Southern Waste Resourceco Pty Ltd v Adelaide Hills Region Waste Management Authority [No 3] - [2019] SASC 192

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SOUTHERN WASTE RESOURCECO PTY LTD v ADELAIDE HILLS REGION WASTE MANAGEMENT AUTHORITY [NO 3]
[2019] SASC 192
Judgment of The Honourable Justice Hinton
15 November 2019
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - MISLEADING OR DECEPTIVE CONDUCT GENERALLY - GENERALLY
A waste disposal facility, or landfill, located at Hartley in South Australia was owned by the Harvey family (the Harveys). Prior to 13 February 2013, the Hartley landfill was operated by the defendant, the Adelaide Hills Region Waste Management Authority (the Authority), a regional subsidiary established under s 43 of the Local Government Act 1999 (SA) by four councils: the District Council of Mount Barker (DCMB), the Rural City of Murray Bridge (RCMB), the Adelaide Hills Council (AHC) and the Alexandrina Council (AC) (collectively, the constituent councils). The constituent councils disposed of the kerbside waste that they collected from their council areas at the Hartley landfill.
The Authority operated the Hartley landfill pursuant to a licence agreement with the Harveys which was originally entered into in 1991 for an initial period of 10 years, with two rights of renewal for a period of 10 years each. In 2011 the Authority sought to exercise the second right of renewal. The Harveys claimed that the Authority’s purported exercise of this right was void. In particular, the Harveys claimed that the Authority had committed breaches of the licence.
The Harveys and the Authority attempted to negotiate the dispute. Whilst the dispute was ongoing, the Harveys spoke to representatives of the plaintiff, Southern Waste ResourceCo Pty Ltd (SWR), a body corporate whose principal business was in the treatment, recycling and disposal of waste. In August 2012, SWR and the Harveys executed two deeds, a Landfill Deed and a Litigation Management and Funding Deed. The former deed granted SWR a licence to operate the Hartley landfill subject to the Authority vacating the land, whilst the latter provided for the subjugation of the Harveys’ rights and interests in the dispute with the Authority to SWR. Thus, from August 2012, SWR assumed responsibility for negotiations with the Authority.
Negotiations between SWR and the Authority were conducted in the course of meetings on 14 September 2012, 5 November 2012 and 12 November 2012, an onsite meeting at Hartley on 23 October 2012, and by way of correspondence, primarily between solicitors for SWR, and the Authority. Throughout its negotiations with SWR, the Authority continued to occupy and operate the Hartley landfill.
As a consequence of its dispute with SWR and the Harveys, the possibility arose that the Authority would lose access to the Hartley landfill, which threatened the security of the waste disposal service that the Authority provided to the constituent councils. As a consequence, the Authority determined to re-establish a landfill site at Brinkley in Murray Bridge as a back-up in the event that the negotiations over the Hartley site resulted in the Authority having to vacate that landfill. By February 2013 the Brinkley landfill was available to receive waste.
An agreement between SWR and the Authority was eventually reached and reduced to two deeds, both executed on 11 February 2013. The effect of the two deeds was, inter alia, that the Authority would vacate the Hartley landfill on 13 February 2013, and in return SWR would pay the Authority the sum of $990,000 and assume responsibility for operating the Hartley landfill, including responsibility for all past, present and future environmental liabilities.
During negotiations SWR was told that the Authority did not control where the constituent councils disposed of their waste and that it was for the councils to determine where they disposed of their waste. SWR was also told that it could approach the constituent councils in an effort to contract with them for the disposal of their waste streams at Hartley. Securing the disposal of a sufficient quantity of the constituent councils' waste was important to SWR's assessment of the opportunity that the Hartley landfill provided. SWR considered that the location of the landfill would likely result in at least AHC and DCMB disposing of their waste at Hartley. Immediately upon settlement AHC and RCMB ceased disposing of their waste at Hartley. In July 2013 DCMB also ceased disposing of its waste at Hartley and in April 2014 AC followed suit.
SWR instituted these proceedings claiming that the Authority had engaged in misleading or deceptive conduct during the course of its negotiations with SWR contrary to s 18 of the Australian Consumer Law. The first aspect of SWR’s primary case was that the Authority informed SWR that it did not control where the constituent councils chose to dispose of their waste and that SWR was free to approach the constituent councils, knowing that SWR’s interest in operating the Hartley landfill was linked to SWR securing the constituent councils’ waste streams. Thus, it was contended, the Authority implicitly represented that the constituent councils were not bound in any way to dispose of their waste with the Authority and that the Authority would not interfere with any attempt made by SWR to attract the constituent councils’ custom. The second aspect of SWR’s primary case was one of the non-disclosure of information that the Authority knew or ought to have known would be material to SWR’s assessment of whether to enter into the deeds on 11 February 2013 in circumstances giving rise to a duty on the part of the Authority to make such disclosure. A further and discrete aspect of SWR’s case concerns representations specifically made in relation to the remaining available airspace in cell 6 at the Hartley landfill. In particular, SWR pleads that the Authority made erroneous representations and warranties regarding the write down asset value of cell 6, and its immediately available and future capacity by representing and warranting that it had an immediately available capacity of 11,000 m3 and would have a further 134,000 m3 available upon construction of cell 7, when in fact it had substantially less immediately available and future capacity.
In relation to its primary claim, SWR pleads that it was misled or deceived by the Authority and its officers into thinking that it would be able to negotiate with the constituent councils to attract their waste to Hartley, when, it is claimed, the Authority had a pre-existing contract, arrangement or understanding with the constituent councils to the effect that the councils were committed to disposing of their waste at the Authority’s landfill facility at Brinkley. Had SWR known that the constituent councils would always be committed to disposing of their waste with the Authority, it would not have entered into the two deeds on 11 February 2013. With regard to the representations made in relation to cell 6, SWR pleads that it was misled or deceived by the Authority in relation to the immediately available and future capacity of cell 6 as well as its write down asset value and contended that it would not have paid what it did in compensation had it known the true position. SWR seeks to recover the losses it claims to have suffered as a result of the Authority’s alleged misleading and deceptive conduct. In the alternative, SWR contends that the same representations and warranties pleaded in support of its misleading or deceptive conduct claim constitute a contravention of s 7 of the Misrepresentation Act 1972 (SA) entitling SWR to damages.
The Authority defended the claim on the basis that there was no misleading or deceptive conduct on its part, and that there was no contravention of s 7 of the Misrepresentation Act 1972 (SA). In particular, the Authority denied making the representations and warranties pleaded, and denied that SWR was entitled to the relief it seeks, instead claiming that SWR failed to put offers to the Authority and the constituent councils which the councils considered outweighed the benefits of continuing to dispose of their waste streams with the Authority. Furthermore, the Authority submits that the proceedings were instituted for an ulterior or collateral purpose or because SWR has been delinquent and acted unreasonably in the conduct of the proceedings.
Held, dismissing the claim:
1. The defendant did not engage in misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law, as a law of the Commonwealth and as a law of this State.
2. The defendant did not contravene s 7 of the Misrepresentation Act 1972 (SA).
3. The proceedings were not an abuse of process.
Acts Interpretation Act 1901 (Cth) s 17; Acts Interpretation Act 1915 (SA); Competition and Consumer Act 2010 (Cth) ss 2, 4, 5, 6, 18, 84, 87, 130, 131, 139, 236; Environment Protection Act 1993 (SA) ss 37, 49, 103; Fair Trading Act 1987 (SA) ss 13, 14, 22; Government Business (Competition) Act 1996 (SA) s 16; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA); Local Government Act 1999 (SA) ss 4, 43, 48, 49, 91, 99, 109; Local Government (Procedures at Meetings) Regulations 2000 (SA); Misrepresentation Act 1972 (SA) s 7; Supreme Court Civil Rules 2006 (SA) r 100; Trade Practices Act 1984 (Cth) ss 18, 52, referred to.
Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; Banque Commerciale SA (In liq) v Akhil Holdings Ltd (1990) 169 CLR 279; British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 1 WLR 727; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; Cummings v Lewis (1993) 41 FCR 559; Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 ; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; Macks v Viscariello (2017) 130 SASR 1; Maxcon Constructions Pty Ltd v Vadasz (2017) 127 SASR 193; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; Vines v Djordjevitch (1955) 91 CLR 512; Software Integrators Pty Ltd v Roadrunner Couriers Pty Ltd (1997) 69 SASR 288; Sykes v Reserve Bank of Australia (1998) 88 FCR 511; Watson v Foxman (1995) 49 NSWLR 315; Williams v Spautz (1992) 174 CLR 509, considered.

SOUTHERN WASTE RESOURCECO PTY LTD v ADELAIDE HILLS REGION WASTE MANAGEMENT AUTHORITY [NO 3]
[2019] SASC 192
Civil
HINTON J:
Contents
Introduction
A.     A brief overview
B.    The players
C.    SWR, ResourceCo and the waste industry
D.    The Authority
E.     SWR’s claim
Preliminary Matters
A.     Pleading issues
a.        Introduction
b.        The Australian Consumer Law
c.        SWR’s pleaded case
d.        Should the Second Statement of Claim be amended?
e.        Is the Authority a trading corporation?
B.    The standard of proof
C.    The view
Misleading and deceptive conduct — the applicable principles
A.     Introduction
B.    Conduct
C.    In trade or commerce
D.    That was misleading and deceptive or likely to mislead and deceive
The evidence to 13 February 2013
A.     The Future Directions Study, Mr Lorenz’s employment, the 2007 council resolutions and the Authority’s 10-year Strategic Plan
a.        The Future Directions Study
b.        The 2007 council resolutions
i.        District Council of Mount Barker
ii.       Alexandrina Council
iii.     Adelaide Hills Council
iv.      Rural City of Murray Bridge

c.        Mr Lorenz’s appointment by the Authority
d.        The report of the Authority’s Chair to the 2007 annual general meeting
e.        The 10-year Strategic Plan and the constituent councils’ waste strategies
f.    Consideration
B.    The Authority and Hartley (1991-2011)
C.    The Harveys and the Authority in dispute
a.        The dispute over the 2011 right of renewal
b.        Consideration
D.    The re-establishment of Brinkley
E.     SWR becomes involved in the Authority’s dispute with the Harveys
a.        Mr Brown
b.        Mr Lucas
c.        The Litigation Management and Funding Deed and the Landfill Deed
d.        Consideration
F.     The negotiations between SWR and the Authority
a.        The meeting at Murray Chambers on 15 August 2012
i.        An overview
ii.       Consideration

b.        Mr Levinson’s email of 13 September 2012
c.        The first meeting at Wallmans (14 September 2012)
i.        Mr Levinson
ii.       Mr Brown
iii.     Mr Lucas
iv.      Mr Pucknell
v.        Mr Lorenz
vi.      Mr Grenfell
vii.     Mr Coleman
viii.     Mr Levinson’s letter of 14 September 2012
ix.      Consideration

d.        The negotiations continue
i.        The negotiations continue via correspondence
ii.       Consideration

e.        The 23 October 2012 site meeting at Hartley
i.        Mr Brown
ii.       Mr Lucas
iii.     Mr Lorenz
iv.      Consideration

f.    The second meeting at Wallmans (5 November 2012)
i.        Mr Brown
ii.       Mr Levinson
iii.      Mr Pucknell
iv.      Mr Lorenz
v.        Mr Salver
vi.      Mr Coleman
vii.     Consideration

g.        The negotiations continue
i.        The negotiations continue via correspondence
ii.       Consideration

h.        The third meeting at Wallmans Lawyers (12 November 2012)
i.        Mr Brown
ii.       Mr Lucas
iii.     Mr Levinson
iv.      Mr Pucknell
v.        Mr Lorenz
vi.      Mr Salver
vii.     Mr Coleman
viii.     Botten Levinson’s letter of 13 November 2012
ix.      Consideration

