Supreme Court of WA|2005-09-22|Before: Miere J

Dockpride Pty Ltd & Anor v Subiaco Redevelopment Authority [2005] WASC 211 (22 September 2005)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : DOCKPRIDE PTY LTD & ANOR -v- SUBIACO REDEVELOPMENT AUTHORITY [2005] WASC 211

Trial of preliminary issue - Tender for purchase of land - Contract - Damages - Whether defendant is liable to plaintiffs? - Breach of contract - Misleading and deceptive conduct - Alleged express representations - Alleged oral representations - Implied contract - Process contract - Identity of tendering party - Whether process contract exists? - Terms of process contract - Implied terms - Compliance with tender Design Guidelines - Implied term to act fairly - Implied terms of fair dealing and good faith - Alleged breaches of process contract - Acceptable variance from Design Guidelines - BP Refinery criteria for implied terms - Content of the obligation to act fairly and in good faith - No established case of breach of contract - Misleading and deceptive conduct - Alleged representations of defendant - "In trade or commerce" - Whether representation was misleading when acted upon? - Reliance - Causation

The preliminary issue is determined in favour of the defendant

Second Plaintiff : Mr S D Rares QC & Mr T J Carmady

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Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 212 ALR 357

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Chapman v Luminis Pty Ltd (No 5) [2001] FCA 1106; (2001) 123 FCR 62

Chinook Aggregates Ltd v Abbotsford (Municipal District) (1989) 40 BCLR (2D) 345

Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594

Cubic Transportation Systems Inc v State of New South Wales [2002] NSWSC 656

Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903

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Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Pratt Contractors Ltd v Transit New Zealand [2003] UKPC 83

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Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240; (2004) 139 FCR 330

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B Seppelt & Sons v Commissioner for Main Roads (1975) 1 BPR 9147

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Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193

Far Horizons Pty Ltd v McDonald's Australia Ltd (2000) VSC 310

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Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191

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Price Higgins & Fidge v Drysdale [1996] VicRp 22; [1996] 1 VR 346

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Streamline Travel Service Pty Ltd v Sydney City Council (1981) 46 LGRA 168

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Wardley Australia Ltd v State of Western Australia (Rothwells Loan Case) [1992] HCA 55; (1992) 175 CLR 514

Wenzel v Australian Stock Exchange Ltd [2002] FCAFC 400; (2002) 125 FCR 570

1 LE MIERE J: This is the trial of a preliminary issue. The plaintiffs claim against the defendant damages for breach of contract, damages under s 79 of the Fair Trading Act 1987 (WA) ("FTA") and s 82 of the Trade Practices Act 1974 (Cth) ("TPA") and orders under s 77 of the FTA and s 87 of the TPA.

2 The preliminary issue is, in essence, the question of the liability of the defendant to the plaintiffs. Subject to the determination of the preliminary issue in favour of the plaintiffs, the issue of quantum of damages is to be tried subsequently.

3 The plaintiffs or one of them was the unsuccessful tenderer in a tender bid for the award by the defendant of a contract to purchase and develop land in the Subiaco Redevelopment Area. The successful tenderer was the Blackburne Consortium.

4 The core of the plaintiffs' action is the claim that the defendant by contract or representation obliged itself to conduct the tender process leading to the award of the contract fairly and in accordance with defined criteria. The plaintiffs allege that in a number of respects the defendant failed to satisfy these obligations. In particular, the plaintiffs allege that the defendant awarded the contract to a tenderer whose design did not comply with two items in the Design Guidelines that I will refer to as the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline. The Rokeby Walk guideline is that a pedestrian route should link Station Square to a car park to the north and should be on the same alignment as Rokeby Road. The Anchor Tenancy Entrance Guideline is that the entry to the anchor tenancy must be oriented towards Station Square having its primary entrance being visually recognisable, and no more than eight metres from the Square.

5 The plaintiffs claim damages against the defendant for a variety of breaches of contract and for misleading or deceptive conduct. I will first refer to the principal parties and persons involved in this controversy and the events leading up to the award of the contract.

6 The second plaintiff (Westpoint) is a property developer. Norm Carey was the managing director and principal of Westpoint. Nick Aitken was at the material times, the general manager of Westpoint.

7 The first plaintiff (Dockpride) is a company related to Westpoint. Norm Carey is the sole director and shareholder of Dockpride.

8 The defendant, which I will sometimes refer to as the Authority, is a body corporate established by the Subiaco Redevelopment Act 1994 (WA) ("the Act"). The Authority is an agent of the Crown in right of the State, and except as provided in s 18 of the Act, enjoys the status, immunities and privileges of the Crown. The Authority consists of five members appointed by the Minister. The five members collectively were referred to by witnesses as the Board and I will follow that convention. The Subiaco Redevelopment Area is an area of approximately 80 hectares adjoining the Perth to Fremantle railway line through part of Subiaco. The functions of the Authority are to plan, undertake, promote and co-ordinate the development and redevelopment of land in the Subiaco Redevelopment Area, and, for that purpose, to prepare and keep under review a redevelopment scheme for that area and to control developments in that area.

9 The Subiaco Redevelopment Scheme ("the Scheme") was published in November 1996. The Scheme divides the redevelopment area into seven precincts. Precinct 1 is known as the Station Precinct. The Station Precinct is itself divided into a number of lots. Of relevance to these proceedings are lots, 1, 2, 3, 4 and 5 and which together became known as Station Square. The five lots total 2.3 hectares of land.

10 Dr Cox was the acting chief executive officer of the Authority. Dr Cox was not a member of the Board.

11 The successful tenderer, which I will refer to as the Blackburne Consortium, is a joint venture between three companies involved in property development - Blackburne Properties Ltd, Rockingham Park Pty Ltd and Stockland Trust Group.

12 In August and September 1997 the Authority advertised in newspapers circulating in the Perth metropolitan area that it proposed the redevelopment of the Station Square Precinct as a retail precinct. The advertisements stated that the Subiaco Redevelopment Project would transfer 80 hectares of dormant industrial land into a vibrant, cosmopolitan community, and at the centre of the project would be the Station Square Precinct and the new subterranean Subiaco railway station. The Authority invited expressions of interest from innovative developers wishing to purchase part or all of the land surrounding Station Square. The advertisements referred to five lots totalling 2.3 hectares of land, approval for 10,000 square metres of retail use and potential for an additional 15,000 square metres of commercial/mixed use.

Westpoint invited to lodge expression of interest

13 On 11 August 1997 Chesterton International (WA) Pty Ltd ("Chesterton") as agent for the Authority, wrote to Westpoint concerning the Station Square project. The letter said that a total of 2.3 hectares of land was available for purchase with pre-approvals for up to 10,000 square metres of retail space plus generous plot ratios for additional commercial/residential development and said that Chesterton would be pleased to provide a detailed briefing if Westpoint was interested in purchasing part or all of the land.

14 By that time Westpoint was already aware of the land and development project. Westpoint had approached Oldfield Knott Architects Pty Ltd to carry out preliminary design work for the development proposal. Subsequently, on 10 September 1997, Westpoint and Oldfield Knott executed a letter agreement setting out the terms on which Oldfield Knott would carry out the design work.

15 By letter of 20 August 1997 Chesterton provided Westpoint with a brochure entitled "Introducing an Exclusive New Retail Development Opportunity in Subiaco, Perth. For Sale by Expressions of Interest".

16 At about that time Chesterton provided to Westpoint, at Westpoint's request, an Information Package ("the Information Package").

17 In late 1997 Mr Carey provided Mr Aitken with a copy of the brochure and the Information Package. Mr Carey told Mr Aitken that he wanted Westpoint to tender for the project and Mr Aitken was to co-ordinate Westpoint's tender.

