Air Great Lakes Pty Ltd v K S Easter

IN THE FEDERAL COURT OF AUSTRALIA) ) AUSTRALIAN CAPITAL TERRITORY ) ) No ACT G86 of 1995 DISTRICT REGISTRY ) ) GENERAL DIVISION ) BETWEEN: HUGHES AIRCRAFT SYSTEMS INTERNATIONAL Applicant AND: AIRSERVICES AUSTRALIA Respondent COURT: FINN J PLACE: CANBERRA DATE: 30 JUNE 1997 MINUTES OF ORDERS THE COURT ORDERS THAT:

1. the parties file agreed short minutes of orders to reflect these reasons;
2. if short minutes are not agreed: (i) the applicant to file and serve proposed minutes of orders along with written contentions supporting the orders; and (ii) the respondent to file and serve its written objections thereto. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) ) AUSTRALIAN CAPITAL TERRITORY ) ) No ACT G86 of 1995 DISTRICT REGISTRY ) ) GENERAL DIVISION ) BETWEEN: HUGHES AIRCRAFT SYSTEMS INTERNATIONAL Applicant AND: AIRSERVICES AUSTRALIA Respondent COURT: FINN J PLACE: CANBERRA DATE: 30 JUNE 1997 REASONS FOR JUDGMENT

TABLE OF CONTENTS PART I: INTRODUCTORY SECTION...........................

1. ACRONYMS AND ABBREVIATIONS..........................
2. PRINCIPAL ACTORS....................................
3. GENERAL CHRONOLOGY................................. Outline of Events................................. PART II: THE CAA AND ITS STATUTE...................... PART III: THE CASE AS PLEADED AND PLEADING ISSUES......
4. The Four Bases of Hughes' Principal Claim..........
5. The Seven Complaints............................... THE SPLITTING OF THE APPLICATION...................... ISSUES NOT PLEADED.................................... PART IV: GENERAL CONTRACT ISSUES......................
6. THE PROCESS CONTRACTS.............................. Additional Chronological Material..................... Conclusions........................................... (i) The 9 March Letter............................ (ii) The RFT Contract.............................. (iii) The Relationship of the Contracts.............
7. THE IMPLICATION OF TERMS GENERALLY.................
8. THE IMPLIED TERM OF "FAIR DEALING"................. (i) Express term.................................. (ii) Implication ad hoc............................ (iii) Implication in law............................ (a) Good faith and fair dealing................ (b) As a legal incident of a particular class of contract...............................................
9. GENERAL TRADE PRACTICES ACT ISSUES................. (i) The nature and basis of the claim............. (ii) The interrelationship of the claims.......... PART V: EVALUATION/SELECTION PROCEDURE FAILURES...... (i) The Role of the CAA Board in Selecting the TAAATS Contractor........................................... The disenfranchisement argument............... The "fetter" argument......................... (ii) The CAA's Obligation in relation to AII and its Compass..................................................... A. Criteria Related Complaints........................ (i) Evaluation in Accordance with the Methodology and Priorities........................................... Additional Factual Material.......................... (ii) The Construction of the RFT Priority Ranking and Evaluation Methodology............................... (iii) The Board's Decision........................... (iv) Conclusions.................................... (v) The Prospect of a Government Subsidy........... B. DITRD Related Complaints........................... (i) Permitting DITRD's Role to Change.............. (a) Allowing DITRD to deal with the Board...... (b) Accepting submissions from DITRD on the price/AII balance................................................. (ii) Reliance on DITRD.............................. (iii) Warranting DITRD's Evaluation.................. PART VI: POLITICAL INTERFERENCE...................... (i) The Propriety of the Communications............ (a) Minister Collins.......................... (b) Minister Griffiths........................ (ii) The Board's Treatment of the Communications.... PART VII: AUDIT FAILURE..............................
10. The Construction Question......................... PART VIII: IMPROPER INTERESTS AND AFFILIATIONS.......
11. Mr Yates..........................................
12. The CAA...........................................
13. DITRD............................................. PART IX: BREACH OF CONFIDENCE........................ The Pleadings........................................ The Four Claims Made.................................
14. The Disclosure to Senator Collins................. (a) Factual Matters.............................. (b) Legal Issues and Submissions.................
15. The TEC's Disclosure of the Price Bids to Ms Clarke (i) Additional Factual Material.................. Submissions and Conclusion:...........................
16. The Disclosure of Price Information by Ms Clarke to Other DITRD Officers and to the Secretary: the Disclosure to Minister Griffiths............................................ Additional Factual Matters........................... Conclusions..........................................
17. The "Leaks" to Thomson............................ PART X: PRICE REDUCTION/AII VARIATION................
18. The Price Reduction...............................
19. The AII Variations................................ PART XI: FAIR DEALING................................. A. THE ALLEGATIONS OF UNFAIR DEALING: CONTRACT CLAIMS
20. Mr Yates.......................................... (i) Permitting an Interested Member to Participate in the Board Decision..................................... (ii) Being Influenced by The Preston Group Ltd Affiliation........................................ (iii) Dealing with and Giving Advice to Thomson.... Additional Factual Material.......................... (a) The TPG Directorship......................... (b) Dealings with the Tenderers.................. (c) Alleged Advocacy for Thomson................. The Alleged Unfair Dealing...........................
