Wagdy Hanna and Associates Pty Ltd v National Library of Australia
[2012] ACTSC 126
•3 August 2012
WAGDY HANNA AND ASSOCIATES PTY LTD v NATIONAL LIBRARY OF AUSTRALIA
[2012] ACTSC 126 (3 August 2012)
TENDER PROCESS – Request for tender by statutory authority – Architecture – Where tender alleged to be unique – Whether individual features or combination unique or novel – Neither individual features nor combination of features unique or novel.
TENDER PROCESS – Confidential information – Alleged disclosure to third party – No direct evidence of disclosure – Disclosure implied – Similarities between plaintiff’s tender and building designed by third party – Plaintiff must demonstrate no other rational explanation for similarity – Evidence of other rational explanations – Relevant differences between tender and building constructed – Positive denial of disclosure – No evidence to support disclosure.
DUTY OF CONFIDENTIALITY – Confidentiality of tender documents – Tender process contract – Term implied into contract that tender material of each tenderer confidential – No breach of contract.
EQUITY – Duty of confidence – Fiduciary relationship between contracting parties – Commercial parties contracting at ‘arms length’ – Where contract relevantly prescribes respective powers and duties of contracting parties – No fiduciary obligation.
EQUITY – Unjust enrichment – Underlying or unifying concept – Not an independent basis for liability.
LIMITATION OF ACTIONS – Limitation Act 1985 (ACT) s 11 – “cause of action” extends to equitable claims – Limitation period expired – Proceedings statute-barred.
LIMITATION OF ACTIONS – Limitation Act 1985 (ACT) s 33 – Fraud, deceit or deliberate concealment – Meaning of “based on fraud” – fraud a necessary ingredient of the cause of action – no suggestion of fraud or deceit on plaintiff’s case – Meaning of “deliberate concealment” – Requirement for “intended” or “active” concealment – What plaintiff must prove – No evidence to support basis for application of s 33.
ESTOPPEL – “Anshun” estoppel – Where alleged obligation so related to previous proceedings that it should have been included – Previous proceedings terminated by settlement – No res judicata – Estoppel not applicable.
DEEDS – Deed of settlement – Release – Construction of deed – Objective test – Where “the discontinued proceedings” construed to mean the facts or matters stated in the pleadings filed in the previous proceedings – Meaning of “arising out of” – Phrase wide enough to include the conduct of the tender process – Proceedings within the terms of the deed of settlement – Plaintiff released defendant from liability – Covenant not to sue – Breach of covenant.
ESTOPPEL – Whether defendant estopped from relying on terms of deed – Alleged disclosure of deed terms by defendant – Proprietary estoppel and estoppel by record or writing not applicable – No evidence that criteria for operation of promissory estoppel met.
REMEDIES – Breach of covenant – Specific performance and injunction not available – Damages – Defendant entitled to actual costs of defending the proceedings.
COSTS – Indemnity costs – Where appropriate – Not appropriate for “marginal” cases – Not a punitive measure – Compensatory – Where commencement and continuation of proceedings has no prospects of success.
Copyright Act 1968 (Cth), s 201
Freedom of Information Act 1982 (Cth)
Limitation Act 1985 (ACT), ss 11, 33
Limitation Act 1969 (NSW), s 23
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No. SC 236 of 2003
Judge: Refshauge ACJ
Supreme Court of the ACT
Date: 3 August 2012
IN THE SUPREME COURT OF THE )
) No. SC 236 of 2003
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:
WAGDY HANNA AND ASSOCIATES PTY LTD
Plaintiff
AND:
NATIONAL LIBRARY OF AUSTRALIA
Defendant
ORDER
Judge: Refshauge ACJ
Date: 3 August 2012
Place: Canberra
THE COURT ORDERS THAT:
Judgment be entered for the defendant on the plaintiff’s claim.
Judgment be entered for the defendant against the plaintiff on the defendant’s counter-claim.
As damages, the plaintiff pay the defendant’s costs of the plaintiff’s claim and the defendant’s counter-claim on an indemnity basis.
On the south-west shores of Lake Burley Griffin in the Canberra suburb of Parkes sits a magnificent edifice built in the style of a large Greek temple, the National Library of Australia, a Canberra icon.
The casual observer might conclude that such a large building houses the whole of the national collection of materials, but with the massive amount of such material, both in print and in other media, produced each day, not to mention the statutory deposit provisions of s 201 of the Copyright Act 1968 (Cth), there is a need for and there are repositories, no doubt less pre-possessing buildings, situated elsewhere in Canberra.
This case concerns one of those repositories. On 25 September 1996, the defendant, in a Request for Tender, invited tenders for the provision of another such repository (called in the Request for Tender, and in these reasons, a storage facility) to be available in the first half of 1997.
The plaintiff submitted a tender along with other companies. The plaintiff’s tender was not accepted. The plaintiff complained about the process and commenced proceedings in the Federal Court of Australia. These were subsequently compromised and a Deed of Settlement entered into between the parties, setting out the terms of the compromise.
The plaintiff later took the view that there had been a breach of the confidentiality that he expected would be maintained as to the content of his tender and, later, a breach of the terms of the Deed of Settlement and commenced these proceedings on 8 May 2003.
THE CASE FOR TRIAL
An analysis of the pleadings shows that the case for trial is as follows.
The plaintiff is an incorporated company and the defendant is a statutory authority. Both have the legal capacity to sue and be sued. These matters were not in issue in these proceedings.
The plaintiff claims that the defendant invited tenders for the storage facility. It says these were invited on or about 3 October 1996; the defendant says they were first invited by an advertisement in The Canberra Times on 25 September 1996. Nothing turns on that difference and it appears that the plaintiff accepts the defendant’s statement of the date.
The plaintiff claims, in a letter dated 14 August 2003 from the plaintiff’s solicitors providing particulars to the defendant’s solicitors, that it submitted a tender comprising twenty-four documents. With a minor disagreement about the description of one of those documents, the defendant admits this fact. While the tender was one exhibit, it was not in bound form as an exhibit. The plaintiff also provided a letter to the defendant with enclosures after the closing date for tenders and then also tabled some documents at the interview with the defendant on 31 October 1996, all of which were exhibited before me but it is not clear whether these additional documents are to be considered as included in the tender as pleaded though they were clearly intended to be taken into account in the defendant’s consideration of the plaintiff’s tender.
The plaintiff claims and the defendant admits that other parties tendered, including Decoin Engineering Pty Ltd (Decoin) and U-Stow-It Pty Ltd (U-Stow-It).
The plaintiff then claims that his tender proposed that the storage facility be built in a certain way and compared that with the proposals in Decoin’s tender. The defendant does not admit these details, but relies on the tenders actually submitted. I shall have to deal with these issues below.
The plaintiff claims that there was a term “implied into the tender process” that the defendant would keep confidential certain matters, including design concepts in the plaintiff’s tender and documents submitted with it. The defendant denies that there was any such contractual term and says that the existence of any other term or “type of term” is a matter of law.
The plaintiff says and the defendant admits that it was informed on or about 8 May 1997 that the tender by Decoin had been accepted. The defendant adds that the principal of the plaintiff had been advised of this earlier by telephone.
The plaintiff then claims that the storage facility as actually constructed incorporated a number of features of the plaintiff’s tendered proposal which the defendant, in breach of the alleged duty of confidence, had revealed to Decoin in discussions with it prior to finalising its choice of tender. The defendant does not admit that such features were incorporated into the storage facility and denies that it revealed any such matters to Decoin.
The plaintiff claims that the breach has resulted in loss and damage to it, including the profit it would have derived from having its tender accepted instead of that of Decoin. It seeks to recover compensation for the loss and damage. The defendant denies any such breach or that any such breach caused a loss or damage, denies that it would have accepted the plaintiff’s tender and says that, if it had not accepted the Decoin tender, it would have accepted that received from U-Stow-It.
The plaintiff makes what appears to be pleaded as an alternative claim, which the defendant also denies, that, by the defendant’s breach of confidentiality, the defendant has been unjustly enriched by receiving the benefit of the features of the plaintiff’s tender which were incorporated into the final design of the storage facility. It claims recovery of that amount by which it says the defendant has been unjustly enriched and the defendant denies that claim.
In addition to its denials as mentioned, the defendant raises three additional defences. In the first place, it claims that the plaintiff’s action is not maintainable by reason of the Limitation Act 1985 (ACT) (the ACT Limitation Act). The plaintiff says in reply that the wrongful disclosure of the confidential material in its tender amounted to fraud or deceit or deliberate concealment of relevant facts by the defendant and, if the cause of action arose prior to 8 May 1997, then s 33 of the ACT LimitationAct extends the time within which the action could be brought.
The defendant also claims, as a defence to any claim by the plaintiff, that the Deed of Settlement in respect of the Federal Court proceedings released the defendant from any such claim. The plaintiff, in reply, claims that the defendant had, in breach of its terms, publicly disclosed the terms of the Deed of Settlement which estopped it from relying on its terms.
Finally, the defendant pleads that the plaintiff is estopped from prosecuting its claim because it had not raised in the Federal Court proceedings the claims it is now making, even though it was aware of them, and that such claims could and should have been included in the Federal Court proceedings, the defendant having, in those proceedings, foregone its right to recover costs and disbursements from the plaintiff when it discontinued the Federal Court proceedings, by reason of the compromise established in the Deed of Settlement. The plaintiff denies that the defendant was entitled to rely on any such estoppel, but, if it was, it is not so entitled because of its conduct. I was not provided with any particulars of that conduct.
The defendant then pleaded a counter-claim against the plaintiff. In it, the defendant claims and the plaintiff agrees that, by the Deed of Settlement, the plaintiff covenanted not to sue the defendant in respect of any matters “arising out of or in any way related” to the Federal Court proceedings. It claims, and the plaintiff denies, that these proceedings breach that covenant and that, as a result, it has suffered loss and will suffer further loss.
In the alternative, the defendant claims, and the plaintiff denies, that the Deed of Settlement did not reflect the intention of the parties that matters such as the plaintiff’s claim in these proceedings would be included within the ambit of the release in the Deed of Settlement, or, in the alternative, that the release would extend to any cause of action connected to the allegations made in these proceedings, and that, as a result, the defendant is entitled to rectification of the Deed of Settlement and that the present proceedings are brought in breach of the intentions of the parties that should have been incorporated in the Deed of Settlement, thereby causing the defendant loss and continuing loss.