G.    SWR gets before the constituent councils
a.        The 22 November 2012 meeting at AC
i.        An overview of the meeting
ii.       Consideration

b.        The 22 November 2012 meeting at DCMB
i.        An overview of the meeting
ii.       Consideration

c.        The 6 December 2012 meeting at AHC
i.        An overview of the meeting
ii.       Consideration

d.        A meeting with RCMB?
e.        Consideration
H.    The Authority and the constituent councils August 2012 – February 2013
Consideration

I. The deed negotiations
Consideration

Post-settlement
A. 11 February 2013 – 30 June 2013
Consideration

B.    1 July 2013 – 30 April 2014
C.    Consideration
A hotchpotch of matters
A.     The constituent councils’ decision of where to dispose of their waste — the relevant factors
a.        Mr Stuart
b.        Mr Grenfell
c.        Mr Salver
d.        Mr Aitken
e.        Consideration
B.    Procurement Policy
a.        District Council of Mount Barker
b.        Alexandrina Council
c.        Adelaide Hills Council
d.        The Authority
e.        Consideration
C.    Prudential policy
a.        District Council of Mount Barker
b.        Alexandrina Council
c.        Adelaide Hills Council
d.        The Authority
e.        Consideration
D.    Competitive neutrality
a.        District Council of Mount Barker
b.        Alexandrina Council
c.        Adelaide Hills Council
d.        The Authority
e.        Consideration
E.     The Ditkuns’ evidence
a.        Anthony Ditkun
b.        Joanne Ditkun
c.        Consideration
F.     Mr Heard’s evidence
a.        Evidence on the voir dire
b.        Consideration
G.    Mr Brown’s visits to Brinkley
Findings
Cell 6
A.     Introduction
B.    The representations in context
a.        The documentary evidence
b.        The oral evidence
i.        Mr Brown
ii.       Mr Lucas
iii.     Mr Manning
iv.      Mr Jarvis
v.        Mr Lorenz
vi.      Mr Coleman

C.    Consideration
In trade or commerce?
The claim under the Misrepresentation Act 1972 (SA)
Orders
Abuse of process?
A.     Was the action an abuse of process?
B.    Consideration

Note: References to pages of the transcript have been included in parentheses in the body of the text.
I
Introduction
The plaintiff, Southern Waste ResourceCo Pty Ltd (SWR or Southern Waste ResourceCo), instituted these proceedings to recover losses it claims to have suffered as a result of misleading and deceptive conduct engaged in by the defendant, the Adelaide Hills Region Waste Management Authority (the Authority or AHRWMA). The conduct allegedly occurred in the course of negotiations that resulted in the execution of two deeds that saw the Authority vacate a waste landfill situated at Hartley in the Adelaide Hills (the Hartley landfill or Hartley) and SWR assume responsibility for the operation of that landfill and all related environmental liabilities.
Under the deeds, in exchange for the Authority agreeing to vacate the Hartley landfill by 5 pm on 13 February 2013, SWR agreed to take vacant possession of the site, to pay the Authority the sum of $990,000 (inclusive of GST), and, in effect, to assume all responsibility for all environmental obligations and liabilities arising from the site, past, present and future. Statements made by officers of the Authority allowed SWR to believe that it would have a genuine opportunity to persuade the councils that had established the Authority to continue to dispose of the household waste they collected to the Hartley landfill when, it is alleged, there in fact existed an arrangement or agreement that the councils would take their waste to the Authority’s facility at Brinkley near Murray Bridge.
As a result of the alleged misleading and deceptive conduct SWR claims to have suffered loss being the difference between what it paid and the true value of what it obtained.
In my view, I would dismiss the claim. My reasons follow.
A. A brief overview
The Authority was established by four councils for the purpose of providing waste management services to those councils and the people who lived and worked within the collective area of those councils. The four councils were the Adelaide Hills Council (AHC), the District Council of Mount Barker (DCMB), the Rural City of Murray Bridge (RCMB) and the Alexandrina Council (AC) (collectively the member councils or the constituent councils).
Since 1991 the Authority operated the Hartley landfill pursuant to a licence granted to it by the then landowner, Herbert Harvey. The licence agreement was for an initial period of 10 years commencing November 1991, with a right to renew in 10 years and a second right to renew after a further 10 years. The constituent councils disposed of the kerbside waste they collected from their council areas at the Hartley landfill.
In 2001 the Authority renewed the licence. In 2011 the Authority sought to do so a second time. By this time Mr Harvey had died leaving the Hartley site to his three sons — Ian, Robin and Darrell. Darrell subsequently died leaving his interest in the Hartley site to his wife, Christine. Hereafter, where I refer to the Harveys, unless otherwise indicated, I should be taken as referring to Robin, Ian and Christine Harvey.
A dispute arose between the Harveys and the Authority which, the Harveys contended, had the consequence that the purported exercise of the 2011 right of renewal was void. More particularly, the right of renewal was conditional on the continuing compliance of all conditions of the licence pursuant to which the site had been occupied including the applicable licence issued under the Environment Protection Act 1993 (SA) (the EPA Act). The Harveys claimed that breaches of the licence had been and were being committed.
The Authority is a regional subsidiary established under s 43 of the Local Government Act 1999 (SA) (the LGA). Under the Authority’s Charter (the Charter) its functions included to facilitate and coordinate waste management including collection, treatment, disposal and recycling within the collective area of the constituent councils and to provide and operate a place or places for the treatment, recycling and disposal of waste collected. The Authority enjoyed legal personality independent of the constituent councils and the constituent councils, despite establishing the Authority, were not constrained to conduct functions delegated to the Authority by or through the Authority.

