Australian Business Skills Pty Ltd v State of New South Wales [2005] NSWSC 1287

New South Wales Supreme Court

CITATION : Australian Business Skills Pty Ltd v State of New South Wales [2005] NSWSC 1287

HEARING DATE(S) : 01/12/2005

JUDGMENT DATE : 13 December 2005

JURISDICTION : Equity Division

JUDGMENT OF : McDougall J

DECISION : See para [67].

CATCHWORDS : CONTRACT – whether State validly terminated contract with first Plaintiff – whether purported termination applied correct legal test – whether director of first Plaintiff responsible because of acts or omissions for refusal of tender to related company – whether related company actually refused tender – no question of principle.

Evidence Act 1995 LEGISLATION CITED : Corporations Act 2001

CASES CITED : Public Service Board of New South Wales v Osmond (186) 159 CLR 656

Australian Business Skills Pty Ltd Plaintiff PARTIES : State of New South Wales Defendant

FILE NUMBER(S) : SC 5158/2005

Mr B De Buse Plaintiff COUNSEL : Ms M Allars Defendant

Moloney Lawyers Plaintiff SOLICITORS : I V Knight, Crown Solicitor Defendant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

Tuesday, 13 December 2005

05158/2005 - AUSTRALIAN BUSINESS SKILLS PTY LIMITED v STATE OF NEW SOUTH WALES JUDGMENT 1 HIS HONOUR: The question for decision is whether the defendant (the State) validly terminated a contract made between it and the first plaintiff (ABS) under which ABS undertook to provide training services.

Background and relevant facts 2 The New South Wales Department of Education and Training (the Department) funds the provision of vocational education and training services. Those services are supplied by "Registered Training Providers" (known, somewhat obscurely, by the acronym "RTOs") that are included on what is called the "Approved Provides List" (known by the acronym "APL"). RTOs tender each year to provide training services during the following year. If a tender is accepted, the RTO enters into a contract with the State, through the Department, known as an "Approved Providers List (APL) Contract for the NSW training market". The State, through the Department, obtains and pays for training services from RTOs with which such contracts have been made. 3 In October 2003, ABS tendered for the supply of training services for the calendar year 2004. At the same time, an associated company known variously as Amstar Learning Pty Limited or National Training Services Pty Limited (Amstar) tendered for the supply of training services. (The companies were associated because they had, at the time, a common director, the second plaintiff Mr Jain.) Both tenders were accepted. 4 In October 2004, both companies tendered for the provision of training services for the calendar year 2005. ABS' tender was accepted. Amstar's was not. The Department informed Amstar of the decision by a letter dated 9 December 2004 which said, relevantly: "…. Assessment of your organisation's performance against the selection criteria has determined that the required standard has not been met. Accordingly, the Department has decided not to accept your organisation's tender for 2005. Details of the assessment of your organisation's performance are contained in an attachment to this letter. If you wish to make representations concerning this decision you will need to write to: [details were given] Correspondence will only be accepted up to 5.00pm Friday 7 January 2005. …" 5 I will set out later in these reasons the relevant terms of the contracts, including the "selection criteria". At present, it is sufficient to note that the attachment to that letter said, relevantly: " APL Selection Criteria – the extent to which the contractor has a completion rate of less than 55% of participants in the last three years: · The completion rate over three years for delivery under the Apprenticeship and Traineeship Training Program was 17% for 122 enrolments, significantly less than half the contract benchmark of 55%. …" 6 Mr Jain said that on 17 December 2004, he caused Amstar to write to the Department stating that Amstar's tender "WAS LODGED IN ERROR" and that the tender "is formerly [sic] withdrawn" He said that the letter also stated that: "…according to our statistics which is [sic] (based on certificates issued) Amstar completion rate is over 50% and not 17%. And the completion rate would have been even higher had Employment National not mismanaged the process which led to two large clients with over sixty trainees withdraw [sic] from the programme, midway. We are happy to substantiate our claim if required." 7 For reasons that I shall give, I do not accept Mr Jain's evidence that he caused a letter in or including those terms to be sent to the Department on 17 December 2004. 8 Mr John Knopman, the officer of the Department with primary responsibility for the administration of the contract between the State and ABS, gave evidence that he had conducted a search of the relevant files and had not found the letter. He also gave evidence · that he had spoken to the person named in the letter, Mr John Skeen, and had been informed that Mr Skeen did not have the letter. (Because the questions heard by me were formulated for separate and preliminary determination pursuant to UCPR Pt 28 r 28.4, and were therefore of an interlocutory nature, this evidence was admissible pursuant to s 75 of the Evidence Act 1995, and I admitted it accordingly); · that in any event, notwithstanding the reference to Mr Skeen, the letter would have come to him because by then he was performing the duties formerly performed by Mr Skeen; and · of the filing system maintained within the Department. Although Mr Knopman, understandably, acknowledged the possibility that the letter had been lost or misplaced (to which I would add, that it might not have been received at all) I accept it so far as it goes. 9 ABS supplied training services during 2005 pursuant to the contract between it and the State that came into existence upon acceptance of its tender. However, on 10 June 2005, the Department wrote to Mr Jain informing him that he fell "within the definition of 'Unsuitable Person'" (an expression defined in clause 10.1.46 of the 2005 APL contract). The letter continued: "If you fail to remove yourself from the management of and employment with Australian Business Skills Pty Ltd within sixty (60) days from the date of this letter, the Department will terminate the 2005 APL Contract with Australian Business Skills Pty Ltd. Accordingly, please advise me in writing when you have removed yourself from the management of and employment with Australian Business Skills Pty Ltd and the date from which it [sic] became effective." 10 Sixty days from 10 June 2005 expired on 10 August 2005; and if one allows two days for the letter to be delivered, and assumes that the time limit should have run from receipt rather than sending, the time would have expired on 12 August 2005. 11 Mr Jain took no action until 3 August 2005 – a week or a little more before the deadline. On that day, he wrote to the Department making the following points: