Lovegrove Turf Services Pty Ltd v Minister for Education
[2003] WASC 66
LOVEGROVE TURF SERVICES PTY LTD & ANOR -v- MINISTER FOR EDUCATION [2003] WASC 66
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 66 | |
| Case No: | CIV:1181/2003 | 18 MARCH 2003 | |
| Coram: | COMMISSIONER JOHNSON QC | 27/03/03 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Application for interlocutory injunction granted | ||
| B | |||
| PDF Version |
| Parties: | LOVEGROVE TURF SERVICES PTY LTD D & E PARKER PTY LTD MINISTER FOR EDUCATION |
Catchwords: | Interlocutory injunction Tender process Breach of implied term of pre-award contract to conduct process fairly Procedural fairness Administrative review |
Legislation: | School Education Act 1999 State Supply Commission Act 1991 |
Case References: | A v Hayden (1984) 56 ALR 73 ABC v Lenah Game Meats Pty Ltd [2001] HCA 63 American Cyanimid Co v Ethicon Ltd (1975) AC 396 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 Cayne v Global Natural Resources [1984] 1 ALL ER 225 Century Metals and Mining NL v Yeomans (1989) 100 ALR 383 Cord Holdings Ptd v Burke, unreported; SCt of WA; SCL 5690; 22 January 1985 Darling Casino Ltd v New South Wales Casino Control Authority (1997) 143 ALR 55 Dickson Property Management Services Pty Ltd v Centro Property Management (Vic) Pty Ltd (2001) 180 ALR 485 Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349 Films Rover v Cannon Film Sales Ltd [1987] 1 WLR 670 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 KC Park Safe (Brisbane) Pty Ltd v Cairns City Council [1996] 1 QdR 497 Metropolitan Transport Authority v Waverly [1991] 1 VR 181 Minister for Immigration and Ethnic Affairs v Teoh [1994-5] 183 CLR 273 Mott v Mount Edon Gold Mines (Australia) Ltd (1994) 12 ACLC 319 OD Transport Pty Ltd v WA Government Railways Commission (1986) 71 ALR 190 Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 Regent's Pty Ltd v Subaru (Aust) Pty Ltd (1996) ATPR 41-463 State of Victoria v Master Builders' Association of Victoria [1995] 2 VR 121 State Transport Authority v Apex Quarries Ltd [1988] VR 187 The Batemans Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 Total Marine Services Pty Ltd v Waller and Anor [200] WASC 2000 White Industries Ltd v Electricity Commission of New South Wales, unreported; SCt of NSW, 25212 of 1987; 20 May 1987 Willow Grange Pty Ltd & Anor v Yarra City Council, unreported; SCt of Vic; 7427 of 1997; 1 December 1997 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiffs
D & E PARKER PTY LTD
Second Plaintiff
AND
MINISTER FOR EDUCATION
Defendant
Catchwords:
Interlocutory injunction - Tender process - Breach of implied term of pre-award contract to conduct process fairly - Procedural fairness - Administrative review
Legislation:
School Education Act 1999
State Supply Commission Act 1991
(Page 2)
Result:
Application for interlocutory injunction granted
Category: B
Representation:
Counsel:
Plaintiffs : Mr C G Colvin and Ms M Jones
Second Plaintiff : Mr C G Colvin and Ms M Jones
Defendant : Mr B P King and Ms V R Crump
Solicitors:
Plaintiffs : Hotchkin Hanly
Second Plaintiff : Hotchkin Hanly
Defendant : Crown Solicitor
Case(s) referred to in judgment(s):
A v Hayden (1984) 56 ALR 73
ABC v Lenah Game Meats Pty Ltd [2001] HCA 63
American Cyanimid Co v Ethicon Ltd (1975) AC 396
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Cayne v Global Natural Resources [1984] 1 ALL ER 225
Century Metals and Mining NL v Yeomans (1989) 100 ALR 383
Cord Holdings Ptd v Burke, unreported; SCt of WA; SCL 5690; 22 January 1985
Darling Casino Ltd v New South Wales Casino Control Authority (1997) 143 ALR 55
Dickson Property Management Services Pty Ltd v Centro Property Management (Vic) Pty Ltd (2001) 180 ALR 485
Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349
Films Rover v Cannon Film Sales Ltd [1987] 1 WLR 670
Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151
KC Park Safe (Brisbane) Pty Ltd v Cairns City Council [1996] 1 QdR 497
Metropolitan Transport Authority v Waverly [1991] 1 VR 181
(Page 3)
Minister for Immigration and Ethnic Affairs v Teoh [1994-5] 183 CLR 273
Mott v Mount Edon Gold Mines (Australia) Ltd (1994) 12 ACLC 319
OD Transport Pty Ltd v WA Government Railways Commission (1986) 71 ALR 190
Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469
Regent's Pty Ltd v Subaru (Aust) Pty Ltd (1996) ATPR 41-463
State of Victoria v Master Builders' Association of Victoria [1995] 2 VR 121
State Transport Authority v Apex Quarries Ltd [1988] VR 187
The Batemans Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247
Total Marine Services Pty Ltd v Waller and Anor [200] WASC 2000
White Industries Ltd v Electricity Commission of New South Wales, unreported; SCt of NSW, 25212 of 1987; 20 May 1987
Willow Grange Pty Ltd & Anor v Yarra City Council, unreported; SCt of Vic; 7427 of 1997; 1 December 1997
Case(s) also cited:
Nil
(Page 4)
1 COMMISSIONER JOHNSON QC: The plaintiffs seek an interlocutory injunction restraining the defendant, the Minister for Education, from advertising or awarding certain tenders to any party other than the plaintiffs pending judgment in the action.
