CATCHWORDS Administrative Law - Case Stated - Contract with Government to supply Aircraft - Whether decision to contract made under @anactment - Whether issue of accounting document a decision - Person Aagrieved - Compliance with Finance Requlations and Directions., Administrative Decisions (Judicial Review) Act 1977. Audit Act 1901. sections 34. 71 and 72. Finance Requlations, rers. 48, 51, 52, S?AA, S?7AR and 12738. Finance Directions. dir. 12. HAWKER PACIFIC PTY. LIMITED v. COLIN W. FREELAND. THE COMMONWEALTH OF AUSTRALIA and CIVIL FLYING SERVICES PTY. LIMITED No. G1l61 of 1982 Fox J. 16 December 1983 Svdnev IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY = r 1982 a (a) n nay oO na oO = GENERAL DIVISION BETWEEN : HAWKER PACIFIC PTY. LIMITED Applicant AND: COLIN W. FREELAND First Respondent AND: THE COMMONWEALTH OF AUSTRALIA Second Respondent AND: CIVIL FLYING SERVICES PTY. LIMITED Third Respondent REASONS FOR JUDGMENT bee cy This case concerns the award, bv the Commonwealth, of a contract to supply five aircraft. The matter comes before the Court by way of an application under the Administrative Decisions (Judicial Review) Act 1977. By advertisements in the "Svdney Morning Herald" and the Melbourne "Ade" on 17 September 1980 and in the Commonwealth Government Gazette of 23 September 1980, the Department of Transport {now named the Department of Aviation ("the Department") publicly invited registrations of interest by potential suppliers of light twin engine aircraft. Seven companies responded. Three of these were eliminated by the Department's preliminary evaluations. Four potential suppliers offering a total of eidht types of aircraft yemained. A "certificate of exemption" purporting to exempt the Department from having to call for tenders publicly (see 5.52 of the Finance Requlations) was siqned by the Acting Assistant Secretary (Commercial) on 27 October 1981. The Department then invited the remaining four companies to tender. These included the applicant and the third respondent. Tenders closed on 17 February 1982. The contract was awarded to the third respondent on 22 June 1982. A document called a "purchase order" for the same aircraft, was prepared on the same dav. The applicant complained that the aircraft which the third respondent contracted to supply did not accord in ail vespects with the specifications in the invitation to reqister an interest, nor with that respondent s tender. At an early stage in the applicant's case the parties agreed to submit four questions for separate decision. Althouch in a form sufficient for the purpose of the proceedings, the questions were not then formulated as a stated case pursuant to Order 29 of the Rules. Following argument upon each question I Gave ex tempore answers. The parties have since submitted a document stating substantially the same questions, but in accordance with Order 29. The questions now are: l. Whether the alleged "decisions" referred to in the applicant's further Amended Application - (a) To award the contract (being exhibit "E" tendered by the applicant) to the third respondent; or (b) To issue a purchase order (being exhibit 1 tendered by the second . respondent) to the third respondent are decasions or either of them is a decision of an administrative character under an enactment. 2. Whether the following matters or anv one or more of them are sutficirent of themselves to make the applicant a "person aaqgrieved"" within the meaning of the Administrative Decisions (Judicial Review) Act:- (a) (b) That the applicant having by letter dated 13 October 1980 (being exhibit marked "WES1" and referred to in the affidavit of Warwick Edward Slade sworn 8 October 1982 and filed in these proceedings) reqdistered an interest in tendering pursuant to a public invitation so to do (being annexure "A" to the said affidavit of Warwick Edward Slade) was invited to tender for the supply of aircraft; or That the applicant was one of only four persons invited to tender and did tender for the supply of aircraft after a larae number of persons had been invited bo reaqister an interest in tenderinda; That, as evidenced bv the minutes being exhibits "F" and "G" tendered by the applicant and by the minute and Contract Board Business Paper being exnibits 2 and 32 tendered bv the second respondent. the applicant's aircraft and the third respondent's aircraft were the onlv aircraft considered finally as being suitable for the second respondent's purposes. Whether