendant
The conduct alleged by Ipex as constituting a breach of Tender Process Agreement also forms the basis of its additional and alternative causes of action. The conduct is set out and dealt with hereunder.
The essence of Ipex’s complaints, despite a lengthy, rather discursive and at times difficult to follow pleading, is that the defendant engaged in conduct that departed in a number of respects from the RFT. In other words, the defendant was obliged to comply with the terms, mechanisms and procedures contained in the RFT.
Accordingly if the defendant acted in accordance with the RFT the claims must fail.

[7]Reasons [48]-[52].

The judge then dealt in turn with the specific breaches alleged by Ipex.

The first alleged breach dealt with by his Honour was the alleged reliance by the respondent, as the basis for evaluation of the tenders, upon flawed evaluation criteria which attached insufficient importance and weight to the financial aspects of the respective tenders. The judge considered the evidence concerning the process adopted by the respondent and concluded that the evaluation procedure and weighting complied with the RFT and the Evaluation Plan. In particular, the judge pointed out that the financial issues or responses criterion was not concerned with the tender prices or costs, as such.

The judge then dealt with an alleged breach under the heading ‘failure to do a proper value for money analysis’ and said:[8]
[8]Reasons [63]-[74].

Once the claim with respect to inadequate weighting falls away, this aspect of the plaintiff’s case comes down to whether, in failing to select the cheapest tender, the defendant failed to use value for money as the primary determinant in assessing tenders.
The plaintiff asserts that as it had submitted the cheapest ‘compliant’ tender the ‘value for money’ criteria required it be selected.
It is true that the Ipex tender was ‘compliant’ in that it met the essential criteria set out in the RFT (1.2.1), however that did not necessarily mean that it complied with Parliament’s business requirements. The qualitative evaluation was designed to measure compliance with the RFT, that is, Parliament’s expectations and business requirements.

An obligation to assess tenders on the basis of value for money does not compel the selection of the cheapest tender. The evaluation process sought to identify the tender response that offered the best solution at the best price. Just because the Ipex tender was the cheapest did not mean that it represented the best value for money. As Street confirmed in cross-examination, the nature of the RFT meant that the question of best value for money was a subjective business judgment.
The RFT was seeking a systems integrator to design and implement a new SOE. It expressly sought an innovative solution for what would be a complicated rollout in a number of locations throughout Victoria within a tight time frame. This was not simply a tender to supply a homogenous list of goods where price or costs would be the major differential between tenders. The focus was upon the system integration services to be provided. This is reflected in the Evaluation Report. Street explained, by reference to the table in the Evaluation Report, that the fact that the Ipex service cost was so low in comparison to all the other tenders immediately raised questions:
‘The $540,000 immediately stands out that there’s something wrong with it compared to the other five, because the purpose of the exercise is to compare them and make sure your comparing apples with apples, and the analysis of the team was that – in looking at the Ipex proposal, that the Ipex bid was putting forward fewer people to perform the job, and there were assumptions that Parliament would have to provide more staff than what they were planning to do when they put the project together. So it stands out. While it is the lowest cost, it stands out as an anomaly and was investigated in detail.’

In any event, it is relevant to note that Parliament had expressly reserved for itself the right not to accept the lowest quotation (RFT, 1.4). Given this express term, there is no basis for Ipex to contend that the lowest quotation gave it any entitlement to be selected.
The evidence demonstrates that in any event those assessing the tenders did not judge the Ipex tender as the best value for money. Their reasoning in this regard is set out in the Evaluation Report at pages 14 and 24. Street said that the comments in the bullet points on page 14 were based upon his numerous discussions with members of the PET. The reasoning is also exposed in the de-briefing notes prepared by Street which noted that the Ipex proposal did not appear to reflect an understanding of what Parliament was seeking in that it was proposing to not go much beyond a hardware and software upgrade. This misapprehension is also confirmed by the evidence of Ms Freund, who characterised the tender as ‘largely a desktop tender’ and that the focus was largely the supply of hardware.
Accordingly I agree with the defendant that this part of the plaintiff’s claim must fail. The Parliament having determined that the Ipex tender did not represent the best value for money, so long as the evaluation criteria were applied as contractually required which I find they were, it is not for the Court to enter into an inquiry as to which tender did represent the best value for money.
It was suggested to Street in cross-examination that his ‘value for money’ analysis, which is graphically depicted in the Evaluation Report, materially misrepresented the relative value for money of the bids. He disagreed and pointed to the fact that the actual scores relevant to the x axis are set out in the Report. He said that the graph was intended to be a ‘high level summary’ of the findings, which was to be read together with the bullet points under the graph. Although the graph prepared by Ipex (Table 1) is a more accurate representation of the position so far as this case is concerned nothing turns on this point.
He denied the suggestion put to him in cross-examination that there was in fact only a small difference between all tenders when one looks at the per centum points allocated as a result of the qualitative assessment. Street explained that the per centum scores set out in the Evaluation Report were not in fact close and that they represented a wide margin of difference. I accept his evidence.
The submission by Ipex that value for money should have been determined simply by dividing the cost by the qualitative score (Table 2) is for the reasons given inappropriate and incorrect. As noted beside the graph on page 24 of the Evaluation Report the costs ‘have not been equalised to take account of differences in proposals’. Indeed the cost differences reflected the different approaches, and the approach taken by Ipex was not adequate according to the PET using the criteria indicated.
Ipex submitted further that in conducting the value for money analysis the equipment component was disregarded in favour of a consideration of the service component. I do not agree. An overall assessment was made and this is apparent from the Evaluation Report and the evidence of Street.

The next allegation by Ipex that was dealt with by the judge was that the respondent had failed to inform Ipex that it intended to adopt or had adopted the evaluation criteria (which it in fact adopted) and that the evaluation criteria gave a weight of only 10 per cent to the financial aspects of the tender. The judge pointed out that, whilst the criteria were set out in the RFT, the weighting was not made known to the tenderers and there was no obligation to inform them of the actual weightings to be applied. The judge found no breach of the tender process agreement.

The next matter complained of by Ipex involved a series of contentions concerning the alleged reliance by the respondent, in considering the tenders, upon so-called ‘touch points’ which, according to Ipex, were not referred to in the RFT and not communicated to tenderers. The judge rejected each of these contentions.

The next alleged breach was an alleged failure to comply with the evaluation process set out in the RFT. The judge was not satisfied that any of the conduct complained of was anything other than conduct specifically permitted and contemplated by the RFT as clarified to all tenderers.[9] His Honour said that the respondent did not depart from the RFT in any of the respects identified by Ipex, or to the extent that there was any ‘departure’, it was either de minimis, irrelevant or specifically permitted by the tender process agreement itself. Further, the judge pointed out that there were express terms of the tender process agreement whereby Parliament reserved to itself a number of rights, including the right not to accept the lowest quotation, or any tender.
[9]Reasons [101].