2 By s 214 of the School Education Act 1999 the Minister is established as a body corporate capable of being sued. Section 216(2)(e) of the School Education Act also confers on the Minister a specific statutory power to contract.
3 Superimposed upon the exercise of that power are policies established by the State Supply Commission ("the Commission") created under s 4 of the State Supply Commission Act 1991 ("SCC Act"). It is a function of the Commission under s 5(b) of the SCC Act to arrange for and co-ordinate the efficient supply of good and services in accordance with the SCC Act. Section 28(1) of the SCC Act empowers the Commission to prepare, issue, amend and revoke policies known as "supply policies" with respect to policies and practices relating to the supply of goods and services and the disposal of goods under the SCC Act for, or by, a public authority. Section 28(3) requires publication in the Government Gazette of notice of the making, amendment or revocation of supply policies. Supply policies, therefore, have the status of delegated legislation. All public authorities, including all employees, members and officers of public authorities and all officers of the Public Service of the State are obliged to comply with supply policies: s 17 of the SCC Act.
4 Under s 18(2) of the SCC Act, the Commission is entitled to provide advice and make recommendation to a Minister responsible for a public authority regarding any matter relating to policies and practices regarding the supply or disposal of goods and services or to the process by which goods and services are disposed of or supplied. The Minister is not bound to accept such advice or recommendation. However, all public authorities are obliged to comply with any direction given, on the advice or recommendation of the Commission, by the Minister responsible for the public authority: s 18(3) of the SCC Act.
5 The first and second plaintiffs are currently contracted to the defendant for the provision of lawn-mowing services at schools throughout the metropolitan area. During 2001 the defendant, through departmental representatives, decided to commence a tender process for contracting lawn-mowing and related services to government schools. In accordance with the relevant supply policy, the defendant forwarded to the Commission a procurement plan. Following approval of the
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- procurement plan a Request For Tender document ("RFT") was submitted which was also approved.
6 For reasons which are of no significance for present purposes, the tender process was split into two rounds. The tenders for Round 1 closed in June 2001 and the tenders for Round 2 closed approximately six weeks later. The timing is significant because of a requirement of the Commission's Open and Effective Competition Policy that unsuccessful tenderers are to be advised of the identity of the successful tenderer and the total tender price on an annual basis of each contract awarded. There was also in place a practice of providing feedback to unsuccessful tenderers. To avoid the potential for creating an unfair advantage to any tenderer, there was no notification as to the outcome of Round 1, nor feedback provided to tenderers between the closing of Round 1 and the closing of Round 2. Consequently, there was no opportunity for any tenderer to revise their tenders for Round 2 in light of the evaluation of the tenders for Round 1.
7 On 7 December 2001 the first and second plaintiffs were advised that they were the preferred tenderers for particular Round 1 contracts. On 20 December 2001 they were advised that they had been awarded those contracts. The first and second plaintiffs were the only successful tenderers in Round 1. On 27 December 2001 the defendant wrote to each of the unsuccessful Round 1 tenderers to advise them that the first and second plaintiffs were awarded contractor status for the Round 1 contracts. Each tenderer was advised of the total lawn-mowing tender price on an annual basis for each contract awarded. In January and February 2002 the tenderers were provided with feedback on their Round 1 tenders. I note in passing that, where a tender process is split into two rounds, passing information in relation to Round 1 when the contract under Round 2 has not yet been awarded has the potential to create unfairness if the Round 2 process is aborted or varied for any reason.
8 The plaintiffs were also tenderers in the Round 2 tender process. The RFT for Round 2 incorporated into the tender process the General Conditions of Contract for the Provision of Services: cl 2.7, cl 3.1 and cl 3.18 of the RFT. Even the RFT cover page identifies the General Conditions of Contract as an additional document relevant to the RFT.