21. DITRD.............................................
22. The Attorney-General's Department................. B. THE TRADE PRACTICES ACT CLAIMS.................... PART XII: THE CONSEQUENTIAL TRADE PRACTICES ACT CLAIM The Price Difference................................. PART XIII: PRINCIPAL FINDINGS AND CONCLUSIONS........ Hughes Aircraft Systems International ("Hughes"), a Californian company, was the unsuccessful tenderer in a two party bid for the award by the Civil Aviation Authority (the "CAA") of the Australian Advanced Air Traffic System Acquisition contract, or TAAATS II as it was referred to at the time and in these proceedings. The successful tenderer was Thomson Radar Australia Corporation Ltd ("Thomson"). It is a subsidiary of a French company, Thomson-CSF ("TCSF"). Air Services Australia, a statutory corporation of the Commonwealth, is for present purposes the successor body to the CAA. It is admitted to be the appropriate respondent in this proceeding. Put compendiously, the core of Hughes' application is the claim that the CAA by contract, representation or promise obliged itself to conduct the tender process leading to the award of the TAAATS II contract fairly and in accordance with defined procedures and criteria. It is alleged that in a significant number of respects it failed to satisfy this obligation. Accordingly, damages have been claimed against the respondent (i) for a variety of breaches of contract; (ii) for misleading and deceptive conduct (Trade Practices Act 1974 (Cth), S52); (iii) for negligence in the administration of the tender process; and (iv) on the basis of equitable estoppel. It will be necessary to refer to the pleadings in this matter in some detail. The proceeding itself raises a range of issues, legal and factual, of no little complexity. My reasons, inevitably, will reflect that complexity. To assist understanding I have considered it appropriate to preface these reasons with an Introductory Section. This will begin with a Glossary of Abbreviations and Acronyms. It will be followed by a description of the principal actors in the events with which this application is concerned. A General Chronology will then be provided. PART I: INTRODUCTORY SECTION
23. ACRONYMS AND ABBREVIATIONS Though the full and correct name or title of the person or thing referred to below will be set out where it first appears in these reasons, the following list is provided as a convenient reference source. AIA Airport Industries Australia. This unincorporated association, which appears to have been formed in March 1993, had the purpose of acting as a network of representatives from industry, government business enterprises and Commonwealth departments to enhance the prospects of Australian companies winning air traffic management business particularly overseas. AII Australian Industry Involvement. This was designated as the fourth major selection criteria in the award of the TAAATS II contract. BAFO Best and Final Offer. The Request for Tender issued to Hughes and Thomson required the lodgment of a BAFO with the CAA. It was to be irrevocable for a period of 6 months from the BAFO closing date. DITAC Department of Industry, Technology and Commerce. This department and its successor (DITRD) were responsible for conducting the evaluation of the tenderers' AII proposals and for advising the Tender Evaluation Committee on AII matters. DITRD Department of Industry, Technology and Regional Development. DITAC mutated into DITRD during the tender process period. Dubs Notes Records of Board meetings prepared by Dr Rosalind Dubs who, at the relevant times, was Corporate Secretary of the CAA. GBE Government business enterprise. The CAA for relevant purposes was a GBE. Macphee Report A Report entitled "Independent Review of the Civil Aviation Authority's Tender Evaluation Process for the Australian Advanced Air Traffic System". The Review, which reported in December 1992 was chaired by the Hon I Macphee AO and was set up by the relevant Minister under s12 of the Civil Aviation Act 1988 (Cth) to inquire (inter alia) into the soundness and fairness of the processes leading to the selection of Thomson as the preferred tenderer for the TAAATS I contract. The Report led to the rebid known as TAAATS II. RADREP Radar Display Replacement Project. This project, in which Hughes and Thomson were competitors, was abandoned by the CAA in March 1991 in favour of the TAAATS concept. The CAA's conduct of this was subject to strong criticism in the Macphee Report, para 3.4.2. RASPP Radar Sensor Procurement Project. This was a contract being performed by Thomson for the CAA during the currency of the TAAATS II tender process. It was unrelated to TAAATS II. RFT Request for Tender. This was issued to Hughes and Thomson under cover of a letter dated 19 July 1993. It is Hughes' case (inter alia) that on lodgment of the BAFO there was a contract between Hughes and the CAA upon the terms and conditions of the RFT and that that contract carried forward the contract alleged to be recorded in the 9 March 1993 letter (see below). RFT CONTRACT See RFT. SDP Specification Development Phase. This was the first phase in the TAAATS II procurement, the second being the TAAATS Acquisition Phase. Only the latter is of significance in this proceeding. TAAATS The Australian Advanced Air Traffic System. The objective of the TAAATS concept was to establish a single, integrated, Australia wide air traffic services system based on two centres, Brisbane and Melbourne. This was to replace the multi-generational systems located at some number of centres around Australia. Against a setting of detailed functional specification, the TAAATS contract was to be for a "turn-key" solution. TEC Tender Evaluation Committee. This was a committee of senior managers of the CAA constituted for the purposes of the TAAATS II tender. Its function (inter alia) was to make a recommendation to the CAA board of the preferred contractor. It recommended Hughes. Tender Process Contract See 9 March letter below. TPG The Preston Group Pty Limited, a company that was part of the Thomson "team" for the purposes of Thomson's AII bid. One of its directors, Mr Ronald Yates, was a member of the Board of the CAA. 9 March Letter This letter, sent separately to, and later signed by, both Hughes and Thomson, detailed procedures and criteria for the award of the TAAATS II contract. It is Hughes' case that the letter gave rise to what has been called the Tender Process Contract on Hughes' agreeing to participate in the new tender process on the terms of the letter. 9 March Contract See 9 March letter.
24. PRINCIPAL ACTORS Attorney-General's Department - John Butler (solicitor with the Australian Government Solicitor engaged by CAA to advise on TAAATS II) - Dennis Rose QC (Chief General Counsel) CAA (1) Board Members - Leslie Fenton Ayres * - Richard Lawrence Baillieu * (Until 31 December 1993) - Henry Bosch * - Peter Courtney Gration * (Chairman) - Russell Ingersoll * - John Hayward Mant * - Douglas Roser * (Chief Executive Officer from July 1993 until December 1994) - Michael Thomas Terrell * - Ronald John Yates * (2) Officers - Dr Rosalind Vivienne Dubs * (Corporate Secretary) - Peter William Hider * (TAAATS Project Manager and TEC member) - David Williams (in-house legal adviser) (3) Consultants/agents for TAAATS - John Michael Moten * (TAAATS independent auditor) DITAC/DITRD - Beverley Anne Clarke * (public servant and DITRD officer in AII evaluation team for TAAATS contract) - Neville Robert Stevens * (Secretary of DITRD until December 1993) - Lorraine Tomlins * (public servant, Director, Aerospace Section) Hughes - Peter Arthur Funge * (TAAATS program manager) - Robert Henry Kramp * (Group Vice-President and Manager, Command and Control Systems Division) - Gary Wayne Osborn * (Air Traffic Control Unit) Ministers - Senator The Hon Bob Collins (Minister for Transport and Communications) - The Hon Allan Griffiths (Minister for Industry, Technology and Regional Development)
    • All persons marked with an asterisk gave evidence, oral and/or affidavit, in this proceeding.
25. GENERAL CHRONOLOGY Outline of Events Many of the particular allegations raised by the applicant require an examination of specific events. That examination will take place as and when each such allegation is considered. The purpose of this general chronology is to provide an overview, albeit lengthy, of the course of events with which this matter is concerned and a context for the more specific events that I will consider. (1) In 1989, following the CAA's release of a request for tender, Hughes, Thomson-CSF and a third company were selected to participate in the project definition of the Radar Display Replacement Project (RADREP). That Project, as its name partially suggested, was a piecemeal response to obsolescence in display systems in Sydney, Brisbane and Canberra. Its scope swelled dramatically over the next year. In March 1991 it was cancelled in favour of the TAAATS concept. I note in passing that while management had by then selected Hughes as the preferred RADREP contractor, that recommendation was never put to the CAA board. (2) The TAAATS I procurement process began with the issue of a request for Registration Of Interest ("ROI") dated 30 May 1991 to six selected tenderers, two of whom were Hughes and Thomson. Over time the tenderers were reduced to Hughes and Thomson. The tender process itself underwent significant periodic modification. On 18 December 1991 the CAA management recommended to the Board that Hughes be selected as the preferred tenderer. The CAA board deferred making a decision for reasons related to perceived "risk" (a technical term) if Hughes were selected. The resultant re-examination of the bids in relation to price and risk led to the recommendation of Thomson as the preferred contractor - a recommendation adopted by the CAA board on 13 March 1992. (3) On 10 July 1992, Senator Peter Cook, the then Minister for Shipping and Aviation Support, initiated the Macphee Review pursuant to a statutory direction given under s12 of the Civil Aviation Act 1988 (Cth). The Report of the Independent Review of the Civil Aviation Authority's Tender Evaluation Process for the Australian Advanced Air Traffic System ("Macphee Report") of 11 December 1992 (to which piecemeal reference will be made), in concluding that the TAAATS I process was in significant respects unsound and unfair, made a variety of recommendations relating to the proposed TAAATS procurement. Adoption of the Report led to the TAAATS II tender. In particular the Report recommended that that tender be limited to Hughes and Thomson, each of which should be invited to participate in it. The Report contributed directly both to the criteria and to the processes adopted for the TAAATS II tender. While the CAA board officially accepted the Macphee recommendations, it is clear that some members at least were hostile to the inquiry and to some of its criticisms. (4) In January 1993 the CAA invited Thomson and Hughes to participate in a further competition for the TAAATS contract. A formal meeting ("the Restart Meeting") was held on 19 January 1993. A transcript of it was kept. Its objectives were to provide reassurance to the two companies as to the processes to be followed and to secure their concurrence in those processes. (5) On 5 February 1993 the CAA wrote to Hughes and Thomson outlining its proposals for, and seeking acceptance of, its "general approach to the selection of a contractor for the TAAATS Project". The matters particularised in this letter were later superseded by more detailed proposals but I would note that the letter particularised that: (a) Australian Industry Involvement ("AII") was to be an element in the tender evaluation and that the evaluation of AII would be undertaken by DITAC which would be a consultant to the Tender Evaluation Committee ("TEC"); (b) the parties Best and Final Offers ("BAFOs") would be evaluated in accordance with specified major and minor criteria (a priority order being given the major criteria), and that the evaluation would be in accordance with a defined evaluation methodology; (c) an independent auditor, responsible to the Board, would be contracted to audit the conduct of the evaluation process; and (d) strict confidentiality would be maintained. (6) On 17 February, Mr Roser, then Acting Chief Executive of the CAA, wrote to Mr Stevens, Secretary of DITAC in terms (inter alia): "The CAA has established a Tender Evaluation Committee, comprising myself and three General Managers, to oversight the evaluation process and to make recommendations to the CAA Board regarding the preferred tenderer for this project. I would like to invite your Department to participate in the selection and evaluation process as a Consultant to this Committee. I would also like to invite your Department to undertake the evaluation of the AII aspects of the proposals from Hughes and Thomson." By letter of 2 March 1993, Mr Stevens accepted the CAA's invitation and nominated Ms Clarke to represent his department as the TEC's consultant. (7) Negotiations between the companies and the CAA during this period occasioned further revisions to the tender process. On 3 March the CAA sent to each the draft of a letter specifying the selection criteria and tender process for the TAAATS acquisition. Comments on it were invited as the letter itself was to be "proposed for each Company's agreement at signature of the SDP Contract". It will be necessary to refer later to the Specification Development Phase ("SDP") contract. It is of no present significance. The draft letter became the letter of 9 March. It is Hughes' case that the terms of this letter had contractual force. Before referring to some of those terms it is necessary to backtrack slightly. (8) On 8 March 1993, Ms Clarke for DITAC wrote to Hughes and to Thomson confirming "the details of the evaluation criteria and approach that [DITAC] will adopt in its evaluation of [AII] for TAAATS". These were (inter alia) as follows: "As DITAC and the CAA have already emphasised assessment of AII proposals should be regarded as a competitive process, and as such should not be regarded as simply a hurdle to be cleared. DITAC is seeking to maximise the strategic opportunities for competitive Australian based firms. DITAC does not expect AII proposals to have a negative impact on the installation timetable or the cost of TAAATS to the CAA. Proposals should be internationally competitive and make good business sense to the TAAATS contractor and its local partners. . . . The evaluation criteria for the TAAATS AII proposals, in ascending order of importance, are as follows:
26. The level of local content:

• civil works
• training
• hardware
• software 2. Development of support and maintenance capability in-country:
• hardware
• software - the involvement of Australian based firms in future software maintenance and enhancement will be highly regarded. 3. Enhancement of skills and capability of Australian based subcontractors as a result of TAAATS: - technology transfer from prime contractor to subcontractors - extent of involvement of subcontractors in software development, systems integration and project management - access to intellectual property by local subcontractors.

4. Exports: - Australian based companies having responsibility for software maintenance and enhancements of systems installed in the region by the contractor - teaming arrangements for TAAATS subcontractors into regional and other markets - other ATC products and services

• developing country markets