18 The brochure described the method of sale as follows. The land was being put up for sale by expressions of interest, which closed on 15 October 1997. The Authority would then review the proposals and invite a number of prospective purchasers to participate in a limited tender for the land. In the first round parties wishing to express an interest in the site were requested to obtain a due diligence package from the exclusive agents. Prospective purchasers were expected to submit proposed sketch plans and indicate a price range.

19 The Information Package stated that Chesterton had compiled the information in association with the Authority and project consultants, to assist potential purchasers in their deliberation on the landholding. The Information Package invited the recipient to submit an expression of interest to be included in the final limited tender. The package included a note that the document did not create any binding obligation on either party and the vendor was not bound to negotiate with any person who registers an interest. The Information Package stated:

"Design guidelines for development within Station Square have been prepared and will form part of the Authority's development control system. Whilst they are currently in draft form, they will in due course be formally adopted by the Authority.

They are included within this informative [sic] package to offer potential developers clear guidance as to the Authority's intentions for Station Square."

20 The Information Package included a disclaimer which stated, amongst other things, that the information contained in the package does not constitute all or any part of an offer or contract of sale and is intended as a guide to potential purchasers only.

21 The Design Guidelines were Appendix 1 to the package. The guidelines stated that they had been prepared to ensure appropriate development within Station Square. They went on to say:

"These guidelines will form the basis of a development agreement between the purchaser of the land, and the [Authority]. Under the terms of the Act the Authority issues development approvals in accordance with the Scheme Text. Building licences will be issued by the City of Subiaco.

These guidelines should be read in conjunction with:

1. Subiaco Redevelopment Scheme text and policies.

2. Building Code of Australia."

"Figure 2, Site Plan indicates site constraints and easements, including the alignment of the Subiaco Railway tunnel and the location of Subiaco Station."

"The northern portion of Subiaco Station precinct is deemed a highly desirable site for an anchor tenancy approximately 4,000 square metres in size. This anchor tenancy will be ideally placed by virtue of its location on one of the new connections through to Jolimont and Wembley from Subiaco.

An anchor tenant located within the Station precinct will attract shoppers and assist in supporting a range of specialty retail outlets located around the perimeter of the Square.

A pedestrian route that links the Square to a car park to the north of the site is required and should be on the same alignment as Rokeby Road. This pedestrian route shall be open to public access at all times and may be covered.

The anchor tenancy should aim to create a Main Street environment. An enclosed shopping mall is not acceptable.

Any pedestrian route to open parking must be kept open and well lit at all times.

The entry to the anchor tenancy must face Station Square and may not be from its northern building line."

24 Special Condition 3.1.1 entitled "Pedestrian Link" stated:

"The pedestrian link performs a major function in providing pedestrian access to the retail sites from the car park to the north and Station Square to the south. Its preferred location is on an axis line with Rokeby Road and as such its landscape treatment is essential to the precinct's success and character."

25 The pedestrian link was called Rokeby Walk. Figure 2, the Site Plan for the Station precinct, included an area marked and described as "Rokeby Walk" which, in the legend, was designated to be a "required pedestrian access within [the] building envelope".

26 On 26 August 1997 Dr Cox, wrote to the editor of the Subiaco Post. In referring to expressions of interest to purchase land adjoining Station Square, Dr Cox said:

"Local residents can also be assured that the size of a prospective developer's cheque book will have no bearing on how their submission is regarded by the [Authority]. All expressions of interest submissions must adhere to the development and design guidelines, set out for the retail/commercial precinct. If they don't comply, they won't get asked to tender. It's that simple."

27 On 10 September 1997 Dr Cox wrote to Mr Walker, CEO of the City of Subiaco, referring to expressions of interest in the Station Square Precinct. Dr Cox said that any remaining issues would be resolved prior to the second phase, when formal tenders were called and that tenderers would be provided with all relevant information "to ensure a complying tender". Dr Cox stated that: "Any development will be fully compliant with the Scheme."

28 On 15 October 1997 Westpoint submitted a written expression of interest. The expression of interest included a sketch plan and development proposal depicting a mixed retail, commercial and residential development on that part of the land known as lot 1. The plaintiffs plead that the sketch plan and development proposal complied with the draft Design Guidelines. The defendant pleads that Westpoint's proposal did not address all of the matters referred to and principles embodied within the draft Design Guidelines.

29 On 15 October 1997 R D Lester, Executive Chairman of Lester Group Ltd, delivered to Chesterton, as agent for the Authority, an expression of interest in participating in the Station Square Precinct Project. In a covering letter Mr Lester stated that the Lester Group acted on behalf of itself and on behalf of Multiplex Constructions and they were likely to join with Blackburne and Co and possibly Stockland Group in the tender. The expression of interest form stated that the persons or companies registering interest were Lester Group Ltd, Blackburne and Co, Stockland Group and Multiplex Construction joint venture.

30 In October 1997 Chesterton delivered its final marketing report to the Authority. The report stated that 16 formal expressions of interest had been received. The majority of expressions were for the development of all lots, however, some of the parties also registered their interest in purchasing only lot 1, or one or more of the other lots. The report assessed the expressions of interest lodged by each party. The report recommended six interested parties to be included in the tender list, including Westpoint and the "Stockland Trust Syndicate".

31 The Authority met on 30 October 1997. At its meeting the Board resolved to endorse the recommended shortlist, that is the six parties, including the Stockland Trust Syndicate and Westpoint, that were to be invited to tender.

Authority representative meets Blackburne representative on 3 November 1997

32 On 3 November 1997, Andrew Howe met with Mr Gavin Cann from Blackburne Real Estate. Mr Howe is a town planner. At the time he was the consultant manager for planning and development reporting to Dr Cox. He was subsequently designated as the contact for tenderers regarding planning issues. Mr Howe's notes record that Mr Cann asked: "Does Rokeby Walk have to be on exactly the same alignment as Rokeby Road and as shown on the Site Plan?" and that Mr Howe replied, "As close as possible. Any variation would need to be substantially justified." The notes also state that Mr Howe referred to a number of matters including the relationship of the supermarket to the Square.

33 On 5 November 1997, Chesterton on behalf of the Authority, wrote to Westpoint and invited Westpoint to tender for the purchase of the land. Chesterton said that Westpoint had been included on the tender list of six parties who had been invited to formally tender for the purchase of all lots. Chesterton said that tender documentation was currently being prepared and Chesterton would contact Westpoint with the tender details as soon as possible.

34 On 2 December 1997, Chesterton forwarded to Westpoint "the formal tender documentation" for the project. The covering letter stated that tenders must be lodged by 5 February 1998 and that the tenders would then be assessed by a selection panel who would make a recommendation to the Board of the Authority. The letter stated that the Authority's Board would make a final decision at its February meeting. The letter stated: "It is important to note that the selection process will be subject to a probity audit by an independent auditor selected from one of Perth's major accounting firms." The letter further stated that any inquiries for any technical and planning advice should be directed through Mr Howe from the Authority.

35 The tender documents sent to Westpoint consisted of a five page document containing an Invitation to Tender, particulars of property to be sold and Conditions of Tender; an 18 page document entitled "Conditions of Sale"; a tender form; a form of deed of guarantee and indemnity and design guidelines, revised edition, dated November 1997.