9 Clause 26 of the General Conditions sets out the terms of the contract created by participation in the RFT process. Clause 26(b) provides:
(Page 6)
- "In consideration of its response being accepted for consideration, the Respondent agrees to the terms set out in this clause 26. The Respondent accepts that the RFT/RFP process exists merely for the purpose of the evaluation committee of the Education Department of WA making a recommendation to the Education Department of WA's Tenders Committee as to which Respondent (if any) should be awarded the contract."
10 Clause 26(c) provides:
"The Minister -
(i) reserves the right, at any time and from time to time, to cancel, vary, supplement, supersede or replace the RFT/RFP process (including the selection criteria) by written notice to the Respondents;
(ii) is under no obligation to offer any Respondent a Contract for the requirement;
(iii) reserves the right to not accept any of the responses submitted."
11 Further, under the General Conditions all warranties are excluded (cl 26(e)), each tenderer is to bear all costs of the process (cl 26(f)), and the tenderer agrees not to challenge any decision in respect of the RFT/RTP process by legal, administrative or any other proceedings (cl 26(h)).
12 The RFT similarly provides that the costs associated with the preparation of the tender, including costs arising from the tender are to be borne by the tenderer: cl 2.5. Clause 2.6 of the RFT also contains the following statement:
"Unless otherwise stated in this document, tenders maybe for all or part of the requirement and may be accepted by the Education Department of WA either wholly or in part. The Education Department of WA is not bound to accept the lowest tender and may reject any or all tenders submitted."
13 The RFT for Round 2 specified the selection criteria and assessment process to be applied in awarding the tender and conferred a broad discretion on the defendant. Specific criteria are referred to in cl 1.5.1, cl 1.5.2, cl 1.5.3, cl 1.5.4, cl 1.5.5, cl 1.5.6 and cl 1.5.7, including a
(Page 7)
- requirement that the tenderer have the capacity to perform the contract (cl 1.5.5). The wording of cl 1.5.8 is of particular significance:
"The criteria detailed above are not in any order and are not necessarily exhaustive or to be given equal weight.
Many factors will contribute to the assessment, and information supplied in response to various sections of the RFT will contribute to the assessment against each criterion."
15 As the applicable criteria appear in different parts of the RFT it is important to note that the RFT specifically states that tenderers are deemed to have examined the tender document and any other information available in writing to tenderers for the purpose of tendering (cl 2.14(a)).
16 After the Round 2 tenders closed the tender evaluation committee met and prepared a tender evaluation report and recommended the plaintiffs be awarded the contract. The tender evaluation report stated that the selection criteria specified in the RFT were used in the evaluation. Part 4.0 of the report entitled "scoring" contained a detailed breakdown of the criteria and relative weightings used in the evaluation process.
17 The recommendation of the tender evaluation committee was considered by the State Tenders Committee ("the STC") on 7 and 14 March 2002. The initial decision of the STC was not to endorse the recommendation. However, on 14 March 2002 the STC "conditionally endorsed" the recommendation. The conditional endorsement was described as being "subject to your Department seeking legal advice on the evaluation process for these tenders".
18 On 4 April the Commission decided to engage an independent consultant to review a complaint concerning the tender evaluation process which had been made by one of the tenderers, Turfmaster Facility Management ("Turfmaster"). Turfmaster's complaints fell into four categories: (a) the length of the tender process, (b) the inconsistency and
(Page 8)
- outcome of the evaluation process, (c) the clarification of submissions during the tender process and (d) the capability and value offered by Turfmaster.
19 Dr Michael of Ken Michael Consulting was engaged to conduct the review. The review was carried out and a Report on Findings provided to the Education Department in May 2002. The scope of the review is set out in the report in the following terms:
"The scope of the study is to review the tender documentation in relation to the RFTs and the evaluation process used.
It should be noted that the review being undertaken relates specifically to the process itself and not to the specification of the desired service, which is considered to be a matter for the client. However, the selection of the service consistent with the requirements of the specification would be a matter for consideration."
20 Dr Michael was provided with all relevant papers and tender documents. He was also provided with other information including the legal advice referred to in the conditional approval. The following portion of that advice is set out in Dr Michael's report:
"There remains issues whether the terms of the RFT, and the evaluation process adopted by the Department, represented open and fair dealing and appropriate tendering practice, both in terms of compliance with State Supply Commission Policies and general government procurement policies."
21 In carrying out his review Dr Michael conducted interviews with Mr Giuseppe Di Pietro, the Education Department's Manager Contract Services and with three representatives from Turfmaster. The plaintiffs were not invited to participate in the review.