Throughout much of 2011 and the first half of 2012 the Authority and the Harveys attempted to negotiate the settlement of the dispute amongst themselves. In time lawyers became involved. One aspect of the dispute was the adequacy of the royalty the Authority paid to the Harveys. During the course of the dispute the Harveys spoke to representatives from SWR. In August 2012 SWR and the Harveys executed two deeds, a Landfill Deed and a Litigation Management and Funding Deed. The former granted to SWR a licence to operate the Hartley landfill for a term of 20 years with a right of renewal for a further 10 years, subject to the Authority vacating the land, in return for the payment of a royalty. The latter provided for the subjugation of the Harveys’ rights and interests in the dispute with the Authority to SWR with SWR undertaking to use its best endeavours to have the Authority vacate the site including, if necessary, litigating. Accordingly, from August 2012 SWR assumed all responsibility for negotiations with the Authority.
Throughout the negotiation of the dispute with the Harveys, and subsequently with SWR, the Authority continued to occupy and operate the Hartley landfill.
The negotiations between SWR and the Authority were conducted in the course of meetings on 14 September 2012, 5 November 2012 and 12 November 2012, an onsite meeting at the Hartley landfill on 23 October 2012, and by way of correspondence, primarily between solicitors. Eventually, a compromise was reached. That compromise was reduced to two deeds, a Deed of Settlement and a s 103E Deed,[1] both executed on 11 February 2013. The essence of those deeds was that the Authority vacated Hartley on 13 February 2013 in return for the payment of $990,000 (inclusive of GST) and SWR assuming responsibility for the operation of the landfill from that date, including assuming responsibility for all environmental liabilities, past and future.
[1] Environment Protection Act 1993 (SA), s 103E.
The dispute with the Harveys and the associated possibility that the Authority would lose access to the Hartley landfill threatened the security of the waste disposal service provided by the Authority to the constituent councils. This caused the Authority to consider alternate possibilities. One such possibility was a landfill at Brinkley, a short distance from Murray Bridge, owned by RCMB and not then in use. The Authority determined to re-establish the Brinkley site during the negotiations over the Hartley site as a back-up in the event that the dispute resulted in the Authority leaving Hartley.
In the absence of the two larger constituent councils (AHC and DCMB) disposing of their waste at Hartley, Hartley ceased to be a viable landfill. SWR found itself in possession of a liability. In taking on the Hartley landfill SWR always thought it would be able to negotiate with the constituent councils on a commercial basis to attract their waste to Hartley. At the risk of oversimplification, SWR claims that it was misled or deceived by the Authority and its officers into thinking that such commercial deals could be done when the true position was that the constituent councils were always committed to disposing of their waste with the Authority. Had SWR known the true position, it would not have gone through with the execution of the Deed of Settlement and the s 103 Deed.
The Authority contends that there has been no misleading or deceptive conduct. Rather, it contends that SWR has failed to put offers to the Authority and the constituent councils which the councils considered outweighed the benefits of continuing to dispose of their waste streams with the Authority.
B. The players
It is convenient to identify in one place the people involved in, or referred to, in this case. The following people are those who gave evidence:
·Andrew Aitken, Chief Executive Officer Adelaide Hills Council and former Board member AHRWMA;
·Simon Brown, Southern Waste ResourceCo Managing Director;
·Robert Coleman, AHRWMA Site Manager;
·James Fairweather, Southern Waste ResourceCo Sales and Marketing Director up until June 2014;
·Simon Grenfell, General Manager of Engineering and Environment Alexandrina Council and AHRWMA Board member;
·John Heard, former Chairman of the Executive Committee of the ResourceCo Group;
·Stuart Hollingworth, ResourceCo Pty Ltd Chief Financial Officer;
·Brett Jarvis, Southern Waste ResourceCo Site Manager;
·James Levinson, Partner of Botten Levinson Lawyers;
·Michael Lorenz, Executive Officer AHRWMA;
·David Lucas, Southern Waste ResourceCo Director/Lucas Earthmovers;
·Andrew Manning, Group Environment Manager Southern Waste ResourceCo;
·Christopher Pucknell, Southern Waste ResourceCo Chief Financial Officer until January 2015;
·Marc Salver, Director for Strategy and Development Adelaide Hills Council and AHRWMA Board member; and
·Andrew Stuart, Chief Executive Officer District Council of Mount Barker.
The following people did not give evidence, but are referred to in the evidence:
·Ian Bailey, Board member AHRWMA and Councillor Adelaide Hills Council;
·Peter Bond, former Chief Executive Officer Rural City of Murray Bridge and Board member AHRWMA;
·Anthony Brazzale, Sales Manager Southern Waste ResourceCo;
·Peter Dinning, Chief Executive Officer Alexandrina Council;
·Bob England, Board member AHRWMA and Councillor Rural City of Murray Bridge;
·Peter Fisher, lawyer for AHRWMA;
·Richard Fricker, Clay and Mineral Sales Director;
·Erin Gillespie, staff member District Council of Mount Baker and AHRWMA;
·Tim Hancock, Director of Engineering Adelaide Hills Council;
·Christine Harvey, site owner, widow of late Darrell Harvey;
·Darrell Harvey, brother of Ian and Robin, husband of Christine;
·Herbert Harvey, father of Robin, Darrell and Ian;
·Ian Harvey, site owner;
·Robin Harvey, site owner;
·Brian Hayes QC, counsel for the Authority;
·Peter Hein, surveyor Allsurv;
·Trevor Hockley, TJH Management Services (consultant to Rural City of Murray Bridge and AHRWMA);
·Norm Key, staff member District Council of Mount Barker and Board member AHRWMA;
·Jason Kerr, Fleurieu Regional Waste Authority Operational Manager;
·Barry Laubsch, former Chairperson AHRWMA and Councillor Rural City of Murray Bridge;
·Ben Lucas, Chief Executive Officer Lucas Earthmovers;
·Scott Lumsden, Partner of Wallmans Lawyers;
·Leah Maxwell, Board member AHRWMA and Waste Strategy Coordinator, AHRWMA;
·David McMahon, Director ResourceCo Holdings;
·Alan Oliver, Board member AHRWMA and Councillor Alexandrina Council;
·Peter Peppin, former Board member AHRWMA and Chief Executive Officer Adelaide Hills Council;
·David Peters, General Manager Corporate Services District Council of Mount Barker and Board member AHRWMA;
·Tim Piper, Director of Finance Adelaide Hills Council and Board member AHRWMA;
·Robert Prime, KPMG;
·Clinton Ramm, Knight Frank real estate agent;
·Michael Roder SC, counsel for Southern Waste ResourceCo;
·Bill Rudd, Botten Levinson Lawyers;
·James Sexton, RE/MAX Hills and Country, real estate agent;
·Lyn Stokes, Chairperson AHRWMA and Councillor District Council of Mount Barker;
·Marina Wagner, Manager and Executive Officer Fleurieu Regional Waste Authority;
·Madeleine Walker, Board member AHRWMA and Councillor Alexandrina Council;
·Sarah Welsh, AHRWMA and TJH Management Services; and
·Simon Westwood, Board member AHRWMA, and Councillor District Council of Mount Barker.
It is also convenient to note that at all material times the Authority has been represented by Wallmans Lawyers (Wallmans) and SWR and the Harveys by Botten Levinson, Lawyers (Botten Levinson).
C. SWR, ResourceCo and the waste industry
SWR was incorporated on 1 June 2011.[2] As at 3 March 2016 the company had four directors — Benjamin Lucas, David Lucas (father of Benjamin Lucas), Simon Brown and Benjamin Sawley.[3] Mr Sawley became a director in March 2015 after the retirement of Christopher Pucknell who had been a director since 2011.[4] Thus at the material time the directors of SWR were Mr Brown, Mr Pucknell, Mr David Lucas and his son, Mr Benjamin Lucas. Further, Mr Brown was the Managing Director of SWR,[5] Mr Benjamin Lucas the company secretary,[6] and Mr Pucknell, until his retirement in 2015, the Chief Financial Officer.[7] Mr Benjamin Lucas played no meaningful part in the negotiations leading up to SWR’s acquisition of the Hartley landfill. That decision was ultimately made by Mr Brown in consultation with Mr David Lucas. Mr Pucknell, whilst a director, in truth fulfilled the role of advisor. Mr Brown had primary carriage of the negotiations resulting in SWR’s acquisition of Hartley.[8] Hereafter wherever I refer to Mr Lucas I should be taken as referring to Mr David Lucas unless I state otherwise.
[2]    Ex P1: 3.
[3]    Ex P1: 3.
[4] Ex P22 at [3]; Ex P23 at [4]; Ex P34 at [3].
[5] Ex P23 at [1].
[6]    Ex P1: 3.
[7] Ex P34 at [1].
[8]    Ex P23.
As at 3 March 2016 all shares in SWR were held by two other corporate entities — Lucas Waste Management Pty Ltd and ResourceCo Holdings Pty Ltd.[9] SWR was, in effect, a joint venture company brought into existence when ResourceCo bought a 50% share of the landfill assets at McLaren Vale owned by the Lucas’ companies. (576) The Lucas’ companies and Mr David Lucas had experience in the operation of landfills, including the construction of cells for the receipt and disposal of waste on such sites. (578) ResourceCo, on the other hand, had a sales and marketing team and expertise in recycling and the processing of waste. (578-579)
[9] Ex P1: 3.
SWR has operated since 1 August 2011.[10] In his statement Mr Brown advised that SWR’s principal business was the treatment, recycling or disposal of various forms of waste.[11] In his oral evidence Mr Brown described the waste industry, which he had been involved in for 23 years,[12] as a mature industry and a logistics industry. (557) The latter description reflected the fact that the industry revolved around the collection, transportation and disposal of waste. Mr Brown added that the industry was extremely competitive and was a high-barrier-to-entry industry because the cost involved in providing services at any step — collection, transportation, processing and disposal — were significant; trucks, transfer stations, processing equipment and landfills were required. (559)
[10] Ex P23 at [6].
[11] Ex P23 at [7].
[12] Ex P23 at [2].
ResourceCo and SWR were involved in the waste industry at the transfer station stage in the process (upstream of collection). ResourceCo and SWR operated transfer stations which they called receivable facilities, one of which was located at Lonsdale. (559-579) Transfer stations allowed for smaller waste loads to be aggregated close to the collection point before being transported by larger trucks to landfill or processing facilities thereby reducing cost. (559) Mr Brown said that the industry was that competitive that the location of transfer stations was strategically important in that the closer they were to the point of collection the lower transportation costs became. (559)
In more recent times landfill levies had given impetus to the development of the recycling industry. It was in the area of recycling that ResourceCo’s business had grown. (558) I understood Mr Brown to be saying that one reason for the formation of SWR was to take advantage of the growth in the recycling industry. In short, SWR would extract from waste resources that could be on-sold. (558) In this connection SWR operates a number of sites in metropolitan Adelaide, sites at McLaren Vale and, since February 2013, the Hartley landfill.[13]
[13] Ex P23 at [7]-[8].
As mentioned, government imposed levies on the disposal of waste to landfill served as an incentive for the development of the recycling industry upstream from collection. (560) In South Australia two levies applied to the disposal of waste to landfill — a metropolitan levy of $57 a tonne and a country levy calculated as 50% of the metropolitan levy. (560) The levy was collected by landfill operators and payable to the Environment Protection Authority (the EPA). Mr Brown said that the industry was actively lobbying for the levy to be increased to provide greater incentive to the recycling industry to expand and develop. (560) Mr Brown provided an example of how ResourceCo had developed a process whereby the combustible component of waste was processed and sold as a fuel to the cement and power industries. A by-product of this process was the creation of what is known as trommel fines, a type of soil. (561) In all, he estimated the facility recycled about 96 per cent of waste and sent the balance to landfill. (561)
Mr Brown informed the Court that after working closely with regulators, trommel fines had been approved for use as daily cover at SWR’s landfills at Hartley and McLaren Vale. (562) Daily cover is a layer of soil that is placed over the top of waste deposited in a landfill at the end of each day to prevent the waste blowing off site and as a means of controlling vermin and odour. With respect to the use of trommel fines, the question that was yet to be determined was whether their use as daily cover was subject to the levy. (562) If trommel fines turned out to be leviable that would affect the cost-effectiveness of their use as cover. (563) Consequently, pending the EPA’s decision, trommel fines were only used by SWR as cover at McLaren Vale but were stockpiled at Hartley for future use. (563)
Mr Brown gave evidence that from his experience the typical metropolitan rate per tonne for the disposal of waste to landfill during 2011-2012 was around $80. Without the levy that would equate to $50-$55 per tonne. He further explained that competition was tight within the industry due to an oversupply of facilities vying for business. That created downward pressure on price. Whilst levies had gone up the cost to the consumer of disposing of waste to landfill had plateaued. The consequence was that to operate a profitable business owners were compelled to reduce costs. In this regard the ResourceCo model, which involved disposing to landfill only what was needed in preference for recycling, was advantageous. (564)
The cost to dispose of waste to landfill is generally published on the internet by landfill operators. Despite that, larger customers will not pay the published rate. Generally, landfill operators will enter into long-term relationships with large customers, being those customers with large volumes of waste to dispose of such as councils. A long-term relationship would involve a price for disposal over a period exceeding 10 years. In this connection Mr Brown said that he worked closely with his sales and marketing staff. (565)
The benefit of a long-term deal was that it provided certainty in relation to the future of the landfill asset and certainty in relation to the cost structure involved in running the asset. From a customer’s point of view, the longer the term of the contract, the better the price they would receive. (566)
Mr Brown said that the location of landfills is what drives a landfill operator’s customer base. Location dictated a landfill’s usage. If a landfill was in the right location and strongly patronised, it allowed for potential to build a manufacturing plant. (567) He said location was all about transport costs. (568)
Whether a customer was in a position to negotiate rates with a landfill operator depended, amongst other things, upon the waste tonnage that they would dispose of to the landfill. Normally, a discounted rate would be set on the basis of the guaranteed receipt of a minimum tonnage of waste. Mr Brown said that negotiations could commence if the customer was in a position to dispose of 5,000 tonnes of waste a year. If such customer was prepared to lock their waste in for five years, you would be able to have a sensible discussion about a long-term fixed rate subject to the Consumer Price Index (CPI). (568) The rate would be fixed dependent upon volume, transport, location and the nature of the waste. (569)
Mr Brown advised that in the waste industry waste is divided into categories. Those categories include construction and demolition waste and municipal waste. Construction and demolition waste comprised the largest sector nationally. It consisted primarily of concrete, asphalt and brick which could be processed into alternate quarry products. The majority of waste from building demolition would now be recycled. There was also a commercial and industrial waste sector which was growing. (569) Commercial and industrial waste included cardboard, paper, plastic, carpet and textiles. (570)
Mr Brown said that household or municipal waste was decreasing due to the greater emphasis upon recycling. With the reduction in the amount of municipal waste to landfill comes increased competition. Currently, councils are investigating methods of separating the organic fraction of municipal waste from the inorganic. Once the organic is taken out, the balance is recyclable. Once waste is recyclable it can be processed and commodified. The result is a reduction of cost and the reduction of waste disposed to landfill. (570-571) For the metropolitan areas the amount of waste disposed of to landfill was decreasing. Outside the metropolitan areas the amount of waste disposed of to landfill had probably stagnated. (571)
A further category of waste was soil or fuel. SWR and ResourceCo did a lot of soil management, soil treatment and soil disposal in Adelaide, Melbourne and Sydney. The market was evolving rapidly. (571) Some soil may be contaminated and require treatment before being disposed of or used at another site. Contaminated soils are separated from clean soils. Clean soil may be redirected to a different use almost immediately. (572) Re-use of contaminated soil depended upon the extent of contamination, the nature of the contaminant, and the cost of treatment. To manage the disposal of contaminated waste could prove expensive. (573)
Mr Brown turned to the issue of transport costs. Whether or not waste would be taken from the metropolitan area to Hartley as opposed to SWR’s site at McLaren Vale depended upon which site it was more cost effective to transport the waste to. In transporting waste to Hartley the cost and time taken for a truck to travel to the site had to be taken into account. Further, a truck travelling up the freeway would burn a lot more diesel than one that was not travelling uphill. Fuel usage and travel time impacted upon the transport cost per tonne. (575). Mr Brown said that it was the practice to calculate a transport cost per kilometre per tonne. He said: (575)
... that’s how you’ve got to break the cost of these projects down. I mean you win and lose these projects on the back of exactly that. So we’re pricing the northern connector at the moment and one of our sites is bidding against Penrice’s material at Angaston and our site is probably 10 ks closer and you know that can save a dollar a tonne which is what wins and loses these projects.
Prior to coming into contact with the Harveys, SWR was not looking to establish a site in the Mount Lofty Ranges/Adelaide Hills. SWR was focused on other opportunities closer to the metropolitan area.
Lastly, the operator of a landfill requires development approval from the relevant local authority, a licence from the EPA, and, unless the operator owns the relevant land, permission from the landowner before they can operate a landfill.
D. The Authority