• developed country markets 5. Collaborative arrangements with Australian based firms and institutions, for the research into and the development of future ATC products and services. 6. A long term commitment to establish a capability and a presence in Australia including the designation of Australia as the maintenance centre for systems installed in the region, and a strategic centre for the manufacture and development of ATC products and services for the international market. The contractor should note that the scope of its AII proposal should be limited to Air Traffic Control products and services. DITAC will make an assessment of the contractor's AII proposal against the above criteria taking into account:- - the contractor's past performance in Australia on AII in ATC related areas - strength of longer term commitment to Australian subcontractors to TAAATS - the extent of Australian value - added in individual AII proposals - the likelihood of individual proposals coming to fruition. Wherever possible the contractor should provide documentation to support its commitment to individual proposals." As with the 9 March letter, this was signed by both companies. (9) The 9 March letter needs to be set out at some length. Insofar as it related to the TAAATS acquisition contract - it dealt with SDP matters as well - the following provisions are of note. "2.1General . . . The CAA reserves the right to modify the strategy at any time after consultation with each Company. Both Companies will be notified in writing of any such modifications. . . . 2.3 Australian Industry Involvement Companies are to develop Australian Industry Involvement Proposals which will be considered in the evaluation of their offers. The Department of Industry, Technology and Commerce (DITAC) has stated that it has given to the Companies a letter dated 8 March, 1993 providing the same guidance to both on the matters to be addressed in the proposals, possible avenues for the Companies involving Australian Industry, and the relative merits of involvement strategies. Companies should note that the CAA requires an in country Australian based software support capability to be established for the more important subsystems, such as radar and flight data processing and display. DITAC will evaluate the offers and will provide copies of the proposals and DITAC's evaluation report to the CAA. Companies will provide DITAC with such information as DITAC may require and agree that the CAA can provide information held in the offers submitted to the CAA as would be required by DITAC in the evaluation of their proposals. Companies will be required to enter into a Deed of Agreement with DITAC covering the implementation of the proposed Australian Industry Involvement Plans with DITAC. A draft Deed of Agreement will be circulated with the draft terms and conditions of the TAAATS Acquisition Contract. It is expected that the terms of both documents will be settled as part of the same process of negotiation of terms prior to the submission of Best and Final Offers. It is expected that the Deed of Agreement will be signed at the same time as the TAAATS Acquisition Contract. 2.4 Best and Final Offers The CAA will by letter request Companies to submit their Best and Final Offers for the TAAATS Acquisition Contract at the date indicated in Attachment C to the SDP Contract. This will be the final opportunity for submission of material describing their offers and the price and other conditions applying. This information will be used in the evaluation of the offers for the selection of the Contractor for TAAATS. The price component of the Best and Final Offers is to be delivered by hand in paper form and on magnetic media in a separate sealed envelope directly to the Project Manager, TAAATS Systems Acquisition Project. 2.5 Evaluation of TAAATS Best and Final Offers 2.5.1 Criteria The CAA will evaluate the best and final offers for the TAAATS Acquisition submitted by the Companies during the Specification Development Phase with reference to the following criteria: Major Criteria Criteria Priority

6. FINALISATION OF CONTRACT 6.1 Prepare Report for Tender Evaluation Committee The results of the evaluation are prepared for presentation [sic] the Tender Evaluation Committee. 6.2 Executive and Board Approval The evaluation is presented to the Tender Evaluation Committee in written form. Presentations to the Tender Committee are made by project manager and evaluators. The Tender Committee recommends a tender to the Board. The board considers the Tender Evaluation Committee recommendation and selects the TAAATS contractor." (10)Consistent with the representations made in the letters of 5 February and 9 March, the CAA on 2 April 1993 entered into an agreement with a Mr John Moten who, as Independent Auditor, was required: "to monitor the AAATS evaluation and selection process, for the purpose of ensuring that the process is appropriate and that it is conducted in as fair and unbiased a manner as is practicable." A schedule to the agreement specified in some detail the audit services to be provided. Mr Moten was to be available to attend and report to meetings both of the CAA board and of the TEC. (11)By letter dated 7 April 1993, Senator Collins (who was minister with "[r]esponsibility for oversighting the CAA") wrote to the CAA requesting that it "operate in accordance with Government procurement and industry development policies [for GBEs]". Those policies apparently had first been published in their then operative form on 17 December 1992 in association with a press release by Senators Button and Bolkus. The object of those policies, as the press release indicated, was to: "ensure agencies give local companies the maximum opportunity to compete for Government business consistent with the commercial objectives of GBEs and the need to obtain value for money." (12)Under cover of a letter dated 19 July 1993 the CAA issued a Request for Tender ("RFT") to both Hughes and Thomson. It is Hughes' case that the terms and conditions of the RFT had contractual force as and from the time Hughes submitted its BAFO on 5 October. Again it is necessary to set out some at least of the terms of the RFT. I preface this by noting that, while the terms of the RFT are substantially similar to those of the 9 March letter to the extent they cover common territory, differences in expression exist between the two. This has been a cause of difficulties. The RFT required that tenders be lodged on or before 5 October 1993. Separate provision was made for lodging the price component: it was by the same date to be delivered directly to the Project Manager, TAAATS Acquisition Project. The RFT further provided (inter alia): "5.3The CAA normally makes public the arrangement of contracts, including the contract price and intends to make public the arrangement of any contract flowing from this RFT, including the contract price after contract signature. . . . 7.1Neither the lowest tender, nor any tender, will necessarily be accepted by the CAA. Acceptance of tender will be effected by the execution of a discrete Contract between the CAA and the Tenderer in the terms of the draft Contract. 7.2The CAA reserves the right to reject any offer which does not comply fully with the Clauses contained in the RFT and its Attachments. . . . 7.4During the evaluation of the tenders pursuant to this tender process the CAA reserves the right to seek clarification in relation to any ambiguity or uncertainty from any or all of the Companies in relation to their offer to provide the Supplies. The CAA will not enter into any discussion or negotiation whatsoever concerning the price component of the Tenders during the evaluation of the offers and while the tender process is on foot. . . . 7.5... Alterations will not be allowed after a Tender has been submitted. . . . 16. Evaluation Criteria 16.1Criteria 16.1.1 The CAA will evaluate the best and final offers submitted by the Companies with reference to the following criteria: 16.1.1.1 Major criteria Criteria Priority 1. Operational and Technical Performance, logistics support and schedule 1 2. Price and other Financial Issues 2 3. Risk 3 4. Australian Industry Involvement 4 16.1.1.2 Minor criteria . . . 16.1.2 The CAA will not be disclosing any further information regarding the level of importance or relative weightings of the criteria and the evaluation methodology. 16.2 Methodology 16.2.1 The evaluation of proposals will be undertaken in accordance with a defined evaluation methodology. The methodology and CAA's conformance with that methodology will be independently audited. 16.2.2 A qualitative assessment technique will be used for evaluation. 