In further defence to the defendant’s counter-claim, the plaintiff denies that the Deed of Settlement encompassed the claims made in these proceedings. The plaintiff also claims that it was a fundamental term of the Deed of Settlement that its terms were to be kept confidential and that the plaintiff has breached that term by disclosing to The Canberra Times certain details of the terms of the compromise, thereby rendering the Deed of Settlement void or, in the alternative, terminated by the defendant, or, in the alternative, releasing the plaintiff from being bound by its terms.
The plaintiff further denies that the parties intended that the Deed of Settlement extended to matters such as were encompassed in the cause of action pleaded in these proceedings and that, if it was the defendant’s intention that it do so, it was not the common intention of the parties and that the plaintiff (though, I think in error, referred to as the defendant in par 8(f) of the Amended Defence to Counter-Claim) did not have that intention, but intended only that the Deed of Settlement should be limited to the allegations set out in the recitals to the Deed of Settlement, the terms of it being read and construed subject to the recitals.
Accordingly, it seems to me that the following issues arise for determination in this action:
(i) Was there a duty of confidentiality reposed in the defendant in respect of any of the contents of the plaintiff’s tender?
(ii) If so, what were the specific matters in the plaintiff’s tender that were subject to any duty of confidentiality on the part of the defendant?
(iii) In that event, did the defendant breach that duty of confidence by revealing to Decoin, before it chose Decoin as its successful tenderer to provide the storage facility, the confidential matters that it was bound not to reveal from the plaintiff’s tender? This, perhaps, requires an answer to the question of whether any feature of the storage facility as constructed by Decoin incorporated any features that were confidentially included in the plaintiff’s tender?
(iv) If so, what loss has been suffered by the plaintiff and how should it be assessed?
(v) When did the plaintiff’s cause of action arise and did any act of disclosure by the defendant amount to deliberate concealment such as to extend the time for in the ACT Limitation Act?
(vi) Did the Deed of Settlement release the defendant from the claims made in these proceedings?
(vii) If not, should the Deed of Settlement be rectified so as to include a release that encompassed claims such as those made in these proceedings?
(viii) Is the plaintiff estopped from bringing these proceedings because they should have been included in the Federal Court proceedings?
(ix) If so, does the defendant’s conduct prevent it from relying on any such estoppel in these proceedings?
(x) Has the plaintiff breached the Deed of Settlement by bringing these proceedings?
(xi) Is the Deed of Settlement void, or in the alternative, terminated by the defendant, or, in the alternative, is the plaintiff released from its terms?
(xii) Has the defendant suffered loss from the alleged breach of the Deed of Settlement by the commencing and prosecuting of these proceedings? If so, how should that be calculated?
It may not be necessary to consider every one of these issues. Clearly, a central issue is whether the defendant revealed to Decoin confidential matters in the plaintiff’s tender.
The plaintiff accepts that there is no direct evidence of this; it says that this is to be inferred from the uniqueness of its tender and the similarity between the building that Decoin built, particularly given the differences between Decoin’s tender proposal and the building it built, that can only be explained by the alleged disclosure.
In order to deal with these issues, it is necessary to outline the circumstances under which the relevant issues arise.
THE HISTORY OF THE TENDERS FOR THE NEW STORAGE FACILITY
Before I set out the relevant history for the purpose of these proceedings, I note that the plaintiff and some of its witnesses expressed great concern about the perceived lack of integrity of the tender process followed by the defendant. There were suggestions that U-Stow-It also expressed such concerns. These matters, however, are not the subject of these proceedings. They were, to some extent, the subject of the Federal Court proceedings. Despite the expressions of concern by the plaintiff and its witnesses and of some criticism of or challenges to the tender process during the hearing of these proceedings, this is not within the terms of these proceedings and I do not consider such matters further.
The relevant history commences in August 1996, when a Steering Committee was established by the defendant to implement a Storage Strategy agreed to by the Council of the defendant for transfer of a part of the defendant’s overseas print collection to a second off-site storage facility and to allow for expansion and retention of Australian materials held by the defendant at the library building at Parkes.
Functional specifications for the storage facility were prepared after consultation with the Steering Committee and mechanical and electrical engineers. The specifications were designed to maximise the possible number of persons or bodies that may be interested in providing the facility, by permitting either modification of existing premises or “greenfields” development proposals.
The Steering Committee formed a Sub-Committee of three to be responsible for interviewing and selecting the successful tenderer.
The defendant caused advertisements to be published in The Canberra Times on 25 and 27 September 1996, inviting persons to tender for the proposed facility, “A Warehouse Facility”. Mr Wagdy Hanna, principal of the plaintiff, saw the advertisement on or about 3 October 1996.
He made inquiries and collected a copy of the Request for Tender, comprising a number of documents, including Specifications, consisting of some sixteen pages.
For these proceedings, relevant provisions of the Specifications were:
1.1SITE
1.2LOCATION
The Location of the proposed offsite facility should be either on a direct motor vehicle route between the National Library of Australia’s main building situated in Parkes, ACT and its existing leased warehouse at Hume, ACT, or within fifteen minutes extra travelling time of that route.
A further requirement of the proposed site would be that neighbouring buildings or sites carrying out noxious or dust producing industrial processes are sufficiently distant from the proposed site, that any by product of such industry or activity would not permeate the proposed site.
...
2.1 BASE BUILDING
2.2 ELEMENTS
The construction shall be from materials and employed techniques to effectively exclude the penetration of moisture, condensation, dust and prevent access by animal or insect pests.
...
2.4MATERIALS
To minimise heat flow through the structure, the external walls and roof should house the following minimum (composite) ‘U’ or transmission coefficient values:
Walls : 0.38 W/m2.K, or less
Roof : 0.23 W/m2.K
Glazing : Nil
...
2.5 CLEAR SPAN
The minimum span between vertical structural members will be governed by the configuration of the nominated shelving system, the clearance required at the ends of the shelving ranges and access requirements listed elsewhere in this specification. The offer must reference the columns in context of the shelving configuration.
...
2.8FLOOR AREA TO ACCOMMODATE
The type of shelving proposed with the offer will determine the footprint of the building for that section dedicated to shelving storage. Additional floor space of 560 m2 will remain a constant regardless of the shelving configuration proposed. This additional floor area will be required to accommodate the following spaces:
Staff work area inclusive of a photocopying room 110m2
Staff lunch room inclusive of a kitchenette 30m2
Public reading room 30m2
Secure storage area 340m2
Ablutions area 20m2
Trolley Parking bay 30m2
(Emphasis in original)
There were specifications for shelving configurations, which, obviously, were a very important consideration. The preamble to this section provided as follows:
3.2 SHELVING CONFIGURATIONS
The National Library of Australia will consider shelving systems that are manually oriented systems and/or mechanically guided and operated systems. Standard height floor mounted single tiered bays will be considered along with multi-tier industrial stacks (high racking).
The secure area shelving described at 3.5 of this specification, shall be standard height single tiered notwithstanding the shelving system offered for the main shelving storage area.
The type of shelving and any attendant materials handling equipment proposed with the offer will determine the footprint of the building for that section dedicated to shelving storage.
(Emphasis in original)
Specifications were then provided at 3.3 for the case where “standard height single tiered bays” were to be proposed. Such standard shelving was, according to the evidence of Ms Janet Smith, Manager, Stock Services of the defendant, 2.1m high, though the Request for Tender did refer to shelving of units 2.375m and 2.475m high. The Specifications, however, permitted an alternative to such shelving as follows:
3.4 NON STANDARD HEIGHT SHELVING
The National Library of Australia will consider an offer based on the supply and installation of multi-tier industrial stacks (high racking) at a greater height than listed at 3.3 above. The shelving system offered at this option shall provide the means to prevent books falling through the backs or ends of the bays.
Motorised materials handling equipment suitable to the retrieval/reshelving task must accompany the offer with this option. The lowest recommended shelf height by the equipment manufacturer must be considered within the offer.
·3.4.1 300mm MINIMUM DEPTH SHELVING QUANTITIES
20,580 shelf metres with a minimum shelf clearance of 308mm
5,460 shelf metres with a minimum shelf clearance of 350mm
540 shelf metres with a minimum shelf clearance of 440mm
·3.4.2 500mm MINIMUM DEPTH SHELVING QUANTITIES
3,070 shelf metres with a minimum shelf clearance of 160mm
·3.4.3 MAXIMUM ROW LENGTH OF SHELVING
The requirement of Building Code of Australia path of travel to fire exits matched to the offer’s proposed shelving configuration will govern the stack range length.
·3.4.4 MINIMUM AISLE WIDTH OF SHELVING
The operational parameters of the offer’s proposed motorised materials handling/retrieval equipment will determine the minimum width of aisle.
·3.4.5 MOTORISED MATERIALS HANDLING
The offer must describe the equipment in terms of lift capacity motor power source, safety features, manoeuvrability, extent of use within existing installations of a similar nature and hourly continous operational life of the energy source. Allowances shall be made within the offer to provide a purpose built operator’s platform. The equipment supplied will be required to service an item retrieval/reshelving to a maximum of 600 actions per day. Any power source, specialised floor treatments, safety railing access restriction devices, platform, fixed lighting, maintenance arrangements, back-up equipment arrangements, dedicated parking areas, ventilation requirements etc deemed necessary for the operation or servicing of the offered equipment shall be detailed with the submission and be included in the financial offer.
Details of available operator training and licence requirements shall be detailed with the submission and be included in the financial offer.
·3.4.6 MAXIMUM HEIGHT OF TOP USEABLE SHELF
The optimum operations height for item retrieval/reshelving of library items is estimated to be a maximum of 6 metres. However if the building economics, the configuration of the shelving of the offered system or other matters considered by the offerer to reduce or increase this limit, the National Library will consider such proposals against the benefits offered.
...
3.6 SHELVING SPECIFICATION
Shelving shall be supplied and installed in accordance with ASA 2143 and ASA 4084 should high racking be the nominated shelving system.
(Emphasis in original)
Twenty-six companies responded to the advertisements and a number who requested it were briefed by Mr Trevor Pidd, the then Manager, Building Management Section, Contracts and Facilities Branch, Corporate Services Division of the defendant. An open information briefing was also conducted at the defendant’s off-site repository at Hume, ACT.
At the closing date for tenders, six tenders were received. The plaintiff lodged one of these, as did Decoin and U-Stow-It.
The plaintiff, in preparing for the tender, made inquiries of various commercial property agents and selected a site in Hume. It also carried out a number of other investigations with various suppliers of items or services to be used in the facility. There is no doubt that the plaintiff and its principal, Mr Hanna, put a lot of effort and care, not only in making these inquiries and obtaining firm quotations, but in thinking about and identifying how the facility could be built and its operation. While that hard work is to be applauded, it does not by itself justify the case for the plaintiff.