36 The Invitation to Tender invited tenders for the purchase of the lots on the terms of the Conditions of Sale.

37 The particulars of the property to be sold listed lots 1, 2, 3, 4 and 5 on the Site Plan and stated that the lots were sold free from encumbrances save and except, amongst other things, the covenants and easements specified in conditions 29 and 30. Conditions 29 and 30 are a reference to cl 29 and cl 30 of the Conditions of Sale. Clause 29 provides, amongst other things, that the grant of a ground lease or the issue of freehold title to land above the railway tunnel will be subject to such covenants which the Authority and Westrail deem necessary or desirable for, amongst other purposes, the construction and maintenance of the railway tunnel and buildings over the tunnel and accesses to it. Subclause 30.1 provides that the lots are offered for sale "subject to various easements as illustrated on the Site Plan and in the Design Guidelines". Subclause 30.2 provides that the purchaser acknowledges that the Authority has agreed to sell and transfer the lots to the purchaser subject to the purchaser granting easements for the vehicular and pedestrian access as illustrated on the Site Plan and in the Design Guidelines.

38 The Conditions of Tender define "Tender" to mean a "tender for the purchase of the lots on and subject to the terms and conditions of this Document". "Document" is defined to mean, amongst other things, the Conditions of Tender and the Conditions of Sale. Clause 2 of the Conditions of Tender sets out the formal requirements for the completion of the tender form and accompanying plans and schedules together with the tender fee. The tender fee is defined to mean 1 per cent of the purchase price, that is the amount specified in the tender form submitted by the purchaser as the purchase price of the lots. Clause 3 of the Conditions of Tender provides that the offer made by each tenderer will remain open until the Acceptance Date, that is, 6 March 1998, and is irrevocable before that time. Subclause 5.1 provides that the tender may only be accepted by the Authority executing the tender form after the Closing Date, that is 5 February 1998, and on or before the Acceptance Date.

39 Clause 6 of the Conditions of Tender is important. I will set it out in full:

"NO OBLIGATION TO ACCEPT

The Vendor is not:

(a) obliged to accept the highest or any Tender; or

(b) precluded from accepting a Tender for the Lots which is not in strict conformity with this Document."

40 Clause 7 provides that the tender fee is to be returned to each unsuccessful tenderer after the Acceptance Date after deduction of bank fees, financial institutions duty, federal debits tax and statutory charges.

41 Subclause 1.2 of the Conditions of Sale provides: "The Design Guidelines form part of this Document". Clause 5 of the Conditions of Sale provides that the lots are sold free from encumbrances save and except, amongst other things, the covenants and easements specified in conditions 29 and 30, to which I have already referred.

42 Subclause 15.1 of the Conditions of Sale provides that within 60 days of the Settlement Date the purchaser shall lodge with the Authority (in its capacity as the relevant planning authority) a formal application for approval to develop the lot or lots with such application to include plans and specifications in sufficient detail to obtain approval of such application which shall, in all respects, be in compliance with the Scheme, the Planning, Policies and the Design Guidelines.

43 Subclause 16.1 provides for the purchaser to apply for a building licence. Subclause 16.2 requires, subject to the Authority's prior approval of the Planning Application and the grant of the building licence, the purchaser to proceed with construction of the development on the lots in accordance with the Planning Application within 120 days of the issue of the building licence. Subclause 16.3 requires the purchaser to cause practical completion of the development of the lots within a specified time. Clause 18 confers upon the Authority an option to repurchase excisable if the purchaser breached condition 16.

44 The Site Plan attached to the revised Design Guidelines continued to show Rokeby Walk to the north of the railway station and the centre line of Rokeby Walk being in a straight line with the centre line of Rokeby Road to the south of the railway station.

45 Section 1 of the guidelines is entitled "General Site Information". Paragraph 1.2 (Application) provides that the guidelines should be read in conjunction with the Scheme Text and Policies. I observe that cl 23 of the Scheme gave the Authority a discretion to approve development applications which did not comply with a standard or requirement prescribed by the Scheme or the Planning Policies which would otherwise be applicable.

46 Paragraph 1.5 of the Design Guidelines was amended to specify as an additional site development requirement the Rokeby Walk required pedestrian access. Previously the draft guidelines had referred only to an additional site constraint including required pedestrian access.

47 Paragraph 1.7 entitled "Adjacent Uses", stated that the land to the east of Station Square is owned by the Authority and is planned to incorporate R18 medium density housing. The revised guidelines added: "The design of the Church Street frontage is therefore important and should be sensitively planned and designed".

48 Section 2 of the Design Guidelines are entitled "Station Square Design Guidelines". Paragraph 2.1 states that the buildings and square that comprise the new Station Square must reflect the Subiaco character in terms of its human scale and its high level of mixed uses. Paragraph 2.3 is concerned with "building form". Subparagraph 2.3.3 ("Articulation") provides that building forms should be articulated in a manner which is appropriate to their size and bulk with particular attention being paid to create a pedestrian scale at ground floor level. It is stated: "Large blank walls abutting the Public Domain are not acceptable". The Public Domain includes Church Street.

49 Paragraph 2.4 ("Facades and Frontages") includes subparagraph 2.4.1 which states: "Station Square has been designed to facilitate retail, the anchor tenant on lot 1, commercial and residential development to ensure the efficient use of the Subiaco Station, and to promote other uses that will contribute to the vibrancy and security of the precinct as a whole". The paragraph states: "Any anchor retail tenancy must have its entrance fronting the Square". Subparagraph 2.4.2 ("Street Frontages") includes the statement that Church Street will become a quiet residential street with predominantly terraced housing fronting the eastern side of the street. Subparagraph 2.4.2 further states that the "development of Station Square bounding Church Street must compliment residential use. Small commercial and residential tenancies are considered appropriate. Development of any major retail anchor tenancy adjacent to or backing onto Church Street must be adequately screened from the street". The revised guidelines added an additional sentence: "Anchor tenancy service areas must not front onto or impact on the residential amenity of Church Street". Subparagraph 2.4.6 states: "Large blank walls abutting the Public Domain are not acceptable". Subparagraph 2.9.2 ("Pedestrian Access") provides that the required locations for pedestrian access routes are as shown on figure 2 - Site Plan. The Site Plan shows Rokeby Walk as a required pedestrian access.

50 Section 3 is entitled "Special Conditions". Paragraph 3.1 is concerned with lot 1. The statement in the earlier guidelines that a pedestrian route that links the Square with a car park to the north of the site is required and should be on the same alignment as Rokeby Road was amended to identify the pedestrian route as Rokeby Walk and to state that the link must, rather than should, be on the same alignment as Rokeby Road. The paragraph goes on to say that the development should aim to create a Main Street environment fronting Rokeby Walk and Station Square. The requirement that the entry to the anchor tenancy must face Station Square was amended in the revised guidelines to state: "The entry to the anchor tenancy must be oriented towards Station Square having its primary entrance being visually recognisable, and no more than 8 metres from the Square. Schemes that do not comply with this requirement will not be accepted".

51 Subparagraph 3.1.1 ("Pedestrian Link") in the revised guidelines continued to state that the pedestrian link, that is Rokeby Walk, preferred location is on an axis line with Rokeby Road. It is stated that the pedestrian link must be designed to, amongst other things, allow for clear views along and across the pedestrian space for security purposes. An illustration on page 36 depicts part of the development as "shopping centre".

52 After it was invited to tender, Westpoint, through its servants and agents, prepared its tender including plans and drawings showing its design for the redevelopment. The plaintiffs submit that the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline had an important consequence in terms of design outcome. If they were complied with, they would, for all practical purposes, mean that the anchor tenant (which would most likely be a supermarket) would be located to the east of Rokeby Walk and that either a blank wall or services area would be located along the western side of Church Street.