22 In the text of his report Dr Michael observes that the selection criteria were clearly stated in s 1.5 and s 6 of the RFT. He also notes that the tenderers were advised that the criteria were not in any order, were not necessarily exhaustive and were not necessary to be given equal weight. Dr Michael rightly observes that this gave the defendant very wide discretion, a fact known to all tenderers. However, Dr Michael comments that this wide discretion "could make it difficult to tender". He states:
(Page 9)
- "There is room for uncertainty in the evaluation of tenders, particularly with some criteria being marked 'essential' and no explanation how they related to the general criteria in Section 1.5 of the RFT or how the non-essential criteria, by implication, would be applied."
23 The relevant findings of the report are as follows:
"(b) The selection criteria were replaced by application of essential and non-essential criteria expressed elsewhere in the RFT…;
(c) The essential criteria were effectively used as sub-criteria of the selection criteria and were used to assess the validity of tenders;
(d) By implication the remaining sub-criteria were 'non-essential', yet formed part [sic] an integral part of the VFM process, an aspect that would have been important to convey to tenderers;
(e) The application of the selection criteria was not outlined in the RFT nor was the relationship between these criteria, the essential/non-essential (sub)-criteria and other information outlined in the RFT."
24 Based on these and other findings, Dr Michael recommended that the tenders be recalled "in view of the lack of consistency between the tender evaluation process as outlined in the RFT and the process actually applied in the assessment of tenders".
25 On 5 June 2002 the Commission recommended to the Minister's Department that the tender be recalled on the basis of Dr Michael's recommendations. On 23 August 2002 the Minister's Department decided to recall the tenders. At no stage in the process from review to recall were the plaintiffs or any tenderer other than Turfmaster given the opportunity to be heard. It is conceded on behalf of the defendant that the plaintiff would have been the successful tenderer had the tender process been allowed to continue.
26 In the affidavit of Giuseppe Di Pietro, the manager of the Education Department's Contract Services Branch, the following reasons are given for the decision to terminate the Round 2 process:
(Page 10)
- (a) The conclusions of the report of Dr Michael who was an independent consultant.
(b) The recommendation of the Commission that the Round 2 process be terminated.
(c) The defendant's obligation to apply policies issued by the Commission and to take the guidelines and recommendations of the Commission into account.
(d) The time lapse since the closing time for Round 2 and the risk that the tenderers might suffer hardship if they were required to maintain the prices they had quoted in their tenders.
(e) No tenderers had been advised of the results of the defendant's review of the Round 2 tenders and the State Tenders Committee had only ever conditionally endorsed the defendant's tender recommendations.
(f) Mr Di Pietro's belief that it was in the interests of all tenderers as a whole that the Round 2 process be terminated.
27 Neither the plaintiffs nor the other tenderers were formally advised of the outcome of any stage of the Round 2 process until the decision was made to recall the tender. At no stage were the plaintiffs formally advised of their status as recommended tenderer. However, the plaintiffs allege that as a result of certain informal discussions with the defendant's representatives they understood themselves to be the recommended tenderers.
28 It is the case that all tenderers had by this time received feedback from Round 1 which would not have been received at the time their tender documents were prepared for the second round. Further, all unsuccessful tenderers had been advised of the plaintiffs' overall contract prices for the Round 1 tender.
29 It is against this factual background that the application for the grant of an interlocutory injunction falls to be considered.
30 An applicant for an interlocutory injunction must demonstrate that:
(a) there is a serious question to be tried;
(Page 11)
- (b) the plaintiff will suffer irreparable injury for which damages will not be an adequate compensation
(c) the balance of convenience favours the granting of the injunction;
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153; ABC v Lenah Game Meats Pty Ltd [2001] HCA 63 at [13].
31 In considering the second of those factors, the test is not simply whether damages will provide the plaintiff with an adequate remedy but rather whether it would be just in all the circumstances to confine the plaintiff to that remedy: Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349; State Transport Authority v Apex Quarries Ltd [1988] VR 187.
32 The factors referred to by the High Court in Castlemaine Tooheys are not independent of each other. In considering whether to grant an interlocutory injunction the Court must have regard to the strength of the applicant's claim: Regent's Pty Ltd v Subaru (Aust) Pty Ltd (1996) ATPR 41-463 at 41-628; OD Transport Pty Ltd v WA Government Railways Commission (1986) 71 ALR 190 at 193.