The Steering Committee considered the tenders and, in some cases, sought further information from them. In particular, Mr Pidd wrote to the plaintiff on 24 October 1996, seeking further information; ten specific requests were made. In the letter, he then added:
At this point of constructing this questionnaire I recognise that evidence of compliance with a major part of our specification needs to be solicited. Perhaps our collective efforts would be served in the most efficient way by your response to the items listed above followed by a schedule of specification clause specific, construction detail response in a text format with reference to sketches where necessary.
The letter then requested “[p]articular emphasis on the following clauses” and listed 24 clauses in the Specification.
This was the first request for further information of those that were sent to a number of the tenderers.
The plaintiff prepared a response to this letter and Mr Hanna delivered it personally on 25 October 1996. Further material was tabled when the plaintiff was interviewed.
On 28 October 1996, the Steering Committee considered all six tenders received (in respect of the plaintiff’s tender presumably with the plaintiff’s letter of 25 October 1996) and excluded all but the tenders from Decoin, U-Stow-It and the plaintiff. It was agreed to invite each to a meeting with its Sub-Committee.
Letters were then sent to Decoin and U-Stow-It, described as “offer specific letters” which sought further information on a number of issues similar to the letter sent to the plaintiff referred to above (at [39]).
Interviews were then conducted by the Sub-Committee on 31 October 1996 with representatives of each of the three tenderers. At the meeting of the Sub-Committee after the interview was conducted with the plaintiff, it was agreed that the plaintiff was not regarded as complying with certain of the selection criteria and was eliminated from the process.
On 5 or 6 November 1996, the Sub-Committee met and agreed that it would recommend Decoin as the preferred tenderer. That decision appears to have been formalised on 11 November 1996 when a recommendation to that effect was put to the delegate of the defendant who had authority to accept the successful tender and submit it to the Minister for final approval.
A contract was entered into with Decoin and the defendant in May 1997. The facility was then constructed by Decoin and that construction has been completed. A number of the witnesses who appeared before me had inspected the completed facility.
In early 1997, Ministerial approval had been given to the awarding of the tender contract to Decoin and the defendant set about notifying the unsuccessful shortlisted tenderers, the plaintiff and U-Stow-It.
An officer of the defendant, Francis Noel Cross, telephoned Mr Hanna of the plaintiff on 18 February 1997 and advised him that the plaintiff’s tender had not been successful. Mr Hanna asked him about the site at which the successful tenderer was to build the storage facility and its tender price.
On the same day, the plaintiff wrote to the defendant seeking details of the sites of the tenders received by the defendant and “proposed rentals for each bid.” The defendant replied saying that it considered the information requested to be commercial-in-confidence and could not be made available.
Subsequently, as noted above, the plaintiff commenced proceedings in the Federal Court of Australia on 29 June 1998 alleging that the defendant had breached the “tender process contract” that regulated the submission and consideration of tenders, had engaged in deceptive and misleading conduct and had breached a duty of care it owed to the plaintiff.
THE PLAINTIFF’S TENDER
Subject to the comment I made above (at [9]), the plaintiff’s tender can be considered for the purpose of these proceedings, in order to determine its content and the qualities on which the plaintiff relied, to have comprised of:
(a) the Tender Documents delivered on 22 October 1996;
(b) the response to the letter seeking further information, that response being dated 25 October 1996;
(c) a letter from the plaintiff dated 28 October 1996; and
(d) a document dated 31 October 1996, tabled at the interview with the Sub-Committee had with the plaintiff on that day.
These are an extensive number of documents, including plans, making a summary of its contents somewhat of a challenge. A problem for such a summary in this context is that it is clear from the evidence in this case that the plaintiff and defendant have quite differing perspectives as to the important features of the tender from their respective interests.
Nevertheless, I can say that, relevantly, the plaintiff’s tender proposed for the storage facility:
(i) a site in Hume;
(ii) a lease for 10 or 15 years;
(iii) annual rental of $477,200 (including $325,000 for the “Base Building”);
(iv) net lettable area of 2,500 sq m (including 2,000 sq m of storage area);
(v) a steel frame with 36,000mm clear span;
(vi) prefinished double layer walls of heavy duty colourbond with internal insulation (unspecified);
(vii) shelving of 7.5 m from Brownbuilt which supplied a quotation for “high rise shelving ... similar to our Universal Channel” with a brochure, included in the tender, but subsequently in the letter of 28 October 1996 said to be Universal Channel shelving;
(viii) two “Crown” stockpicker motorised handling equipment, Crown also supplying a quotation and a brochure;
(ix) a plan provided with the material tabled on 31 October 1996 showing a larger building with more storage space, but which was subsequently said by Mr Hanna to show how the original design could be expanded, though it did not indicate that anywhere on the plan;
(x) shelves in the storage area that were in parallel rows facing the short sides of the rectangular building with, in the original plans, a relatively large aisle on one side with shelves above 3m clearance for the last 5 rows, though in later plans the shelves above 3m clearance extended the length of the building; and
(xi) a rectangular building with office and other facilities as a square extension half way down one side.
The Decoin tender proposed for the storage facility:
(i) a site in Hume;
(ii) a lease for 10 years with 2 extensions of 5 years with alternative costings for a 15 year lease and a 20 year lease;
(iii) an annual rental of $572,715.00 (including $276,580 for the “Base Building”);
(iv) net lettable area of 2973 sq m;
(v) a steel frame with 25m and 20m clear span;
(vi) clay double brick walls with 50mm styrene cavity infill;
(vii) high rise shelving of 6.6m (though the drawing actually referred to 7.0m shelving) with the same brochure for Universal Channel shelving from Brownbuilt as that included in the plaintiff’s tender;
(viii) two “Crown” stockpickers as motorised handling equipment, with the same Crown brochure included as in the plaintiff’s tender;
(ix) in a plan provided, shelves in the storage area in parallel rows facing the short side of the building but with a central aisle as well as side aisles and some shelves on a side wall; and
(x) a rectangular but nearly square storage and associated area with an extension at one end making an “L” with the main building at the extended end, and the secure storage and office area.
It is, of course, difficult to summarise the features of the proposals contained in the tenders. These summaries are not intended to follow the selection criteria established by the Steering Committee’s Sub-Committee, to be comprehensive or exhaustive, or, more importantly, replicate or identify the relative importance of particular facets of the proposals from the defendant’s point of view. They are, however, the matters that appear most relevant to these proceedings.
UNIQUENESS AND THE PLAINTIFF’S TENDER PROPOSAL
The evidentiary basis for the plaintiff’s claim for breach of confidence is that:
(a) its proposal contained unique properties;
(b) the Decoin tender did not contain those properties;
(c) the building ultimately built by Decoin did contain some of the unique properties;
(d) the only way Decoin could have incorporated those unique properties is if the details of the plaintiff’s tender had been revealed to Decoin; and
(e) the defendant must have made that disclosure.
Effectively, the defendant challenges each of these matters.
To evaluate the plaintiff’s claim, it is necessary to consider each of these steps.
The plaintiff’s proposal contained unique properties
Mr Hanna, principal of the plaintiff, made a number of affidavits filed in these proceedings. In them, he outlined the plaintiff’s claim to uniqueness. It seems appropriate to set out the claims in his own words.
In his affidavit, sworn on 13 November 2006, he says:
The unique concept
The Exhibits to my affidavit identified as exhibits IIH 4, 4, 8, 10A and 10B contain the detailed tender proposal submitted by the plaintiff in response to RFT 96/32. The concept which I developed to meet RFT 96/32 was, I believe unique. After reading the tender proposal, RFT 96/32, I realised that the defendant was seeking a unique solution to a problem which confronted it and other large Australian and overseas libraries. That problems [sic] was to provide a facility for the storage (shelving) and retrieval of books and printed matter in a controlled environment which would prevent the materials being damaged by moisture, dust, light and temperature, and which was within a designated distance from the main library facility. Additionally, and crucially, the facility had to provide a certain volume of storage at a competitive price. The size of the building would be therefore determined by the shelving height and retrieval method employed to recover items. The defendant wanted a facility that would permit library staff to gain access to the stored materials quickly. In RFT 96/32 the defendant state [sic] that it considered that the optimum “operational height for item retrieval/reshelving ... is estimated to be a maximum of 6 metres” (Exhibit WIIH 3 at p10 pt 3.4.6). A maximum shelving height of 6 metres means that in order to store the volume of material required, the floor area of the building would be approximately 3,000 square metres. My design met these problems by a unique combination of higher shelving, shorter horizontal travel of the retrieval system, and thus a smaller floor area by approximately 17% combined with metal cladding walls and dedicated lighting for the retrieval system. My design meant that the net lettable area was therefore significantly reduced and the yearly rental for the building consequently reduced. After 15 years the defendant would own my building for no additional payments.
Later, he summarised the elements of his unique design in the same affidavit as follows:
The unique features of my design as submitted in the tender documents (Exhibits 4, 5, 8, 10A, 10B) were –
a. 7.5mm shelving with 7.2mm top usable shelf;
b. net lettable area of 2,500 sq m;
c. annual rent of $477,200.00;
d.wall materials – insulated panels, inner and outer layers of colorbond steel bonded to an insulated core of expanded polystyrene with U coefficient value of 0.38 W/m2.k;
e.retrieval system – 2 number Crown stockpickers model SP 3015 tL214 capable of reaching the top shelves in a safe and stable manner with dedicated lighting.
I assume that in a. the reference should have been to “7.5m” and “7.2m” not, as in the affidavit, “7.5mm” and “7.2mm”.
There is a sense in which the proposal is obviously unique, namely that, as it has specifically quantified, identified features, which were incorporated into the plaintiff’s tender, was a separate, complete whole, a separate individual proposal – a unique bundle of words, plans and figures. That, of course, is not the sense in which uniqueness is relevant.
The Macquarie Dictionary (Macquarie Publishing Pty Ltd, 5th ed, 2009) at 1798 gives three meanings of “unique” as follows:
1. of which there is only one; sole. 2. having no like or equal; standing alone in comparison with others; unequalled. 3. remarkable, rare or unusual.
What, it seems to me, the plaintiff is saying is that his tender proposal has such remarkably rare or unusual features, ones peculiarly responding creatively to the Request for Tender, that it is so unlikely that another person would independently have thought of them that they could, if included in another proposal, only have been sourced from the plaintiff’s tender.
Of course, it is not possible absolutely to exclude serendipitous coincidences, but it is necessary to consider the circumstances carefully to see whether such coincidences can be at least discounted.