53 That contention is denied by the defendant. The defendant submits that the plaintiffs' assertion that "compliance" in relation to Rokeby Walk meant "for all practical purposes" a blank wall or services on Church Street, is contradicted by the evidence, including that of the plaintiffs.

54 It is common ground that a blank wall or services area located along the western side of Church Street was a less than satisfactory design outcome because it was intended that the eastern side of Church Street would have a residential use.

55 Mr Aitken, Mr Oldfield, Mr Strzelecki and Mr Van Den Dries each gave evidence of discussions about the supermarket fronting Station Square and Rokeby Walk being in alignment with Rokeby Road and the effect of those design principles upon the redevelopment design. I accept that those matters were discussed amongst Mr Aitken, Mr Oldfield, Mr Strzelecki and Mr Van Den Dries and indeed by Mr Aitken with Mr Carey and Mr Artelaris, the manager of Westpoint Consulting - that is the architectural arm of Westpoint. I accept that the substance and outcome of those discussions was that Mr Strzelecki and Mr Oldfield considered that if the supermarket was to front the Square and Rokeby Walk was to be in alignment with Rokeby Road then the supermarket would have to be located to the east of Rokeby Walk. I accept that Mr Strzelecki found that locating the supermarket to front onto the Square and placing Rokeby Walk in alignment with Rokeby Road placed constraints upon the design of the redevelopment and Mr Strzelecki would have been able to come up with what he regarded as a better design result if Rokeby Walk had been moved to a different location. I also accept that Mr Strzelecki did not attempt a different design because he was instructed not to do so by Mr Aitken. Mr Aitken instructed the architects not to move Rokeby Walk out of alignment from Rokeby Road because he considered that to do so would be a departure from the Design Guidelines and would risk the Westpoint tender being rejected, that is, not selected as the winning tender.

56 I accept that positioning the supermarket to front onto the Square and aligning Rokeby Walk with Rokeby Road significantly impacted upon Westpoint's design.

57 I do not accept the plaintiffs' contention that locating the supermarket so that it fronted onto the Square and placing Rokeby Walk in alignment with Rokeby Road forced them to produce a design which included either a blank wall or services facing Church Street. It was possible to include a residential use facing Church Street, even if the supermarket was placed to the east of Rokeby Walk and facing the Square. The Westpoint design included in its expression of interest included a residential component facing Church Street.

Communications between Authority and Blackburne

58 The Blackburne Consortium was also giving consideration to the location of Rokeby Walk.

59 On 3 December 1997, Gavin Cann of Blackburne Properties Ltd wrote to Dr Cox. Mr Cann referred to a meeting on 17 November 1997 and said:

"At that meeting, in response to a specific question, you stated that Rokeby Walk would be located off Station Square in any position that suited the developer's planning scheme. I note, however, that in the Tender Document just received under SPECIAL CONDITIONS (page 35, paragraph 3), and Rokeby Walk 'is required and must be on the same alignment as Rokeby Road.' But under clause 3.1.1 reference is made to a 'preferred location on an axis line with Rokeby Road ...' .

The pedestrian link proposed in paragraph 3 presumes a link to a car park on the north of the site. However, the car park could be below, above or somewhere else. We believe a similar planning outcome and better design can be achieved by locating Rokeby Walk more centrally off the square.

We would appreciate your confirmation that there is flexibility in the location of Rokeby Walk (as it significantly impacts on our preferred plan) and in exercising such flexibility that our proposal will not be adversely judged."

60 On 16 December Dr Cox wrote to Mr Blackburne in reply to Blackburne's letter of 3 December and a further letter of 10 December 1997. Dr Cox said, in relation to Rokeby Walk:

"There are a number of design criteria as to why Rokeby Walk has been located in the position as indicated on Figure 2 of the Guidelines. Access through to a 'carpark' is only one of them. The main reason is to ensure the 'continuation' of Rokeby Road in some form by its extension north of Roberts Road, across the Square and station bridge above the tunnel and continuing on through or into the development on Lot 1. The Authority is therefore committed to this design principle and would not look favourably upon any significant variation to the required alignment (plus or minus 5 m). In addition, the architectural plans submitted as part of your Registration of Interest (as prepared by Grounds Kent) include this element in the preferred location. Your team was shortlisted on the basis of these plans and to make a fundamental change on the concept at this stage would be inappropriate."

61 On 16 December 1997 Howard Mitchell, a consultant urban designer and ultimately a member of the Authority's selection panel, wrote to Mr Howe at the Authority. Mr Mitchell referred to their telephone conversation the previous day and stated that Gavin Cann had approached Mr Mitchell to clarify an issue within the brief in regard to "interpretation of the location of Rokeby Walk". Mr Mitchell then referred to the discussion and Mr Howe's facsimile of 16 December 1997 and said it was apparent that an emphasis was being given to Rokeby Walk being seen as an extension to Rokeby Road. Mr Mitchell said:

"I think it is important to note that, in the preparation of the 'Registration of Interest' brief our recommendations were that flexibility was retained in regard to the alignment of Rokeby Walk as it was not as important as achieving frontage access from anchor tenancies to the Square. Also, visually there was no connection across the Square from Rokeby Road. Karen also recalls that the Subiaco Council had great concerns over any extension of Rokeby Road as this was seen to affect the viability of other areas of Subiaco. Your statement made in your facsimile would seem to have changed this view."

The reference to "your facsimile" was a reference to a facsimile Mr Howe had sent to Mr Mitchell earlier on 16 December 1997 and which had set out the responses that were to be provided to Blackburne.

Westpoint representatives meet Authority representatives on 10 December 1997

62 Meanwhile on 10 December 1997, Mr Aitken, Tony Van Den Dries from BSD Consultants and Ian Oldfield and Robert Strzelecki from Oldfield Knott Architects had attended a meeting with Dr Cox and Mr Howe, to receive feedback on Westpoint's expression of interest submission and to understand the tender decision-making and selection process.

63 Mr Aitken's evidence is that during this meeting Dr Cox said words to the effect that the Authority was pleased with the quality of Westpoint's expression of interest, Westpoint had read the signals well and adopted the design guidelines and included a good mix of land uses. Dr Cox said many of the would-be tenderers had not been invited to tender because their expressions of interest did not comply with the design guidelines and in particular those where the supermarket did not front onto Station Square. Mr Aitken said Dr Cox had said that the Authority wished to maximise the financial returns to itself whilst at the same time deliver a good outcome for the community. When asked by Mr Aitken what was meant by a good outcome for the community, Dr Cox referred to the design guidelines. The importance of the alignment of Rokeby Walk with Rokeby Road was also discussed and Dr Cox had stated that the visual extension of Rokeby Road across the Square into Rokeby Walk was important and it could not vary more than a couple of metres either way. Mr Aitken said Dr Cox had said that the tender process would be fair and open. The winning tenderer would be selected by an independent six-member assessment panel. The answers to any generic question relevant to all tenderers would be provided as advice to all tenderers whereas unique questions specific to an individual proposal would be answered only to the proponent and a probity auditor would be appointed to ensure equity and transparency of the selection process. One further thing that was discussed at that meeting was the issue of the distribution of retail space. Mr Aitken's note of the meeting is in evidence.

64 Mr Oldfield, Mr Strzelecki, Mr Van Den Dries, Dr Cox and Mr Howe gave evidence of the matters discussed at that meeting. Mr Strzelecki's note of the meeting is in evidence.

65 The Authority's note of the meeting incorrectly records the meeting to have occurred on 10 November 1997. The note says that Dr Cox confirmed that Westpoint's submission had picked up on the spirit of the guidelines and Subiaco and that Dr Cox had referred to the good mix of land uses proposed. The note says: "Issues to be addressed include pedestrian link from Station to car park to be removed. Westrail will not permit it".