His Honour rejected, on the evidence, a contention by Ipex that representatives of the respondent had made certain admissions in a debriefing meeting. His Honour was not prepared to find that anything of consequence was said at the meeting that would have been of assistance to Ipex.[10] In the course of considering this point, his Honour found that the essential criticism of the Ipex bid that was communicated to Ipex during the debriefing meeting was that its low-cost minimal proposal seemed under-resourced. His Honour went on to say:[11]

On the evidence, it is apparent that Ipex took a minimalist approach, which focused on cost. Miles acknowledged that it may have done so because it relied upon what an individual employee of the Parliament had told someone at Ipex that ‘cost, cost, cost’ would be the major determinant. This is reflected in his note, exhibit P4. Miles acknowledged that Ipex believed it had the ‘inside word’.
It was an express condition of the RFT that tenderers ought not to rely upon information provided to them by any person, including employees, agents and consultants of Parliament, with the exception of matters expressly set out in the RFT or advised in writing (RFT Section 2.9).
Further, canvassing by a tenderer and/or his agents of any employee of the Parliament with respect to any matter pertaining to the RFT or the selection process was grounds for absolute rejection of that Tenderers proposal (RFT Section 2.13).
If Ipex misapprehended the selection criteria, that was not due to any fault of the Parliament or as a result of anything contained in the RFT. The fact that Ipex were ‘at pains to point out’ at the 8 August 2002 meeting that they had been labouring under a misapprehension about ‘cost, cost, cost’ demonstrates the absence of a causal nexus between the contents of the RFT and the tender document put forward by Ipex.

[10]Reasons [121].

[11]Reasons [117]-[120].

In relation to other causes of action pleaded and relied upon by Ipex, the judge said that they all had as their underlying factual basis the same conduct relied on as constituting the alleged breaches of contract,[12] and it followed that those causes of action were not made out.[13] Accordingly, the judge found it unnecessary to deal with other specific matters raised in relation to the applicability of the Fair Trading Act, reliance issues and the adequacy of the evidence in relation to damages.
[12]Including the alleged departures from fairness, reasonableness and good faith.
[13]Reasons [122].

Grounds of appeal

The amended notice of appeal dated 17 August 2011 contained 47 grounds of appeal, extending over some 18 pages.[14] The appellants’ outline of submissions dealt with the grounds of appeal in groups. The bulk of the outline of submissions consisted of statements, in many cases without any, or any substantial, supporting argument, that the judge erred in one respect or another. It was difficult from the outline to understand how the appeal was put or, at least, to understand the analysis relied upon to support the grounds of appeal. We therefore find it convenient to deal with the primary submissions of Ipex, made orally, before returning briefly to the particular grounds set out in the notice of appeal.
[14]The grounds of appeal contained in the amended notice of appeal are set out in the appendix to this judgment.

Ipex’s primary submissions

Referring to the RFT, Ipex said that it had satisfied Stage 1 and that the central question in the appeal was whether or not the method of evaluation identified in the RFT was in fact followed by the respondent when it came to the assessment of tenders under Stage 2. Ipex said that its primary contention was that the scoring against criteria identified under Stage 2 in the RFT was not done – there was no ranking ever produced despite the mechanics of scoring having been undertaken. In Stage 2, the process involved an evaluation of the quality of the bid and the criteria listed in the RFT in that regard were all concerned with matters relating to ‘the ability to do the contract well’. After that, there had to be a comparison of the costs of each of the bids carried out independently of the quality evaluation. After those two processes had taken place, the ‘two strings of analysis’ had to be brought together at what the RFT described in cl 1.2.3 as the ‘final decision point’. Ipex submitted that this process had not been followed.

Ipex acknowledged that the Evaluation Plan did not form part of the tender process agreement but submitted that the tender process agreement contemplated that there would be predetermined criteria in existence. Ipex accepted that the criteria were not themselves set out in the RFT but contended that they were to be found in the Evaluation Plan. Ipex’s complaint was that the plan which was allegedly contemplated and required by the RFT was not in fact followed.

According to Ipex, one of the things that was not done by the respondent was ‘scoring’ against the evaluation criteria. Ipex said that it was known from the RFT that the criteria must be scored but it was not known how they were going to be scored and part of the difficulty was that they were not all scored. Some criteria were simply not scored. Ipex accepted that it was for the respondent to establish the criteria (and that it had done so) but contended that there was a failure by the people carrying out the evaluation to score those criteria.

Ipex said that one of its principal complaints was that the criteria were ‘subjectively’ evaluated whereas the obligation under the RFT was to perform an ‘objective’ evaluation and there was not in any way to be a subjective analysis. As leading counsel for Ipex put it:

That is one of the principal complaints that we have, that what is contemplated by the request for tender, and what was drawn up in compliance with the obligations imposed by the Request for Tender, was not in any way a subjective analysis. When it came to the crunch the witness, Mr Street, who had taken over – or taken to himself the determination of the conduct of the tender process, had no justification for the course which had been followed and simply said, ‘Well, I can do whatever I like’, it is a matter of subjective business judgment. ‘I do not have to justify how I came to this conclusion,’ that it was appropriate to firstly depart from the process of leaving until the end the comparison of costs and quality, if one can put it that way. ‘I do not have to justify in any way, shape or form how I can suggest that it is appropriate to advance a short listing process’, where one supplier or one tenderer whose quality has been assessed as lesser, but his cost is significantly more, how it is appropriate to advance and ultimately select that bidder. There is no rational way in which he could justify it. Obviously he realised that. He did not attempt to justify it that way, he simply said, ‘Well, subjective business judgment, I can pick any tenderer I prefer without any reason, without any justification for that.’

Ipex contended that there had to be a rational comparison of costs with a consensus assessment of quality and this was not done. There had to be a numerical assessment as required by the Evaluation Plan but, whether or not the scoring method contained in the Evaluation Plan had to be followed, some scoring method had to be adopted and the respondent had failed to score at all in respect of the criteria identified by cl 1.2.2 and this was a breach of contract.

Leading counsel for Ipex then said:

What was contemplated by the contract, and indeed carried into effect by the expert assessor team that was established, was a comprehensive set of questions and provisions or physical sheets established to provide a score in accordance with established criteria, one represented a certain conclusion about the criteria; two represented a certain conclusion; six represented a conclusion that it not only met all the requirements under that heading, but went above and beyond them. Every single criteria under those headings was provided for in a physical score sheet, and many of them were scored, many of them were scored, and the upshot was those scores were then collated and figures produced. There was indeed a ranking on the basis of the qualitative criteria. But that ranking was then completely disregarded when it came to the selection of the preferred tenderer, because the company that was chosen ranked lower than another tenderer, significantly in terms of quality, and was significantly more expensive. It is the failure of those conducting the evaluation to actually carry through what the State promised would be set up, and was set up, but not performed.

Ipex therefore submitted that there was a breach of contract constituted by the respondent’s alleged breach of the express provisions of the tender process agreement contained in cll 1.2.1 to 1.2.3 of the RFT. In addition, there were said to be implied obligations of fairness, reasonableness and good faith that arose under the contract and the respondent was said to be in breach of those obligations in relation to its actions under cll 1.2.1 to 1.2.3.

Ipex referred to the graph set out at page 24 of the Evaluation Report. Ipex said that such a graph was contemplated by the Evaluation Plan but that the graph itself was inaccurate but, more significantly, the evidence of Street showed that he did not logically or reasonably use the graph to undertake a comparison between the cost and qualitative criteria but instead made a subjective business judgment. Ipex accepted that the other members of the PET had followed the Evaluation Plan but complained about what was done by Street with that material ‘once the experts had scored and that had been put together as a consensus view’.