Nevertheless, it is appropriate to consider each of the relevant elements of the plaintiff’s proposal to see what may be unique about them in the sense of being remarkable, rare or unusual. It is, thus, akin to a circumstantial case in criminal law so that the plaintiff must satisfy me that there is no other rational explanation for the presence of the relevant features in the building as constructed than that the content of the plaintiff’s tender must have been disclosed. See Shepherd v The Queen (1990) 170 CLR 573 at 578.
Shelving
The first item referred to was the shelf height. The plaintiff proposed a shelf height of 7.5m with 7.2m as the top usable shelf. The Request for Tender referred to an “optimum operational height ... of 6 metres” but expressly left open a higher shelf height (see paragraph 3.4.6 in [35] above). It seems to me, then, that to provide for a height greater than six metres is, in itself, hardly a unique feature, it having been in the contemplation of the defendant in considering the specifications to include in the tender. See also the evidence referred to below at [81].
The next question is whether 7.5m is a special height that renders it unique. For example, was 7.0m or 7.2m significantly different from the proposed 7.5m?
None of the plaintiff’s affidavits addressed that issue directly. It was addressed in general terms in paragraph 68 of Mr Hanna’s affidavit, extracted above (at [57]), but this really said no more than that a higher shelving reduced the floor area needed, which made good economic sense and a more efficient building, points made by a number of witnesses and hardly a secret; it is a matter of logic related to storage in general.
Indeed, as Mr Ian Stephenson, the Manager of Brownbuilt Pty Limited, which was to provide the shelving in both the plaintiff’s tender and the Decoin tender, said, “I do know a lot about storage in general and book storage is just an adaptation of our product to suit their storage needs.”
So far as the plaintiff’s plan was concerned, Mr Stephenson said that he himself had actually suggested to Mr Hanna “the configuration of the shelving based on the efficiency of storage and other parameters given by the National Library and their specification.” This included “what the footprint and also the elevation would be for the shelving and the basic configuration of that shelving with taking into account the efficiency of retrieval, storage and the like.” His plans also showed the height of the shelves on which he said he had advised Mr Hanna. He said the height of the shelving was “an interpretation by [Mr Stephenson] ... to suit [the plaintiff’s] building height.”
Similarly, Mr Stephenson was unsurprised that a tenderer would seek to use high shelving, such as the shelving proposed by the plaintiff, and, indeed, at least on its drawings, by Decoin.
He said, also, that he provided information about the design, such as the needed space above the shelves to allow for “sprinklers and the like” and to allow access to the motorised retrieval device, the stockpicker, which protrudes above the top of the shelving. There were, of course, Building Code of Australia provisions relating to matters such as building height, which Mr Hanna knew. Thus, Mr Stephenson agreed that the height of the shelving was something he provided from his knowledge of shelving, after interpreting the height of the building specified by Mr Hanna. Hence his recommendation of the particular shelving proposed, which was regularly stocked by Brownbuilt. He also agreed that Brownbuilt supplies such shelving at lower and greater heights.
He also provided information to the plaintiff about aspects of the design, based on his work in other situations, including the width of aisles and the provision, at his suggestion of a “drive-thru situation.” He agreed that he had “quite a lot of input into the plan”.
Mr Stephenson acknowledged that he had been approached by each of the short-listed tenderers, the plaintiff, Decoin and U-Stow-It. He told them that he was providing quotations for the others. He provided a quotation for Decoin for the same kind of shelving. He recommended the same shelving to each tenderer.
When asked whether the provision of high shelving and stockpickers to retrieve items from high shelving is a new phenomenon, he answered “No, not at all”.
In approaching his customers, Mr Stephenson explained:
My expertise is in the maximisation of the structure both in a plan view and in an elevation to get the maximum amount of storage in that area, given other parameters of retrieval rates and the like.
He was also aware that each tenderer was proposing to provide for the same mechanical retrieval system, the Crown stockpicker. Mr Stephenson’s evidence was important for it showed the likely source of the shelving height for the plaintiff’s tender and it made a relevant connection with each of the tenderers and the information which they had sought and which he could supply.
The Decoin tender referred to shelf height of 6600mm and also 7000mm. It was acknowledged that this meant 7000mm to the top of the shelf, a relevant comparator. It was not the same as the plaintiff’s tender. Ultimately, the shelves were built to 7225mm. In his affidavit of 14 June 2007, Mr A Stodulka, Managing Director of Decoin at the time of the tender, pointed out that the height was determined by a number of factors, including the maximum allowable building height, the minimum allowable roof pitch, the need for allowance for insulation and linings, steel beams, airconditioning ducts and fire hydraulics and shelf braces to stabilise the shelves. This ultimately permitted a shelf height of 7.5m. Mr Stodulka said that the change was a result of these matters being further considered together with a clarification received from the supplier of the stockpicker that it could reach to a maximum height of 7.5m.
Further, in her affidavit of 6 June 2007, Ms Janet Smith, who had, at the time, been Manager, Stock Services of the defendant, stated:
Although the concept of ‘high rise’ shelving (that is shelves that were above the standard approx. 2.1 metres in height) was new to the Library for storage of books, I recall that, along with the Library’s Occupational Health and Safety Officer and another member of Stack Services staff, I visited a number of facilities in Sydney prior to tender specifications being developed for the warehouse project, to view operations using this type of shelving and to investigate its feasibility for use in the Library’s facility. ‘High rise’ shelving was in common use at many facilities at the time.
Ms Smith explained in cross-examination that the “many facilities” to which she referred were not libraries. It was clear, however, that she had accepted that such high rise shelving was applicable to library storage. Indeed, she commented that:
we did quite a bit of research about the possibilities because ... we wanted to know whether we should go to tender setting ... low shelving that we were used to ... or whether ... our staff could deal with [high-rise shelving] and that we could manage effectively.
It was clear in the context of the actual specifications in the Request for Tender, as noted above (at [35]), that Ms Smith had already answered that question in the affirmative and thus initiated the possibility of the storage facility having high-rise shelving. The idea of such shelving was that of the defendant or, at least, originated from it.
This was explained in his oral evidence by Mr Pidd:
You see, and if you need the RFT please indicate that, sir, but the problem for the library which the RFT was addressing was the need to obtain firstly an alternative storage facility for its material in that general sense, correct? --- Yes.
And that the particular problem was how to store large volumes of material which were ever increasing in the most efficient manner? --- That wasn’t the intent of the specification that I wrote because of the nature of the property market that we didn’t want to exclude people, so we virtually said that you can have – and at that time in Canberra, the market was pretty slack, so they could have a huge warehouse that they could put standard height shelving in that someone could manually take it out; they could provide mechanically assisted shelving, such as compactus; or alternatively they could supply industrial high rise shelving. So that we didn’t want to exclude anybody from the market, so there was those three choices that people could adopt.
But the industrial high rise you’re talking about wasn’t 7.5 metre high, was it? --- We only said, and this was on the basis of the people that manage the stacks who had gone and – to visit various organisations that had high rise shelving in. And they had formed the view that 6 metres was probably the most optimum height because of the speed of retrieval et cetera. So, that’s how that found it’s way into the specification.
Accordingly, it does not seem to me that the height of the shelving was unique in any relevant way. It was an inevitable function of the imperative to maximise the floor area and the possible reach of the mechanised retrieval system and the likely result of the advice that Mr Stephenson gave, which advice was available to each tenderer.
Net lettable floor area
The net lettable floor area was the second item. The plaintiff’s proposal was for a building with a net lettable floor area of 2,500 sq m. This is, as was said a number of times in the evidence, and as is obvious, directly related to the cost of the construction of the storage facility and the rental to be paid.
The proposed net lettable floor area for the Decoin tender was 2,973 sq m. In a revised tender, it reduced that to 2,734 sq m. This was a result of increasing the height of the shelves to 7.2m and of amending the thickness of the walls infill from 50mm to 75mm. This reduced the net lettable floor area and also the annual rent. Mr Stodulka explained that, before he increased the height, he assured himself that there were no safety implications.
None of this was subject to any challenge in cross-examination of any of the defendant’s witnesses, and, in particular, of Mr Stodulka. Ultimately, the building was, it appears, built with a net lettable floor area of 2,648 sq m or 2,556.6 sq m. Both figures were referred to in the material I had. It appears that the latter figure excluded the 92 sq m loading bay. This issue was not raised with Mr Stodulka in cross-examination. The latter size is, of course, very similar to the size of the plaintiff’s proposed building. It seems to me, however, that the area is so much a function of a significant range of other matters that it is hardly a necessary or useful mark of uniqueness, unless all the other features are identical. Some of those other features were said by Mr Stodulka to be different from the plaintiff’s tender proposal and he was not relevantly challenged. Some features, of course, were the same, such as the need to have aisles of a size to accommodate the stockpickers, which would thus have to be the same, a proposition embraced by Mr Hanna.
It seems to me that while the plaintiff’s floor area may be unique as a number it is not so in a relevant way. Two things are important: the floor area is a product of the configuration of the building, which was primarily designed, of course, for storage of books and similar materials on shelves provided in rows and thus likely to be similar in all proposals to meet the specifications and that it depended on such a range of components that it did not provide a valid measure of whether the underlying components were unique.
Annual rent
The third item of uniqueness referred to by Mr Hanna was the annual rent. The plaintiff had included an annual rent of $477,200 which included the Base Building rent at $325,000 with specified additions set out in the tender.
It was never explained how this was relevantly unique. Clearly the rent would be dependent on the cost of obtaining the land, whether by purchase or lease, and the cost of constructing and maintaining the building. Different components may result in the same final rent though individually being widely different.
This is shown in the fact that the relevant comparators for Decoin in its original tender showed an annual rent of $572,715 (with a Base Building rent of $276,580) for a ten year lease and $532,625 (with a Base Building rent of $257,219.40) for a twenty year lease. The revised proposal reduced the annual rental to $509,730 because of the reduced area and other additions which, in discussion with the Sub-Committee, were agreed not to be required. It appears from the evidence that the final annual rental for the building as built was $467,666 which is, of course, very close to but not identical with that proposed by the plaintiff.
In this case, there are significant differences between the overall rent and the components in each case of the original tenders. The evidence, referred to below, as to how Decoin came to the final rental shows factors quite independent of the features of the tenders that, in the case of the plaintiff’s tender, the plaintiff said were unique. No explanation was offered in the material submitted by the plaintiff, that is evidence or submissions, as to why such evidence should be ignored.
Thus, while the actual amount of the rent may be unique, it is such a composite figure that it cannot be said to be a relevant feature showing that there was a uniqueness justifying a conclusion that there had been disclosure of the plaintiff’s tender.