The Authority is a regional subsidiary established under s 43 of the LGA.[14] It is not in dispute that the Authority was properly established nor that it is a body corporate enjoying legal personality. More particularly, under Sch 2 Pt 2 clause 18 of the LGA, the Authority is a body corporate, has the name assigned to it by its Charter,[15] has the powers, functions and duties specified in its Charter,[16] and holds property on behalf of the constituent councils.[17]
[14] Ex P1: 4 at cl 1.2.
[15] Ex P1: 4 at cl 1.1.
[16] Under Sch 1 Pt 2 cl 19 of the Local Government Act 1999 (SA) a charter must be prepared for a regional subsidiary by the constituent councils. The content of a charter must address those matters set out in Sch 2 Pt 2 cl 19(2) of the Act.
[17] See also Ex P1: 4 at cl 1.7.
Clause 1.4 of the Authority’s Charter set out objects and purposes of the Authority. It provided:
1.4 Objects and Purposes
The Authority is established for the following objects and purposes:
1.4.1to facilitate and co-ordinate waste management including collection, treatment, disposal and recycling within the Region;
1.4.2to develop and implement policies designed to improve waste management and recycling programmes and practices within the Region;
1.4.3to regularly review the Region’s waste management and recycling practices and policies;
1.4.4to provide and operate a place or places for the treatment, recycling and disposal of waste collected by or in the areas of the Constituent Councils;
1.4.5to develop further co-operation between the Constituent Councils in the collection, treatment, recycling and disposal of waste for which the Constituent Councils are or may become responsible;
1.4.6to minimise the volume of waste collected in the areas of the Constituent Councils which is required to be disposed of by landfill;
1.4.7to educate and motivate the community to achieve the practical reduction of waste through reuse and recycling initiatives;
1.4.8to be financially self sufficient,
and in doing so will give due weight to economic, social and environmental considerations.
The “Region” is defined in the Charter as the collective areas of the constituent councils.[18]
[18] Ex P1: 4 at cl 1.1.
In order to fulfil its objects and purposes the Charter conferred the following powers upon the Authority:
1.5 Powers
The powers, functions and duties of the Authority are to be exercised in the performance of the Authority’s objects and purposes. The Authority shall have those powers, functions and duties delegated to it by the Constituent Councils from time to time which include but are not limited to the following:
1.5.1to acquire, deal with and dispose of real and personal property (wherever situated) and rights in relation to real and personal property provided that it shall be a condition precedent that any such transaction may not incur a singular or a total liability of $250 000 or more without the prior approval of all of the Constituent Councils;
1.5.2to sue and be sued in its corporate name provided that any litigation is subject to an immediate urgent report to the Constituent Councils by the Executive Officer;
1.5.3 subject to Clauses 1.5.1, 1.5.12 and 1.6 of this Charter to enter into any kind of contract or arrangement;
1.5.4to borrow funds and incur expenditure in accordance with Clauses 1.5.1, 1.5.2 and 1.6 of this Charter;
1.5.5to establish a reserve fund or funds clearly identified for the upkeep and/or replacement of fixed assets of the Authority or for meeting any deferred liability of the Authority;
1.5.6to invest any surplus funds of the Authority in any investment authorised by the Trustee Act 1936, or with the Local Government Finance Authority provided that:
1.5.6.1in exercising this power of investment the Authority must exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of other persons; and
1.5.6.2the Authority must avoid investments that are speculative or hazardous in nature;
1.5.7to distribute profit to the Constituent Councils and where this power of distribution is exercised to do so on a proportionate basis in accordance with the Schedule of Constituent Council’s Interests in Net Assets as provided at Clause 7.2 of this Charter;
1.5.8to enter into agreements with the Constituent Councils for the purpose of operating and managing sites for the treatment, recycling and disposal of waste;
1.5.9to raise finance for all purposes relating to the collection, treatment, recycling and disposal of waste;
1.5.10to determine the types of refuse and waste which will be received and the method of collection, treatment, recycling and disposal of the waste;
1.5.11to enter into any kind of contract or arrangement to undertake projects and to undertake all manner of things relating to and incidental to the collection, treatment, recycling and disposal of waste, provided that any project with a value of $500 000 or more requires the prior approval of all the Constituent Councils;
1.5.12to commit the Authority to undertake a project in conjunction with any other Council or government agency and in doing so to participate in the formation of a trust, partnership or joint venture with the other body to give effect to the project provided that any project with a value of $500 000 or more requires the prior approval of all of the Constituent Councils;
1.5.13to employ, engage, remunerate, remove, suspend or dismiss the Executive Officer of the Authority;
1.5.14to open and operate bank accounts;
1.5.15to make submissions for and accept grants, subsidies and contributions to further its objects and purposes and to invest any funds of the Authority in any securities in which a Council may lawfully invest;
1.5.16to charge whatever fees the Authority considers appropriate for services rendered to any person, body or Council (other than a Constituent Council) provided that such fees charged by the Authority shall be sufficient to cover the cost to the Authority of providing the service;
1.5.17to charge the Constituent Councils fees for services that cover the cost to the Authority of providing the services;
1.5.18to do anything else necessary or convenient for, or incidental to, the exercise, performance or discharge of its powers, functions or duties.
For reasons that will become apparent, it is appropriate to highlight clauses 1.5.16 and 1.5.17 and the vesting of a discretion to charge fees above cost for services rendered save in relation to constituent councils who are to be charged fees that cover the cost to the Authority of providing the service.
Further, notwithstanding the powers conferred in the Authority, and its purposes and functions, under s 43(4) of the LGA the establishment of the Authority did not derogate from the power of a constituent council to act in a matter. This was re-affirmed in clause 8.6.1 of the Charter which stated:
8.6.1The establishment of the Authority does not derogate from the power of any of the Constituent Councils to act independently in relation to a matter within the jurisdiction of the Authority.
The governance of the Authority was the subject of clauses 2 and 3 of the Charter. Clause 2.1 provided that the Authority was a corporate body governed by a Board which had the responsibility of managing “the business and other affairs of the Authority ensuring that the Authority acts in accordance with this Charter”. Under clause 2.2 all meetings of the Authority were to be meetings of the Board, and under clause 2.3 the Board was empowered to make decisions in accordance with the powers and functions of the Authority established in the Charter and set out above.
Clause 3.2 dealt with the membership of the Board. The Board consisted of eight members, two appointed by each of the constituent councils, one being an elected member of the particular constituent council and the other being an employee of that council. Clause 3.2 also provided for the appointment of a deputy Board member who may act in place of a Board member appointed by a constituent council if that member was unable for any reason to attend a Board meeting.
Clause 3.2.5 of the Charter required that there be a Chairperson and deputy Chairperson of the Board. Those positions were to be elected by a ballot of the whole Board but must be drawn from those Board members who were also elected members of the constituent councils. The Chairperson was required to preside at all meetings of the Board and, in his or her absence, the deputy Chairperson acted in the office of the Chairperson.[19] If neither were able to attend a Board meeting, the Board would elect an acting Chairperson from amongst those Board members present who were elected members of the constituent councils.[20] The Chairperson and deputy Chairperson held their offices for 12 months, vacating them at the annual general meeting.[21] Each was eligible for reappointment.
[19] Ex P1: 4 at cl 3.2.7.
[20] Ex P1: 4 at cl 3.2.7.
[21] Ex P1: 4 at cl 3.2.6. As to the annual general meeting, see Ex P1: 4 at cl 3.7.
The term of office of each Board member was to be determined by the constituent council responsible for the Board member’s appointment.[22] At the conclusion of that term of office a Board member was eligible for reappointment.[23]
[22] Ex P1: 4 at cl 3.3.1.
[23] Ex P1: 4 at cl 3.3.1.
Clause 3.3.2 of the Charter dealt with the issue of when the office of a Board member became vacant. If such office did become vacant within the meaning of clause 3.3.2, the constituent council that appointed the Board member was responsible for appointing a replacement Board member.[24]
[24] Ex P1: 4 at cl 3.3.4.
The proceedings of the Board were dealt with in detail in clause 3.4 of the Charter in addition to Pt 2 of the Local Government (Procedures at Meetings) Regulations 2000 (SA). That is to say, the regulations applied to the proceedings of the Board save to the extent that they were modified by clause 3.4.[25]
[25] Ex P1: 4 at cl 3.4.1.
Under clause 3.4.2, subject to the special provisions of clause 3.4, no meeting of the Board could commence until such time as a quorum of members was present and no meeting could continue if a quorum of members was not present. A quorum was comprised of one half of the members in office, ignoring any fraction, plus one.[26] Under clause 3.4.3 attendance at a meeting could be effected electronically.