16.2.3 The proposals will be first evaluated against all of the above criteria except for Australian Industry Involvement and price/financial considerations. If one proposal does not have substantial advantages over the other, they will be considered equivalent and the recommendation will be made on the basis of price and financial considerations and then Australian Industry Involvement." (emphasis added) I would interpolate at this point that the sentence emphasised differs from that used in the 9 March letter which provided that, where the proposals were considered equivalent "the recommendation will be made on the basis of Australian industry participation and price/financial considerations." This difference was pointed out to the Project Manager, Mr Hider by Mr Moten, the Independent Auditor, on 16 July while the RFT was in draft. Mr Moten described the change as one of "emphasis". Returning to the RFT: "16.2.4 If one proposal does have substantial advantages over the other, the recommendation will be made on the value for money basis taking into account the identified advantages, the price and financial considerations and then Australian Industry Involvement (AII). 16.2.5 The CAA has established a Tender Evaluation Committee of senior CAA managers. A representative from the Department of Industry, Technology and Regional Development (DITRD) will provide advice on AII matters directly to the Tender Evaluation Committee. 16.2.6 An independent auditor has been contracted to verify that the evaluation procedures were followed, the evaluation was conducted fairly and the offers received due consideration. The auditor will report to the Evaluation Committee prior to the final recommendation and be responsible to the CAA Board. 16.2.7 The CAA reserves the right to make available to advisers and third parties (such as representatives of the Civil Air Operations Association of Australia) a copy of the Tenderer's proposals or part of the proposals for evaluation purposes only. Measures designed to achieve the strict confidentiality of the information contained in the proposals will be implemented and maintained. 16.2.8 The CAA will ensure that any adviser or third party involved in the evaluation process will not have any affiliation with any of the Tenderers for the TAAATS project. 16.2.9 CAA's evaluation of the Tenders (including the Pricing Schedule and the offer to provide the Supplies) shall be in the absolute and unfettered control and discretion of CAA. . . . 19. Confidentiality 19.1 [T]he CAA undertakes to maintain the confidentiality of information received in response to this request and will not release it to any competitor or potential competitor without written authority of the Company. . . . 21. Australian Industry Involvement 21.1 The entry into a contract pursuant to Clause 7.1 shall be subject to, and conditional upon, the Contractor executing a Deed of Agreement with the Commonwealth acting through the Department of Industry, Technology and Regional Development (DITRD) in relation to the Contractor's Australian Industry Involvement obligations. 21.2 Tenderers shall submit as part of the Tender proposal their; a) proposed Deeds of Agreement they are prepared to execute on Contract award; b) proposed Australian Industry Involvement Plan; and c) other information supporting an evaluation of their proposals. . . . 34. Amendment of RFT 34.1 The CAA reserves to itself absolutely the right to vary or amend the terms and conditions of this Request for Tender upon giving the Companies timely and concurrent written notice of such variation or amendment." (13)On 19 July Ms Clarke of DITRD wrote to Hughes and Thomson outlining DITRD's "base-line AII requirements for TAAATS". These were related to the Government's industry development and procurement policies for GBEs which, as noted in (11) above, were announced in December 1992. On 2 August, Ms Clarke again wrote to both companies reaffirming that the scope of the AII proposals was to be as in the 8 March 1993 letter: DITRD, apparently, had created some uncertainty in this matter. Then on 12 August she wrote what was intended to be a consolidation of the advice given to them on AII evaluation criteria and baseline requirements. The letter, which indicated that it was to supercede "all previous communication", contained a draft of the deed of arrangement for AII that was to be negotiated with DITRD. I would also note that the letter reiterated the view of 8 March that: "DITRD does not expect AII proposals to have a negative impact on the installation timetable or the cost of TAAATS to the CAA. Proposals should be internationally competitive and make good business sense to the TAAATS contractor and its local partners." (14)Hughes submitted its BAFO on 5 October 1993. It alleges that on and from this date it and the CAA were bound to a tender process contract on the terms of the RFT. This contract is said to be cumulative upon that created by acceptance of the letter of 9 March. (15)The TEC met on a number of occasions between 15 and 18 November 1993 to determine the preferred tenderer. In the event the TEC's recommendation was Hughes. This was formally reported to the Board by the TEC Report of 26 November 1993. Ms Clarke was present at the TEC meetings and she was at least by this time aware there was an expected contract price difference between the two BAFOs. It favoured Hughes and was in the order of $37 million. At the 18 November meeting Ms Clarke indicated that Thomson's AII proposals afforded wider community benefits than Hughes' and that if Thomson was to be accepted because of this, there probably would need to be a subsidy of some form from the Federal Government to the CAA. This view was put directly to the Board by DITRD at its meeting on 6-7 December. (16)Between the 18 November TEC decision and the CAA board meeting of 6-7 December, Mr Roser, by then the CAA Chief Executive, briefed Senator Collins on the recommendation. A like briefing would seem to have been given to Minister Griffiths by DITRD officers. Legal advice was sought severally by Mr Hider and Mr Moten of John Butler of the Attorney-General's Department concerning AII and the application of the evaluation criteria. By letters of 2 December to General Gration (Chairman of the CAA board) and Mr Roser, Minister Griffiths raised directly the importance of AII in the award of the TAAATS contract and concluded: "One of the Government's key objectives in encouraging the growth of our manufacturing and services sector, particularly in technology intensive activities, is to achieve our broader economic and social objectives. In this context, I would encourage the CAA to give every consideration to AII in reaching its final decision on the preferred tenderer." On 3 December, Senator Collins wrote to General Gration in the following terms: "I take this opportunity to confirm as I have advised the Board previously the Government's two major concerns regarding the TAAATS project. The first priority is that we get an air traffic control system which is technically advanced and delivers safe and efficient radar services. The other priority was to maximise opportunities for Australian industry involvement. The Government recognises that the CAA has in place evaluation criteria to address these matters and formal advice to the Government in response to the findings of the Macphee Inquiry. This advice was well set out in the former Chairman's letter to Senator Cook on 30 December 1992. The Government appreciates the role the CAA has given to the Department of Industry, Technology and Regional Development in providing advice on the issue of Australian industry participation. I understand that the Minister for Industry, Technology and Regional Development has also written to you in this regard. Of course the decision is clearly a matter for the CAA Board using all the evaluation criteria established for the tender process." Both letters were tabled at the CAA board meeting on 6 December. (17)In a letter of 3 December to Senator Collins, Minister Griffiths raised the prospect of submitting to Federal Cabinet for its consideration the issue of the wider community benefit of the AII proposals for TAAATS. That letter (which I infer betrayed a knowledge of the substance of the differences between the two bids in price and on AII) was written with the object of procuring Cabinet's view on whether Thomson should be preferred for "wider AII" reasons. There is no evidence that Minister Griffith's request was acted upon in any way. The Board was informed during its meeting of 6 December (via Mr Roser) that Senator Collins, having obtained legal advice from Mr Dennis Rose QC of the Attorney-General's Department, was apparently of the view that for the Government to interfere in the contract allocation would be an "extremely high risk proposal". (18)At the 6-7 December board meeting the TEC recommendation was not