6.2 Should leave be granted to file the FASC?
24 Leave to file the FASC should be refused for the following reasons.
25 First, a major difficulty with the FASC as initially proposed and the ASC in Australian Parking (No. 1) was the pleading that Reino engaged in misleading and deceptive conduct by failing to disclose the alleged requirements of a third party (MasterCard) for the new machines to accept contactless payments on instalment, notwithstanding that the RFT stated that the requirement was for the machines to be capable of upgrade after installation to accept contactless payments, as I found Australian Parking (No. 1) at [33]. That claim had also created internal inconsistencies and ambiguities in the pleading. As earlier explained, that claim was abandoned by Australian Parking at the hearing of the present application and, as a result, Australian Parking did not press its application to amend the ASC to include paragraphs 39 to 54 of the FASC inclusive. However, with the abandonment of that claim, the pleadings at paragraphs 5-14 of the FASC no longer have any apparent relevance as they do not appear to plead facts material to the Reino RFT Claim or the Website Claim. Certainly, if they have a continuing relevance, that is not apparent from the pleading itself. Leave should therefore be refused to amend to include paragraphs 5-14.
26 Secondly, there is a failure to plead the connection between the Reino Constraints pleaded at paragraphs 26(a) and (b) of the FASC, which are said to render false or misleading the implied representation of compliance, and the RFT requirements pleaded at paragraphs 17(a)-(d). Sensibly read, the allegation at paragraph 26(b) that Reino was unable to upgrade its parking ticket machines because it did not have EMV certification, did not comply (at the least) with the requirement identified at paragraph 17(c) that the tendered solution must be upgradeable to include contactless payments. However, it is not clear whether this is the only requirement in paragraph 17 with which Reino did not comply by reason of the allegation at paragraph 26(b). Nor is it clear with which of the four requirements identified at paragraph 17 of the FASC, the alleged constraint at paragraph 26(a) of the FASC did not comply. As an aspect of this, the relationship alleged between the EMV requirements and contactless is not apparent from the pleading. In this regard, senior counsel for Australian Parking contended from the Bar table that:
(1) for a credit card to be EMV compliant, it was necessary for the card to have a chip (explaining that a chip can be activated by insertion into the base of a pay machine or used in a contactless way); and
(2) for a credit card to be contactless, it is necessary for the card to have a chip so that "contactless is a subset of EMV".
27 However, none of those facts are presently pleaded. The relationship between contactless and EMV remains unclear from the pleading, contributing to the difficulties in understanding how the alleged Reino Constraints led to a failure to comply with the RFT requirements at paragraph 17 of the FASC. In short, as counsel for Reino submitted:
… it's not clear and it certainly not stated in the pleading, which is the critical thing, which conditions in the RFT… paragraph 26(b) engages with. We shouldn't be left, your Honour, looking at this pleading, going back and saying, well, is it (d)? But ... Mr Newlinds said on the transcript that doesn't deal with contactless. There is no clear case as to even which requirements of the tender resulted in the representation being false. There is just an assertion in 26 and 27 [of the FASC] that because of two circumstances that aren't particularised that a representation was false, and in relation to (a), we don't, with respect, understand whether the words EMV pick up contactless or not.
So those matters, your Honour, I accept could be corrected. I accept that. A further pleading could be put forward and we could look at it and form a view about whether it does maybe finally make it to a case that gets over the line, but I do respectfully submit that we don't understand the case on the mishmash of the pleading plus the written plus the oral submissions and the only way it can really sensibly go forward is a pleading which pleads the material facts relied upon to establish falsity of the representation, firstly, and secondly, at the very least, tell us which RFT tender requirements some paragraphs 26(a) and (b) engage and that should be done in the pleading itself. It shouldn't be done on the transcript in the course of a hearing of the present kind.
28 In this regard, as Jagot J held Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 516 at [23], a vague and ambiguous pleading "cannot be cured by oral submissions instructing the reader about how the paragraph should be read. It needs to be clear from the face of the pleading." While Reino properly accepted that "there's a spectrum here", i.e. that in some circumstances clarification may suffice, I agree with counsel for Reino that there were material differences between what was said in submissions by Australian Parking and the pleadings which "squarely cross the line".
29 The connection between the alleged Reino Constraints, on the one hand, and the failure to comply with the RFT requirements, on the other hand, is fundamental to the Reino RFT claim. That connection forms the basis of the pleadings at paragraphs 27-28 that the Compliance Representation was false and therefore misleading or deceptive, or that the Alternative Compliance Representation was misleading because Reino lacked reasonable grounds for making the representation. As such, among other objections, the pleadings are embarrassing in that they fail to state with sufficient clarity, the case against Reino, and leave Reino to attempt to piece together what is referred to. It follows that leave should be refused to amend the ASC to include paragraphs 15 to 38 of the proposed FASC.