Blackburne representatives meet Authority representatives on 17 December 1997

66 On 17 December 1997 John Blackburne, Gavin Cann and members of Stockland Property Trust met with Dr Cox and Mr Howe. The Authority's notes of the meeting record that Mr Blackburne asked whether or not the plus or minus 5 metres was the absolute limit on the alignment of Rokeby Walk and that Dr Cox confirmed that that was the Authority's preferred position and that options would be looked at when assessing the urban design aspects of the proposal. Mr Blackburne asked if a tenderer could put in a non-compliant bid. Dr Cox confirmed that in the event that the team was successful, the Authority would then discuss design issues which may vary from those in the Guidelines.

Westpoint representatives meet Authority representative on 21 January 1998

67 On 23 December 1997, Chesterton sent a facsimile message to Mr Aitken concerning whether the 7,000 square metre limit on retail use on Lot 1 still applied. Chesterton stated that the Authority originally included the requirement when it was unsure whether or not Lot 1 would be purchased separately as it wished to ensure that the remaining lots included a significant retail component of their own. Chesterton stated that as all of the short listed tenderers were bidding for the whole site, that specific requirement was no longer necessary. However, notwithstanding the relaxation of the 7,000 square metre limit, it was still a high priority of the Authority to ensure the development of active uses at ground level primarily fronting the Square on all sides and, where possible, the surrounding streets.

68 On 21 January 1997, Dr Cox and Mr Howe met with Mr Aitken of Westpoint. Mr Aitken's notes of the meeting include a note: "Scheme and Guidelines allow give and take".

69 Mr Aitken gave evidence that there was a discussion about Westpoint submitting its tender through a related entity. Mr Aitken said that Dr Cox advised that the selection panel members had been finalised and confirmed that a probity auditor had been appointed.

Blackburne representatives meet Authority representatives on 21 January 1998

70 On 21 January 1997, Dr Cox and Mr Howe met with Mr Blackburne, Gavin Cann and members of the Stockland Property Trust. The Authority's note of the meeting does not refer to anything of significance in this action except that Mr Blackburne was told not to talk to Mr Mitchell regarding the Blackburne tender.

Further correspondence between Authority and tenderers

71 On 29 January 1997, Dr Cox wrote to each of Westpoint and Blackburne Properties Ltd in response to a number of concerns which had been raised regarding the Conditions of Sale.

72 Dr Cox said that the Authority was not an ordinary vendor. The Authority is a statutory body with responsibility for ensuring development of the Subi Centro Project. As such, the Authority must ensure that when disposing of land for development, adequate provisions are included in the Conditions of Sale which will ensure the land is developed in accordance with the winning tenderer's proposal. The letter went on to refer to condition 17 (sale or mortgage of lots) and condition 18 (option to re-purchase).

73 On 30 January 1998, Mr Howe sent a facsimile to Mr Strzelecki of Oldfield Knott and sent a copy to Mr Aitken. The facsimile included a section entitled "Station Square - Design Philosophy" and a section entitled "Station Square - Specific Points". The latter section included the following sentences: "Rokeby Walk will provide the gateway between Tafe Road and Station Square. It is an extension of Rokeby Road as a pedestrian spine through to Salvado Road and Wembley" and "The anchor tenancy opens directly to Station Square, opposite Rokeby Walk, contributing to the vitality of the public domain."

74 On 30 January 1998, Gavin Cann of Blackburne Properties wrote to Mr Howe. Mr Cann said: "Further to our discussion on planning issues would you please confirm that our consortium would not be held to the use and design of buildings shown in our tender bid. With further research, changing markets and the efflux of time there may be alternative uses and designs that are more appropriate. We do, of course, appreciate that any changes would need to comply with the Tender Document Design Guidelines." Mr Howe replied by letter of 4 February 1998 "to clarify the Authority's position regarding the status of lodged tender plans". Mr Howe said that it was not acceptable to the Authority that the final development application lodged by the successful tenderer would vary greatly from the tendered plans.

75 On 2 February 1998, Dr Cox wrote to Blackburne Properties and said that the Authority had no objection to tenders being lodged by a variation to the original (invited) syndicate but the Authority might seek clarification from the tenderer as to the reason and extent of any changes.

76 On or about 5 February 1998, Mr Aitken submitted a tender for the purchase of the land. The covering letter is on a Westpoint letterhead. It states:

"We have great pleasure in submitting to you Westpoint Corporation's tender for the Station Square Precinct.

It is submitted under the legal entity of Dockpride Pty Ltd, an entity created specifically for the purpose of carrying out the Station Square Precinct development, supported by deeds of guarantee and indemnity from Westpoint Corporation Pty Ltd and Forestview Nominees Pty Ltd."

77 The tenders were considered by an assessment panel consisting of Ron Doubikin, the chairman of the Authority; Dr Cox; Mr Walker, the CEO of the City of Subiaco; Graham Iddles, the managing director of Chesterton; Mr Mitchell and Karen Hyde, a town planner contracted by the Authority. The assessment panel met to consider the tenders on 12, 17 and 23 February 1998.

78 At the meeting on 12 February 1998 each member of the panel was asked to review the tenderers' drawings and make their own individual assessments based on a scoring system and a selection matrix. The panel then discussed each item of the selection criteria for each tender and a consensus was reached. The tenderers were then ranked in order from one to six with the Blackburne tender being ranked first and the Dockpride tender being ranked second. The tender documents disclosing the tender price were then opened. Blackburne had tendered a price of $10.5 million, Dockpride a price of $12.188 million and the other tenderers lower prices. The panel members decided to eliminate all but the Blackburne and Dockpride tenders on a combination of price and design considerations. The panel then asked Mr Mitchell to prepare a report on the advantages and disadvantages of the Blackburne and Dockpride tenders on technical merit. The meeting was adjourned to 17 February to assess the two tenders in light of Mr Mitchell's report.

79 The panel reconvened on 17 February. Mr Walker was not present. Mr Mitchell provided a report dated 16 February 1998 which the panel considered. The report set out a comparison of the two tenders. The comparison was based upon what its author described as the key criteria in the design and development briefs issued. The report listed 10 criteria:

The supermarket relationship to the square;
The development proposals in relationship to surrounding land uses;
Vehicular access to Roberts Road;
Non-vehicular access to the square;
Development mix;
Car parking requirement;
Elevations;
Plot ratio;
Station Square vibrancy;
Development time frame/viability.

80 Prior to the meeting on 17 February, the panel had caused questions to be faxed to each tenderer. Representatives of each tenderer attended the meeting on 17 February and answered the questions. Dr Cox considered that the most critical answer by the Westpoint representatives was a comment by Mr Oldfield to the effect that there would be a requirement to subdivide the large retail and commercial elements proposed in lot 1 into smaller units to create a shopping centre on lot 1. Dr Cox recalled that Mr Oldfield described Rokeby Walk through lot 1 as a typical shopping mall or words to that effect.

81 After the representatives of Dockpride and Blackburne had left the panel further discussed the two tenders. Dr Cox recalled that the majority of panel members expressed concern at Mr Oldfield's comments about a shopping centre or shopping mall and saw that as being a significant departure from the vision and draft design guideline requirement for the focus to be on a vibrant Subiaco Square and this would detract from that. At the conclusion of the meeting the panel members decided to seek independent advice on the impact on adjacent land of the blank wall development along Church Street proposed by Dockpride as compared to a quality residential development.