[26] Ex P1: 4 at cl 3.4.2.
Meetings of the Board were required to be open to the public unless the Board resolved to consider a matter in confidence in accordance with the provisions of Ch 6 Pt 3 of the LGA.[27] If a resolution was passed that a matter be considered in confidence, a note to that effect had to be made in the minutes of the fact of the resolution and of the grounds on which it was made.[28] If a matter was considered in confidence the Board could subsequently resolve to keep minutes and/or documents considered during that part of the meeting kept confidential under s 91 of the LGA.[29]
[27] Ex P1: 4 at cl 3.4.5.
[28] Ex P1: 4 at cl 3.4.5.
[29] Ex P1: 4 at cl 3.4.6.
All matters for decision at a Board meeting were to be decided by a simple majority of the members present and entitled to vote on the matter.[30] All members, including the Chairperson, were entitled only to a deliberative vote.[31] In the case of an equality of votes, the Chairperson did not possess a casting vote and the matter was deemed to have lapsed.[32]
[30] Ex P1: 4 at cl 3.4.7.
[31] Ex P1: 4 at cl 3.4.7.
[32] Ex P1: 4 at cl 3.4.8.
Clause 3.4.4 dealt with resolutions in writing made in the absence of a meeting. It provided:
3.4.4A proposed resolution in writing and given to all Board Members in accordance with proceedings determined by the Board will be a valid decision of the Board where a majority of Board Members vote in favour of the resolution by signing and returning the resolution to the Executive Officer or otherwise giving written notice of their consent and setting out the terms of the resolution to the Executive Officer. The resolution shall thereupon be as valid and effectual as if it had been passed at a meeting of the Board duly convened and held.
As will be seen, it was pursuant to the power contained in clause 3.4.4 that the Board entertained a resolution in writing facilitating the execution of the Deed of Settlement and s 103E Deed.
The frequency of meetings of the Board was a matter for the Board save that the Charter required there be at least one ordinary meeting in every four months.[33] Special meetings of the Board could be convened at any time at the request of the Chairperson or upon the written request of at least three members of the Board.[34] A notice of all meetings of the Board was to be given in accordance with the requirements applicable to a council under the LGA.[35]
[33] Ex P1: 4 at cl 3.4.9.
[34] Ex P1: 4 at cl 3.4.10.
[35] Ex P1: 4 at cl 3.4.11. See also Local Government Act 1999 (SA), s 83.
Under clause 3.4.12 the Executive Officer of the Authority was required to cause minutes to be kept of the proceedings of every meeting of the Board and to ensure that the minutes were presented at the next ordinary meeting of the Board for confirmation and adoption. If the Executive Officer was excluded from attendance at a meeting, the presiding member was required to cause the minutes to be kept.[36]
[36] Ex P1: 4 at cl 3.4.12.
The functions of the Board were set out in clause 3.1. It provided:
3.1 Functions of the Board
3.1.1The formulation of strategic and business plans in accordance with Clause 5 of this Charter and the development of strategies aimed at improving the business of the Authority.
3.1.2To provide policy direction to the Authority.
3.1.3Monitoring, overseeing and measuring the performance of the Executive Officer of the Authority.
3.1.4Subject to this Charter ensuring that the business of the Authority is undertaken in an open and transparent manner.
3.1.5Ensuring that ethical behaviour and integrity is established and maintained by the Authority and its Board Members in all activities undertaken by the Authority.
3.1.6Assisting in the development of strategic and business plans.
3.1.7Exercising the care, diligence and skill that a prudent person of business would exercise in managing the affairs of other persons.
3.1.8Developing and giving effect to policies that reflect the Authority’s responsibilities under the National Competition Policy (if applicable) and the Trade Practices Act.
3.1.9Ensuring that the Authority functions in accordance with its objects and purposes and within its approved budget.
Again, for reasons that will become apparent later in this judgment, and bearing in mind the obligation imposed by clause 3.1.8, under clause 1.3 of the Charter it was declared that the Authority not undertake any commercial activities that constituted a significant business activity of the Authority to which the principles of competitive neutrality must be applied. That declaration purportedly relieved the Authority of having to comply with the requirements of Sch 2 clause 32 of the LGA. The principles of competitive neutrality to which clause 1.3 and Sch 2 clause 32 of the LGA refer are those published under s 16 of the Government Business Enterprises (Competition) Act 1996 (SA). The principles are intended to neutralise the competitive advantage that a government agency or a local government agency engaged in significant business activities may have over private business operating in the same market by virtue of the fact of the agency being controlled by government or local government.[37] Clause 1.3 was, in effect, a declaration that the business activity engaged in by the Authority was not of a level of significance that the Authority had a competitive advantage over private business operating in the same market by virtue of the Authority being controlled by government or local government. It will be necessary to return to the application of the principles of competitive neutrality and competition policy later in these reasons.
[37] Government Business Enterprises (Competition) Act 1996 (SA), s 16(1).
Under clause 3.5 the Charter picked up and applied to Board members all provisions governing the propriety of conduct of members of a council and public officers under the law of this State and the provisions of the LGA regarding conflicts of interest. Further clause 3.5 commanded that at all times Board members “act in accordance with their duties of confidence and confidentiality and individual fiduciary duties, including honesty and the exercise of reasonable care and diligence with respect to the performance and discharge of official functions and duties as required by” Pt 4 Div 1 Ch 5 of the LGA and Sch 2 Pt 2 clause 23 of the LGA.
In order to carry out its functions the Board was empowered by clause 6 of the Charter to appoint an Executive Officer and other staff on terms and conditions to be determined by the Board.[38] Under clause 6.1.2 the Board was required to delegate responsibility for the day-to-day management of the Authority to the Executive Officer. Further, pursuant to clause 6.1.3 the responsibilities of the Executive Officer were listed as follows:
[38] Ex P1: 4 at cl 6.1.1.
6.1.3The Executive Officer will be responsible to the Board:
6.1.3.1for the implementation of its [the Board’s] decisions in a timely and efficient manner;
6.1.3.2to carry out such duties as the Board may direct;
6.1.3.3attending at all meetings of the Board unless excluded by resolution of the Board;
6.1.3.4providing information to assist the Board to assess the Authority’s performance against its Strategic and Business Plans;
6.1.3.5appointing, managing, suspending and dismissing all other employees of the Authority;
6.1.3.6determining the conditions of employment of all other employees of the Authority; within budgetary constraints set by the Board;
6.1.3.7providing advice and reports to the Board on the exercise and performance of its powers and functions under this Charter or any Act;
6.1.3.8ensuring that the assets and resources of the Authority are properly managed and maintained;
6.1.3.9ensuring that records required under the Act or any other legislation are properly kept and maintained;
6.1.3.10exercising, performing or discharging other powers, functions or duties conferred on the Executive Officer by or under the Act or any other Act or this Charter, and performing other functions lawfully directed by the Board;
6.1.3.11achieving financial and other outcomes in accordance with adopted plans and budgets of the Authority; and
6.1.3.12for the efficient and effective management of the operations and affairs of the Authority.
Provision was also made in clause 6 for the appointment of a suitable person to deputise for the Executive Officer in the event that he or she was absent for any period exceeding three weeks.[39] Further, the Executive Officer was empowered to delegate or sub-delegate to an employee of the Authority or a committee comprising employees of the Authority, any power or function vested in the Executive Officer.[40] Where such power or function was delegated to an employee, that employee was responsible to the Executive Officer for the efficient and effective exercise or performance of that power or function.[41] A written record of all delegations and sub-delegations was required to be kept at all times by the Executive Officer.[42]
[39] Ex P1: 4 at cl 6.1.4.
[40] Ex P1: 4 at cl 6.1.5.
[41] Ex P1: 4 at cl 6.1.6.
[42] Ex P1: 4 at cl 6.1.7.
Here reference should also be made to clause 1.8 of the Charter. It provided:
1.8 Delegation by the Authority
The Board may by resolution delegate to the Executive Officer or to any officer of the Authority any of its powers, functions and duties under this Charter but may not delegate:
1.8.1the power to impose charges;
1.8.2the power to enter into transactions in excess of $50 000;
1.8.3the power to borrow money or obtain any other form of financial accommodation;
1.8.4the power to approve expenditure of money on the works, services or operations of the Authority not set out in a budget approved by the Authority or where required by this Charter approved by the Constituent Councils;
1.8.5the power to approve the reimbursement of expenses or payment of allowances to Members of the Board of Management;
1.8.6the power to adopt budgets;
1.8.7the power to adopt or revise financial estimates and reports; and
1.8.8the power to make any application or recommendation to the Minister.
A delegation is revocable at will and does not prevent the Board from acting in a matter.
[emphasis in original]