Passing from the foregoing general submissions, Ipex concentrated upon making four points or complaints.

The first point was that Street had substituted his subjective business judgment for the collective consensus opinion of the experts.

The second point was that the process called for was an assessment of value for money and there had been no rational comparison of costs with the qualitative assessment determined by the consensus of the experts.

The third point was that the required process was not followed in two significant respects. There was a failure to score as required and there was a failure to undertake a rational comparison of costs with qualitative assessment. Under cl 1.2.3, the question of costs had to be kept separate from the qualitative assessment until the ‘final decision point’.

Ipex said that, as a result of the respondent’s failure to adopt the promised methodology, Ipex had suffered loss whether or not they would have won the tender. Ipex had spent tens of thousands of dollars in putting in a bid which it would never have put in if it had known that ‘despite what was represented in the RFT, in the end the scores were going to be thrown out the window, the cost was going to be thrown out the window and one non-expert subjective business judgment was going to determine the outcome.’

The fourth point was that the matters that the judge was required to consider to determine whether or not the misleading and deceptive conduct claims were made out were not identical with the matters required to determine whether or not there had been a breach of contract and it was submitted that the judge was wrong to conclude that simply because there was no breach of contract, a misleading and deceptive conduct claim must fail.

Ipex’s primary submissions rejected

For the reasons that follow, we do not accept Ipex’s primary submissions.

Ipex said that the central question on the appeal was whether or not the method of evaluation identified in the RFT was followed by the respondent. We think, as did the trial judge, that this method of evaluation was in fact followed by the respondent. Ipex’s primary contention, that the scoring against criteria identified under Stage 2 in the RFT was not done, has not been made out. Nor has Ipex made out its contention that no ranking was ever produced despite the mechanics of scoring having been undertaken. On the contrary, page 14 of the Evaluation Report[15] shows that, not only was the scoring undertaken but the weighted scores of the competing tenderers were compared and evaluated. We do not think that there is any substance in this aspect of Ipex’s submission – it may be that all that Ipex was saying was that the weighted scores for some of the criteria set out in the RFT and in the Evaluation Plan were not set out in the table at page 14 of, or elsewhere in, the Evaluation Report but, as mentioned earlier,[16] the weighted scores for the criteria not listed were of no significance. Scores were omitted from the table for only two of the criteria, namely ‘Financial responses (not costs)’, and ‘Privacy and Legal’. Those two criteria had in fact been considered by the PET. The PET had found no significant difference between the tenderers on those criteria. That is why the PET omitted the scores. Ipex says that the scores should still have been included. It submits that including the scores would have produced a narrower proportionate or percentage gap between the tenderers on their overall scores. That may or may not be correct. However, it matters not. The respondent was under no contractual obligation to give any specific weight to any of the listed criteria. In any event, of course, the ranking order of the tenderers (on the non-cost criteria) would have remained the same regardless. Nor were the proportionate or percentage differences between the overall scores in any way determinative. They could only have been determinative if Ipex were correct in a further submission which it makes, namely that the successful tenderer was required to be identified by a strictly arithmetical process of dividing each tenderer’s score by its dollar bid so as to produce a ‘value’ figure per dollar. That further submission is unacceptable. It finds no support in the terms of the RFT. Indeed it is a fanciful submission. The trial judge rightly rejected it.[17]
[15]See [11] above.
[16]See [11] above.
[17]Reasons [73].

As indicated in the extract from counsel’s address set out in [34] above, Ipex submitted that the respondent’s alleged departure from the terms of the RFT was demonstrated or illustrated by its having ultimately chosen CSM over Compaq. Ipex pointed out that Compaq had a higher score and lower cost than CSM yet CSM was chosen. Ipex submitted that this fact revealed that the selection was not based on the score and the cost. However, the score and the cost were used to short list CSM and Compaq. They were then approached for more information and it was this additional information, in combination with the bids, that appears to have led to CSM being chosen, despite its bid initially being assessed as having a lower score and higher price than Compaq. Under the terms of the RFT it was perfectly open to the respondent to proceed in this way.

The next contention by Ipex was that the costs of the bids had been taken into account as against the quality assessments prematurely, whereas cl 1.2.3 required that they only be compared at the ‘final decision point’. Street[18], in his evidence, having been asked whether the price information was kept separate from the assessment against the evaluation criteria ‘until the final decision point’, answered that ‘from a pure point of view, no.’ In the same vein, Ipex complains that the creation of a ‘shortlist’ comprising Compaq and CSM was not authorised or allowed by the RFT because it contravened the obligation to bring the price information together with the quality assessment only at the final decision point. However, in our opinion, the construction placed by Ipex on the words ‘final decision point’ is artificial and incorrect. In our opinion, the expression ‘final decision point’ does not refer to a point of time, whether that be a minute or a day, immediately prior to the final selection of the successful tenderer. The expression is to be understood more generally as referring to the period during which the already assembled qualitative assessment and price comparisons were available to the PET and to the decision makers of the respondent for the purpose of selecting the successful tenderer. We do not think that, so understood, the respondent was in breach of cl 1.2.3. We note the finding of the trial judge, unchallenged on the appeal, that it was only after the tender evaluation worksheets were scored and weighted in accordance with the methods described in Part 2 of the Evaluation Plan that the resulting scores were brought together with an analysis of cost to arrive at a ‘value for money’ view of each tender in accordance with the process described in Part 3.1 of the Evaluation Plan.[19] We note also the trial judge’s further unchallenged finding that the ‘actual costs of the tender responses and the pricing submitted were analysed by Street and shared with the PET after the qualitative assessments had been completed and the comparative results incorporated into the Evaluation Report’.[20] Accordingly we see no reason to depart from the conclusion of the trial judge that ‘the analysis of costs and pricing was undertaken separately from the evaluation undertaken by the PET’, as envisaged in the RFT and the Evaluation Plan.[21]
[18]Mr Street was an experienced information technology management consultant, at the relevant time employed by KPMG. He had a variety of qualifications including a graduate diploma in computer studies and he was a fellow and honorary life member of the Australian Computer Society, the society of ICT professionals.
[19]Reasons [61].
[20]Reasons [95]. Our emphasis.
[21]Reasons [61].

Even if this view be incorrect, we consider that cl 1.2.3 of the RFT has to be read subject to the rights of the respondent under cl 1.4 to not accept the lowest quotation, or not accept any tender, or to continue to contract negotiation stage with one or more selected tenderers. In other words, we do not think, on any reading of cl 1.2.3, that the respondent or the PET was precluded from creating a shortlist as part of the process of determining the successful tenderer. In any event, we consider that the adverse judgments expressed about the Ipex tender in the Evaluation Report were such that it would have been an exercise in futility for any consideration of its tender to continue beyond that point and thus any breach as alleged was immaterial.[22]
[22]Compare what was said by the trial judge as referred to in [25] above.