the Certificate of Exemption No. 554 executed on 27 October, 1981, being exhibit 4 tendered by the second respondent, was valid. If the said Certificate of Exemption No. 554 was not valid, whether the procedure adopted bv the first respondent or the second respondent 1ts servants and agents in calling for reqistrations of interest and subsequently aunviting in the manner it did (as evidenced by the axhibit marked ""WES2" referred to ain the said affidavit ot Warwick Edward Slade) tenders for the supply of aircraft, constituted the public invitation of tenders within the meaning of the Finance v7 Reaqulations. Question 1 The applicant arqued that both the award of the contract and the aissue of the purchase order were decisions of an administrative character under the Finance Reaulations. a These Reculations are made under s.71l of the Audit Act 1901 of which sub-section (1l)(e) 1s relevant to this case: ""71.(2) The Governor-General mav make reaulations (not inconsistent with the provisions of this Act) for carrying out the provisions of this Act and ian particular for and in relation to - (e) the purchase of chattels and other property for or by the Commonwealth; The relevant Finance Reculations are Reaqulations 51. 52, sub-requlations (2), (3) and (4) of Requlation S2AA and Regulation 52A: "S1.¢1) Subtect to any Act making provision with respect to contracts for supplies and to requlation 52AA of these Requlations. wnere - (a) any suppligss the estimated cost of wnich axceeds $200 are required: (b) re 1s no existing contract between Commonwealth and a supplier swunder wot hi Eat oO sl which the supplies so required can be obtained: and (c) the supplies are not obtained under a contract between a State and a supplier, at least three representative quotations for the supplies shall. whenever possible. be obtained unless tenders are publicly invited. (3) Where the estimated cost of anv supplies exceeds $200 but does not exceed $500, a quotation ebtained under this requlation in respect of the supplies mav be eral or in writing, but. in the case of an oral quotation, the details of the quotation shall be recorded in the appropriate Departmental file. (4) Where the estimated cost of anv supplies exceeds $500, each quotation obtained under this requlation in respect of those supplies shall be in writing. 52.(1) Subiect to any Act makina provision with respect to contracts for supplies and subiect to the next succeeding requlation, contracts shali not be entered into. and orders shall not be placed, for supplies the estimated cost of which exceeds $10,000 unless tenders have first been publicly invited for thase supplies. . SZAA. (2) Where the Secretary certifies that compliance with requlation 51 of these Requlations. or with the last preceding reaqulation. in respect of supplies of a kind specified in the certificate is. having recqard to the nature of the suppiies and to the established practices in a protession, business. trade or industry connected with the supply of supplies of that kind. impracticable or inexpedient, requiation S31 of these Requlations or the last preceding requlation,. as the case may be, does not apply to supplies of that kind. (32) The next succeeding sub-redulation applies to supplies ot the following kinds: (a) metals for use in the manufacture. by or on behalf of the Commonwealth. of coins, medals. medallions. plaques and other like objyects at a mint: (b) supplies relating to the defence of the Commonwealth; (c) supplies for the Department of Housing and Construction; (d) supplies obtained by or on behalf of the Administator of the Territory of Christmas Island in connection with the administration of the Territory: and (e) supplies approved. or to be obtained. by the Purchasing Division of the Department of Administrative Services or by a Tender Board of a Department. ta) Where the Secretary. or an officer authorized by him by instrument in writindg for the purpose, certifies. in respect art particular supplies, being supplies of a kind to which this sub-reaulation applies. that compliance with requlation 51 of these Regulations, or with the last preceding reculation. is. by reason of the urcency with which those particular supplies are required. the sources of those particular supplies or otherwise, impracticable or inexpedient, requlation 51 of these Requlations or the last preceding regulation, as the case may be, does not apply to those particular supplies. 52A.