Clause 3.6 also empowered the Board to establish committees for the purposes of assisting it in the performance of its functions. A committee was required by clause 3.6.2 to operate in accordance with the general procedure applicable to the Board unless such procedure was varied by the Board in establishing the committee. As will be seen, the Authority had at least two committees, the Audit Committee and the Maintenance and Operations, or M & O Committee.
Under clause 6.2.2 the Charter empowered the Board to engage professional consultants, or authorise the Executive Officer to engage professional consultants, to provide services to the Authority as may be necessary for the proper execution of its decisions, the efficient and effective management of its operations and affairs, and for the purpose of giving effect to the general management objectives and principles of personnel management prescribed by the Charter.
Clause 6.3 provided for the establishment of a common seal of the Authority to be affixed to documents executed by the Authority. Where the common seal was used it had to be attested by the Chairperson and the Executive Officer of the Authority. Under clause 6.3.2 the common seal could not be affixed to a document except to give effect to a resolution of the Board. Further, the Executive Officer was required to maintain a register recording the resolutions of the Board giving authority to use the common seal and the details of the documents to which the common seal was affixed with the particulars of the persons who attested the fixing of the seal and the date thereof. Importantly, delegations made to the Executive Officer under clause 1.8, being effected by resolution, would be required under clause 6.3 to bear the common seal of the Authority.
With respect to the operations of the Authority, clause 5.1 required that the Authority prepare and adopt a 10-year Strategic Plan for the conduct of its business identifying its objectives during that period and the principle activities that it intended to undertake to achieve those objectives. The Strategic Plan was to be submitted to the constituent councils for their approval and reviewed once in every four years in consultation with the constituent councils.[43] In addition, under clause 5.2 the Authority was required to prepare a three-year business plan linking core business activities to strategic, operational and organisational requirements with supporting financial projections, in consultation with the constituent councils. The business plans were to be submitted to the constituent councils for their approval.[44] The contents of a business plan are as prescribed by Sch 2 Pt 2 clause 24 of the LGA.[45]
[43] Ex P1: 4 at cll 5.1.2-5.1.3.
[44] Ex P1: 4 at cl 5.2.3.
[45] Ex P1: 4 at cl 5 and the note thereto.
In terms of reporting to the constituent councils, clause 5.3 commanded the Authority to report by 30 September of each financial year on the work and operations of the Authority detailing achievement of the aims and objectives of its business plan and incorporating the financial statements of the Authority and any other information or reports as required by the constituent councils. In addition, on or before the second Friday in September of each year, the Board was required to present to the constituent councils a balance sheet and full financial report in relation to the previous financial year.[46]
[46] Ex P1: 4 at cl 5.3.2.
It is unnecessary to deal with the Authority’s power to borrow and spend.[47] However, something must be said regarding the financing of the Authority and its budgeting practices. Those considerations were the subject of clause 4 of the Charter. In particular clause 4.1 required that the Authority prepare and, after 31 May each year, adopt an annual budget for the forthcoming financial year in accordance with the LGA. The content of an annual budget was to accord with Sch 2 Pt 2 clause 25 of the LGA.[48] Within five business days of an annual budget being adopted it is to be provided to the Chief Executive of each constituent council.[49] Reports summarising the financial position and performance of the Authority were to be prepared and presented to the Board at every ordinary Board meeting.[50] Further, the Board was required to reconsider the budget at least three times a year at intervals of not less than three months between 30 September and 31 May.[51]
[47] See Ex P1: 4 at cl 1.6.
[48] See Ex P1: 4 at cl 4 and the note to cl 4.
[49] Ex P1: 4 at cl 4.1.2.
[50] Ex P1: 4 at cl 4.1.3.
[51] Ex P1: 4 at cl 4.1.4.
Clauses 4.2, 4.3 and 4.4 deal with financial contributions, administration contributions and operating contributions. Under clause 4.2 the Board’s annual budget was to include the funds required to enable the Authority to operate and fulfil its objects and purposes. Under clause 4.3 each of the constituent councils was required to contribute equally to the administration costs required by the Authority as set out in the budget. Those costs were to be paid in advance by monthly instalments. Provision was also made for emergency contributions. Clause 4.4 set out operating contributions consisting of fees, charges, imposts, levies and prices payable by the constituent councils for the collection, receipt or purchase of waste by the Authority. In this regard the contribution that the constituent councils made was determined proportionate to that council’s current annual asset percentage as at the date that the income requirement contained within the budget was approved by the Board.[52] Importantly, clauses 4.2.1 and 4.3.1 indicated that the approved Board budget must be submitted in turn to the constituent councils for approval in relation to the financial and administrative contributions to be made.
[52] Ex P1: 4 at cl 4.4.2.
It is unnecessary to deal with the clauses of the Charter addressing the banking of the Authority or its maintenance of a schedule of assets, save to the extent that the latter was required to be prepared every financial year.[53]
[53] Ex P1: 4 at cl 7.2.1.
Under clause 7 the Board was required to maintain a record known as the “Schedule of Constituent Councils Interest in Net Assets”. That Schedule reflected the proportionate contribution each constituent council had made to the growth of the net assets of the Authority having regard to the proportion of contributions to the Authority’s assets in proportion to each constituent council’s asset percentage and subscriptions. Thus a council’s interest in net assets was linked to the extent to which the constituent council contributed to the Authority’s profits. That is to say, being a customer of the Authority contributed to a constituent council’s interest in the Authority’s net assets.
Clause 7 further provided that the Schedule, once updated at the end of each succeeding financial year, would reflect the proportionate contribution of each constituent council since the commencement of the Authority, and, once accepted by the Board, would be evidence of the agreed proportion of a constituent council’s interest in the net asset percentage as at 30 June in the relevant year. Under clause 7.2.2 the constituent councils agreed to be bound by the annual decision of the Board as to the net asset percentage.
Clause 8 of the Charter dealt with miscellaneous matters including the alteration of the Charter, the withdrawal or addition of a constituent council, the winding up of the Authority, insurance and superannuation requirements, the review of the Charter and disputes between constituent councils. It is unnecessary to go through each clause in detail. For reasons that will become clear it is important, however, to observe:
·     Under clause 8.2.3 in the event of a constituent council withdrawing from the Authority that council was entitled at the discretion of the Board to be paid not more than 20% of its interest in the net asset percentage of the Authority as determined and agreed in accordance with clause 7.2.2. The withdrawing council was entitled to receive that sum in quarterly instalments to be paid over a period of two years with a first instalment being due on the first day of January following the actual date of withdrawal.
·     Under clause 8.2.5 the withdrawal of any constituent council did not extinguish the liability of that council for the payment of its contribution towards any actual or contingent deficiency in the net assets of the Authority at the end of a financial year in which such withdrawal occurred.
·     Equally, under clause 8.2.6 the withdrawal of a constituent council did not extinguish the liability of that council to contribute to any loss or liability incurred by the Authority at any time before or after such withdrawal in respect of an act or omission by the Authority prior to such withdrawal.
·     Under clause 8.7.1 the Charter was to be reviewed by the constituent councils acting in concurrence at least once in every three years.
·     Under clause 8.8.1 the constituent councils agreed to work together in good faith to resolve any matter requiring their direction or resolution.
·     Lastly, the constituent councils may direct and control the Authority under clause 8.6.2, but before doing so must all first agree on the action to be taken. Under clause 8.6.3 any direction given under clause 8.6.2 must be in writing.
E.      SWR’s claim
SWR’s primary claim is one seeking damages under s 236 of the Australian Consumer Law, as contained in Sch 2 of the Competition and Consumer Act 2010 (Cth) (CACA), in consequence of it sustaining loss and damage because the Authority engaged in misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law.
In its Second Statement of Claim SWR pleaded that it was induced to enter into the Deed of Settlement and the s 103 Deed by the Authority as a consequence of the Authority warranting and representing that:[54]
29.1.It, the Authority, had no pre-existing contract, arrangement or understanding with the member Councils, which would prohibit or hinder or render less likely the member Councils from using the Land [Hartley] or from entering into a contract with SWR in relation to waste disposal;
29.2.It would not impair or hinder or interfere in any way with attempts that might be made by SWR to obtain the waste disposal business of the member Councils;
29.3.It would not induce or seek to induce the member Councils to use the site at Brinkley rather than the Land;
29.4.It did not know of any matter that would mean that it was likely or possible that member Councils would not utilise the services of SWR and would dispose of waste at a site other than the Land;