accepted. A majority of the Board expressed a preference for Thomson based upon the risk associated with the purported lack of provenness of Hughes' Flight Data Processing solution. In the event, as recorded in the Board minutes, the Board resolved to: "(i) request the TEC, through the Chief Executive, to reconsider its advice to the Board in the light of: (a) the Board's belief that the TEC was interpreting the Authority's position on the AII issue too narrowly; and (b) the advice of the Independent Auditor that the Authority was obliged to take the broader view given the process that had been laid out in the documentation sent to the companies; and (ii) bearing in mind the advice given to the companies on 9 March 1993, the request for tender in July, the DITRD letter to the companies on 12 August, and legal advice subsequently taken, request from the Chief Executive advice on whether the broader assessment of the AII criterion favoured by the Board was consistent with members' fiduciary duties under the Civil Aviation Act (R241/93)." (19)On 14 December Thomson submitted a price reduction of $19.4 million to Mr Hider of the TEC. It was considered that $16.7 million of this was an inadmissible price variation. Mr Hider informed General Gration (and probably Mr Roser) of the letter. At the Board meeting of 23 December the Board was informed that one tenderer (unnamed) had submitted an impermissible variation that could not be taken into account. (20)Again on 14 December Thomson sent to Ms Clarke a letter in response to her letter of 10 December, which upgraded Thomson's export commitment by a sum in the order of $155 million. That upgrade was noted in DITRD's subsequent report to the CAA board. (21)On 15 December the TEC reconvened. Its recommendation remained unchanged. Its conclusions on the question of AII as reported to the Board were (inter alia) that: "(3)The TEC notes the advice from DITRD that "In DITRD's view the substantial benefits offered by the Thomson proposal to the wider community, and to the CAA itself outweigh the price disadvantage of the companies tender". (4) The TEC acknowledges that there are some direct benefits to the CAA in the extra commitment to research & development and exports associated with the Thomson offer, but considers that the benefits to the CAA are not nearly commensurate with the additional costs involved. (5) The TEC notes also that the realisation of the extra benefits to the broader community postulated by DITRD to be associated with the Thomson offer are necessarily speculative, based on expectations of the size of markets and Thomson's success in penetrating the markets. (6) Accordingly, the TEC concluded that the extra costs to the CAA could not be justified in the context of the uncertainty associated with the realisation of the extra benefits to the broader community." (22)On 16 December 1993, Mr Dennis Rose QC provided legal advice to Mr Roser on AII. The question he answered is conveniently captured in the opening paragraphs of Mr Rose QC's letter: "2. You ask whether the Board, in evaluating the tenders, would be acting in a manner inconsistent with its duties under the Civil Aviation Act 1986 ("the CAA Act") if it were to give weight to Australian Industry Involvement (AII) factors that would not be likely to benefit the CAA. 3. In my opinion, the answer is 'No'. Indeed, not only may the CAA take such factors into account but it is legally obliged to do so." The emphasis in para 3 is in the original. (23)The CAA board at its 23 December meeting again rejected the TEC recommendation and selected Thomson as the TAAATS contractor. The board minutes of that meeting indicate that (a) General Gration, at the outset, reminded members of Mr Rose QC's advice; and (b) Mr Ron Yates declared a potential conflict of interest in that he was deputy chairman of The Preston Group Pty Ltd ("TPG"), a company involved in Thomson's AII proposals. The minutes record (inter alia) that: "The Board was reminded that in relation to assessment of AII, the RFT had specified that DITRD would provide advice to the Tender Evaluation Committee. Theirs was the most expert source of advice on AII available to the Board and more so than that of the TEC whose technical expertise lay elsewhere. The views of the TEC on the wider implications and benefits of AII should therefore be viewed accordingly. . . . The Board agreed with the TEC that there were no risk issues in relation to either company or the Authority's project management of such magnitude that the project should not proceed. The Board also accepted the judgment of the TEC that the risks associated with both offers were essentially the same. Having previously endorsed the TEC assessment that both companies were substantially equal also on the operational/technical performance criterion, and noting the views expressed by members of the Board, the Board agreed that in accordance with the RFT procedures, it should proceed to consideration of the tenders on the basis of the remaining two criteria of price and AII. The Board noted Government policy on Australian industry involvement and its considerable importance to Australian industry, and agreed that Thomson offered a significant advantage in this area. The Board further noted the net present values of total project cost for Hughes of $190.3M compared with $207.0M for Thomson. Following discussion, and having regard to DITRD's advice and the advice of Mr Dennis Rose QC, the Board decided that the substantial benefits offered by the Thomson AII proposal to the wider Australian community, and to the Authority itself, outweighed the price disadvantage of the company's tender." (24)By letter of 24 December to Thomson, Mr Hider indicated that the "clarifications" (ie the price reduction) contained in the letter of 14 December would be accepted in calculating the contract price and this in fact occurred. (25)On 12 January 1994 the CAA conducted a debriefing meeting for Hughes. At it Hughes' officers were told that the Board's decision was based on AII and that, while Thomson's contract price would not then be disclosed, when it was later published they would see that, as to the price difference: "at NPV levels, taking into account contract price, total Project costs and life cycle costs, there really was not a great deal in it. The variance was only a few percentage points. The difference between the prices at that level, NPV, was a few percentage points." The NPV reference is to net present value. (26)Thomson's signing of the TAAATS contract with the CAA and the AII Deed of Agreement with the Commonwealth, occurred at a signing ceremony on 7 February 1994. (27)Hughes filed its application for preliminary discovery in this Court on 22 December 1994. PART II: THE CAA AND ITS STATUTE The CAA was constituted a statutory corporation by the Civil Aviation Act 1988 (Cth), s8 ("the Act"). Previously its functions had been discharged in a ministerial department. The general functions of the CAA as delineated in s9 included: "(b)to provide air route and airway facilities; (c)to provide air traffic control services, and flight service services, for, in either case, surface traffic of aircraft and vehicles on the manoeuvring area of aerodromes; . . . (m)any functions incidental to any of the foregoing functions." Additionally, sub-section (4) of s9 provided that: "Subject to section 12, the functions to provide services and facilities may be performed at the discretion of the Authority." The CAA's powers were conferred by s13. They include a power to enter into contracts. Significantly, a 1990 amendment to the Act repealed s13(3). That sub-section had precluded the CAA from entering into a contract involving the payment of more than $6 million without the approval of the minister. The CAA was required, in the performance of its functions and the exercise of its powers, to consult where appropriate "with government, commercial, industrial, consumer and other relevant bodies": s16. The 1990 amending statute to which I have referred also created a more explicit governance structure within the CAA. A new s32A created a board of the CAA. Section 33(1) constituted the board of: "(a)a Chairperson; (b)a Deputy Chairperson; (c)the Chief Executive Officer; and (d)6 other members." And s32B prescribed the "Purposes of the Board". That section warrants quotation in