Auspine Limited v South Australian Forestry Corporation [2007] FCA 416

FEDERAL COURT OF AUSTRALIA

Auspine Limited v South Australian Forestry Corporation [2007] FCA 416 AUSPINE LIMITED v SOUTH AUSTRALIAN FORESTRY CORPORATION SAD 119 OF 2006

MANSFIELD J

22 MARCH 2007

ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SAD 119 OF 2006

BETWEEN: AUSPINE LIMITED

Applicant

AND: SOUTH AUSTRALIAN FORESTRY CORPORATION

Respondent

JUDGE: MANSFIELD J

DATE: 22 MARCH 2007

PLACE: ADELAIDE

REASONS FOR RULING 1 Auspine Limited, subject to final instructions, seeks leave to file and serve an amended statement of claim (the ASC). The final instructions are themselves dependent on certain officers of Auspine being permitted to inspect certain documents which, to date, they have not seen because of orders restricting the inspection due to their claimed commercial sense. How that difficulty is resolved is presently being addressed by the solicitors for the parties. 2 South Australian Forestry Corporation (FSA) objects to certain other allegations in the ASC. The parties are agreed that it will be helpful if I were to rule on those objections. FSA accepts that leave to file and serve the ASC generally should be given, provided it is in an appropriate form (and subject to the issue of final instructions of Auspine once the issue of access to confidential documents is resolved). It is common ground that such leave should only be given in respect of the ASC if it is in an appropriate form. 3 Auspine's claim arises from its tender to FSA with respect to the harvesting of sawlog over a five year period from 1 July 2005 from FSA's forest resources. Expressions of interest were invited by a Call Document in about July 2004. Auspine submitted a proposal in response on about 20 August 2004. Carter Holt Harvey Wood Products Australia Pty Ltd (CHH) also submitted a proposal to FSA in response to the Call Document. There were other tenderers. It is not necessary to refer to their circumstances because FSA, for the purpose of this proceeding, accepts that Auspine's proposal would have been preferred by FSA over all other tenderers than CHH. 4 Subsequent to the bid close, it is alleged, FSA held discussions with CHH, leading to CHH putting forward a modified proposal for the sawlog harvesting and covering a term of 5 + 5 + 5 years. It is also alleged that Auspine was not informed about or given the opportunity to change its offer in response to the modified CHH proposal. There are also other allegations in the existing statement of claim and in the ASC. 5 Ultimately CHH became the selected contractor. Auspine alleges that, had it had the opportunity to resubmit a modified proposal to cover the period of the CHH modified proposal, and had FSA complied with the terms under which it had indicated that it would otherwise assess the bidding proposals, its proposal would have been accepted. Its claim against FSA is based upon breach of the terms of the tender evaluation contract, misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1975 (Cth), negligence and misfeasance in public office. 6 As the concerns of FSA in relation to the ASC are relatively discrete, it is convenient to deal with them severally. 7 FSA submits that references to the Minister for Forests (SA) in the ASC should not be permitted as the Minister is not a party and there is no allegation of any conduct on his part which might give rise to a cause of action against him, nor any indication otherwise of why the Minister is referred to at all. It says it does not therefore know the case that has to be met in relation to the allegations concerning the Minister, if indeed there is any such case. 8 I propose to permit the references to the Minister in the ASC to remain. Counsel for Auspine indicated that the sole purpose of the references to the Minister is to indicate how it alleges that the relevant decisions of FSA were made. It is not alleged that, to the extent that the Minister's action was a step (the final step) in that process, he himself acted improperly in any way. Its case is simply that he was the final step in the decision-making process of FSA, following the recommendation of its Board, so it was appropriate to allege that step. 9 FSA expressed concern about par 56 of the ASC, as it refers to events subsequent to the perfection of the causes of action. It does not know why those allegations are made, nor why they are material. 10 Paragraph 56 of the ASC identifies "Reasons Given to Applicant as to why not Selected". Counsel for Auspine indicated that the paragraph is simply to put FSA on notice about certain evidence proposed to be led going to a material issue to a cause of action. Given that explanation, I do not consider it embarrassing to allow that paragraph to remain although, strictly speaking, it does not plead material facts. 11 FSA also expressed concern about references to the Public Corporations Act 1993 (SA) in the particulars of one of the material terms of the tender evaluation contract. Counsel for Auspine accepted that that Act could not support the asserted term of the tender evaluation contract in the circumstances generally pleaded. The particulars of proposed par 29(o) subcl (d), (f), (g) and (i) which referred to the Public Corporations Act 1993 are to be deleted from the ASC. 12 FSA objected to references to its internal Evaluation Plan, because it is not pleaded as having formed part of the tender evaluation contract, and is not pleaded otherwise to have been provided to Auspine or to the other tenderers. It therefore says that the Evaluation Plan has no role to play in the causes of action alleged, with one reservation. That reservation relates to the cause of action based upon misfeasance in public office. If that claim is not permitted to be made through the ASC, then FSA contends that all references to the Evaluation Plan should be removed. 13 But for the pleading of misfeasance in public office, I do not think the references to the Evaluation Plan in the ASC are allegations of material facts, or of particulars of material facts. Counsel for Auspine acknowledged they do not go to the breach of contract claim, or to the misleading and deceptive conduct claim. The reference to the Evaluation Plan in particulars (f) and (h) to par 29(o) of the ASC, concerning the terms of the tender evaluation contract, are therefore to be removed from the ASC. Nor is it alleged that the Evaluation Plan was a fact itself relevant to the relationship between Auspine and FSA, so that it supports the negligence claim. These observations are to be read subject to the two qualifications referred to in [19]. 