(1) Where a Requisition for supplies has been approved bv the person or persons to wnom it had been submitted for approval under requlation 48, the Permanent Head shall issue a Purchase Order in accordance with Form 13 in respect of the supplies specified in the Requisition. (1A) It shall be sufficient compliance with the requirements of sub-requlation :(1) 1if an authorized officer issues the Purchase Order therein referred toa. (2) Unless the Minister otherwise approves. au Purchase Orders shall be prepared in triplicate and shall be numbered consecutively. (3) A Purchase Order shall not be issued except in accordance with the Requisition as approved." Question lia) - The Awarding of the Contract The Finance Requlations provide various conditions precedent that need to be satisfied before a contract can be awarded. The power to contract is an inherent prerogative or qaovernmental power which 1s requlated by those Reaqulations (notably Reaulations 51 and 52). The decision to award a contract 15 an exercise of this power and is therefore not made under an enactment (see New South Wales v. Bardolph (1934) 52 C.L.R. 455 at 474-475, 496 and 508). Compliance with the Requlations is but a step leading to the awarding of the contract. Ido not accept the applicant's proposition that because the Requlations requlate the power to contract they were the source of a "valid power" to contract. I answer question Ifa) - No. Ouestion 1(b) - The Issue of the Purchase Order Reaulation 52A provides that the Permanent Head "shall' issue a purchase order after a requisition for supplies nas been approved. It was submitted that its issue was purely mechanical and therefore that no relevant decision was involved. The use of the word "shall" does suagest that this 1s the case. It is also clear that the purchase order 15 an accounting document for the purposes of the Audit Act. see s.34 (by virtue of 5.71 of the Audit Act the Finance Requlations are "for carrving out the provisions or" the Act). While a purchase-order 1s a document addressed to the intended supplier, and may be the document on which he acts. it does not follow that the person who siaqns it or authorises its 1ssue, 1s the person who makes the decision that the aoods be purchased. Regulations 4& and 52ZA indicate che contrary. fc does not seem to me possible. by referring to documents broucht into existence to implement the order. to escape the fact that the order is part of an exercise of the preroaative. I answer question lib) - Wo. Question 2 . The provisions of the Administrative Decisions (Judicial Review) Act 1977 dealing with the requirement that an applicant be a "person aggrieved" have been widelv construed on numerous occasions. It 1s trite law that the applicant must suffer as a result of the decision complained of bevond the sufferina of an ordinary member of the public. The mere fact that the applicant 11. and the third respondent were business competitors does not make the former a "person aggrieved". In this case business competitors reaqistered their interest and were then selectively invited to tender for the aircraft contract. Oniv four persons were so invited. Questions 2(a) and. 2(b) differentiate between the invitation to tender and the submission of a tender. [It seems clear as a matter of practical consideration. that the applicant was a "person aagrieved". at least by virtue of its submission of a tender. The cost of tendering and the volume of documentation alone indicate this. In the circumstances I also reaard the applicant's claim to be a "person aagrieved" as being supported bv its receipt of an invitation to tender. The selective invitation initiated the applicant's commitment to prepare a tender and placed it far beyond the position of a member of the public. At the later staqe referred to in question 2(c) only aircraft proposed bv the applicant and the third respondent were considered. IT answer question 2(a) - Yes. I answer question zZ(b) - Yes. I answer question 2!c) - Yas. Question 3 In the circumstances. this question does not arise. Ic was, however. arqued before me. and I expressed views upon the matters raised or matters in similar terms. at the conclusion of araqument. I shall therefore discuss these matters. The certificate of exemption (exhibit 4+) was aranted pursuant to sub-rea. (4) of Requlation S52AA which applies to supplies specified in sub-rea. (3) of that Requlation. It was challended on the basis that: ts it did not rafter