33 The third of these factors is also referred to as the risk of doing an injustice: per May LJ in Cayne v Global Natural Resources [1984] 1 ALL ER 225 at 237. It is a fundamental principle in exercising the discretion to grant injunctive relief and that is that the court should take whichever course appears to carry the lower risk of injustice: Films Rover v Cannon Film Sales Ltd [1987] 1 WLR 670 at 680; Total Marine Services Pty Ltd v Waller and Anor [200] WASC 2000, per Roberts-Smith J at [72]
Whether there is a serious question to be tried
34 Plaintiff's claim is based on three alternative causes of action:
Breach of contract
35 The plaintiff alleges that there was a breach of the pre-award or process contract which governed the rights as between the plaintiffs as tenderers and the defendant as to how the consideration of the tenders would occur. It is said that, pursuant to the process contract, the defendant agreed that if contracts were awarded they would be awarded in accordance with the selection criteria and the evaluation methodology
(Page 12)
- specified in the request for tender and that such evaluation would be conducted fairly. The decision of the Federal Court in Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 is relied on in support of the propositions that there existed a pre-award contract and that there was an obligation on the defendant to act fairly to each of the tenderers in the conduct of tender process: see also Willow Grange Pty Ltd & Anor v Yarra City Council, unreported; SCt of Vic; 7427 of 1997; 1 December 1997, Byrne J at [5].
36 In Hughes, the plaintiff and another had tendered for a procurement contract with the Civil Aviation Authority. The CAA failed to evaluate the tenders in accordance with priorities and methodologies prescribed in the Request for Tender, and accepted an out of time change to the other tenderer's commitment to one of the criteria. It did so without informing the plaintiff. The tender was awarded to the other tenderer. Finn J concluded (at 197):
"Given the view earlier expressed that fair dealing is, in effect, a proper presupposition of a competitive tender process contract (especially one involving the disposition of public funds), and given that a public body is the contracting party whose performance of the contract is being relied upon, a necessary incident of such a contract with a public body is, I am prepared to conclude, that it will deal fairly with the tenderers in the performance of its tender process contracts with them."
37 That there exists in relation to the tendering process a cause of action for breach of an implied contractual term to act fairly was not disputed by the defendant.
The failure to accord procedural fairness
38 The plaintiffs submit that they had a legitimate expectation that they would be dealt with fairly in the tender process and the Minister would apply the principles of procedural fairness in making any decision to award a tender. The authorities of Willow Grange Pty Ltd v Yarra City Council, White Industries Ltd v Electricity Commission of New South Wales, unreported; SCt of NSW, 25212 of 1987; 20 May 1987 per Yeldham J, KC Park Safe (Brisbane) Pty Ltd v Cairns City Council [1996] 1 QdR 497 and Darling Casino Ltd v New South Wales Casino Control Authority (1997) 143 ALR 55 were relied upon in support of the general proposition that the existence of a legitimate expectation imposes a duty to accord procedural fairness.
(Page 13)
- Administrative review of the exercise of the power to recall the tender
39 The plaintiffs assert that the decision of the Minister to recall the tenders was made in respect of the exercise of a statutory power, attracts a duty to act fairly, and is reviewable. The status of the relevant supply policies as subordinate legislation supports the claim but is said not to be essential to it.
40 It was further submitted that, in circumstances where the exercise of such statutory power affects the interests of a party in a way that is "immediate, significant and peculiar to that party", then that party has standing to seek declaratory and injunctive relief: The Batemans Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 267. The latter point as to the plaintiffs' standing to bring an action of this type was not disputed by the defendant.
41 In effect, the basis of each of these separate causes of action is that the defendant failed to act fairly. The essence of the plaintiffs' complaint that the defendant failed to act fairly is the decision to recall the tender without giving the plaintiffs the opportunity to be heard in circumstances where the plaintiffs was the existing provider of services and had attained the status of recommended tenderer. The fact that there was no formal communication to the plaintiffs of their recommendation tenderer status is said to provide no bar to the rights for which the plaintiffs contend as knowledge is said not to be a necessary element of such rights: see Minister for Immigration and Ethnic Affairs v Teoh [1994-5] 183 CLR 273 at 291 per Mason CJ and Deane J and at 301 per Toohey J.
42 On behalf of the plaintiffs a clear distinction is drawn between the facts of the instant case and claims brought by unsuccessful tenderers dissatisfied with the outcome of a completed tender process. A distinction is also drawn between this case and one where there is a decision not to accept any tender or to initiate a fresh tender process because of a change in the requirements for the particular goods or services. It is said that in this case, there is a supervening event not otherwise contemplated by the tender process which, if it does not accord with proper processes, invalidates the defendant's decision.
43 Clearly these distinctions need to be drawn in order to overcome the well-established disinclination of the courts to interfere in the tender process: see, for example, White Industries Ltd v Electricity Commission
(Page 14)
- of New South Wales, per Yeldham J at 30 and Willow Grange Pty Ltd v Yarra City Council at [5].