29.5.It would not seek to obtain for itself the custom of the member Councils in relation to their disposal of waste;
29.6.It was possible that the member Councils would enter into a contract with SWR for the disposal of waste at the Land on usual commercial terms.
29.7.Cell 6 [at Hartley] had 11,000 cubic metres of immediately available space and cell 6 would have an additional 134,000 cubic metres available upon the construction of cell 7 with a value of $1.2m.
[54] Second Statement of Claim at [29].
SWR further pleaded that the warranties and representations referred to in paragraphs 29.1-29.6 were implied at meetings that occurred between SWR and the Authority, these being the three meetings at Wallmans on 14 September, 5 November and 12 November 2012 and another meeting onsite at Hartley on 23 October 2012. Further, SWR also pleaded the warranties and representations were implied from:[55]
30.2.the fact that up to the date of settlement, the member Councils had used the Land for the disposal of waste;
30.3.the fact that from settlement, SWR was to be the operator of the waste disposal business conducted on the Land;
30.4.the fact that the planning approval as evidenced by the decision of the Planning Appeals Tribunal for use of the Land as a waste disposal site was limited to waste supplied by Councils;
30.5.the fact that without the custom of the member Councils, SWR could not profitably operate the waste disposal business situate on the Land;
30.6.the fact that without the custom of the member Councils, the business to be conducted by SWRC on the Land was of little or no value.
[55] Second Statement of Claim at [30].
The warranties and representations referred to in paragraph 29.7 of the Second Statement of Claim were pleaded by SWR as contained in an email from the Authority’s lawyers, Wallmans, to SWR’s lawyers, Botten Levinson, dated 22 January 2013 in addition to being implied from the written-down asset value of cell 6 as set out in a letter from Wallmans to Botten Levinson dated 25 September 2012.
SWR further pleads that the Authority knew or ought reasonably to have known that the following information was material to SWR’s decision to enter into the Deed of Settlement and the s 103E Deed:[56]
32.1.… any contract, arrangement or understanding entered into between the Authority and the member Councils for using the land at Brinkley for the waste disposal rather than using the Land [Hartley];
32.2.… knowledge of any negotiations or alternatively any discussions between the Authority and member Councils for using the land at Brinkley for the waste disposal rather than using the Land;
32.3.… knowledge that it was the then intention of the Authority to seek to induce or encourage member Councils to cease using the Land for waste disposal and instead use the site at Brinkley;
32.4. … knowledge of the fact that it was likely that the member Councils would enter into a contract with the Authority for the disposal of waste at Brinkley;
32.5. … knowledge of the fact that it was unlikely that member Councils would enter into a contract with SWR whereby they would agree to dispose of the waste at the Land.
[56] Second Statement of Claim at [32].
SWR pleads that knowing the above, and in the light of the warranties and representations made, the Authority misled and deceived SWR inducing it to enter in the Deed of Settlement and the s 103E Deed by not disclosing that:[57]
[57] Second Statement of Claim at [33].
33.1.It, the Authority, had entered into a contract, arrangement or understanding with the member Councils for using the land at Brinkley for waste disposal rather than using the Land [Hartley];
…
33.2.It, the Authority, had entered into negotiations or alternatively had held discussions with the member Councils for using the land at Brinkley for waste disposal rather than using the Land;
…
33.3.It was [the] intention of the Authority to seek to induce or encourage member Councils to cease using the Land for waste disposal and instead use the site at Brinkley;
33.4.It was likely that the member Councils would enter into a contract with the Authority for the disposal of waste at Brinkley;
…
33.5.It was unlikely that the member Councils would enter into a contract with SWR whereby they would agree to dispose the waste at the Land.
From the above it is immediately apparent that SWR’s case of misleading and deceptive conduct has two aspects, one founded on actual warranties and representations made and the other on the non-disclosure of facts where the circumstances gave rise to a duty on the Authority’s part to make disclosure.
SWR claims that as a consequence of the Authority’s misleading and deceptive conduct it suffered loss and damage in that:[58]
[58] Second Statement of Claim at [41].
41.1.It has paid the sum of $990,000 to the Authority pursuant to the terms of the Deed;
41.2.It has expended the sum of $264,976.85 on capital invested in the business by SWR to date which expenditure is now worthless in that the business is not profitable;
41.3.It has a liability or a future liability to the Harveys in the sum of $1,263,751.01 which represents the net present value of the amount of royalties that it owes to the Harveys pursuant to the terms of [the] Landfill Deed or in the alternative it has lost the profits of the facility with a net present value of $3.77m;
41.4.It has incurred losses in carrying on the waste disposal business on the Land to December 2013 in the sum of $63,057;
41.5.Under the terms of the Deed and the Further Deed, it has:
41.5.1.assumed liability for; and
41.5.2.released and discharged the Authority from; and
41.5.3.given an indemnity to the Authority in respect of all claims arising out of the lawful and proper Environmental Performance by the Authority in relation to its operation of a bulk waste facility on the Land and has thereby incurred a liability which, but for the terms of the Deed and Further Deed it would not otherwise have had for
(a)the capping of cells 1 to 4 in the sum of $500,000;
(b)the capping of cell 5 in the sum of $744,000;
(c)the capping of cell 6 in the sum of $779,000;
(d)post closure remedial work in the sum of $800,400.
41.6.lost the capacity of cell 6 to a value of at least $1,008,000.
Accordingly, SWR seeks an award of damages under s 236 of the Australian Consumer Law (Cth).
In the alternative to its primary claim SWR pleads that:[59]
39.1.SWR entered into the Deed and Further Deed as a result of the warranties and representations referred to in paragraph 29 above;
39.2.the Authority made the warranties and representations;
39.3.the warranties and representations were false and misleading for the reasons set out in paragraph 35 above;
39.4.the Authority was a contracting party to the Deed and the Further Deed.
[59] Second Statement of Claim at [39].
This alternative claim is advanced on the basis that the same warranties and representations as pleaded in support of the misleading and deceptive conduct claim constitute a contravention of s 7 of the Misrepresentation Act 1972 (SA) entitling SWR to damages. My understanding of the way in which SWR presented its case is that I need only consider the alternative basis if the primary basis fails.
For its part the Authority denies that it made the warranties or representations pleaded by SWR, denies that it was under any duty to make disclosure and denies that SWR was induced to enter into the Deed of Settlement and s 103E Deed. The Authority’s defence raises the following issues:
·Is the Authority a trading corporation to which s 18 of the Australian Consumer Law (Cth) applies?
·Was the Authority engaged in trade and commerce within the meaning of s 18(1) of the Australian Consumer Law (Cth)?
·What is the effect of clauses 22, 23 and 24 of the Deed of Settlement which purport to exclude reliance on representations?
·What knowledge did SWR have of Brinkley as an alternate site to receive the member councils’ waste?
·What were SWR’s intentions in relation to Hartley, and how dependent was it on the member councils’ waste streams? Did SWR represent to the Authority that its intended business at Hartley was not dependent on and did not rely upon the waste streams of the member councils?
·What was the effect of clause 9 of the Deed of Settlement?
·Was there a contract, arrangement or understanding between the Authority and the member councils concerning the member councils’ waste going to Brinkley?
·Was there any duty or obligation on the Authority to make disclosure of the matters alleged?
·Did SWR represent to the Authority that SWR’s business at Hartley was not dependent on the receipt of the waste of the member councils, and if so, what effect does such representation have on its claim?
·What knowledge did SWR have of the following matters, and if so, what effect does that knowledge have on its claim(s):
o    the terms of the Charter;
o the provisions of the LGA in relation to regional subsidiaries;
o    the operations of the Authority including its business plans, shared services model and annual reports;
o    the intentions of the member councils and the Authority in relation to the disposal of waste;
o    the move of the Authority and its operations to Brinkley, and the competition by the Authority for the waste of the member councils;
o    the matters likely to be taken into account by the member councils in relation to the deposit of their waste streams, and the failure on the part of SWR to take steps to protect against competition from the Authority;
o    the extent to which the Authority gave notice to SWR of its intentions about seeking to obtain the waste of the member councils and the use of Brinkley;
o    SWR’s failure to make enquiries of the Authority in relation to the inclusion of clause 9 of the Deed of Settlement, details of its operations at Brinkley, and details of its discussions about the waste of the member councils;
o    That it was ultimately a decision of each member council as to whether they would deposit their waste at Hartley or Brinkley;
o    That SWR had made proposals to the Harveys prior to any expectation of Council waste;
·Whether SWR suffered any loss and damage as a consequence of the conduct of the Authority;
·Whether any loss or damage arose from the negligent failure of SWR to protect its own interests;
·Whether any loss or damage was suffered partly as a result of the failure of SWR to take reasonable care and the amount of damages should be reduced accordingly;
·Relevant to costs, whether the claim is an abuse of process because it is being pursued for an ulterior motive.