Materials for construction of the walls
The materials from which the walls of the proposed storage facility were to be constructed comprised the next item. The plaintiff proposed “prefinished heavy duty color bond [sic] with insulation barrier”. Mr Hanna described this in his affidavit as noted above (at [62]). He also said that he told the Sub-Committee on 31 October 1996, that “[t]he material which I am using is colorbond clad finished, which discourages settlement of dust.” In the tender plans, it was described as “BHP custom blue orb in colorbond off-white”.
Decoin’s tender proposed the use of cavity brickwork with insulation, quite different from that of the plaintiff’s proposed wall construction. What was actually constructed used a proprietary product known as Equitilt. It was described in a product brochure tendered in the proceedings as:
a stressed skin sandwich panel, comprising COLORBOND© pre-painted steel skins continuously laminated over a fire retardant treated Expanded Polystyrene (EPS) core ... [a] lightweight panel with excellent thermal insulation properties.
Mr Alistair Swayn, a distinguished architect, filed an affidavit as to the comparison between the relevant Decoin plans and those of the plaintiff. He addressed the wall materials. He said that, in his opinion, they were different but that, in any event, the materials proposed in the plaintiff’s tender were not unique. They were, he said, “industry standard products”.
Mr Eric Martin, a very well-qualified architect, addressed briefly the issue of the wall materials. In his affidavit, he described the wall material for both the plaintiff’s tender and the building as built by Decoin as “metal cladding both sides and insulation between”. He did not go into particulars. This evidence was not inconsistent with that of Mr Swayn.
Mr Roger Pegrum, also a distinguished architect, referred as well to the wall materials in the building as built. He referred to the wall materials as one of the “similarities” with the plaintiff’s tender as follows:
External walls were to be brickwork but are now prefinished steel panels and precast concrete.
The reference to concrete is interesting. Mr Swayn also referred in his oral evidence to the “concrete internal lining”, which is consistent with Mr Pegrum’s description. Mr Stodulka, however, was adamant that there was no concrete wall on the inside of the building he proposed.
Mr Stodulka also described the materials he used and those in the plaintiff’s tender as different. The BHP product proposed by the plaintiff was “corrugated sheeting” and he said that BHP did not “make anything like Equitilt at that time in corrugated sheeting with a laminated polystyrene foam insulation layer”. The plaintiff’s wall material was not, he said, “a laminated product like Equitilt”.
In any event, the U-Stow-It proposal for the walls was “100mm colourbond steel sheet insulated panels vapour sealed and external to the structural frame” for the main book storage space, relevantly similar to that which was in the plaintiff’s tender. There is no suggestion that the plaintiff’s tender had been disclosed to U-Stow-it.
While at some level, there may be a descriptive similarity between the two methods of wall construction, I am not satisfied from the evidence that the plaintiff’s wall material was unique; it was clearly a readily available product which was not, in fact, the product ultimately used in the construction of the storage facility itself.
Materials retrieval system
The final item referred to was the retrieval system for the stored material. The plaintiff proposed two “Crown” stockpickers model SP3015TL214. Decoin proposed two or three “Crown” stockpickers and included a brochure for the series SP3000 stockpicker which included, it appears, the model referred to by the plaintiff. U-Stow-It proposed “[t]wo Crown Model SP 3015TL214 stockpickers”.
There can be no suggestion that the plaintiff’s proposed materials handling system was unique.
Combination of features
The only issue, then, is whether, notwithstanding that I have not found any of the individual items were unique in the relevant sense, the combination was unique.
In a different context, Megarry V-C said in Coco v AN Clark (Engineers) Ltd [1968] FSR 415 at 420:
Novelty depends on the thing itself, and not upon the quality of its constituent parts. Indeed, often the more striking the novelty, the more commonplace its components.
Attractive though such a statement is, and undoubtedly true in many cases, the storage facility in this case is somewhat different.
I am satisfied that the plaintiff’s proposal is not novel in this sense. The similarities of the proposals contained in the various tenders was as much a result of the limited options that were available to comply with the specifications of the defendant as on novel solutions. Unsurprisingly, all three tenders showed a rectangular base building with rows of shelves parallel to the shorter side of the rectangle. The actual height of the shelves differed, but, for reasons set out above (at [68]–[85]), I am satisfied that was an issue expressly raised in the Request for Tender.
The actual height of the shelving was in large part determined by the regulatory height allowable for the building itself and the height that the stockpicker could reach and safely allow staff to use it. The first matter was a matter of building and planning regulation, the second of commercial availability, the third occupational health and safety regulation.
I note, too, that in her affidavit of 25 May 2007, Ms Maggie Jones, who was at the relevant time, Director, Collection Management and Retrieval Services for the defendant, expressed the following view:
In my opinion, the detail in the plaintiff’s tender is not unusual or unique and I do not recall at the time considering that the plaintiff’s designs were particularly noteworthy in any aspect as to uniqueness.
Her opinion as so expressed was not challenged in cross-examination.
Ms Smith made a similar statement in her affidavit and was also not challenged on it in cross-examination.
In any event, if the Court is to consider novelty in the sense in which it is referred to by Sir Robert Megarry V-C, then the Court must consider the whole of the facility, not merely one part, even if the central and largest part is the serried racks of high-use shelving. The similarity of the shelving was demonstrated by placing a transparency of the plaintiff’s proposed layout of the proposed storage facility over the storage facility as built. The shelving was, in the circumstances, however, not strikingly similar: rows of parallel shelves will, of course, be similar to rows of parallel shelves, hardly striking. Further, the “thing itself”, namely the whole of the facility, included significant functional differences such as the central aisle of the Decoin facility, the different operational arrangements for the stockpickers between the facilities proposed by the plaintiff and that constructed by Decoin, and the layout more generally, including some features of the shelves which, in the plaintiff’s tender, included some high rise shelves which commenced at a height to allow the stockpickers to travel under them (as noted in item (x) in [54]), a feature not replicated by the ultimately built facility. The floor plan comparison between the two made by Mr Swayn seems to me to be compelling. It also shows that the broad outline and functionality of the Decoin facility did not change significantly between the original tender and the completed facility but was significantly different from that proposed by the plaintiff.
I am not satisfied that there was in the relevant sense any uniqueness or novelty in the facility proposed by the plaintiff in its tender such that similarities with the proposals in the other tenders, especially that of Decoin, could only be explained by Decoin gaining knowledge of the plaintiff’s tender. Indeed, as noted below, there were rational and compelling explanations for similarities not dependent upon disclosure.
I accept that, as submitted by Mr R Thomas, counsel for the plaintiff, information can be confidential even if not novel. He referred to what Gordon J said in Krueger Transport Equipment Pty Ltd v Glen Cameron Storage and Distribution Pty Ltd (2008) 78 IPR 262 at 284; [92]:
Before proceeding, however, I pause here to note that care must be taken in using such loaded terms as ‘novel’ in this context. The parties proceeded in this case as if it were a patent matter, presenting expert testimony regarding prior art, common general knowledge, and so forth. That is to say, they implicitly proceeded as if the Krueger design had to be patentable in order to be confidential ... Unfortunately, this is a fundamentally wrong approach in breach of confidence litigation. As Megarry J said in Coco (at 48), one should not get caught up by particular adjectives such as novel; ‘whether it is described as originality or novelty or ingenuity or otherwise, I think there must be some product of the human brain which suffices to confer a confidential nature upon the information’. To put it more plainly, information need not be patentable, copyrightable, or otherwise protected by the intellectual property laws in order to be confidential. Common examples of commercial information that may be considered confidential even if not novel in the patent law sense include customer lists, price lists, business proposals, and marketing strategies. In this regard, I would draw the parties’ attention to the concise definition of confidentiality provided by IP Toolbox in its handy reference page, ‘The concept of legal confidentiality’ (available at article&ID=194):
Confidential information need not be entirely composed of information that is not available publicly. Public information can also be considered as confidential. This depends on the way a business uses the information. A customer list, for example, can be protected as having the necessary legal confidentiality where it has been developed and treated as confidential, even though it is drawn from information which is publicly known (ie. telephone records, trade journals, public registers etc).
While that must all be accepted, it is not here to the point in this case, for the issue is not whether the information in the tender was confidential. That seems to be accepted by both parties. The issue is whether the features in what Decoin ultimately built as the storage facility were so unique, or novel, that it could only have been so built if the plaintiff’s tender had been disclosed to Decoin. That does rely on concepts of novelty and not merely confidentiality.
The Decoin tender
Just as the plaintiff’s tender, or, at least, final proposal for consideration by the Sub-Committee, consisted of a number of documents submitted over time and after the first response to the request for tender had been lodged with the defendant on 22 October 1996, so Decoin’s tender consisted of the document submitted also on 22 October 1996, the closing date, but also some modifications made thereafter.
This involved a revision dated 31 October 1996, the day of the interviews. There were also two other variations after that. I need to take these into account.
I also need to take into account, for a full evaluation of the matters, issues that were raised by Mr Pegrum. I have already addressed the issues that the plaintiff said were unique in his tender proposal. I have found that these were not so unique that any inclusion of one or more of them in another tender on the building as actually constructed would only be explicable by the disclosure of the contents of the plaintiff’s tender. Mr Pegrum, however, referred to a list of six “similarities” between the plaintiff’s tender and the completed building which he said was “short but telling”. I infer that he was saying that these were such as to suggest that there must have been disclosure. This list includes some matters referred to by the plaintiff, but includes some additional matters I shall consider.
Thus, I need to consider each of these matters in terms of the Decoin tender and the completed building in the context already proposed (at [53] above).
The first item is the location. Decoin in its original tender (that is the document lodged on 22 October 1996), proposed a block at Block 14 Section 22 Hume at the southern end of the suburb. It was close to a sawmill and a pre-mixed concrete plant. this site was also the site identified in the revised tender (of 31 October 1996). On 4 November 1996, however, he proposed instead a block at Block 27 Section 2 Hume, which was about 1.6 kilometres further north in the suburb. It was well away from the sawmill and the concrete plant. It was also only three blocks away from the site proposed by the plaintiff. That variation was accepted by the Sub-Committee.
The second item is the floor area. As noted above, the Decoin tender originally showed this as 2973 sq m in the tender schedule. On the accompanying plan, it was noted as 2937 sq m. In the revised tender, the area was 2734 sq m. In evidence, Mr Stodulka said this was achieved “by rationalising the shelving layer”. This includes an increase in the height of the shelves to 7225mm.
The third item is the shelving layout. In the Decoin tender, there were 37 standard “shelf units in two rows facing the short side of the building with, at one end of one row 5 shorter shelf units adjacent to the loading bay and three shelf units at the side between the secure storage, the office and the trolley area”. There was an aisle between the two rows. In the revised tender, the shorter shelf units had been made full length and one of the thee shelf units at the side had been removed.