44 As Thomas J observed in KC Park Safe (Brisbane) Pty Ltd v Cairns City Council, at 505 in the context of the concept of "legitimate expectation":
"The term 'legitimate expectation' has been considered by the High Court in Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487, FAI Insurance Ltd v Winneke (1982) 151 CLR 342, 370, Salemi v MacKellar [No2] (1977) 137 CLR 396, and in Kioa above to mention only a few … . It seems to me that the authority's right to reject is an essential part of the process of tendering and that every tenderer knows this.…Also virtually every tender involves the tenderer in a degree of expense, and in the usual course of such expenses are something that the tender would be prepared to forego. That is not to say that tenderers are not entitled to fair play, but the rules of the game are fairly basic ones. From the tenderer's point of view it is something of a gamble and the tenderer is looking for a valuable benefit. Even conduct raising the tenderer's hopes will not necessarily deprive an authority of the right of summary rejection."
45 In relation to the claim based on a failure to accord procedural fairness, reliance is placed on the obiter comments of Yeldham J in White Industries Ltd v Electricity Commission of New South Wales,at 32, that the existing suppliers of goods or services subject to tender would undoubtedly have had a legitimate expectation that the principles of natural justice would be observed in relation to it.
46 The plaintiff also calls in aid the fact that the court in KC Park Safe (Brisbane) Pty Ltd v Cairns City Council, at 503, acknowledged as arguable, although "a somewhat slender point", the existence of a legitimate expectation based simply on expenditure incurred during the tender process.
47 The plaintiffs refer to Willow Grange Pty Ltd v Yarra City Council in which, it is said, that the court accepted there was a serious question to be tried in circumstances where what was being called for was much closer to a review of the actual evaluation rather than the tender process itself. I have some difficulty with this submission. On my reading of the Willow Grange case the basis of the complaint about the tender process
(Page 15)
- was that, in the course of previous discussions, a particular method of evaluation was held out to tenderers as being the applicable method, and that method was not in fact applied. As Byrne J stated at [9]:
"The conclusion which I draw from this unhappy history is that there is a serious issue to be tried, that Rantrack's tender was assessed on the basis of criteria which were unknown to it and, more importantly, which were different from those which it was reasonably entitled to believe would in fact be applied."
49 Ultimately, in relation to the procedural fairness issue, the plaintiff relies on the fact that the particular factors present in this case extend beyond any of those considered in the decided authorities on the tender process but exist in a context in which legitimate expectations have been held to arise and hence there must be a serious question to be tried. It is also said that the fact that one of the tenderers was given an opportunity to be heard reinforces the need for the plaintiffs to be heard because every other tenderer has an interest in the tender process starting again.
50 More generally, in relation to the unfairness which is said to arise from the course adopted by the defendant, the plaintiff takes issue with the report on which the decision is effectively based. It is said that the "flaw" in the tender process identified by Dr Michael simply doesn't exist. Consequently, the decision to accept Dr Michael's recommendation, either without giving the plaintiffs the opportunity to be heard as to the accuracy of his conclusions or in any event, was demonstrably unfair to the plaintiff who was the only tenderer who would be adversely affected by the decision to recall the tenders. Further to suggest that the decision is fair because it could cause hardship to the plaintiff if it were bound by its tender prices after the considerable time lapse is said to overlook the fact that the plaintiffs may have preferred the opportunity to decide whether their preference was to accept that hardship rather than lose the contract.
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51 On behalf of the Defendant it is submitted that there is no serious question to be tried for the following reasons:
1. The terms of the process contract itself preclude the claim.
2. There is no proper basis for judicial review of the defendant's decision to recall the tender: KC Park Safe (Brisbane) Pty Ltd v Cairns City Council, at 501; Cord Holdings Ptd v Burke, unreported; SCt of WA; SCL 5690; 22 January 1985, at 17; White Industries v Electricity Commission of NSW, (Yeldam J) at 18; Seddon, Government Contract (1999) at 278-9; Century Metals and Mining NL v Yeomans, at 407; State of Victoria v Master Builders' Association of Victoria [1995] 2 VR 121 at 162 and 166; cfMetropolitan Transport Authority v Waverly [1991] 1 VR 181 at 204 (but see Seddon (supra fn 155 at 302)
3. Even if the decision to recall the tender were subject to judicial review, the plaintiffs could not show that the defendant did not accord the plaintiffs procedural fairness because:
(i) Neither the plaintiff's nor any other tenderer had a legitimate expectation that they would be given the opportunity to be heard on the decision;
(ii) The fact that the plaintiffs had reached the status of recommended tenderer did not ground a legitimate expectation that they would be consulted before the recommendations to recall the tender were effected;
(iii) There is no basis for alleging that the defendant acted outside the policies of the State Supply Commission.
4. Even if there is an implied term in the process contract that the defendant act fairly and in good faith the plaintiff cannot demonstrate that the defendant acted unfairly by terminating the process.