full. "32B. (1) The purposes of the Board are: (a) to decide the objectives, strategies and policies to be followed by the Authority; and (b) to ensure that the Authority performs its functions in a proper, efficient and economical manner. (2) Anything done in the name of, or on behalf of, the Authority by the Board is to be taken to have been done by the Authority." I would note in passing that s40 of the Act imposed a relatively standard disclosure obligation on board members having a direct or indirect pecuniary interest in any matter considered by the board. It will be necessary later to consider the terms of this section. One of the board members was to be the Chief Executive Officer ("the CEO") of the CAA. That official's position was created by the Act, s84. The CEO was to be appointed by the minister after recommendation from the board and held office during the board's pleasure: ss84(1), 89. The duties of the CEO's office as prescribed by s84A were as follows: "84A. (1) The Chief Executive Officer is, under the Board, to manage the Authority. (2) Anything done in the name of, or on behalf of, the Authority by the Chief Executive Officer is to be taken to have been done by the Authority." To the extent that the Act gave formal expression to the relationship that was to exist between the CAA and the minister administering the Act as a result of Administrative Arrangements Orders, this was to be found, for purposes of present relevance: (a) in the minister's powers to appoint board members including the CEO: ss33(4), 84; and to remove board members (other than the CEO) on specified grounds: s42, cf s89; (b) in the power to give written directions to the CAA: s12; and (c) in the powers to direct the board in relation to the CAA's financial plan: see generally ss43-48; and to approve or vary the board's recommendation of the dividend (if any) to be paid to the Commonwealth: s56. Here it is necessary to venture in a little detail into some of the powers mentioned. First, the general power to direct contained in s12. It provides: "12.(1) The Minister may give the Authority written directions as to the performance of its functions or the exercise of its powers. (2) Directions as to the performance of the regulatory functions shall be only of a general nature. (3) Particulars of any directions given in a financial year shall be included in the annual report of the Authority for that year. (4) The Authority must comply with a direction given under subsection (1)." Secondly, directions and the CAA's financial plan. In parallel with its s43 obligation to create a corporate plan, the board had the s44 obligation to develop a financial plan. When preparing that financial plan, the board was required by s45 to consider (inter alia): "(b)the objectives and policies of the Commonwealth Government known to the Board; (c)any directions given by the Minister under section 12; . . . (g)the need to earn a reasonable rate of return on the Authority's assets (other than assets wholly or principally used in the performance of regulatory functions or the provision of search and rescue services); (h)the expectation of the Commonwealth that the Authority will pay a reasonable dividend; and (j)any other commercial considerations the Board thinks appropriate." By virtue of s47 of the Act the minister was empowered to direct the board to vary its financial plan in a variety of respects. Significantly, the CAA was entitled to reimbursement for complying with a s12 direction but not a s47 one, the latter being expressly excluded from the reimbursement regime created by s48. Insofar as presently relevant s48 provided: "48.(1) Where the Authority satisfies the Minister that it has suffered financial detriment as a result of complying with a direction given by the Minister under this Act, the Authority is entitled to be reimbursed by the Commonwealth the amount that the Minister determines, in writing, to be the amount of that financial detriment. (2) The reference in subsection (1) to suffering financial detriment includes a reference to: (a) incurring costs that are greater than would otherwise have been incurred; or (b) forgoing revenue that would otherwise have been received." Finally, the minister's powers in relation to dividends. The Act, s56 required the board each year to notify the minister in writing of the dividend (if any) it recommended that the CAA pay the Commonwealth. In making its recommendation the board was obliged to have regard to the matters specified in s45 - those of present relevance are set out above. The minister was then empowered to approve or vary the recommendation and in so doing had to have regard to (inter alia): "the objectives and policies of the Commonwealth Government:" s47(2)(b) As will be seen, as the AII issue crystallised in the deliberations of the TEC and the Board in November - December 1993, the issue of a s12 direction and s48 reimbursement or of a s56 dividend reduction emerged as muddying influences in the evaluation of the rival bids. PART III:THE CASE AS PLEADED AND PLEADING ISSUES To appreciate both the shifts that have occurred in the pleading of this case and the significance the pleadings have assumed, it is appropriate to refer at the outset to its history in this Court. Preliminary discovery having been ordered on 28 June 1995, Hughes filed its application and statement of claim on 22 December 1995. At the first directions hearing on 9 February 1996 the parties agreed to a timetable for the preparation of the matter with a view to a projected hearing in August 1996. There was inevitable movement in the dates fixed for particular steps. Nonetheless, the matter came on for hearing as projected on 5 August. That day began, as did many during the 25day hearing, with the calling on of subpoenas. This growing accretion of material led, inevitably, to the emergence of new issues. Mr Macfarlan QC, who appeared with Dr Griffiths for the CAA, made abundantly clear that the respondent intended to meet the case as pleaded; that the issues had been narrowed by extensive particulars; and that there would be no acquiescing in de facto alteration of the case as pleaded. He persisted in this stance, as he was quite entitled to, throughout the hearing. Its consequence, as was acknowledged by Mr Gyles QC who appeared with Mr Speakman for the applicant, was to precipitate periodic applications to amend the pleadings - the last (and unsuccessful) such application being made during the respondent's address. That the applicant's ultimate pleading was the Fifth Further Amended Statement of Claim conveys some indication of this regular process of amendment. I adopted a generous approach to amendment, while proposing such steps (including adjournment) as seemed fair and reasonable to offset any apprehended prejudice to the respondent. It appeared to me desirable to facilitate in so far as was reasonably practical the fair ventilation of the issues that the applicant wished to raise against the respondent. Nonetheless, and perhaps because any variation to the case as originally pleaded was required to be expressed in an amendment, the pleadings themselves have assumed no little importance in this matter. There is one matter relating to amendment to which I am obliged to refer. On 4 September, over the respondent's objection, I allowed the applicant to further amend a paragraph of its then statement of claim (para 13A) dealing with an allegedly impermissible variation Thomson made to its AII proposals. That variation related to changes in commitment in the deed that would implement its AII plans: see on this Part x: Price Reduction/AII Variation. I indicated at the time that I would provide brief reasons for allowing the amendment in these reasons. Notwithstanding the respondent's submissions, I concluded that, though the course to the amendment was unusual (it was essentially the product of cross-examination of Ms Clarke) it nonetheless concerned what were matters of construction of documents already in evidence and that to allow the amendment would occasion no real prejudice to the respondent. I would note that both parties provided extensive written submissions on the subject matter of the amendment. Before turning specifically to particular pleading issues, it is desirable to outline at least in synoptic form the case pleaded by Hughes against the CAA.