The fourth item is the shelving height. In the Decoin tender, the shelf height was noted as 6600mm, though on the accompanying plan, it was shown as 7000mm. It appears that this difference was from the shelf to the top of the shelf. As noted above (at [123]), the revised tender showed the height as 7225mm. This, it appears, would have resulted in a height to the top of the shelf of about 7500mm.
The fifth item is the external wall materials. In the Decoin tender and the revised tender, the wall materials proposed was 270mm clay brickwork with 50mm styrene cavity fill (75 mm in the revised tender).
The final item was the rental for the first year. The Decoin tender had three schedules: $572,715 (with Base Building $276,580) for a 10 year lease, $555,533.60 (with Base Building $268,282.60) for a 15 year lease, and $532,625 (with Base Building $257,219.40) for a 20 year lease. The revised tender did not include a schedule of prices. A letter dated 5 November 1996, however, noted a 3% per annum reduction in rental “for a 15 year lease from 10 years”.
In addition, a document tabled at the interview that Decoin attended with the Sub-Committee on 31 October 1996 addressed issues that had been raised by the Sub-Committee and, as a result, reduced the rental to $509,730 per annum for a 10 year lease. On 5 November 1996, Decoin offered to reduce the rental to $467,666 per annum for a 15 year lease. I note that U-Stow-It also addressed the issue of a 15 year lease on or about 6 November 1996.
Mr Hanna had also referred in his description of uniqueness to two other matters which, for completeness, I mention here. The first is the material from which the walls were to be constructed. That is dealt with above (at [126]).
The second matter was the retrieval system. As noted above (at [104]), all three tenderers, including Decoin, proposed 2 “Crown” stockpickers model SP 3015TL214.
Finally, in its Statement of Claim though not elsewhere, such as in Mr Hanna’s affidavit, the plaintiff referred to the matter of “clear span”. The plaintiff proposed no internal columns. The Decoin tender was not completely clear but it seemed that it proposed columns at 25 metres.
The building as constructed
Using the terms referred to by Mr Pegrum, it appears that the building as constructed contained the following elements.
As to the first element, namely the site, the facility was built at the location Decoin re-negotiated with the defendant on 4 and 5 November 1996.
As to the second element, the evidence of the net lettable area of the building was unclear. A letter from Decoin to the defendant dated 8 August 1997, stated that “the actual figures from those plans submitted to DELP [Department of Environment, Land and Planning of the ACT] are: ...
Net lettable area warehouse 2289 m²
(As defined by BOMA) loading bay 92 m²
office 267 m²
This totals 2648 sq m of net lettable area. A plan prepared by Archline and dated May 1997, however, showed the floor area as 2556.6 sq m. I am, on the state of the evidence, unclear about the true comparator given the matters referred to above (at [88]). For the purposes of these reasons, I am prepared to accept that it was, in fact 2556.6 sq m, that is, excluding the loading bay.
The third element is the shelving layout. The actual layout was similar to that in the revised tender, though it appears that two “half” shelf units (that is one sided, not two-sided) had been added to the two units shown at the side. Nineteen of the shelf units in the parallel rows are shorter than the remaining twenty-two units. A row of shelf units was also placed on the outer wall of the secure storage area. There was an aisle down the middle of the rows.
The fourth element was the shelving height. The shelving in the completed building was a height of 7225mm, the same as in the revised tender.
The fifth element was the wall material. The building was constructed using the Equitilt panels. These differed markedly from the brick and infill proposed in the Decoin tender and revised tender.
The final element was the rental. The final rental, according to the letter from Decoin dated 8 August 1997 (see [134] above), stated a rental for a 15 year lease was $467,666 per annum.
As to the additional matters, the position is as follows.
The walls were ultimately constructed of the product, Equitilt. It is referred to above (at [96]). The description is important but I do not need to repeat it. I refer to the comments above (at [97]–[101]). The reason for this is that the Sub-Committee had a concern that the plaintiff’s construction may require a metal to metal connection from the outer skin of the wall, being corrugated iron, which could easily result in transfer which can cause condensation and which would, therefore, be a risk to the stored collections. This concern was not alleviated in questioning at the interview with the plaintiff. The lamination of the Equitilt product and its method of construction would have resolved that issue.
The materials retrieval system actually in use was as proposed in each of the tenders.
As to the clear span, the facility was actually built with columns which were incorporated within the shelving, different from the tender proposal of the plaintiff.
Decoin could only have included those items different from its tender by knowing what was in the plaintiff’s tender
In relation to this, there is a range of evidence I must consider. The first is what explanation was offered for the changes between the tender and the ultimate construction as set out above. The second is the evidence of whether there was any disclosure. The third is simply an assessment of the necessity of disclosure to the final design.
As to the first of these matters, there is a range of evidentiary material. I turn initially to the evidence of Mr Stodulka. His overall approach to the tender process was explained in his affidavit of 18 October 2007:
The original plans accompanying Decoin’s tender response of 22 October 1996 were conceptual and plan 96060/01 was indicative of Decoin’s proposed shelving. Decoin, in consultation with the Library, intended to refine its plans so that the plans would meet the necessary planning authority requirements ...
Under cross-examination, he expanded on this approach:
So would it be fair to say then that the original tender lacked, in your mind, some degree of specificity, lacked some specifications, that were going to be added later? --- I think we understood there would be evolutionary improvement in those concepts that we submitted. Now I can give you several examples of how those evolutionary concepts came about in every sort of aspects of the design.
...
The tender that you put forward on 22 October 1996 lacked some specifications, a degree of precision, that you understood would be added to it, in your words, as it evolved over time? --- Refinement. Refinement, yes.
Well, the word ‘concept’ is a bit more than indicating something more than refinement would be needed, does it not? --- Not in my mind, I knew what I was going to build and it was sort of set by size of the parameters around the shelving.
But it is the case that you understood that consultation would take place with the library, in order to refine your concept, your design? --- I would say that the – in our submission we met the minimum requirements, so if we were – can I give you an example of this maybe where we refined it, or we sort of improved the design, or?
Well I’ll come to that in a moment, sir. What I’m focusing on is your own words in paragraph 4. ‘Decoin, in consultation with the library, intended to refine its plan so the plan could meet the necessary Planning Authority requirement’? --- That was one aspect of that refining process, to meet the requirements of the ACT Land and Development ...
But you understood that your concept and plan 9606001 would be refined in consultation with the library. Correct? --- The details would be, like certain details would be, yes. You know, not the design of the shell, they were interested in the design of the shell, they were interested in the mechanism of the – how the shelving would operate more than the superstructure.
In Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 322–3, Yeldham J considered the jurisdiction of a tribunal and said:
As I have earlier said I consider that the expression ‘arising out of a contract for the supply of goods or the provision of services’ is sufficiently wide to bring within the definition of ‘consumer claim’, a claim by a person for money or performance of work (or otherwise, as is provided in the definition itself) being an obligation arising out of a contract of the relevant kind, to which the respondent to the claim against whom an order is sought is not a party. Provided a contract between consumer and the person engaged in a business activity for the supply of goods or services does exist it is necessary only, to constitute a ‘consumer claim’, that such claim be one ‘arising out of’ the contract. Whether it is in tort or under the Sale of Goods Act or in contract is to my mind an irrelevant consideration.
Starke J in Smith v Australian Woollen Mills (1933) 50 CLR 504 at 517–18, stated that “[t]he expression ‘arising out of’ imports some kind of causal relationship ... but it does not necessitate direct or physical causation.” Thus, for example, Allsop J, with whom Finn and Finkelstein JJ relevantly agreed, held in Comandate Marine Corp v Pan Australian Shipping Pty Ltd (2006) 157 FCR 45 at 90–1; [176] that a claim under the Trade Practices Act 1974 (Cth), in respect of representations made during negotiations leading up to the entry into a charter party for a ship which representations turned out to be false, was a claim “arising out of the time charter”. His Honour said:
This being, in my view, the correct approach, it is clear that all the Trade Practices Act 1974 (Cth) claims here arise out of the time charter in that they arise out of the formation of the contract. That this is so is demonstrated here by the equivalent evidence (as can be seen from the pleading) necessary to show (1) the falsity of the representations and the breach of the asserted contractual terms; and (2) the damage flowing from the misleading or deceptive conduct and the breach of contract. It is also demonstrated by the fact that the conduct asserted to be misleading or deceptive was the body of negotiations that led to the formation of the contract. It is also demonstrated by the fact that the contract was entered in reliance upon the impugned conduct. Without the entry into the time charter, that is without the coming into existence of the time charter, there would have been no act of reliance upon which to found a cause of action under the Trade Practice Act. It is true to say that, in one sense, the claims also arise out of the Trade Practices Act itself; but they do arise out of the contract in the sense discussed above.
Of course, the phrase has to be read in conjunction with “or in any way related to”, also in clause 2, which is clearly a phrase of very wide import: IBM Australia Ltd v National Distribution Services Pty Ltd (1991) 22 NSWLR 466 at 477, 483, 487. As Yeldham J pointed out in Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508, the phrase would, in relation to a contract, include a reference to matters such as frustration, rescission and rectification.
It seems to me that, in this case, the phrase is quite wide enough to include the conduct of the tender process (assuming no contract has come into existence) and the breach of any duty owed by the defendant as the party calling for the tenders.
I rely particularly on the fact that the tender process contract pleaded by the plaintiff in the Federal Court proceedings was referred specifically as regulating “the procedures to be followed and the criteria to be applied in the award of the [tender]”, which procedures must have included compliance with any duty of confidentiality, as this would be crucial to the assurance of a process that did not undermine the application of the selection criteria. It is confirmed by the evidence of Mr Hanna and officers of the defendant as to their understanding of the need for confidentiality as an element in the process.
Even were there to be no express contractual term as to confidentiality, the existence of the contract pleaded by the plaintiff and the circumstances in which it was made gave rise to the implication of the implied term imposing a duty to respect the confidentiality of the plaintiff’s tender material and this is clearly “arising out of” the process regulated by the contract. At worst it is in a very direct way “related to” it.
Further, the pleadings alleged that the defendant issued the Request to Tender and the plaintiff lodged a tender. Even in the absence of a tender process contract, any alleged duty must arise out of or be related to those facts.
I have no doubt that these proceedings are within the terms of the Deed of Settlement and the plaintiff had, thus, released the defendant from any liability that it could have suffered in these proceedings.
Accordingly, the plaintiff had covenanted not to sue the defendant, by virtue of the Deed of Settlement, for any claim that the plaintiff may have had arising out of any breach of any term of the “tender process contract” or, alternatively, of any breach of a duty of confidentiality created by the tender process. This would, of course, have been a complete defence to the plaintiff’s claim. It was, of course, pleaded as such by the defendant.