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52 The defendant relies on the terms of the process contract to support its position. In particular,cl 26 of the General Conditions of Contract, which entitles the defendant to cancel or replace the tender process and reserves to it the right not to accept any of the tenders, is said to preclude any claim based on the decision to recall the tenders. However, in Seddon, Government Contracts, (2nd Edition, Federation Press, 1999) at 241 - 242, on which the defendant relies, it is made clear that there are limitations on the scope of such provisions. For example, it is said that if it could be shown that the process was a sham, each tenderer would have a right of action for the wasted cost of continuing to prepare bids when, in reality, the government had decided to abandon the tender. That, of course, is not this case. However, as counsel for the plaintiffs submitted, the existence of such a disclaimer clause does not excuse a failure to observe the basic underlying obligation in a public tender to treat the parties fairly: Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469. Further, it is said that contractual rights of that kind must be exercised in good faith, reasonably and not capriciously: Dickson Property Management Services Pty Ltd v Centro Property Management (Vic) Pty Ltd (2001) 180 ALR 485, at 487, per Ryan J; White Industries Ltd v Electricity Commissioner of New South Wales, per Yeldam J at 30. On the plaintiff's argument the decision was not reasonably based because it took into account irrelevant considerations and flawed advice. The defendant submits that it cannot be said that a decision based on the advice of an independent consultant and on legal advice is unreasonable, even if that advice ultimately proves to be flawed. A contrary view would have significant ramifications for government contracting.
53 In view of the broad terms of cl 1.5.8 of the RFT and the concession made by the defendant that the criteria applied by the tender evaluation committee were in every case referred to in the RFT, I have some difficulties with the conclusions reached by Dr Michael in his report. However, it is not the court's role on an interlocutory injunction application to finally determine matters of fact and for that reason I make no finding as to whether Dr Michael's report is flawed. Suffice to say that I consider there to be some substance in the position taken on behalf of the plaintiff with respect to that report.
54 In considering whether the decision to recall the tenders was reasonably based consideration must also be given to the reasons given by Mr Di Pietro. Again, I consider there to be some substance to the submission that at least some factors taken into account by Mr Di Pietro
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- were inappropriate and could not provide a reasonable basis for the decision to recall the tenders.
55 It can be seen from this analysis of the countervailing arguments that I do not consider that the provisions of the process contract are a complete answer to any claim brought for breach of contract so as to conclude that there is not a serious question to be tried.
56 It is further submitted that cl 26(b) of the General Conditions of Contract creates a contract which extends only to the point where a recommendation is made. Since the decision under consideration occurred beyond that point in the tender process there can be no breach of contract. No authority was provided in support of that very narrow interpretation, the effect of which would be that there would be no entitlement to damages if the defendant acted wholly unfairly after the initial recommendation was made but before the process was completed. That point has some significance in the context of the issue of whether damages would be an appropriate remedy.
57 Finally, it is said that there is no unfairness because recalling the tenders does not affect any one particular tenderer; it affects all tenderers. I cannot accept that submission. The fact that all tenderers are affected by the decision does not mean that they are each affected in the same way or to the same extent. Irrespective of whether the plaintiffs were aware that they were the preferred tenderers, they are the only tenderers to suffer a detriment as a result of the decision. Further, the law requires that those conducting the tender process act fairly to each of the tenderers. It is at least arguable that this involves treating them equally. Conferring on Turfmaster, but not on the plaintiffs, a right to be heard does not constitute equal treatment.
58 As to the cause of action based on a denial of procedural fairness, the defendant relies primarily on the authorities and text to which I have already referred in support of the proposition that a tenderer who has not been formally notified that it is the recommended tenderer, has no legitimate expectation and no entitlement to procedural fairness. On the defendant's submission the plaintiffs had no more than a hope that it might be the successful tenderer: State of Victoria v Master Builders Association of Victoria, at 166. It is said that, while the tenderers are entitled to fair play, "the rules of the game are fairly basic". I think that this observation of Thomas J in KC Park Safe (Brisbane) Pty Ltd v Cairns City Council, at 505, is a succinct summary of the principles set out in the relevant authorities. Nevertheless, as was observed by his
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- Honour in relation to the construction of the term "legitimate expectation" (at 505):
"The scope of the term is, I think, deliberately left wide so that courts may intervene in appropriate cases but not so wide as to unnecessarily inhibit ordinary reasonable activities by governments and by statutory authorities."
60 In Cord Holdings Ltd v Burke, unreported; SCt of WA; SCL 5690; 22 January 1985, Smith J recognised that a legitimate expectation can arise where something is taken away from a party (at 17):
"The allegations in the statement of claim do not bring the plaintiff's case within the intermediate category of the English [legitimate] expectation cases. The decision merely refused to grant to the plaintiff a privilege which it sought and nothing was being taken from the plaintiff."