We would also reject Ipex’s complaint that the qualitative criteria were ‘subjectively evaluated’ whereas the contractual obligation was to perform an ‘objective’ evaluation. The scoring process necessarily involved subjective business judgments, and evaluations of the kind that appear on pages 14 (under the table) and 24 (under the graph) were properly involved in the process and were not precluded by the RFT. We do not agree with the characterisation of Street’s evidence contained in the passage set out in [32] above – the evidence given by Street in cross-examination does not support the contention that he acted on the basis that he could do whatever he liked or did not have to justify how he came to a conclusion. Nor does his evidence justify the contention that he went out, as it were, on a frolic of his own. What appears from the Evaluation Report and his evidence is that the analysis of the tenders set out in the report was considered and approved by the PET prior to the completion of the Report. In particular, the PET considered that the ‘compromises’ by Parliament involved in any acceptance of the Ipex tender were such that the Ipex tender did not involve value for money, even at the significantly lower price tendered.

We reject the contention by Ipex that there was no rational comparison of costs with a consensus assessment of quality and, as already mentioned, we also reject the suggestion that this could be a purely arithmetical exercise.

Insofar as the graph on page 24 of the Evaluation Report was not drawn to scale, it does not appear on the evidence that this had any material effect or was capable of having any material effect on the tender process.

Turning to the four specific points or complaints raised by Ipex,[23] we have already dealt with the first three of these, but we would add that we do not accept the description of the tender process advanced by Ipex that the scores were ‘thrown out the window’, that the cost was ‘thrown out the window’ or that ‘one non-expert subjective business judgment’ determined the outcome. In relation to that last matter, Street was an expert but, in any event, he did not determine the outcome on his own but acted in consultation with the PET.
[23]See [38]–[42] above.

The fourth point or complaint made by Ipex was, as we have said, that the judge had wrongly concluded that, simply because there was no breach of contract, Ipex’s misleading and deceptive conduct claims had to fail. This point involves a consideration of Ipex’s further amended statement of claim dated 19 August 2010 (‘the statement of claim’). The conduct of the respondent relied upon by Ipex was constituted by the provision to tenderers of the RFT and the provision of essentially no other information.[24] Ipex alleged that as a consequence of that conduct, the respondent had impliedly represented to Ipex that it would act fairly and in good faith in assessing tenders, that it would act fairly and reasonably in dealing with the tenderers, that all of the relevant information was contained in the RFT and that the relevant requirements of the respondent were specified in the RFT.[25] There was also an allegation that the respondent impliedly represented that it and its servants and agents would ‘use value for money considerations as the primary determinant in assessing the tenders.’ We interpolate that this last alleged representation could not possibly be implied from the provisions contained in the RFT.
[24]See para [22] of the statement of claim.
[25]These are the principal implied representations contained in para [23] of the statement of claim.

Ipex alleged that the said implied representations were continuing representations as to the respondent’s intentions but that in fact the respondent intended to, in various ways, depart from the provisions of the RFT and had in fact departed from the provisions of the RFT.[26]
[26]See paras [23], [25] and [26] and [81]-[82] of the statement of claim.

Ipex alleged that these implied representations were misleading and deceptive and made in contravention of s 9 of the Fair Trading Act 1999 (Vic).[27]
[27]See paras [27] and [28] and [83]-[87] of the statement of claim.

Allegations based on unconscionable conduct,[28] estoppel[29] and negligence[30] were made on the basis of the same or similar allegations.
[28]See paras [17]-[21] of the statement of claim.
[29]See paras [30] – [37] and [74]-[78] of the statement of claim.
[30]See paras [86]-[88] of the statement of claim.

In our opinion, the pleaded allegations referred to above show that the misleading and deceptive conduct case, the unconscionable conduct case, the estoppel case and the negligence case were indeed based upon the same contentions as to departure from the RFT as were relied upon by Ipex for its breach of contract claims. The judge was not in error in so concluding and in dismissing those claims as a consequence of having dismissed the breach of contract claims.

For the foregoing reasons and for those given by the trial judge, we consider that Ipex failed to establish a breach of the terms of the RFT or a breach of the alleged implied terms relied upon by it. We will now add some brief observations on the specific grounds of appeal.

Grounds 8-10 and 19: Breach of the Tender Process Agreement and Short Listing

We have dealt with these grounds in [44]-[47] above. We would only add that the part of these grounds suggesting that Ipex would have been ranked number one if the contractual tender process had been followed is fanciful having regard to the legitimate evaluation of the competing tenders summarised in particular on pages 14 and 24 of the Evaluation Report.

Grounds 11-22: Failure to do a proper value for money analysis; Short Listing; Reliance upon ‘touch points’

We have dealt with that aspect of these grounds that involves Ipex’s contention that there was a subjective rather than an objective evaluation at [48]-[49] above. The grounds are otherwise somewhat repetitive both with regard to the contention that Ipex’s tender should have been ranked number one because it was the lowest priced tender and with regard to the contention that Compaq and CSM should not have been shortlisted. Insofar as these grounds refer to the so-called ‘touch points’, the appellant did not seek to support the assertion that the judge ought to have found on the evidence or on the weight of the evidence that the respondent ‘wanted a Rolls Royce solution’ and we do not discern any error in the judge’s analysis in relation to these so-called touch points. Further, it should be mentioned, as the respondent correctly submitted, that ‘value for money’ was not a term used in the RFT. Ground 16, in particular, is largely based on proposed evidence of one Roger Warr that the trial judge excluded. The appellants’ challenge to the exclusion of that evidence was ultimately abandoned.[31]
[31]The appellants expressly withdrew grounds 43 and 44 which related to this matter. See below.

Grounds 23-28: Failure to comply with the evaluation process

We have already dealt with the substantial issues raised by these grounds but insofar as these grounds seek to challenge specific factual findings of the judge, they were not supported in oral argument by the appellant and the assertions in the grounds that the judge ought to have made certain fact findings are not self-evident. On a reading of the grounds we can find no reason why it was not open to the judge to make the findings that the appellant seeks to attack therein.

Grounds 29-38: Failure to evaluate and assess the criterion ‘4.6 Solution Evaluation – Financial’ in breach of the express terms

These grounds cover a number of separate topics. Insofar as they are concerned with the judge’s rejection of the complaint by Ipex that certain of the qualitative criteria were disregarded, we have already dealt with this point. The appellant did not otherwise seek to develop these grounds (other than the ground relating to the misleading and deceptive conduct claims which we have already considered) and we do not think that these grounds, of themselves, disclose or establish any error by the judge.

Grounds 1-5 and 7: Inadequate Reasons and failure to consider or properly consider the Appellants’ misleading and deceptive conduct claim and 'additional and alternative causes of action'

We have already rejected the Ipex submission that the misleading and deceptive conduct claims and the other additional and alternative claims were factually different from the breach of contract claims. Accordingly, the complaint in these grounds that the judge failed to provide adequate findings and reasons in dismissing these claims is rejected. The respondent advanced a number of further reasons why these grounds were of no avail to Ipex having regard to deficiencies in Ipex’s case, but it is unnecessary to canvass these despite their apparent validity.

Remaining grounds

The appellant expressly withdrew grounds 43 and 44. We have already dealt with the substance of the other remaining grounds. They do not warrant any further consideration.

Conclusion

For the foregoing reasons, the appeal is dismissed.