In the counter-claim, however, the defendant seeks the following remedies:
(i) An order in the nature of specific performance to stay the present proceedings.
(ii) An injunction restraining the plaintiff from commencing any further court proceedings against the defendant in respect of any matter arising out of or in any way related to Federal Court of Australia proceeding number AG 52 of 1998.
(iii) In the alternative to (i) and (ii), damages for breach of the deed of settlement, and, in the alternative, restitution on the basis of a failure of consideration under the said Deed.
(iv) Costs, to be paid on the indemnity basis.
The first two orders do not seem to me to be available. As to the first, the proceedings have now been heard. Such an order would ordinarily be likely to be made at an interlocutory stage of the proceedings rather than after they have been heard. I do not consider it appropriate, especially as I have found in favour of the defendant on the plaintiff’s claim, to make such an order.
As to the second, I have no evidence to suggest that the plaintiff proposes to commence any further proceedings. No doubt my findings on the questions of the limitation issue would be a significant disincentive to such further proceedings in any event. There is no evidence of “substantial imminence of irreparable damage” to justify such an order: R v Macfarlane (1923) 32 CLR 518 at 551.
The next order sought is damages. As I have found the Deed of Settlement, a contract, to have been breached, the ordinary consequence would be an award of damages. Such damages have traditionally been based on the rule formulated in Robinson v Harman (1848) 1 Ex 850 at 855–6; 154 ER 363 at 365, namely that:
where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.
This has been confirmed in the High Court on numerous occasions. See, for example, Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286; [13].
The damages to which the defendant would then be entitled would be the actual costs of defending the proceedings, for, had the contract not been breached, the proceedings would not have been taken. That, it seems to me, is the measure of the damages.
This would amount, then, to what is now commonly called indemnity costs as claimed by the defendant in the fourth order sought. There seems to me to be a convergence here. An order for costs is, of course, an indemnity for the costs expended by the party for whose benefit the order is made: Harold v Smith (1860) 5 Hurl & N 381 at 385; 157 ER 1229 at 1231. That is to say, they are a compensation for the costs incurred by reason of the proceedings, as was made clear by Mason CJ in Latoudis v Casey (1990) 170 CLR 534 at 543. See also per McHugh J at 567 and what his Honour then said in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97; [67].
This court has power under r 1752(1)(b) of the Court Procedures Rules to make a special costs order that the costs be payable “on an indemnity basis”. That basis has been described in the order made in Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1997) 72 FCR 151 at 159, as
such costs ... to include all costs except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the [party for whose benefit the costs order is made] will be completely indemnified by [the party who is ordered to pay the costs] for its costs ...
This accords with formulations such as those of Megarry V-C in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] 1 Ch 59 at 72. See also Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103. This has been adopted in this Territory in Quirk v Bawden (1992) 112 ACTR 1.
The circumstances under which indemnity costs may be made are now well-known. They were set out in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232–4. They have been discussed since then in a large number of cases.
One ground for such an order is where the proceedings are, in the words of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401, “commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.”
Of course, such cases should be distinguished from “marginal” cases, else every unsuccessful litigant would, by definition, be at risk of paying costs on an indemnity basis as the court has rejected their claim or defence. That is neither the law nor appropriate.
Of course, the distinction between a case so hopeless that it ought to be visited with an indemnity costs order and a merely marginal one is not easy to draw. As Gray J said in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) ATPR ¶ 42-200 at 48,332; [26]:
There is not a line, much less a clear line, between having a sound basis for litigation and acting unreasonably in pursuing litigation. Rather, there is a gap, perhaps a substantial one, between having a sufficiently good case to commence and continue proceedings, even if they turn out to be unsuccessful, and having acted so unreasonably as to warrant the award of indemnity costs, or of costs on a basis other than the usual one.
See also Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (No 2) [2005] FCA 401 at [2].
As noted by Marshall J in Winspear v Mackinnon [2008] FCA 322 at [5], “[t]he overriding consideration is the justice of the particular case.” The principles were set out as follows in Hamod v New South Wales (2002) 188 ALR 659 at 665; [20]:
Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
In this case, the plaintiff had settled with the defendant and executed a comprehensive Deed of Settlement. There was no reservations about issues that could later be litigated.
I accept that the plaintiff’s witnesses gave evidence that supported its case, though, as I have noted above (at [198]–[201]), it was not evidence on which I could particularly rely to draw the necessary inferences to the requisite standard of proof.
It is true, and needs fairly to be borne in mind, as Gray J said in Australian Competition Consumer Commission v Leahy Petroleum Pty Ltd at 48,332; [26] that “[i]t would be a rare case, however, in which any party proposing to commence litigation would be able to look at the material available to it as if it were a judge doing so at the end of a trial.”
Nevertheless, it seems to me that there is a case here for an award of indemnity costs on the traditional basis, both because the litigation was commenced in the face of the Deed of Settlement and then its continuance in the light of the comprehensive evidence of the defendant’s witnesses which showed the flimsiness of the inferences that were necessary to underpin the plaintiff’s case.
In any event, I am also satisfied that this would be the measure of the damages payable to the defendant for the breach of the Deed of Settlement. There should be an award of costs of the claim and counter-claim on the indemnity basis to the defendant.
Reliance on the Deed of Settlement
There is, however, one final issue that needs to be resolved. The plaintiff says that the defendant cannot rely on the Deed of Settlement in its counter-claim for it breached it. The allegation is that the defendant breached the term, clause 5, requiring that the contents of the Deed not be disclosed.
The plaintiff alleges that the disclosure was made to Frank Bernard Cassidy, a freelance journalist.
Mr Cassidy’s evidence was that the media outlet for whom he worked at the time had been telephoned by Mr Hanna and they subsequently arranged to meet. The two had a conversation on 27 June 1999 in which Mr Hanna informed Mr Cassidy that the plaintiff had been a tenderer for the storage facility and explained how he thought the process was unfair. Mr Cassidy recorded the conversation on tape, but the taped record does not survive.
There appear to be other conversations with Mr Hanna, but the dates were a little unclear.
Mr Hanna told Mr Cassidy that he had complained about the tender process and had taken action in court, though he did not give much detail about that.
Mr Cassidy was aware that the tender process was, at that stage, some two years old and that the building had been built. It appears that Mr Hanna told him that the court case had concluded.
Mr Cassidy had a very hazy recollection of the conversation but he had made some notes which gave some content to the conversation. Some of the notes, however, meant little to him now. He knew, from what Mr Hanna told him, that U-Stow-It was also a tenderer.
Mr Hanna was very critical of the defendant. He gave Mr Cassidy a folder of material. There was a reference to the defendant’s annual report in which it was written in glowing terms that the storage facility was a “first” for Australia. Mr Hanna clearly thought that he was the author of the ideas that had justified that claim, though, as I have found, this cannot be said to be so.
In Mr Cassidy’s notes there was a reference to “compensation” but he could not recall to what that referred. In particular, he was adamant that Mr Hanna had not spoken about the outcome of the court case.
Subsequently, Mr Cassidy spoke to Mr P Robbie of U-Stow-It. His notes of that conversation included the following information as he explained in cross-examination:
And then, ‘The ombudsman said he was actively looking during 1998.’ ‘Halfway through the year we thought they were going to make a judgment.’ ‘One of the other tenderers took court case against National Library.’ ‘Ombudsman said, “complaint put in abeyance while the court case heard”’.
All right, and the next, what’s after that? --- ‘Now we’re getting to great difficulty.’ ‘Court equals’ or it was – ‘didn’t make up its mind’ I presume that – ‘There was an outcome in May 1999.’ ‘Settled out of court.’ ‘Undisclosed details.’ ‘We’ve written back to ombudsman. Have asked him to reactivate the case.’
So you now know by reason of having spoken to Mr Hanna and Mr Robbey that there was a court case that Mr Hanna had brought, that had been settled out of court in May 1999 with undisclosed details? --- Yes.
And you knew that after Mr Hanna came to you complaining to you about the, the way the library had handled it? --- Yes.
And asking you to write a story about that? --- Essentially, yes.
Mr Cassidy then approached the defendant. There was, so he said, a process for doing so where, if he wanted information, he would be directed to a media person who, he understood, was authorised to speak on behalf of the defendant. Mr Cassidy has no memory of to whom he spoke when he contacted the defendant. He did not, so far as he could recall, speak to the then Director-General of the defendant, Mr Warren Horton.
He appears, from his notes, to have discussed the tender process with the person to whom he spoke. He also appears, from those notes, to have been told that “Purchasing Australia” and the Minister “gave [the process] the tick” and that it “[m]et all due measures of probity”.
He was also told, it appears from his notes, that the court case – presumably that brought by the plaintiff in the Federal Court – was “[s]ettled out of court.” His notes also record “[w]ithdrew the action”. This was, Mr Cassidy accepted, about the action of the plaintiff of which he had already been informed by Mr Hanna. His notes also record “Not paid. Not a settlement”.
In one of his affidavits, Mr Cassidy deposed:
I contacted Mr Hanna around the end of June to ask him questions about the tender and he advised me in words to the following effect ‘there was a dispute with the Library. It has been settled out of court and the details are confidential. I cannot discuss the matter with you.’ Mr Hanna did not disclose any details, or documents to me concerning the settlement and he was quite strong about discussing the matter.
Mr Cassidy then wrote an article which was published in The Canberra Times on 21 July 1999, under the headline “Library ‘failed’ in $5m Contract”. Relevantly, in the article appeared the following paragraphs:
Another unsuccessful tenderer, Wagdy Hanna and Associates, of Deakin, took legal action against the Library, but settled out of court.
Mr Horton said the case was dropped and Wagdy Hanna was not paid.
The parties agreed to keep details of the withdrawal confidential and Wagdy Hanna had no comment.
This was clearly based on the conversations Mr Cassidy had with someone from the defendant. This was, Mr Thomas submitted, a breach of clause 5 of the Deed of Settlement.
The plaintiff pleaded in its reply to the defence:
The Plaintiff joins issue with the Defence and additionally says that
...
that [sic] if, which is denied, the Deed of Release relied upon by the Defendant applies to the Plaintiff’s claim then the Defendant is estopped from relying upon the terms of that Deed by reason of its conduct in publicly disclosing terms of that Deed without consent or knowledge of the Plaintiff; and
I find it difficult to see how an estoppel arises in these circumstances. The notion of estoppel is usefully summarised in Professor G E Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 5th ed, 2011) at 321; [10.05] as follows:
The basic purpose of an estoppel is to prevent the harm that results from a person repudiating the foundation of a belief or assumption he or she has induced. Beyond this broad statement are numerous applications to specific circumstances and qualifications, which have developed into different ‘forms’ of estoppel, at common law and in equity.