61 The real question then is whether the particular circumstances of this case, not found in any of the decided authorities, are such as to take the case beyond that of a mere hope and into the realm of a legitimate expectation. It may be a "somewhat slender point" but it does, in my view, constitute a serious question to be tried.
62 As to the final cause of action, it is said that the plaintiff has failed to identify any breach of the supply policies of the Commission. Insofar as it is said that there has been a breach of the requirement of transparency, good faith and fairness, it is disputed that the facts of this case constitute such a breach. In my view, there is a reasonable argument that terminating the tender in the circumstances which here apply, which include a failure to advise or invite comment from the entities directly and significantly adversely affected by that decision, breach the duty of fairness owed by government agencies applying policies which have the force of law.
63 The defendant submits that the plaintiffs are required to establish more than an arguable case; they must satisfy the court that there is some probability that at the end of the day they will be entitled to relief. The
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- test in Castlemaine Tooheys Ltd v South Australia, at 153 is that there is "a serious question to be tried". In American Cyanimid Co v Ethicon Ltd (1975) AC 396 there is a suggestion that the phrase "serious question to be tried" means no more than that the claim is not frivolous or vexatious (per Lord Diplock at 407). In Mott v Mount Edon Gold Mines (Australia) Ltd (1994) 12 ACLC 319, at 321, Owen J observed that there has been considerable debate as to the meaning of the expression "serious question to be tried" and expressed a reticence to attempt a more intricate definition. His Honour referred to the words of Dawson J in A v Hayden (1984) 56 ALR 73, at 79:
"... a court ought not to be misled by an overstrict application of verbal formulae to depart from its primary duty to do complete justice in the cause ...".
Whether damages are an adequate remedy
65 On behalf of the plaintiffs it is said that damages are not, in this case, an adequate remedy because of the difficulties in quantifying, not only the loss of losing the contracts but the consequential losses which will flow to the plaintiffs' businesses. The defendant submits that, in cases of claims by unsuccessful tenderers, damages are an appropriate and adequate remedy. Support for that proposition is said to be found in Pratt Contractors Ltd v Palmerston North City Council. However, a somewhat different view was taken by Byrne J in Willow Grange Pty Ltd & Anor v Yarra City Council at 14:
"I reject the submission put on behalf of the City of Yarra that in such a case an award of damages would suffice. In the event that Rantrack is successful at trial in establishing that the tender process was defective and should be quashed, the value of the lost right is problematic if not impossible to quantify. In essence the right which it has lost is a right to participate in a fair tender process and, if successful, to enjoy the profits from the business over the term of the lease.
66 In the end, I do not think it is necessary to determine whether damages are an appropriate remedy in this case. Only one of the plaintiffs' causes of action creates an entitlement to damages. The
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- procedural fairness or administrative law actions create no such entitlement. On behalf of the defendant it was submitted that the causes of action are inevitably linked. It is said that if the plaintiffs succeed in establishing that they have been denied procedural fairness they will have established a breach of the process contract which would entitle them to damages. I do not accept that submission. In any event it is substantially undermined by another of the defendant's submissions that the process contract terminates once the recommendation is made by the tender evaluation committee. As the decision upon which the plaintiffs' action is based occurred after that point in time, a finding that the plaintiffs had been denied procedural fairness would not also constitute a breach of the process contract.
67 For these reasons I consider that it would not be just in all the circumstances to confine the plaintiff to the remedy of damages.
The balance of convenience
68 The plaintiffs have provided an undertaking as to damages and the difference between cost under the existing contract and the tender as awarded could be easily evaluated. The plaintiffs are presently providing the services to the defendant as a continuation of existing contracts. It is accepted that the services are being provided to an acceptable standard. If the injunction is granted, the plaintiff will continue to provide the services until the action is concluded. The defendant, and the public to whom it is responsible, will therefore suffer no tangible detriment if the injunction is granted. However, if the injunction is not granted the plaintiffs suffer the detriment of no longer being remunerated for providing the services and consequential losses to their respective business. Further, although entitled to participate in any new tender process, the information which has now been passed to competing tenderers has the potential to adversely affect the plaintiff's prospects of replicating its "success" in the initial Round 2 process.
69 When alerted to those competing outcomes, counsel for the defendant properly conceded that the balance of convenience favours the plaintiffs.
70 As I have already determined that there is a serious question to be tried and that damages would not be an adequate remedy, the result is that the appropriate course is to grant the injunction sought by the plaintiffs.
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71 I am, however, concerned to ensure that the parties and others who have an interest in the outcome of the aborted tender process should remain in a state of limbo for as short a period of time as possible. For that reason, before granting the injunction I would seek from the plaintiffs an undertaking that the action be formally expedited. That will require no more than the bringing of an application to have the action included in the expedited list. It will then be for the court to determine at the time of the hearing of that application whether this action is an appropriate one for inclusion in the list.
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