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APPENDIX

APPELLANTS’ GROUNDS OF APPEAL

Inadequate Reasons and failure to consider or properly consider the Appellants’ misleading and deceptive conduct claim
1. The learned trial judge erred in failing to provide adequate findings and reasons to enable a proper understanding of the basis upon which he refused the Appellants’ misleading and deceptive conduct claim under the Fair Trading Act 1999 relating to the evaluation of the tender and, in particular, failed to:
(a) identify with specificity the evidence he found to be irrelevant;
(b)identify with specificity what evidence he relied upon and what evidence he rejected in reaching his decision;

(c) weigh the merits and demerits of each party’s evidence;
(d)demonstrate that all the facts, evidence and pleadings had been carefully assessed;
(e)identify the legal issues and properly consider the relevant and applicable law.

2. The learned trial judge failed to consider or properly consider the Appellants’ misleading and deceptive conduct claim under the Fair Trading Act 1999 in respect of the evaluation of the tender.

3. The learned trial judge ought to have:
(1) found that in relation to the misleading and deceptive conduct claim:
(a)the onus of demonstrating that the respondent had a reasonable basis for its future representation was not satisfied.
(b)the respondent was incorrect in its assertion that its conduct was not in trade or commerce within the meaning of ss 8A and 9 of the Fair Trading Act.
(c)that it was reasonable for all tenderers including the appellant to expect that the respondent would disclose the matters as contended by the appellant.
(d)that the departure from the tender process set out in the Request for Tender was misleading or deceptive

(2)considered and taken into account matters beyond merely the express terms of the Request for Tender in deciding whether the respondent had engaged in misleading or deceptive conduct.

4.The learned trial judge erred (at [122]) in holding that the other causes of action, as pleaded, all have as their underlying factual basis the conduct as alleged and that it must follow that the causes of action are not made out.

5. The learned trial judge ought to have held that:
(a)Even if his Honour’s finding that there was no breach of the express terms of the tender process contract was correct, it cannot and does not follow automatically that the other causes of action are not made out;
(b)For the misleading and deceptive conduct claim to be established, it is necessary to establish that the representation in the Request for Tender (RFT) concerning the evaluation of the tender was misleading and deceptive;
(c)Nothing his Honour found in [93] to [100] dealing with ‘Failure to comply with the evaluation process set out in the RFT’ would mean that it would follow that the representation cannot be misleading and deceptive under the Fair Trading Act.

(d) The matters set out in [93] to [100] dealing with ‘Failure to comply with the evaluation process set out in the RFT’ is irrelevant to whether the representation of the evaluation and evaluation criteria explicitly and expressly stated in the RFT was misleading or deceptive.
(e)If the representation concerning the evaluation and evaluation criteria expressly stated in the RFT was false and incorrect and would lead the First Appellant into error, then it is misleading and deceptive;
(f)The disclaimer clauses (referred to at [102]) cannot exclude a misleading and deceptive conduct claim.
(g)The representation relates to the evaluation and evaluation criteria and there is no express and explicit clauses that say that the Respondent can change the evaluation process and evaluation criteria without informing the First Appellant and the other tenderers;
(h) The misleading and deceptive conduct claim involves different factual and legal consideration from a breach of tender process contract claim;
(i)There is no evidence that the Respondent, in fact, changed any of the conditions of the tendering.
(j)In fact, the cross examination of Denis Street showed that he decided to remove the Solution Evaluation—Financial Response.
(k) There was no evidence that the Steering Committee approved this decision or that the RFT and Evaluation Plan authorised any changes to the evaluation criteria or evaluation process.

Failure to determine whether there were implied terms and the nature and contents of any such implied terms of the Tender Process Agreement
6. The learned trial judge, in failing to identify the implied terms and the nature and extent of the legal obligations, thereby led himself into error as a result of not correctly analysing the relevant factual conduct of the Respondent that was pertinent to the content of the implied terms of good faith and fair dealing and the requirements that such implied terms were imposed on the Respondent.

Conduct of the Respondent and the basis of the ‘additional and alternative causes of action’
7. The learned trial judge erred in holding (at [50]) that the conduct alleged by the Appellants as constituting a breach of the Tender Process Agreement also forms the basis of its additional and alternative causes of action:
(a) as the conduct alleged as constituting a breach of the tender process contract does not form the basis of the misleading and deceptive conduct claim under the Fair Trading Act 1999 in respect of the evaluation of the tender nor the estoppel and negligence claims in that regard;
(b)the conduct relevant for each of those claims raises different and distinct factual and legal considerations from a breach of the tender process agreement claim.

Breach of the Tender Process Agreement
8. Having found (at [44]) that the presumed intention of the parties was to enter into a legally binding process contract, the learned trial judge erred (at [70]) in holding, on the weight of evidence, that the evaluation criteria was applied as contractually required. The learned trial judge ought to have held that the Respondent had not treated the First Appellant reasonably and fairly in circumstances where:

(a)The selection of the successful tenderer did not follow the explicit evaluation process inasmuch as it did not follow the process stage of ranking the tenderers by ‘value for money’ to obtain the highest index, that is, the one that offers the best ‘value for money’ as shown on page 24 of the Evaluation Report;
(b)CSM, as selected by the Respondent would be ranked 5^th out of six tenderers if the specific process was followed. The process was not followed. The Respondent failed to follow the evaluation plan bringing together the results of qualitative scored assessment and costs that would produce ‘value for money’ as required under clause 3.1 of the Evaluation Plan;
(c) The Respondent did not perform the vendor selection process that would produce or yield the ‘preferred supplier recommendation’ as required under clause 1.4.2.3 of the Evaluation Plan;
(d) The Respondent failed to comply with the explicit terms of the RFT being clause 1.2.3 concerning the ‘final decision point’;
(e)The Respondent failed to properly perform the ranking of all six tenderers required under clause 1.2.1 of the RFT and as contemplated in section 1.4.2.2 of the Evaluation Plan; and
(f)If the Respondent had followed the tender evaluation process, the First Appellant would be ranked number one (1) (‘obtained the highest Index’) as it achieved the best ‘value for money’, that is, the lowest dollar ($) value for each unit of qualitative score.

9.The learned trial judge erred (at [79]) in accepting Denis Street’s evidence that by short listing CSM and Compaq, the evaluation team varied the process but that the RFT allowed this variation and that the Respondent’s conduct of varying the evaluation process was still fair, in circumstances where:
(a) The variation was in fact a complete digression from the tender evaluation process.

(b) The variation, in fact, constituted a major change.
(c)The evaluation process was structured so that the successful tenderer would be selected by the evaluation process itself.
(d)Cost was not properly considered at all, as evident from the project evaluation report.
(e)The technology to be rolled out under the Parlynet Project was considered to be a matter for contract negotiation rather than to be a factor in the selection of the tenderers.
(f) CSM was chosen arbitrarily rather than by the objective contractual structured tender evaluation process.