82 The advice was sought by a facsimile dated 18 February 1998 from the Authority to Time Conti Sheffield and to Chesterton. Time Conti Sheffield responded by letter of 22 February 1998. Time Conti Sheffield concluded that the blank wall would have a detrimental impact of between $25,000 to $30,000 per single residential development and between $15,000 to $20,000 land content per unit. Time Conti Sheffield also opined that the negative effect of the blank wall could be reduced to some extent by redesign, for example providing a landscaped setback area alongside and in front of the wall and/or terracing the wall at each end of the three levels. Chesterton responded by a letter of 23 February 1998. Chesterton concluded that one would expect lots immediately opposite a blank wall development to be less desirable than lots nearby which have a slightly better outlook but the evidence in East Perth would not support a significant discount.

83 The assessment panel met again on 23 February 1998. The panel members undertook a comparative analysis of the Dockpride and Blackburne tenders. It was the unanimous view of the panel that the Blackburne tender was the best. Dr Cox said that the key issues were that the Blackburne proposal provided for a better overall development mix of the Station Square precinct that integrated and blended with existing Subiaco, a complementary extension of Rokeby Road and a more appropriate development along Church Street. The panel unanimously recommended that the Blackburne tender be accepted.

The Authority selects the Blackburne tender

84 The Authority's Board considered the panel's recommendation at a meeting on 26 February 1998. The minutes of that meeting record that a report summarising the tender and tender assessment processes, tender results and the panel's recommendation was presented to the Board for consideration. Mr Doubikin, as chairman of the tender assessment panel, briefed the Board on the major issues considered by the panel and the reasons for their choice of the recommended tenderer. After discussion it was the Board's view that the bid submitted by Blackburne was technically superior to the Dockpride bid. The proposal from Blackburne would significantly contribute to the achievement of the Subi Centro Vision and the price differential of $1.45 million (based on net present value) was compensated for by a better urban design and functional outcome. The Board noted that the tender submission from Dockpride varied significantly from its original expression of interest proposal because it did not include residential development on lot 1. The previously proposed land use mix was more in line with the Subi Centro vision. The Board resolved to accept the Blackburne tender subject to approval from the Minister for Planning. The Minister subsequently approved the acceptance of the Blackburne tender.

85 On or about 19 March 1998 the Authority executed the contract document accepting Blackburne's tender.

86 On 19 March the Authority sent written notice to each of the tenderers of the result of the tender. Meanwhile, on the afternoon of 19 March 1998, Mr Aitken had heard a rumour from a Westpoint employee that Westpoint had been unsuccessful in the tender. Mr Aitken telephoned Dr Cox. Dr Cox's file note says that Mr Aitken stated that he was disappointed not to win the tender and expressed surprise. Mr Aitken asked if the winning tender was higher or lower than Westpoint's bid and was told that the winning bid was about $1.45 million net present value lower. Mr Aitken asked for feedback on the reasons for the trade-off. Dr Cox said that the key issues were land use and interface with Station Street residential. In his evidence Dr Cox explained that Station Street was a mistaken reference to Church Street. The note says that Mr Aitken asked why those issues had not been raised during the interview and Dr Cox responded that the interview was to clarify issues raised in the assessment, that is to obtain more information rather than to critique or negotiate. Dr Cox offered a formal briefing with Mr Mitchell present and that was tentatively arranged for the following Monday. Mr Aitken's note of the meeting noted that the Dockpride tender was acceptable but not as good as the winning tender, it was not a case of being non-compliant. Mr Aitken's note also referred to the following elements of the Dockpride proposal:

Frontage to Church Street;
Impact on residential;
Land values;
Integration of design.

The note refers to the overall balance of uses, retail and substantial residential on lot 1 and says "combination of uses better complimented vision".

87 On 24 March 1998 Mr Aitken wrote to Dr Cox, describing himself as general manager of Westpoint. Mr Aitken said that "we" understand the decision to reject our tender in favour of a lower tender rests upon the view that the successful tenderer's design concept is superior to ours and we were informed that the Authority prefers an urban/residential mix development on lot 1 rather than the commercial development upon which our tender is based. Mr Aitken complained that "we" were never informed that the Authority had a preference for a particular type of development, and we were given no opportunity to tender on that basis. Mr Aitken said that "we" are taking legal advice on the Authority's ability to reject our highest tender on a basis that was not disclosed to us and for which we could have catered in our tender had we known all the facts.

88 On 24 March 1998 Messrs Carey, Aitken, Oldfield, Hocking and Strzelecki on behalf of Westpoint and Dockpride, met with Dr Cox and Mr Mitchell on behalf of the Authority. The Authority's file note records that Dr Cox summarised the selection process and then referred to specific issues. The first issue is described as "interface with Station Street". That is an erroneous reference to Church Street. The note records that Dr Cox read out the guideline requirement and indicated that the blank wall service area did not provide the same attraction as a residential frontage in view of the medium density residential proposed on the eastern side of the development. That was reinforced by Mr Mitchell. The second specific issue was recorded as "interaction with Square". Dr Cox advised that the design for lot 1 provided concern for potential to have internal mall focus as opposed to the alternative bid which provided retail closer to the Square. Mr Aitken asked why those issues had not been raised with Westpoint prior to the finalisation of the tenders and Dr Cox responded that the tender process was to clarify not to negotiate an outcome. There was reference to an assertion by Mr Carey that the Westpoint bid was induced by Chesterton's statement that it would be on the basis that the highest bid wins as long as the submission was compliant. Dr Cox's note records that Mr Aitken asked whether the selection panel was aware that Rokeby Walk was offset to Rokeby Road and whether they would have come to the same decision if they were aware of the guideline requirements. Dr Cox responded that the panel was aware of the requirements and considered the submission offered an appropriate design solution.

89 The plaintiffs claim damages for breach of contract.

90 The plaintiffs plead that it was an express or alternatively a term implied by necessary implication on the true construction of the Tender Document (and incorporated Conditions of Sale and Design Guidelines), that the plans submitted to the Authority with any tender submitted pursuant to the Invitation to Tender must show a design of the redevelopment which complied with two specified requirements of the Design Guidelines.

91 The first requirement is that the pedestrian route described as Rokeby Walk which was to link the proposed Station Square to a car park to the north of the land, must be on the same alignment as Rokeby Road ("the Rokeby Walk Guideline"). The second requirement is that the proposed building to house the anchor tenancy on lot 1 must be orientated towards Station Square, having its principal entrance visually recognisable and no more than eight metres from the proposed Station Square ("the Anchor Tenancy Entrance Guideline").

92 The defendant denied that there was such an express or implied term of the Tender Document. The defendant says that such a term would contradict or be inconsistent with documents comprising the Tender Document and that on their proper construction none of those documents required designs to comply with any of the Scheme, the Planning Policies or the Design Guidelines. The defendant says that such a term would contradict cl 6 of the Conditions of Tender which reserved to the Authority the right to accept a tender not in strict conformity with the Tender Document (including, amongst other things, the Design Guidelines or the Conditions of Sale).

93 The plaintiffs plead that on or about 10 December 1997, the Authority by its servant, Dr Cox, represented orally to Westpoint by Mr Aitken that the Westpoint sketch plan and development proposal contained in its expression of interest complied with the Design Guidelines, and further that many would-be tenderers had not been invited to tender because their expressions of interest did not comply with the design guidelines; and that the Authority wished to maximise the financial returns to itself from the tender process and also wished to achieve a good outcome for the community, and further that if the design for the redevelopment complied with the Design Guidelines, that would achieve such a good outcome for the community. The plaintiffs plead that by necessary implication those express representations gave rise to the further representation that the Authority would only consider tenders which complied with, and would not accept tenders which did not comply with, the Design Guidelines in the respects referred to. These are referred to by the plaintiffs as the Oral Representations. They are denied by the defendant.