• Hughes: $167.4 million
• Thomson: $201.8 million
• Variance:$34.3 million in Hughes' favour. ... . The 'Net Present Values' (NPV's) of the expected Contract Price (10% p.a.), having regard to the payment schedules proposed by each of the contenders and taking account of savings from financing arrangements, amount to:
• Hughes: $138.6 million
• Thomson: $159.5 million
• Variance:$20.9 million in Hughes' favour. . The Net Present Values (NPV's) of the Total Project Cost (10% p.a.), having regard to the payment schedules proposed by each of the contenders and taking account of savings from financing arrangements, amount to:
• Hughes: $190.3 million
• Thomson: $207.0 million
• Variance:$16.7 million in Hughes' favour ... . NPV's of Comparative LCC's [Life Cycle Costs] are:
• Hughes: $164.5 million
• Thomson: $186.0 million
• Variance:$21.5 million in Hughes' favour." I should add that these figures took account of the "admissible" $2.7 million, but not the "inadmissible" $16.7 million, price reductions made by Thomson on 14 December. Additionally I should make reference to Mr Roser's evidence on this matter. In cross-examination, having been taken to the various ways in which the price difference could be expressed, he was asked: "Q. [Mr Gyles QC]: ... The bids were never a few percentage points apart, whichever way you manipulated the figures, were they? A. That's right, yes. Q. Why did you say that to them? A. The comparison we were using obviously for public purposes was the contracted price that we would have with Thomson. Q. And, Mr Roser, you knew that that was not the bid price, didn't you? A. That Thomson - you're quite right, yes, I did, yes. Q. So that the way you did it, I don't mean only you, but the way you did it at the debrief, meant that Hughes were not told what the price difference in the bids were? A. No, they were not. Q. Why not? A. That isn't normal to tell companies that, Mr Gyles. And I don't think there was any obligation on us to tell them that. ... Q. Furthermore, the request for tender made clear that the contract price would be made public; is that right? A. I can't recall, but it is normal to make the contract price public, yes. Q. That's right. Contract price was to be made public; correct? A. Yes. Q. And this procedure, I suggest to you, which you devised, was very clear that there could be no, repeat 'no', negotiation on price after best and final offer, didn't you? That was the procedure? A. Yes. Q. Therefore, it could be safely assumed that in this contract the contract price would be the best and final offer, save for a permissible option? A. Yes. Q. The device which was adopted here of Thomson revising their bid and having that taken into account meant that that assumption which Hughes must make was falsified, wasn't it? A. Not by the CAA. Q. I beg your pardon? Who else was running this organisation, sir? I thought the CAA were the contracting party? A. If Thomson reduced their price in that process, why shouldn't we have taken account of it, if the decision was made their way? Q. Mr Roser, your procedures simply did not permit of people to rebid, did it? A. No, you're quite right. Q. It should have been tossed out the window back at them, shouldn't it? A. Yes, I suppose so. Q. Yes, it should have been. And then there might have been an honest disclosure of the difference in price then, mightn't there - difference in bids, I mean? A. Yes. Q. Let me suggest that the strategy which was adopted was to 'ensure' that the truth did not emerge before the contract was signed with Thomson in order to prevent Hughes stopping it; that is the truth, isn't it? A. It was never a conscious decision, Mr Gyles." The reference in that evidence to the RFT requiring disclosure of the contract price was to para 5.3 which indicated that the CAA intended to make the contract price public after signature. This is a clear case of conduct that was misleading and deceptive. While the respondent has contended that the representations made at the debrief were to a comparison of proposed contract prices (rather than bid prices) and no more, I can only conclude that, in the context of a debriefing as to the outcome of a tender process involving the application of defined criteria and methodology, any reasonable tenderer in Hughes' position would properly and incorrectly assume from the representations in the circumstances that (i) the difference referred to reasonably reflected the differences with which the CAA was working when it took its decision - and this even though the final contract price might later be augmented by the addition of "options": see RFT para 22; (ii) that difference was not 8 per cent or more - and this was the lowest percentage difference of the various measures used; and (iii) the contract price when later revealed would not embody a post-BAFO price reduction which would make the actual contract price look much closer by comparison than would otherwise have been the case - and as was the case when the Board decision was taken. My conclusion that the representation as to a "few percentage points" had a retrospective as well as a prospective character becomes the more inescapable when it is noted that Mr Roser used the past tense when referring to it in the second of the excerpts set out above. Indeed movement between tenses is a feature of the discussion of the difference in those excerpts. I cannot in consequence accept the respondent's submission on this matter. Neither can I accept that 8 per cent is a "few" in the context of the explicit 'much more towards the 2 than the 10' comment made by Mr Roser. I should add that I regard the unrevealed inclusion of Thomson's post-BAFO price reduction in the contract price as constituting an element in the conduct that was misleading and deceptive in the circumstances: see Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. Though acknowledging that a guilty intent is not a necessary element in a s52 contravention, the applicant has invited me to find that such was there in this case. Given my finding, I decline to express a view on this matter other than to say that, whatever the rationalisation resorted to by the CAA, the representations themselves suggest a certain deviousness on the CAA's part. They perpetuated the concealment of irregularities in, and breaches of, the TAAATS process. Hughes has pleaded, and Mr Kramp and Mr Funge have given evidence of, its reliance on the CAA's contravening conduct. It did not take steps to prevent the CAA's failure to evaluate, or to compel the CAA to evaluate, the tenders as required by the RFT contract. It did not take steps to prevent the execution of the TAAATS contract with Thomson. Without expressing any views on those steps and their likely result, I find that Hughes did rely on the CAA's conduct and in so doing failed then to challenge the actions of the CAA. PART XIII: PRINCIPAL FINDINGS AND CONCLUSIONS My observations here will be generalised, brief and highly selective. First, I have found that the processes leading to the award of the TAAATS contract were governed by a process contract, the principal terms of which were contained in the RFT. I also have found it to be an implied term of that contract that (inter alia) the CAA would conduct its tender evaluation fairly. I have determined as well that a term should be implied as a matter of law into a tender process contract with a public body (such as this was) that that body will deal fairly with a tenderer in the performance of its contract. Accordingly I have made such an implication into the RFT. In this contractual setting, I have concluded that the CAA acted in breach of its contract with Hughes in that - (i) it failed to evaluate the tenders in accordance with the priorities and methodology prescribed in the RFT (paras 16.1 and 16.2); (ii)it failed to ensure that measures designed to achieve strict confidentiality of information contained in tenderers' proposals, were maintained (RFT para 16.2.7); and (iii) it accepted an out of time change to Thomson's proposed deed of AII commitment. While there was evidence enough to warrant Hughes' allegation of a breach of the fair evaluation/fair dealing terms, I have not found it necessary to reach a conclusion on these given the breaches of contract that already have been made out. Secondly, I have found that the CAA made, and (by its subsequent decisions and actions) falsified, certain representations as to the processes and methodology to be followed in the selection of the TAAATS contractor. These occurred in circumstances where Hughes was reasonably entitled to expect the CAA to disclose to it that the CAA did not intend to, and did not, adhere to what it had previously represented it would do. In these circumstances I have concluded that the CAA engaged in conduct in contravention of s52 of the Trade Practices Act 1974, that conduct relating substantially, though not precisely, to the same matters in respect of which I have found breaches of contract to have occurred. Additionally I have found that the CAA engaged in conduct in contravention of s52 in the representations it made to Hughes when de-briefing it on the basis of the CAA board's selection of Thomson as the TAAATS contractor. In each such instance of contravening conduct, I have found that Hughes relied upon that conduct. Thirdly, I have not found it necessary to make any findings on the applicant's claims in negligence and equitable estoppel. While the negligence claim in particular may have required examination of matters not expressly canvassed in these reasons, the claim itself achieved little prominence at the hearing and even less in submissions. Given the failures and failings of the CAA I have identified in my findings, little practical purpose would have been served by inviting further and detailed submissions on this claim and by engaging in a protracted examination of it. Finally, bearing in mind the "splitting" of this proceeding, the orders I propose to make are that the parties file agreed short minutes of orders to reflect these reasons and if short minutes are not agreed, (i) the applicant to file and serve proposed minutes of orders along with written contentions supporting the orders, and (ii) the respondent to file and serve its written objections thereto. I certify that this and the preceding 339 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate Dated: 26 June 1997 Counsel for the applicant : R V Gyles QC Solicitors for the applicant: M R Speakman Mallesons Stephen Jaques Counsel for the respondent : R Macfarlan QC Solicitors for the respondent : Dr J E Griffiths Freehill Hollingdale & Page Dates of hearing : 5-8; 12-16; 19-23; 27-30 August 1996; 3-5, 9, 10, 16, 17 September 1996 Date of final written submission : 31 January 1997 Supplementary questions : 11 March 1997 Date of final submission to supplementary questions : 29 April 1997 Date of judgment : 30 June 1997