The learned trial judge ought to have held, on the weight of evidence that the Respondent had not acted fairly and reasonably and in good faith and had not complied with the criteria and approach referred to in the RFT.
10. The learned trial judge erred (at [79]) in finding that the express term of the RFT contemplated that the Respondent will have the flexibility to proceed to negotiate with one or more selected tenderers. The learned trial judge erred in failing to construe the clause to mean that more than one tenderer might be selected after the value for money analysis on to the phase when the terms of the service contract were to be negotiated as contemplated in clause 1.4 of the RFT. The learned trial judge erred in interpreting that clause to mean that the Respondent had the power to depart from the tender selection process with regard to particular tenderers. The learned trial judge ought to have found that the Respondent had not complied with clauses 1.2.1 — 1.2.3 of the RFT (Express Terms’) and not acted fairly and reasonably and in good faith in circumstances where:
(a) The RFT and the evaluation plan set out the steps for the selection of the successful tenderer.
(b)The ranking selection stage was not performed as required under the Express Terms and as contemplated in section 1.4.2.2 of the Evaluation Plan.
(c) As the tenderer was not selected by the evaluation process there was no one to negotiate with, as contemplated.

(d) The arbitrary choice of the tenderer contradicts the Express Terms.

Reliance upon flawed evaluation criteria in assessing the tender
11. Having found (at [54] and [55]) that the evaluation criteria included work sheets comprising Part 4 of the Evaluation Plan that were scored and weighted and, further, having found (at [98]) that the ‘financial privacy and legal’ evaluation criteria had not been scored (assessed) at all, the learned trial judge erred in accepting that ‘value for money’ of each tender was carried out in accordance with the process described in part 3.1 of the evaluation plan. The learned trial judge ought to have found, on the weight of evidence, that the Respondent relied upon flawed evaluation criteria, in circumstances where:
(a) Part 3.1 explicitly says ‘the resulting score of each category will be brought together with the comparison costs (of each tenderer) to produce a holistic “value for money” view of each proposal’. The costs were not brought together. The selection was made on Denis Street’s qualitative assessment only.
(b) The cost of equipment was not taken into account, and the issues associated with technology were considered to be a matter for contract negotiation.

Therefore the learned judge ought to have found that the Respondent had not acted fairly and reasonably and in good faith and had not complied with the criteria and approach referred to in the RFT.
Failure to do a proper value for money analysis
12. The learned trial judge erred (at [66]) in holding that the First Appellant’s tender did not represent the best value for money because it was the cheapest tender, in circumstances where the learned trial judge found that the evaluation process sought to identify the tender response that offered the best solution (qualitative) at the best price (all costs) (at [66]). The learned trial judge ought to have made an alternative finding, on the weight of evidence, that if the tender evaluation process was performed according to the Express Terms and had the Respondent acted fairly, reasonably and in good faith, the First Appellant would be ranked (or indexed) number one (1) and thus obtain the highest index as it achieved the best ‘value for money’.
13. The learned trial judge erred (at [66]) in finding that the nature of the RFT meant that the question of best value for money was a ‘subjective business judgment’. On evidence or on the weight of evidence, the learned trial judge ought to have found that the tender evaluation process to determine the best value for money was not used by the Respondent, in circumstances where:
(a)the evaluation of the responses to the RFT would be objective, documented, auditable and quantifiable, as documented in the Evaluation Plan;
(b)the outcome of the tender would identify the value for money ranking, as documented in the Evaluation Training document; and
(c) the selection was based only on qualitative measures, namely the focus was upon the system integration services (only) to be provided (at [67]).

Therefore the learned judge ought to have found that the Respondent had not acted fairly and reasonably and in good faith and had not complied with the criteria and approach referred to in the RFT.
14. The learned judge erred (at [69]) in finding that Denis Street stated that the comments in the bullet points on page 14 of the Evaluation Report were based upon his numerous discussions with the members of the Project Evaluation Team ('PET') in circumstances where the learned trial judge ought to have found, on evidence or on the weight of evidence, that:
(a)Denis Street did not give any evidence of such discussions with the members of the PET, nor, could he remember even one member or the topics which he discussed with the members of the PET;
(b) Denis Street stated that he was not qualified to assess aspects of the proposal as he was not a member of the PET who knew the Parliament’s requirements;
(c) The services assessment (qualitative) of the PET was not properly considered and instead was replaced by comments of Denis Street who was brought in to manage the process;
(d) No witness that was a member of the PET was called on behalf of the Respondent despite the fact that some of those members were still employees of the Respondent and known to the Respondent at the time of the trial;
(e) Cost was not properly considered at all, as evident from the Respondent’s Evaluation Report;
(f) The Respondent decided that ‘the price was not an issue, getting the best integrator is’.

Therefore the learned judge ought to have found that the Respondent had not acted fairly and reasonably and in good faith and had not complied with the criteria and approach referred to in the RFT.
15. The learned trial judge erred in finding (at [71]) that in so far as this case is concerned nothing turns on the point that the value for money analysis which was graphically depicted in the Evaluation Report and which was intended to be a high level summary of the findings which were to be read together with the bullet points under the graph, in circumstances where, on evidence or on the weight of evidence:
(a) the graph materially misrepresented the relative value for money of the bids; and
(b) showed that an accurate ranking of the six tenderers was not performed.

Therefore the learned judge ought to have found that the graph demonstrated that the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
16. The learned trial judge ought to have found (at [73]) that value for money is determined simply by dividing the cost by the qualitative score (Table 2). The learned trial judge ought to have accepted the evidence of Roger Warr as set out in paragraph 45 below and found that the table is commonly used to calculate the dollar ($) value ratio of each vendor’s ranking.
17. The learned trial judge ought to have found (at [74]) on evidence or on the weight of evidence, that the cost of equipment was not a value for money consideration during the selection process as the issues associated with technology were to be a matter for contract negotiation only once the tenderer was selected, rather than to be a factor in the selection itself as shown on Page 18 of the Evaluation Report.

Therefore the learned trial judge ought to have found that the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT
18. The learned trial judge erred in holding (at [65]) that even though the First Appellant’s tender was compliant in that it met the essential criteria set out in the RFT, it did not necessarily mean that it complied with the Respondent’s business requirements. The learned trial judge ought to have found, on evidence or on the weight of evidence, that all six (6) tenderers, including the First Appellant, scored above thirty percent (30%) for the criteria ‘Solution Evaluation — Parliament Requirements’ and thereby met the Respondent’s business requirements and therefore by excluding the First Appellant prior to the ‘final decision point’ as required in clause 1.2.3 of the RFT the Respondent failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.

Failure to inform Ipex of the change in the evaluation process (criteria)
19. Having found (at [79]) that Denis Street admitted that by short listing CSM and Compaq, the evaluation team varied the evaluation process but the RFT allowed this variation, the learned trial judge erred in holding that the process was still fair, in circumstances where the learned trial judge ought to have held that:
(a) the short listing of tenderers was a material departure from the tender evaluation process inasmuch as the short listed tenderers were invited to present their proposal after each bid was assessed and scored qualitatively by the PET;
(b) the other three (3) tenderers, had not been informed and were not asked to participate in the new request for proposal (RFP), and hence could not have had the opportunity to present revised proposals;
(c) a variation of this magnitude required re-tendering, that is, informing and negotiating with all of the tenderers.