to "particular supplies"; and fii) 1t¢ did not state the reasons for certification: and (1ii) the supplies were not approved by a Tender Board of -Ehe Department. The applicant submitted that the certificate must refer toa particular aircraft and not aircraft of a kind. The araqument was based on the proposition that sub-rec. 162) of Requlation 52AA veters to "supplies of a kind" and therefore where sub-raq. (4) refers to "particular supplies" a greater dearee of specification was reauired. I find no dirficultv with that initial x a) proposition. However, the applicant suqgested that the Department would have to specifv the particular aircraft thev wanted, without publicly calling for tenders, before a cartificate exempting the Department from calling public tenders could be 1ssued. This suaqgestion is quite circuitous and is opposed to the spirit of,the basic requirement in Regulation 52 that thers be public tenders. The detailed recommendations set out in the document before the certificate listed eight aircraft and specified that they achieve certain altitude. pavload and vurpose requirements. They went far bevond specifving aircraft of & kind in a generic sense. The certificate clearly relates to those specifications and on this question they should be read together. To mv mind the certificate was of sufficient particularity to satisf7 Requlation 52AA(4). By s.72 of the Audit Act the Requlations mav authorise persons there specified to give "directions" to officers in relation to any of the matters for which requlations mav be made. Requlation 127A(1)} does just that with respect to the Minister or Secretary of the Department of Finance In this case para. 12 in Part 25 of the Finance Directions 'in evidence as axhibir ''B"> ais as follows: 14. "Certificate of Exemption from Tenders and Quotations (Finance Requlation 52AA(4)) 12. The reason(s) for seeking a dispensation from the requirement either to obtain representative quotations or publicly invite tenders. shall be clearlv stated in writing bv the recommending officer and contracts shall not be signed or orders placed until the certificate is qiven. If the authorised person aives the requested certificate. he shall clearly state on the papers the reasonis) which have satisfied him that he should so certify." The certificate is found at the foot of p.3 of exhibit "CERTIFICATE OF EXEMPTION NO. 554 ; In accordance with Finance Requlation 52RA(4) I hereby grant a Certificate of Exemption from the invitation of public tenders. 'Sad. T.M. Wheeler) Aa/Assistant Secretary (Commercial: 27 Oekoper 1981" Counsel for the applicant submitted that the certificate contains no reasons and therefore is in breach of direction 12. Requlation 127A(5) is relevant in determining the consequences. Counsel was not. however. prepared to contend that invalidity of the certificate resulted; the irreqularitv was used "in aid of the general arqument". In the circumstances, no final decision 1s vceaquired from me, although [I incline to the view chat invalidity dad not result. Direction 12 deals with internal administrative procedures and should probably be understood as directory only (see Hatton v. Beaumont (1977) 2 WN.S.W.L.R. 211 per Hope J.A. at 215). Requlation 52AA(4) only applies if one of the Paragraphs of sub-req. (3) is satisfied. Paragraph (e) of that sub-reaqulation is the only relevant paraqraph. It refers to "supplies approved. or to be obtained. ... by a Tender Board of a Department". The Department has no Tender Board so called. It does have a Contract Board. Having reqard to the evidence of the atfidavit of Mr. Charles Ross Groat and the annexures thereto, I conclude that. for the purposes of Requlation 52AA(3)(e). the Contract Board was a Tender Board. T answer question 3 - Does not arise. Question 4 This question does not arise. althouch 1t was submitted by both parties that if I answered Ouestion 3 in accordance with the views I have expressed, the answer should he - No. Tt is not ie) necessarv to sav anvthing further. My answers to the questions posed for separate decision Rees ite Lemania np ake) net Rael nena tl Me a Ln nt a ee Neh Rc ms Nn nnn mee ew 16. are therefore: Question l(a) - No. 1(b) - No. Question 2(a) - Yes. 2(b) - Yes. Z(c) - Yes. Question 3 - Does not arise. - ' Question 4 - Does not arise. I certifv that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judament herein of his Honour Mr. Justice Fox. try 'Associate Dated: 16 December 1983