94 The plaintiffs plead that from or about November 1997 to January 1998 Westpoint prepared a detailed design for the proposed redevelopment for incorporation in a tender for the land ("Westpoint's design"). Westpoint's design is said to have complied with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline. The defendant denies that either of the plaintiffs prepared or submitted as part of a tender a detailed design that complied with the Design Guidelines in the respects referred to.

95 The plaintiffs plead that at all material times, Westpoint intended, as the Authority knew, or it was within the contemplation of Westpoint and the Authority, that Westpoint's tender should be submitted by a related company and if it were, that Westpoint would provide a guarantee of the obligations thereof, in or to the effect of the form of the guarantee contained in the Tender Document. That is denied by the defendant which says that at no time did Westpoint communicate the alleged or any intention that its tender would be submitted by a related company.

96 The plaintiffs plead that on or about 5 February 1998, Westpoint and/or Dockpride submitted Dockpride's tender for the land and incorporated within it Westpoint's design and a guarantee by Westpoint in or to the effect of the former guarantee contained in the Tender Document in respect of Dockpride ("the Westpoint guarantee") together with a further such guarantee by one of its associated companies, Forestview Nominees Pty Ltd.

97 The plaintiffs plead that by reason of the matters referred to thus far, the Authority, Westpoint and/or Dockpride, entered into an implied contract, the terms of which were that in consideration of Westpoint and/or Dockpride preparing and submitting a tender and/or Westpoint providing the Westpoint guarantee, the Authority would do certain things and conduct itself in certain ways. The plaintiff referred to this alleged implied contract as a process contract. That is the terminology used by Finn J in Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; (1997) 76 FCR 151, to describe a preliminary contract between the organisation seeking tenders and any tenderer who puts in a complying tender.

98 The terms of the process contract are pleaded in par 14 of the statement of claim as follows:

"14.1 the Authority would only consider with a view to accepting, and accept, a tender containing plans for a design for the redevelopment, which complied with the [the Rokeby Walk Guideline and the anchor tenancy entrance requirement].

14.1A The Authority would act fairly at all times in its dealings with each of the persons or companies or groups which it had invited to tender (collectively the Invitees) prior to selecting a tender for acceptance;

14.1B The Authority would not communicate to any of the Invitees material information as to any matters which a tender should or could address or omit unless it communicated that information to all the other Invitees;

14.1C the Authority would deal with each of the Invitees fairly and in good faith;

14.1D the Authority would accept for consideration a tender submitted by a company associated with an Invitee provided that the form of guarantee required in the Tender Document was also given by the Invitee concerned;

14.1E save as provided in 14.1B the Authority would not accept a tender which did not comply with a mandatory and/or material requirement in the Design Guidelines including, inter alia, the Rokeby Walk Guideline and the anchor tenancy entrance requirement.

14.1F the Authority and each respective Invitee would do all things necessary or reasonably necessary on its part to be done to give the other the benefit of the tender process contract;

14.2 that the Authority would act fairly in considering competing tenders and, if the Authority decided (inter alia) that it would permit other tenderers to submit tenders containing plans for a design which did not comply with the Rokeby Walk Guideline and the anchor tenancy entrance requirement it would inform each tenderer (including Dockpride) of that fact, and give each tenderer the opportunity to modify its design and plans comprised, or to be comprised, in its tender;

14.3 the Authority would accept the tender which:-

14.3.1 contained plans for the redevelopment which complied with the Rokeby Walk Guideline and the anchor tenancy entrance requirement;

14.3.2 offer the highest price;

14.4 The Authority would not accept a tender which did not offer the highest price in preference to a tender which:-

14.4.1 contained plans for the redevelopment which complied with the Rokeby Walk Guideline and the anchor tenancy entrance requirement.

14.4.2 offered a higher price.

14.5 the Authority would not, merely on the basis of a subjective preference for another design, fail to accept a tender which offered the highest price and which complied with the Rokeby Walk Guideline and the anchor tenancy entrance requirement;

14.6 the Authority would assess competing tenders by reference to the criteria contained in the Design Guidelines in each of the Rokeby Walk Guideline and the anchor tenancy entrance requirement."

99 The defendant denies that the parties entered into a contract, whether implied or otherwise. The defendant says that its Invitation to Tender was an invitation to treat. The defendant further says that the purported Dockpride tender was an offer to the Authority to purchase the land. The defendant further says that cl 6 of the Invitation to Tender was inconsistent with, and mitigated against, the implication of a tender process contract between tenderers and the Authority.

100 The defendant further pleads that if there was any implied contract entered into then the contract was between the Authority and Westpoint, but Westpoint did not submit a tender and consequently there was no breach of any contract with Westpoint.

101 The plaintiffs plead that on or about 19 March 1998, without informing Westpoint or Dockpride that it would consider and accept plans of the proposed redevelopment (submitted with tenders) that did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline, the Authority accepted a tender from the Blackburne Consortium containing plans of a redevelopment which did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline and which was a tender at a lower price than Dockpride's tender.

102 The defendant admits that it did not inform Westpoint or Dockpride that it would consider and accept plans for the proposed redevelopment that did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline but says it had no obligation to do so.

103 The defendant admits that on or about 26 February 1998 it decided to consider and accept the Blackburne tender and admits that the Blackburne tender was at a lower price than the purported Dockpride tender. The defendant pleads that the Blackburne tender did not materially depart from the matters referred to and the principles embodied in the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline. The defendant further says that the Blackburne tender was the tender which best addressed or complied with the matters referred to, and principles embodied in, the Design Guidelines, including the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline and the Scheme, Residential Design Manual and Planning Policies. The defendant pleads that it decided to accept the Blackburne tender after its assessment panel conducted a formal assessment of the tenders and determined that the Blackburne tender best addressed the defendant's overall requirements for Station Square as expressed in the Design Guidelines, Scheme, Residential Design Manual and Planning Policies.

104 The plaintiffs plead that in accepting the Blackburne tender, the Authority acted in breach of one or more of the terms pleaded by the plaintiffs to be express or implied terms of the Tender Document and each or one or more of the terms of the implied or process contract. The conduct of the Authority said to constitute those breaches of contract are said to breach those contracts in three ways. First, the plaintiffs say that the Authority decided to consider and accept the Blackburne tender which contained plans of a redevelopment which did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline and which was a lower price than Dockpride's tender. Secondly, the plaintiffs say that the Authority did not act fairly and in good faith in its dealings with Westpoint and/or Dockpride prior to selecting the Blackbourne tender when that tender did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline. Thirdly, the plaintiffs say that the Authority had communicated material information in relation to the alignment of Rokeby Walk to the Blackburne Consortium without communicating that information to Westpoint or Dockpride, namely that while the alignment of Rokeby Walk and Rokeby Road in the Rokeby Walk Guideline was the Authority's preferred position, tenders which did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline would be considered.

105 The plaintiffs plead that the Authority accepted the Blackburne tender notwithstanding that it did not comply with one or more mandatory and/or material requirements constituted by the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline and failed to accept Dockpride's tender on the basis that the Blackburne tender offered, by subjective assessment, a preferable design notwithstanding that the latter was for a lesser price than Dockpride's tender and did not comply with one or more of the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline. Those matters are denied by the defendant.