14 FSA's objection to the allegations to support the tort of misfeasance in public office is simply that it is not arguable on the primary facts pleaded. It makes a similar contention with respect to the claim in negligence which, it submits, cannot be maintained consistently with the claim for breach of contract. 15 The tort of misfeasance in public office comprises five elements: an invalid or unauthorised act, done maliciously, by a public officer, in the purported discharge of that officer's public duties, and which causes loss or harm to the claimant: see Sanders v Snell (1998) 196 CLR 329; Northern Territory v Mengel (1995) 185 CLR 307. 16 In my judgment, at present the ASC does not plead all the material facts necessary to make out the tort of misfeasance in public office. 17 The invalid or unauthorised act is said at par 76 to be that of the members of the Evaluation Panel, by reference to the South Australian Forestry Corporation Act 2000 (SA) or the Public Corporations Act 1993 "or otherwise in accordance with the law". That allegation does not refer back to any particular paragraph of the ASC, although there is a general reference to pars 4 to 56 which largely comprise allegations of factual events. I have read those paragraphs carefully. I do not think it clearly emerges how the general allegation in par 76 is linked back to those earlier paragraphs. It is not appropriate to speculate about that, and FSA should not be required to do so. So far as I can see, the principal allegations are in par 48 of the ASC where it is said that the Evaluation Panel failed to properly apply the correct evaluation criteria under the Evaluation Plan and so provided incorrect, inaccurate and incomplete information to the next rung of decision-making within FSA. 18 There is common ground for the purposes of this argument that malice may be established by an intention to act outside lawful authority, or by reckless disregard for the limits or requirements of the lawful exercise of authority. Paragraph 76 alleges the Evaluation Panel "knew or ought to have known" that they were not acting within their authority. I do not think the allegation that they "ought to have known" of that matter is sufficient to establish a reckless disregard for the limits of their authority. I think it is arguable that knowingly acting in a manner which is not authorised by the source of the power to act is sufficient to support a pleading of intention to act beyond authority, and so arguably to support a finding of malice. But at present I do not discern that the ASC, either by more precise reference back to earlier paragraphs, or within par 76 itself, identifies clearly the facts or circumstances upon which it is alleged that the members of the Evaluation Panel did intentionally act outside their authority. Nor indeed – for the purposes of this tort – does it identify, clearly the nature and source of the "duties of office" referred to at the end of par 76. I also do not consider that the ASC clearly identifies the facts or circumstances which make the duties referred to in par 76 duties to be carried out by a public officer in public office: cf Cannon v Tache (2002) 5 VR 317. As was argued on behalf of FSA, there is a very serious issue as to whether the Evaluation Panel or its members were public officers, and as to whether it or its members were discharging public duties in evaluating the tenders. 19 I do not allow the proposed par 76 of the ASC simply because of its form. Unless Auspine restructures its allegations to support the claim of misfeasance in public office, it would follow that pars 73 and 74 would also be disallowed. Paragraph 75 may stand if the negligence claim (pars 77 to 79) are allowed to stand. It would also follow that the references to the Evaluation Plan and its contents in par 5 would also be disallowed, except to the extent that it was desirable to allege its existence and general purpose in that and other paragraphs of the ASC so that Auspine could adequately plead how the relevant decision within FSA came to be made. That is the same purpose for which references to the Minister have been permitted to stand in the ASC. References to the Evaluation Plan may also be permitted to stand to the extent to which reference to it is necessary to allege facts as to the merits of Auspine's tender by reference to criteria determined by FSA internal documents. 20 If Auspine wishes to maintain a cause of action based upon misfeasance in public office, I direct that it provide to FSA and to my associate within 10 days a further amended statement of claim indicating the proposed further changes. In the event that FSA maintains its view that the claim of misfeasance in public office is not maintainable on its face, it is given liberty to apply to have that issue listed for further urgent interlocutory hearing. If it does not wish to maintain that cause of action, it will no doubt notify FSA by its solicitors promptly. 21 Finally FSA submits that pars 77 and 78 cannot be maintained because they allege a negligence claim where one can be made because the claim overlaps entirely with the claim based on breach of contract: cf Astley v Austrust Ltd (1999) 197 CLR 1. 22 I am not persuaded that the allegations based on breach of contract and on negligence so closely overlap that it can be said confidently that the negligence claim must be struck out. Nor, in any event, am I persuaded that concurrent causes of action for breach of contract and negligence arising out of much the same circumstances cannot be maintained at all. Subject to the references to the Evaluation Panel and to the Evaluation Plan in pars 77 and 78 being withdrawn in any event as it is accepted they cannot support the negligence claim in the manner they are alleged, I propose to allow pars 77 and 78 of the ASC to stand. 23 I will give the parties leave to submit minutes of order, to the extent necessary, to reflect these rulings. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.