30 While, in light of the conclusion that I have reached, it is unnecessary to consider the further objections to the application for leave to further amend, I note the following further difficulties with the pleadings.
31 First, Australian Parking initially submitted at the hearing that the pleading at paragraph 17(c) of the FASC that the tendered solution must be upgradable to include contactless payments meant that it had to be upgradable by Reino because part of the evidence will be that the parking machines are "sealed proprietary boxes, so third parties actually can't open them up and fiddle with them, so it can only be Reino." Accordingly, Australian Parking submitted that there was no disconnect between the pleading that the Alternative Compliance Representation was that "it [i.e. Reino] would be able to comply with all of the requirements of the RFT", on the one hand, and the pleading at paragraph 17(c) of the FASC, on the other hand. Such matters were rather, in Australian Parking's submission, ultimately matters for evidence to determine whether anyone other than Reino could upgrade the machines. In my view, should Australian Parking decide to attempt to replead, this point should be clarified in the pleading.
32 Secondly, Reino submits that the proposed pleading if allowed, would be liable to be struck out in any event on the basis that:
Where the tenders were required to make express representations about the extent of their compliance in the tender response, there is no basis in law to plead that the act of submitting the tender response carried an implied representation of compliance with each and every tender requirement. The very purpose of requiring tenderers to submit a response was to obtain a written statement identifying the extent of their compliance with the requirements of the RFT, including any exceptions where they did not comply. No implied representation of the kind pleaded is capable of arising at law, in the circumstances.
33 In other words, as counsel for Reino submitted at the hearing, there is a contradiction between paragraphs 24 and 22 of the FASC. Thus the allegation at paragraph 24 that the Compliance Representation is implied by reason of the act of submitting a tender - of "putting it in the box" - is undermined by the pleading at paragraph 22 that a tender response could note points of non-compliance. In this regard it is apparent that, while the pleading at paragraph 22 of the FASC refers only to there being a capacity for a tenderer to note exceptions to compliance in its response to the NCA RFT, the ACT RFT also made provision for a tenderer to identify exceptions to compliance, as Reino pointed out.
34 In response, Australian Parking submitted that the existence of a statement in the RFT requiring a tenderer to set out any exceptions to compliance in its tender does not render unarguable the implied Compliance Representation in circumstances where Australian Parking also pleaded at paragraph 30 that the tender by Reino was among those "accepted by the RFT agencies as being fully conformant with the requirements of the RFT". However, that is not what is currently pleaded in the proposed FASC which identifies the sole basis for the implied representation as the act of submitting the tender. As it currently stands, therefore, I do not consider that the pleading raises an arguable case. I also note that to the extent (if any) that the proposed pleading speculated that Reino had not identified any relevant exceptions to compliance, it would have been objectionable also on this ground: see Australian Parking (No. 1) at [48] and [73].
35 Finally, Reino submits that paragraphs 30 to 38 inclusive of the FASC fail to plead the material facts relied upon to establish causation and damages. In particular, Reino submits that:
In a rolled up way, FASC [38] asserts, on the one hand, that [Australian Parking] has "thereby suffered loss and damage, being the profits that it would have earned as the successful tenderer party". However, damages for loss of a chance (as pleaded in the first half of FASC [38] are assessed having regard to the value of the chance itself, not the value that would have been realised if the chance had eventuated (as pleaded in the second half of ASC [38]). The allegation that [Australian Parking's] loss is the "profit" it would have obtained as the "successful" party is thus a materially different allegation to what is pleaded in the first half of FASC [38]. Further, in any case, the material facts relied upon to establish that [Australian Parking] "would have" won the tender are not pleaded. For example there is no pleading that [Australian Parking] itself complied with all of the requirements of the RFT in its tender response. Further, the pleading rises no higher than the allegation in FASC [36] that [Australian Parking] was "one of… two unsuccessful shortlisted tenderers". There is no pleading of any material facts to establish why it is alleged that [Australian Parking] would have succeeded over the other unsuccessful tenderers. Further, as with the previous struck out pleading, there are no particulars of the asserted loss or damage.
36 However, as earlier mentioned, Australian Parking abandoned in reply the pleading that the loss and damage was "the profits that it would have earned as the successful tenderer party". As such, Australian Parking's case was put purely in terms of the loss of a chance, being an allegedly increased chance that its tender would have been accepted in circumstances where the shortlist would have been reduced from three to two if the RFT Agencies had not been induced to accept the Reino tender as conformant by reason of the alleged misrepresentations and Reino had therefore been excluded from consideration. As a consequence, the understandable criticisms identified by Reino of the pleadings as initially proposed with respect to loss and damage have largely been met, and the FASC now pleads causation: cf Australian Parking (No. 1) at [61]. The criticism that remains is that "no particulars" have been given of the asserted loss or damage. However, I would not have refused leave to amend by reason of a lack of particulars.