In cross-examination, Mr Pucknell was questioned about SWR’s motives in bringing the claim against the Authority: (1327)
Q… I’ll put that more specifically, you knew that they would be pressured by the expenditure of legal costs defending a claim brought by Southern Waste ResourceCo.
AAnyone would, yes.
QAnd that was all designed to try to force a commercial result satisfactory to Southern Waste ResourceCo.
AI think it was a path to getting the authority to the table I think.
QAnd you wanted to get the authority in front of a judge in order to try to force a commercial result.
AThat’s not my words I don’t think.
QNo, they’re Mr Brown’s words, aren’t they.
AIt sounds like something Simon might say but I can't confirm that for sure.
Mr Fairweather was cross-examined on the same topic: (1660)
QIn 2013 you had discussions with Mr Brown about putting legal pressure on the authority.
AIn when, sorry, what time frame?
Q2013.
AYes.
QAnd indirectly putting legal pressure on the member councils.
AYes.
QAnd that would involve legal costs pressure as a way of getting the authority and the member councils to the table.
AYes.
QYou supported that strategy.
AWas supportive of trying to make an outcome. For want of a better expression it’s his train set. So if that’s the strategy he wants to embark on, then I'm an employee under that structure.
QYou mean Mr Brown by that answer.
AYes.
QAnd Mr Brown told you that he thought the only way to bring the commercial discussion to a head was to issue proceedings.
ANot those exact words but words to the effect.
On 5 September 2013, in response to an email from Mr Jarvis about potential problems with the cells at Hartley, Mr Brown sent an email to Mr Jarvis, Mr Pucknell and Mr Manning in which he wrote:[1117]
I am all over it legally Brett.
It is the only way we will get them to the table unfortunately.
We need to sign off on the site issues promptly as well.
Regards Simon.
[1117] Ex D13: 518 at p 3912.
Mr Brown was taken to this email and asked whether he believed that the only way to get a commercial deal with member councils was to make legal claims against the Authority and Mr Lorenz. He explained that SWR had found it extremely difficult to understand who it was “dealing with”. (834) He said: (834)
It was nearly impossible for us to realise who was controlling these matters, so it was extremely important for us to bring this to a head and we thought the only we way that we could it, unfortunately, is to issue proceedings and we obviously - we had discussions with and did presentations to the authority and we obviously had lots of individual discussions with the councils prior to issuing these proceedings and none of them were going anywhere. So, yes, that’s how we got to be where we are.
Later in cross-examination, Mr Brown said that it was his view that the dispute needed to be resolved in front of a judge, as, “the whole thing” was a “mess”. (1911) He explained that SWR had incurred significant costs and that they had concerns with the state of the Hartley landfill. As to the issues with the cells, he said: (1911)
…We agreed to pay money for the cell space that was presented and it wasn’t there, the liner issues and just the infrastructure that needed to be put in to the site to get our EPA licence back under control.
Mr Brown denied that raising the matters in the letter of demand was part of a strategy. (1912)
On 20 September 2013 SWR extended an offer to the Authority for the deposit of the constituent councils’ waste at Hartley for a seven-year period at a cost of $34.70 per tonne.[1118]
[1118] Ex P8: 329 at p 2574.
On 3 October 2013, in response to an email from Mr Manning concerning cells 6 and 7A at Hartley, Mr Brown wrote:[1119]
Thanks Andrew.
Unfortunately the only way we will bring this to a head is to get them in front of a judge.
Chris can you update the group of our discussion re bringing this to a head.
They will continue to fuck around forever if we let them.
Regards Simon.
[1119] Ex D26.
Later that month, Mr Brown wrote to each of the constituent councils extending to them an offer in the same terms as that sent to the Authority in September 2013.[1120] Ultimately, those offers were not considered until the following year, and then only by the elected members of AHC, AC and RCMB.
[1120] Ex P8: 339; Ex P8: 340; Ex P8: 341; Ex P8: 343; Ex P8: 345.
Mr Fairweather was asked whether the 3 October 2013 email represented the view that he and Mr Brown had in October 2013. He agreed. He said that he thought Mr Brown felt as though SWR would be “strung out” for a very long time. (1803) In cross-examination on the voir dire, Mr Brown was shown this email and asked whether it was his view in October 2013 that the only way to bring the commercial discussions to a head was to bring proceedings.[1121] He said: (1924)
I had that view for a while, unfortunately. The only way that this was going to be resolved was in front of a judge. We needed to work out whether we were naive or whether we had the wool pulled over our eyes. There has never been any intent at all on our behalf to put forward a claim. If we wanted to, you know, walk away from these proceedings we would have done it a long time ago. It’s something that we are very passionate about, the way that we were misled throughout this transaction.
[1121] Ex D16: 598.
Mr Heard was taken to this email in the course of being cross-examined on the voir dire.[1122] He said that he had discussions with Mr Brown about how SWR might convince the constituent councils to deposit their waste at Hartley. He explained that he and Mr Brown discussed “getting it in front of a judge” many times. (1959) He denied that there was a deliberate strategy to delay extending long-term offers to the constituent councils until after the letters of demand were sent. (1961) It was put to Mr Heard that the primary purpose of the letters was to force the constituent councils to the table. Mr Heard replied “[w]e were trying to get their business”. (1962) He was questioned about the “strategy” of offering to concede the claim if the constituent councils agreed to deposit their waste at Hartley long-term: (1962)
[1122] Ex D16: 598.
QAnd you’re aware, aren’t you, that the plaintiff has offered to give up its present claim and pay its own costs if the member councils agree to deals for the deposit of their waste on a long-term basis.
AYes.
QAnd you agreed with that strategy.
AYes.
QBecause the purpose of the proceedings is to try and obtain those long-term deals you described.
AYes.
QAnd that’s why the plaintiff is willing to spend money on the proceedings.
AEither get the business from the councils or get reimbursed for the misrepresentations that Resourceco claimed occurred.
Mr Heard reiterated that SWR adopted the principle that it would make every endeavour to get the business back and to settle its differences with the Authority and its constituent councils. He said that if that was not going to be successful then SWR had no other option but to sue. According to Mr Heard, “the last thing that Resource Co wanted to do was to have another legal battle on their hands over this issue”. (1967) It was put to him that the battle would be “worth taking up” if there was a prospect of retaining the constituent councils’ waste on a long-term basis. To that proposition, he replied, “t]hat or being reimbursed for our losses”. (1967)
As for SWR being delinquent, the Authority contends that inferentially SWR must have been in possession of documents that it failed to disclose on topics including:
·the assessment of the opportunity that Hartley posed, including by KPMG, and the commercial motivations behind the Landfill Deed and the Litigation Management and Funding Deed, including the waste streams behind the Landfill Deed and the analysis behind the Litigation Management and Funding Deed;
·documents revealing SWR’s understanding of the terms, effect and implications of the Landfill Deed and the Litigation Management and Funding Deed;
·The dissemination and evaluation of the documents referred to in exhibit D15;
·the target list of councils and commercial customers prepared by SWR post-settlement and dealings with other councils and commercial customers post-settlement;
·documents explaining how Mr Pucknell arrived at the conclusion that Brinkley posed a transport cost disadvantage of $15 per tonne for councils Adelaide side.
No documents on these topics have been disclosed, yet, as I have said, the Authority contends that inferentially I should conclude they exist or at least documents falling within the categories exist and that SWR and its solicitors and counsel have determined that they should not be disclosed.
The Authority complains that between September 2012 and 11 February 2013 SWR has identified over 500 communications over which privilege is claimed. Only “half a dozen communications or so” in that three-month period were disclosed. The Authority finds this incredulous.
To this the Authority adds that some of the disclosure that has been made has been inadequate, for example, documents such as emails have been produced without dates or names of addressees and documents disclosed late (for example exhibit D15), some during the trial itself and then some in the defence case (for example, the 2007 council resolutions).
The Authority contends:[1123]
32.This claim has been brought as a continuation of SWR’s strategy to try to obtain Member Council waste. It has been advanced in circumstances where SWR knows that many of its elements are without foundation. It knows that it entered into the settlement deeds with full knowledge of the risks that all of the Member Councils might choose to take their waste to Brinkley. It is also made in circumstances where SWR knows that it has had a continuing opportunity to present offers to the Member Councils, but has sought to conceal those facts from the court.
33.SWR has failed to give disclosure throughout the action. A number of crucially relevant to documents were disclosed only very shortly before trial. Documents relating to the “2007 resolutions” were produced without explanation during cross examination of the Authority’s witnesses. Emails have been disclosed in circumstances where, without explanation, either the date of the email or the identity of the recipients is not recorded. Contrary to all objective evidence, SWR claims that the Hartley Information Paper was prepared only after settlement. As discussed throughout the Authority’s submissions, there are other documents which must exist, which have not been disclosed at all.
[1123] Defendant’s Closing Submissions at pp 348-349 [32]-[33].
The Authority’s contentions ignore the cross-examination of Mr Levinson, Mr Brown, Mr Pucknell, Mr Fairweather and Mr Hollingworth on the issue of disclosure. Whilst I may have some suspicions about adequacy of searches, which for that matter may be said to apply equally to Mr Stuart’s, Mr Grenfell’s and Mr Aitken’s evidence on disclosure, I did not gain the impression that anyone was intentionally withholding documents or did not believe that an appropriate search had been made.
SWR also pointed to the Authority’s failures in making adequate and timely disclosure including, for example, despite SWR’s pleaded case, the late disclosure of the 2007 council resolutions. Those resolutions were not dealt with in any of the witness statements provided by the Authority nor disclosed by the Authority. They were obtained by way of third party discovery from some of the councils. Lastly, SWR also contended that the Authority was equally guilty of late disclosure, including disclosure during the trial and that, minded of how it was that disclosure of the 2007 resolutions occurred, the Court could not be satisfied that there were no other documents evidencing the commitment to which those resolutions refer.
B. Consideration
I have found that Mr Brown and Mr Lucas assessed the Hartley opportunity thinking that the costs drivers that lead the ordinary customer to choose a particular landfill applied no less to the constituent councils. I have found that they misjudged the capacity of the Authority to compete for the constituent councils’ waste streams. In answer to Mr Brown’s question whether SWR was deceived or naïve, I have found it was not the former.
I have found that SWR was aggressive and bullish during the negotiations. I have found that if they did not apply the time pressure, they were complicit with the Harveys in doing so. There can be no doubt that the intention was to have the Authority leave Hartley as quickly as possible. I think it the case that, believing the ordinary costs drivers applicable, SWR considered that the sooner the Authority left Hartley the sooner SWR could begin to make money. I have found that the prospect of the EPA licence not being transferred was not considered an obstacle of great moment by SWR.
I have found that knowing that the Authority intended to move to Brinkley where it would continue in the landfilling business, SWR expected to lose RCMB’s waste stream to Brinkley and possibly AC’s. However, once again, thinking that the costs drivers that lead the ordinary customer to choose a particular landfill applied no less to the constituent councils, SWR expected to retain AHC’s and DCMB’s waste streams. As I have said, SWR’s attitude was one of secure the landfill and the tonnage from those councils proximate would likewise be secured. In this connection SWR relied upon the fact that it had agreed in clause 9 of the Deed of Settlement to charge the constituent councils the same rate to dispose of waste at Hartley as the Authority had been doing immediately prior to settlement. Thus, bearing in mind the increased transfer cost for AHC and DCMB to take waste to Brinkley, SWR believed that receipt of AHC’s and DCMB’s waste at Hartley was assured.
I do not doubt that from the beginning SWR was intent upon obtaining AHC’s and DCMB’s waste streams. I see nothing wrong with that. Equally, I see nothing wrong with SWR adopting the approach it did to the negotiations with the Authority.
The loss of AHC’s waste would have come as a shock to SWR. Elsewhere I have commented on Mr Brown’s 18 March 2013 letter. That letter, like the 16 July 2013 letters of demand, was inaccurate. I have also been critical of Mr Brown in my findings and I have found that on occasion he was untruthful. Nonetheless, I am not persuaded that these proceedings were instituted for an ulterior purpose such as to amount to an abuse of process. In my view, Mr Brown’s thinking was relatively simplistic in that he and SWR could not understand why the gate price they had offered, bearing in mind the increased transport cost to Brinkley, did not result in AHC and DCMB disposing of their waste at Hartley. Being of this mindset, it is only a short step to conclude that there must be an agreement, arrangement or understanding in place preventing the constituent councils from disposing of their waste with SWR and that he had been lied to by the Authority in the course of the negotiations. Comments made by council officers appear to have fuelled Mr Brown’s suspicions.
I have no doubt that, ultimately, SWR’s intention is to attract the constituent councils’ waste streams to Hartley and that it was hoped that these proceedings assisted in that outcome being achieved. After all, volume is essential to the profitability of a landfill. Nonetheless, I do not think SWR set about contriving a spurious claim, engaging solicitors and counsel, and embarking upon a trial of that claim for the purpose of applying costs pressure in the hope that the Authority would simply relent and a commercial deal would be done. SWR has prosecuted the matter to is conclusion.
I am not persuaded that the action has been pursued for an ulterior purpose such as to amount to an abuse of process.
I do not think that cross-examination of some of the witnesses called by the Authority to suggest that the constituent councils’ waste streams were used as a lure to induce SWR to enter into the Deed of Settlement and s 103E Deed went beyond the proper presentation of the SWR’s case. It seems to me that if there were a contract, arrangement or understanding that bound the constituent councils to dispose of their waste with the Authority, as SWR believed, then knowing that fact, any suggestion that SWR could contract with the constituent councils for the receipt of their waste could be said to amount to use of the waste streams as a lure.
This matter is complex. Late changes to pleadings only added to complexity and to difficulties for both sides in making timely disclosure. Reliance upon non-legally trained people to conduct searches and to determine what documents answer a description in a list and what do not without the benefit of understanding the pleadings and the legal issues they give rise to, is fraught with risk but often necessary for practical reasons.
As I have said none of the witnesses tackled on the question of disclosure, called by both SWR and the Authority, struck me as intentionally withholding documents or as not believing that an appropriate search had been made. I am not satisfied that SWR was delinquent, or remiss in meeting its disclosure obligations.
For the above reasons, any costs award made against SWR in view of my dismissal of its claim should not be made on an indemnity basis.

(Kerr J).