Professor Dal Pont then refers to the “customary classification” of the three classes of estoppel as identified by Deane J, with whom Blackburn J agreed, in Reed v Sheehan (1982) 39 ALR 257 at 275:
At least since the time of Coke (Coke’s Littleton, 352a), it has been customary to recognize three general classes of estoppel: of record (eg, judgment), of writing (viz, deed) and in pais (between persons in the land or country (pays) ie by conduct). Estoppel in pais includes both the traditional common law estoppel which prevents a party from denying an assumption which formed the conventional basis of a relationship between himself and the other party or which he has adopted against the other party by the assertion of a right based on it and estoppel by representation which was of later development with origins in chancery. Estoppel in pais is also commonly regarded as including at least under a Judicature Act system such as in the Australian Capital Territory, the overlapping equitable doctrines of proprietary estoppel and estoppel by acquiescence or encouragement. I put to one side, for the moment, the question whether the High Trees House case, supra, type of equitable estoppel, which is usually and conveniently called ‘promissory estoppel’, exists in the law of the Australian Capital Territory and, if it does, whether it is also included in estoppel in pais or should be consigned to a separate class.
See also the summary of the principles of equitable estoppel set out by Einstein J in Redowood Pty Ltd v Mongoose Pty Ltd (2004) 49 ACSR 172 at 191; [123].
Regrettably, I was not much assisted by submissions from the plaintiff as to how this case was put. The plaintiff’s opening submissions put it as follows:
The confidentiality clause was recognised by the parties ... as an important term. The evidence of Cassidy [sic] would be accepted that the defendant provided details of the settlement terms to him – that disclosure was wrongful and the defendant should not be permitted to rely upon the Deed in these proceedings.
That, of course, appears to be the argument from estoppel which was pleaded in the reply to the defence.
There was brief reference to this issue in the oral submissions of Mr Thomas, who said:
And your Honour in relation to the Deed of Release, your Honour has the evidence of Mr Hanna in relation to the confidentiality clause and [one of the defendant’s officer’s] acknowledgement that that was an issue. We simply say in relation to that it’s not a matter of setting aside the Deed, we never sought to do that. We simply say equity won’t allow the defendant to rely on it in circumstances where your Honour would find, we say, that they disclosed the terms.
No authority or principle was cited to justify the claimed defence, namely that by its own breach of the Deed of Settlement, the defendant was estopped from relying on its terms.
Because of this, it is a little difficult to understand and evaluate the claimed answer to the defendant’s defence. Doing the best I can, however, it seems to me that:
(1) there is no case here for estoppel by record or by writing;
(2) there is no case here for proprietary estoppel, which applies where, by encouragement or acquiescence an owner of property is prevented from denying an interest in the property to another party who has been encouraged or allowed to expend funds or otherwise act in relation to the property with some representation of a benefit that will accrue, as in Chalmers v Pardoe [1963] 1 WLR 677 at 681–2;
(3) only promissory estoppel is left as the form of estoppel that could be meant by the plaintiff;
(4) for such an estoppel to operate, in the words of Priestly JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 610:
[T]here must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in the circumstances where departure from the assumption by the defendant will be unconscionable.
(5) there was here no assumption created or encouraged by the defendant in the plaintiff of the kind referred to by Priestly JA and none was identified by the plaintiff.
This is a somewhat simple approach but in the absence of a clearer exposition of the plaintiff’s case on this issue it is, in my view, sufficient to dispose of the matter.
Indeed, it might also be pointed out that as equity follows the law, the assumption on which this pleading has proceeded is fundamentally flawed. It assumes that a breach, even a flagrant breach (which, for the argument, I will assume that it was) is necessarily unconscionable. Again, it is difficult to accept that as representing the law.
While, as Mahoney JA said in Antonovic v Volker (1986) 7 NSWLR 151 at 165, the term “unconscionability” is far better described than defined, I do note that Deane J said of the term in Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 441:
The most that can be said is that ‘unconscionable’ should be understood in the sense of referring to what one party ‘ought not, in conscience, as between [the parties], to be allowed’ to do ... In this as in other areas of equity-related doctrine, conduct which is ‘unconscionable’ will commonly involve the use of or insistence upon legal entitlement to take advantage of another’s special vulnerability or misadventure ... in a way that is unreasonable and oppressive to an extent that affronts ordinary minimum standards of fair dealing (citations omitted).
There is simply no evidence here to suggest that, if there were a breach of the non-disclosure term in the Deed of Settlement, it was unconscionable; it may have been made in ignorance, by mistake or without authority.
In any event, it cannot be seen to have taken advantage of any vulnerability of the plaintiff in an unreasonable or oppressive way.
More importantly, it did not induce the plaintiff to assume that a state of affairs existed or would exist and to rely on that to it detriment.
Separately from the reply and the oral argument, the plaintiff, in its defence to the counter-claim, pleaded that clause 5 of the Deed of Settlement was a fundamental term, that the conversation with Mr Cassidy breached that term and that, as a result, the Deed of Settlement was void, or in the alternative terminated the Deed of Settlement or, in the alternative, the plaintiff was not bound by the Deed of Settlement.
I am prepared to accept that, whether through inadvertence, mistake, ignorance or deliberately, there was a breach of clause 5 of the Deed of Settlement. The evidence is too unclear for me to make a final finding on that, though I accept that it is unlikely that Mr Cassidy would have attributed the statement he did to Mr Horton if it had not come from what he reasonably regarded as a reliable source of the defendant. That breach did not, of itself, however, terminate or bring to an end the Deed of Settlement. Despite a breach of a contract, both parties remain bound by the contract unless there is an election by the innocent party, if he, she or it has the right to do so, to rescind: Foran v Wight (1989) 168 CLR 385 at 416–17; Heyman v Darwins Ltd [1942] AC 356 at 361.
Here, there was no election by the plaintiff to rescind the Deed of Settlement. As there was neither contractual nor statutory provisions as to termination of the contract, the common law applies. At common law, the clearest form of election is by communication of unequivocal words or conduct evincing an election to terminate performance of the Deed of Settlement: Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525 at 550. There was, here, no such communication by the plaintiff.
In J W Carter, Breach of Contract (Law Book Co, 1984) at 336; [1016], the author states:
Of course, a promisee who wishes to terminate should do his best to communicate his election since actual communication will leave no doubt in the promisor’s mind.
Examples of types of conduct which are capable of being regarded as unequivocal include: the rejection of the promisor’s performance; the making of an alternative contract; an act, on the part of the promise, which puts it out of his power to perform the contract with the promisor; the forfeiture of a lease; the issue and service of a writ alleging termination, claiming damages based on a termination of performance, or seeking a declaration that termination has occurred; and an unequivocal statement at the trial of the action.
Where the promisee’s conduct is equivocal no election will occur, even if there is communication to the promisor. For example, the issue and service of a writ making alternative claims for damages based on termination and for specific performance is not to be regarded as unequivocal conduct (footnotes omitted).
No such efforts were made by the plaintiff prior to or in the course of these proceedings. Indeed, the statement of its counsel, set out above (at [362]) is contrary to that position. The commencement of these proceedings being, so far as the plaintiff’s pleading was concerned, quite independent of the Deed of Settlement, is no such election.
Lest the plaintiff suggest otherwise, its pleadings were not consistent with an election to terminate the Deed of Settlement. Thus, in answer to the defendant’s defence of release, it pleaded first that the Deed of Settlement did not “pertain to the cause of action pleaded in these proceedings” and then that, in the alternative, the Deed of Settlement was void, terminated by the defendant or that the plaintiff was not bound. Nowhere did it plead that the plaintiff accepted the repudiation of the Deed of Settlement alleged to be constituted by the breach, thereby bringing the Deed of Settlement to an end.
Perhaps as significantly, there was no affidavit or oral evidence of or on behalf of the plaintiff of any such election.
In my view, the plaintiff’s reply to the defendant’s counter-claim fails.
CONCLUSION
As a result of my consideration, I answer the questions I posed above (at [24]) as follows:
(i) Was there a duty of confidence reposed on the defendant in respect of the plaintiff’s tender?
Answer: Yes.
(ii) What were the specific matters in the plaintiff’s tender that were subject to any duty of confidentiality on the part of the defendant?
Answer: Unnecessary to answer.
(iii) Did the defendant breach that duty of confidence by revealing to Decoin before it chose Decoin as its successful tenderer to provide the repository, the confidential matters that it was bound not to reveal from the plaintiff’s tender? This perhaps, requires an answer to the question of whether any feature of the repository as constructed by Decoin incorporated any features that were confidentially included in the plaintiff’s tender?
Answer: No.
(iv) If so, what loss has been suffered by the plaintiff and how should it be assessed?
Answer: Unnecessary to answer as the plaintiff has suffered no loss compensable by the defendant.
(v) Did the act of any disclosure by the defendant amount to deliberate concealment such as to extend the time for in the ACT Limitation Act?
Answer: As there was no disclosure, unnecessary to answer.
(vi) Did the Deed of Settlement release the defendant from the claims made in these proceedings?
Answer: Yes.
(vii) If not, should the Deed of Settlement be rectified so as to include a release that encompassed claims such as those made in these proceedings?
Answer: Unnecessary to answer.
(viii) Is the plaintiff estopped from bringing these proceedings because they should have been included in the Federal Court proceedings?
Answer: No.
(ix) If so, does the defendant’s conduct prevent it from relying on any such estoppel in these proceedings?
Answer: Unnecessary to answer.
(x) Has the plaintiff breached the Deed of Settlement by bringing these proceedings?
Answer: Yes.
(xi) Is the Deed of Settlement void, or in the alternative, terminated by the defendant, or, in the alternative, is the plaintiff released from its terms?
Answer: No.
(xii) Has the defendant suffered loss from the alleged breach of the Deed of Settlement? If so, how should that be calculated?
Answer: Yes and the damages should be calculated on the basis of an award for indemnity costs.
As a result, there must be judgment for the defendant on the plaintiff’s claim and judgment for the defendant on its counter-claim. I shall make orders accordingly.
I certify that the preceding three hundred and eighty (380) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Acting Chief Justice Refshauge.
Associate:
Date: 2012
Counsel for the plaintiff: Mr R Thomas
Solicitor for the plaintiff: Trevor Barker and Associates (now Dickson Legal)
Counsel for the defendant: Mr B A Meagher SC
Solicitor for the defendant: Blake Dawson (now Ashurst)
Date of hearing: 2–4, 8–12 December 2008
Date of judgment: 3 August 2012
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