Therefore the learned trial judge ought to have found that the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
Reliance upon the touch points
20. The learned trial judge erred in finding (at [83]) that comments made during the Industry briefing on 23 May 2002 were not consistent with the ‘assertion that the Respondent wanted a Rolls Royce solution’. The learned trial judge ought to have found, on evidence or on the weight of evidence, that the assertion was very probable in circumstances where the budget allocated was not limitless and where the Respondent was not looking for an extension of the existing environment but for a ‘fresh look’ (at [84]). Therefore the learned trial judge ought to have found that in failing to disclose that the Respondent wanted a Rolls Royce solution the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
21. The learned trial judge erred in finding (at [69-70] and similarly at [84], [85], [86], [87]) that the First Appellant’s tender did not go beyond a hardware and software upgrade. The learned trial judge ought to have found, on evidence or on the weight of the evidence, that the First Appellant proposed to replace ‘all .., in scope Compaq equipment with ... Ipex equipment’ and therefore this was no reason to exclude the Appellant prior to ‘the final decision point’ (under clause 1.2.3). By doing so the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
22. The learned trial judge erred in accepting (at [88], [89], [90]) the attributed importance of one (1) out of thirty-eight (38) assessed criteria by the PET namely, the anywhere/anytime criteria in circumstances where:
(a) The anywhere/anytime criteria was one of the 11 criteria of ‘Parliaments [Respondent’s] Requirements’;
(b) The ‘Parliaments [Respondent’s] Requirement’ criteria weighting was 10% of 100% criteria. The 10% weight represents the relative importance [RFT 1.2.2, according to relative importance];
(c) The anywhere/anytime criteria relative importance therefore was a mere 1.5% (one of the lowest).

The learned trial judge out to have found that this was no reason to exclude the Appellant prior to the ‘final decision point’ (under clause 1.2.3 and that by doing so the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
Failure to comply with the evaluation process
23. The learned trial judge erred (at [95]) in holding that the pricing submitted was analyzed by Denis Street and shared with the PET after the qualitative assessments had been completed and the comparative results incorporated into the Evaluation Report in circumstances where:
(a) There was no evidence that Denis Street shared the pricing with all the relevant members of the PET assigned to evaluate these criteria.
(b) Comparative results were not used in the evaluation process except in the ‘value for money’ analysis where the price and qualitative assessment are brought together for creating a comparative result for ‘value for money’.
(c) There was no proper comparative results incorporated in the evaluation report and, further, the evidence shows that cost was excluded from the evaluation selection process.

24. Having found (at [96], [97], [98] and [100]) that the Respondent did not conduct an evaluation of ‘the solution evaluation financials’ and ‘solution evaluation/privacy and legal criteria’, and that the Project Evaluation Report did not set out scores awarded to any of the competing tenderers in relation to this criteria the learned trial judge erred in holding (at [96]) that these components were reviewed by the PET as a legal justification or excuse in circumstances where:
(a) Part 1.2 of the evaluation plan states that ‘the evaluation will be objective, documented, audible, and quantifiable to compare essential differences between proposals’ and the evaluation team will reach a consensus decision following independent assessments.
(b) Part 1.4.2.2 of the evaluation plan states that ‘complying responses will be evaluated and scored against the supplier and technical evaluation criteria detailed in this plan’;
(c) Part 1.2 of the evaluation plan states that ‘suppliers will be dealt with no discrimination’;
(d) The fact is that the two sets of the said criteria constituting 25% of the solution evaluation were not assessed prior to commencing the scoring when it was an explicit requirement to assess and reach consensus pursuant to the express terms of the RFT and the evaluation plan;
(e) Denis Street admitted that discrimination in assessing had taken place and could not explain further on this point.

The learned trial judge ought to have found that the Respondent failed to comply with the Express Terms and to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
25. The learned trial judge erred (at [95] [98] and [99]) in holding that the evaluation report did not set out scores awarded to any competing tenders and did not affect the outcome in circumstances where:
(a) any assertion that it would not affect the evaluation process does not permit any interim non-objective decision; and
(b) as the criteria represents 25% of the total score for the Solution evaluation it is unquestionable the scores could affect the outcome.

Therefore the learned trial judge ought to have found that the Respondent failed to comply with the Express Terms and to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
26. The learned trial judge erred (at [101]) in holding that the Respondent did what it said it would do and that it did not depart from the RFT in circumstances where the Respondent:
(a) was bound by the Tender evaluation process, including the RFT and the Evaluation Plan;
(b) failed to follow the requirements of the structured Request for Tender evaluation process documents such as the RFT and the Evaluation Plan;
(c) did not follow the ultimate explicit process of the Vendor selection process by not following at all or not properly following the process that would yield the selection of the ‘preferred supplier’;
(d) did not perform or did not properly perform the ranking of all six respondents, including the First Appellant;
(e) aborted the evaluation process prior to the completion of the evaluation process.

Therefore the learned trial judge ought to have found that the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
27. Further, the learned trial judge erred (at [101]) in holding that the fact that First Appellant scored 14% less on quality but was about $3 million cheaper is superficial and breaks down on analysis in circumstances where as evidenced on page 14 of the evaluation report:
(a) The First Appellant scored 6% less on quality compared to CSM, and 11% compared to Compaq;

(b) The First Appellant was $5 million cheaper than CSM;

(c)On any reasonable analysis where the First Appellant was only 6% lower on quality than CSM, it cannot be superficial and does not break down on analysis, if the Respondent pays 178% increase in cost ($5 million more than the First Appellant’s tender) for a difference of 6% in qualitative merits.

Therefore the learned trial judge ought to have found that the respondent failed to act fairly and reasonably and in good faith and complied with the criteria and approach referred to in the RFT
28. The learned trial judge erred further (at [101]) in holding that the matters referred to by Street and the PET are relevant, appropriate and within their remit under the RFT and the Evaluation Plan in circumstances where the same was contrary to the Express Terms and the Evaluation Plan and were neither relevant nor appropriate and were not based on facts but rather the opinion of Denis Street.

Failure to evaluate the tenders by the PET in respect to the criteria ‘Solution Evaluation/Financial’ and ‘Solution Evaluation/Privacy and Legal’ in breach of the Express Terms
29. The learned trial judge erred (at [95]) in finding that the allegation was not made out on the basis that the actual costs of the tender responses and the pricing submitted were analysed by Denis Street and shared with the PET after the qualitative assessments had been completed and the comparative results incorporated into the Evaluation Report, in circumstances where:
(a) the allegation in fact made by the Appellants, and shown to be established on the evidence of Street and the objective documentary evidence of the Evaluation Report, was that the Respondent had breached the Express Terms.

30. The learned trial judge erred (at [96]) in holding that whilst none of the tender responses were scored by reference to the fourth criterion identified on the tender evaluation worksheets entitled ‘4.6 Solution Evaluation/Financial’, nevertheless, these components of the tendered responses were reviewed by the PET.
31. Further, the learned trial judge erred (at [96]) in holding that having conducted the review, there were no significant issues or differences arising and on that basis it was decided to not score these components, namely ‘4.6 Solution Evaluation/Financial’ and exclude them from further consideration. The learned trial judge ought to have held that the decision to not score these components and exclude them from further consideration demonstrates a clear breach of the Express Terms.
32. In addition, the learned trial judge erred (at [96]) in holding that as these components were only a very minor component of the overall assessment criteria, this had no material impact on the overall outcome in circumstances where this conclusion is factually false and irrelevant in any event as it was an express term of the tender process agreement that required the Solution Evaluation/Financial to be performed.

33. The learned trial judge ought to have held:
(a) That the excluded components were material as they represented 10% of the total resulting scores or 16% of the score of Solution Evaluation criteria, bearing in mind that according to the Respondent and the learned trial judge, it was ‘Parliaments Requirements’ that was the most important, which itself represented 10% of the total resulting scores;
(b) whether it is or has a material impact on the overall outcome is not even in evidence because it was not scored and evaluated and in fact was seemingly unilaterally removed by Denis Street.

34. The learned trial judge erred (at [99]) in holding that as all tenderers were judged by equivalent criteria the decision not to take the financial and privacy and legal criteria into account did not affect the outcome of the evaluation process in circumstances where:
(a) his Honour stated (at [97]) that the First Appellant complains that in the Project Evaluation Report dated 1 July 2002 no points at all were allocated to the evaluation of Ipex’s tender by the PET in respect to the criteria ‘Solution Evaluation/Financial’ and ‘Solution Evaluation/Privacy and Legal’ which comprised 25% of the total score for the solution criteria;
(b) his Honour found (at [98]) that the Project Evaluation Report did not set out the scores awarded to any of the competing tenderers in relation to the financial and privacy and legal criteria.

35. The learned trial judge ought to have held that the failure to award such scores in the Project Evaluation Report is evidence that the Respondent breached the Express Terms and also that the Respondent had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
36. Further, the learned trial judge ought to have considered or properly considered that the claims made by the Appellants were not limited to a breach of contract claim and included a misleading and deceptive conduct claim under the Fair Trading Act.
37. In addition, the learned trial judge erred in finding (at [99] and at [100]) that in not taking the financial and legal criteria into account, the outcome of the evaluation process was not affected and that this was confirmed, in the case of financial, by the electronic record prepared by Street which confirms that the financial criteria was deleted from the Solution Evaluation category (being exhibit P9) in circumstances where:
(a) the criteria was removed contrary to the express and explicit terms of the RFT; and
(b) what the electronic record confirms is the unequivocal evidence that the Respondent had breached the express term of the tender process contract and had failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.

38. The learned trial judge erred in failing to have regard to the evidence that:
(a) The excel spreadsheet contained the evaluation and score of the Evaluation Criteria, Supplier Evaluation and Solution Evaluation that was used for the Evaluation Report dated 1 July 2002
(b) The spreadsheet shows that the complying tender responses, including the plaintiff’s tender response, were not evaluated and scored against the evaluation criteria, Solution Evaluation, Financial Responses,-
(c) Further, the electronic version of the excel spreadsheet shows that the evaluation criteria, Solution Evaluation, Financial Responses was removed.

Therefore the learned trial judge ought to have found that the Respondent had breached the express term of the tender process contract and—failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
Conclusions as to conduct
39. The learned trial judge erred (at [101]) in holding that the Respondent did what it said it would do and that the Respondent did not depart from the RFT in any of the respects identified, and to the extent that there was any departure from the RFT it was either de minimis, irrelevant or specifically permitted by the Tender Process Agreement.

40. The learned trial judge ought to have held that:
(a) de minimis does not apply to a breach of the Tender Process Agreement and further does not apply to misleading and deceptive conduct claims under the Fair Trading Act, which is a statutory cause of action;
(b) the evaluation criteria is expressly stated in the RFT and the Evaluation Plan and, hence, any departure from the RFT is not irrelevant;
(c) the Tender Process Agreement did not specifically permit a departure from the evaluation criteria expressly stated in the RFT and the Evaluation Plan.

Therefore the learned trial judge ought to have found that the Respondent failed to comply with the Express Terms and failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT.
41. The learned trial judge erred (at [102] and [103]) in holding that further, and in any event, to the extent of any departure from the RFT such departure was specifically permitted by the following clauses:
(i) not accept the lowest quotation, or any Tender, for all or part of the solution being proposed (clause 1.4);

(ii) negotiate with tenderers during the evaluation period (clause 1.5);
(iii) continue to contract at the negotiation stage with one or more selected tenderers (clause 1.4);
(iv) select an appropriate tenderer from tender proposals for specific services with whom further negotiations may be undertaken (clause 1.4);
(v) change any details of the RFT, including the conditions of tendering (clause 1.6).

42. The learned trial judge ought to have held that:
(a) the clauses referred to are known as disclaimer clauses’ in the context of a tender process agreement;
(b)disclaimer clauses cannot be used to avoid a finding that there is a breach of the tender process contract by failing to evaluate the tender according to the express evaluation criteria;
(c) an attempt to rely upon such disclaimer clauses may be a breach of the implied term of good faith and fair dealing in and of itself;
(d)the disclaimer clauses do not provide a justification for breach of the express terms concerning the evaluation of the tender process;
(e) even if the disclaimer clauses could be used, none of the clauses provide that the Respondent can change the express terms dealing with the evaluation and scoring of the tender without informing the tenderers;
(f) disclaimer clauses are ineffective as a matter of contract law (and generally not effective for a misleading and deceptive conduct claim) unless they expressly and explicitly make it clear that they override an explicit and express term of the contract;
(g) Any construction of a disclaimer clause otherwise would lead to absurdity and the tender process contract would be meaningless;
(h) The disclaimer clauses in any event are not even applicable. They relate to ‘negotiations’ and ‘conditions of tendering’;
(i) what this claim relates to is the breach of the express and explicit terms dealing with the evaluation of the tender and the evaluation criteria and scoring and analysis of the costs, which goes to the heart of the fair tendering process for the best use of public money, not generalities of conditions of tendering or negotiations.

Therefore the learned trial judge ought to have found that the Respondent failed to comply with the Express Terms and failed to act fairly and reasonably and in good faith and comply with the criteria and approach referred to in the RFT and also engaged in misleading and deceptive conduct.
Exclusion of the Appellants’ expert evidence
43. The learned trial judge erred (at [18] and [19]) in holding that:
(a) the expert statement of Roger Warr did not truly represent an area of expertise sufficient to make it expert evidence; and
(b)the many questions asked and answered by Roger Warr, were or could have been matters for the court to decide;

and thereby refused to permit the Appellants to adduce the expert evidence of Roger Warr, which was the only expert evidence sought to be adduced by the Appellants in respect of the evaluation of the tender.
44. The learned trial judge ought to have admitted the expert evidence of Roger Warr and ought to have found that it was generally accepted in the industry that a fair and reasonable tender process required a ranking of all tenders by reference to a direct comparison between them of their quality and cost.

Failure to grant the relief sought
45. The learned trial judge erred by failing to grant the relief sought by the first appellant namely declarations as a primary and independent relief for contraventions of the Fair Trading Act and breach of the tender process contract and also damages.
46. The learned trial judge ought to have granted the declarations sought and ordered that the Respondent pay damages as claimed.
47. The grounds of appeal of the Second Appellant are the above grounds of the First Appellant.

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Assessment	Score	Description
Significantly exceeds requirements	5	Solution significantly exceeds the defined standard
Exceeds requirements	4	Solution exceeds the defined standard
Fully Complies	3	Solution fully meets the defined standard
Mostly Complies	2	Minor changes or compromise required to meet the defined standard
Partially Complies	1	Major changes or compromise required to meet the defined standard
Does Not Comply	0	Unable to satisfy the defined standard – no evidence offered

[2012] VSCA 201

29 August 2012