106 The defendant pleads that if there was an implied contract between the defendant and the plaintiffs or either of them then such a contract would have required the Authority to address the extent to which tenders addressed, or alternatively, complied with, the matters referred to, and the principles embodied in the Scheme, Design Guidelines, Planning Policies and Residential Design Manual. Further, the purported Dockpride tender, objectively assessed against the matters and principles referred to, failed to address or alternatively comply with, those matters and principles or, alternatively, failed to address or comply with those matters or principles to a significantly greater extent that the Blackburne tender. The defendant says that by reason of those matters the defendant could not, consistently with any implied contract, have accepted the purported Dockpride tender, or alternatively, have selected it in preference to the Blackburne tender, and did not act in breach of contract in awarding the tender to Blackburne.

107 The plaintiffs plead that Westpoint and/or Dockpride have suffered loss and damage by reason of the asserted breaches of contract. Particulars of loss and damage are that had Dockpride's tender been accepted, Dockpride would have purchased the land and carried out the project at a net profit in the order of $23.85 million. Alternatively, Dockpride had the opportunity of winning the tender or submitting a design which did not comply with the Rokeby Walk Guideline and the Anchor Tenancy Entrance Guideline.

108 The plaintiffs plead that Westpoint prepared, and Westpoint and/or Dockpride submitted, Dockpride's tender for the land and incorporated within it Westpoint's design and a guarantee by Westpoint. The plaintiffs plead that by Westpoint and Dockpride preparing and submitting the tender, and by the Authority, Westpoint and Dockpride engaging in conduct prior to the submission of the tender, the Authority, Westpoint and/or Dockpride entered an implied contract, the terms of which I have referred to earlier.

109 The existence of a pre-award or process contract in tenders is not automatic. Whether or not a process contract exists depends on the intention of the parties: Cubic Transportation Systems Inc v State of New South Wales [2002] NSWSC 656 at [31] - [44] per Adams J; Transit New Zealand v Pratt Contractors Ltd [2002] 2 NZLR 313 at [77] - [78]. In an appropriate case a bilateral contract is formed with each tenderer who submits a complying tender. The contents of this bilateral contract depend on the intentions of the parties. The terms, express or implied, of the request for tender will be an important factor in determining the intention of the parties.

110 The plaintiffs plead that Westpoint and/or Dockpride submitted Dockpride's tender for the land.

111 Westpoint prepared the tender. The tender was submitted under cover of a letter on a Westpoint letterhead. It was signed by Mr Aitken who described himself as general manager of Westpoint. The letter commenced by saying: "We have great pleasure in submitting to you Westpoint Corporation's tender for the Station Square precinct".

112 Notwithstanding those matters, the tender was submitted by Dockpride not Westpoint. Mr Aitken's letter went on to say that the tender "is submitted under the legal entity of Dockpride Pty Ltd, an entity created specifically for the purpose of carrying out the Station Square precinct development". The Invitation to Tender issued by the Authority stated that each tenderer must complete two copies of the tender form by inserting, amongst other things, the name, address and ACN of the tenderer. The tender form stated that the tenderer was Dockpride as trustee for the Dockpride Unit Trust. Dockpride's ACN was inserted and the document was executed by the application of Dockpride's common seal.

113 The defendant Authority submitted that there was no process contract because, amongst other reasons, the Invitation to Tender was issued to Westpoint and the tender was submitted by Dockpride. If the Invitation to Tender comprised the offer to enter into a process contract, it was submitted, that offer was made to Westpoint, which Westpoint, by failing to lodge a tender, declined to accept. It was not open to Dockpride to accept the offer because the Invitation to Tender was made to Westpoint.

114 The plaintiffs plead that at all material times Westpoint intended, as the Authority knew, or it was within the contemplation of Westpoint and the Authority, that Westpoint's tender should be submitted by a related company and if it were, that Westpoint would provide a guarantee of the obligations thereof.

115 On 21 January 1998 Dr Cox and Mr Howe of the Authority met with Mr Aitken of Westpoint. Mr Aitken's evidence is that at this meeting he informed Dr Cox that Westpoint was considering submitting its tender through a related entity which would be a company specifically incorporated to submit the tender and carry out the development if the tender was successful. Mr Aitken's evidence is that Dr Cox responded, in effect, that through his experience at East Perth as Chief Executive Officer of the East Perth Redevelopment Authority he understood that developers established entities for particular projects and this would not affect Westpoint's tender provided that the tender was supported by appropriate guarantees. Dr Cox's evidence is that there was a discussion in which Mr Aitken said that at some stage after the submission Westpoint may be interested in assigning the contract to another party and he, Dr Cox, responded that in that event the Authority would be favourably disposed to it because he had had prior experience at East Perth with the same sort of issue.

116 Mr Aitken produced his note of the meeting. Mr Aitken's note made no reference to the tender being submitted through a related entity. The note includes the following: "s.25 never a problem at East Perth, will insist on same obligations, wouldn't be disposed of new entity be a range of entities". "S.25" appears to be a reference to cl 25 of the Conditions of Sale. That clause provides "that no party may assign or transfer any of its rights or obligations under the Document without the prior consent in writing of the other party". That supports Dr Cox's evidence. Mr Howe's note of the meeting includes: "Clause 25 - Assignment after purchase. SRA ok with this provided new entity is prepared to accept all conditions of contract". That too supports Dr Cox's evidence.

117 In cross-examination it was put to Mr Aitken that until the day or the day before the tender was submitted no thought had been given to the tender coming from another entity. Mr Aitken said he disagreed because he got advice from solicitors. In re-examination Mr Aitken said that the advice that he received that made it so clear in his mind about the conversation he had with Dr Cox was that if "we" were to assign the rights under the tender after winning the tender and a contract had effectively been entered into for the purchase of the land, we may be up for stamp duty on the further assignment. It was subsequently agreed that the legal advice was not obtained any earlier than 4 February 1998.

118 In closing submissions, counsel for the plaintiffs submitted that bearing in mind that a further meeting or conversation occurred between Mr Aitken and Dr Cox on 4 February 1998, it is possible that Mr Aitken has his dates wrong and the issue was discussed at the later meeting rather than the meeting of 21 January 1998. Mr Aitken's note of his conversation with Dr Cox on 4 February 1998 contains no reference to Westpoint submitting its tender through a related entity. Mr Aitken did not say in evidence that he had discussed the issue with Dr Cox on 4 February 1998. In cross-examination it was put to Dr Cox that it was possible that in his phone conversation or meeting with Mr Aitken on 4 February 1998 Mr Aitken may have raised the issue as to whether or not a related company could have put in the bid rather than Westpoint. Dr Cox said he had no recollection of that question being asked of him.

119 I find that Mr Aitken did not inform Dr Cox that Westpoint was considering submitting its tender through a related entity and Dr Cox did not say to Mr Aitken that that would not affect Westpoint's tender provided that it was supported by appropriate guarantees. The file notes of Mr Aitken and Mr Howe of the 21 January 1998 meeting are inconsistent with Mr Aitken's evidence and support the evidence of Dr Cox that what was discussed on 21 January 1998 was assignment of the contract after award. The fact that Mr Aitken obtained legal advice about double stamp duty being payable if the contract was assigned to another entity after it had been awarded to Westpoint does not support the plaintiffs' case. The obtaining of that advice is consistent with Mr Aitken and Westpoint deciding that Dockpride should submit the tender but it does not follow that Mr Aitken raised the matter with Dr Cox. The fact that the legal advice was obtained no earlier than 4 February does not support Mr Aitken's evidence that the matter was discussed on 21 January. The submission that Mr Aitken got his dates wrong and that the issue was discussed by Mr Aitken and Dr Cox on 4 February 1998 is not supported by any evidence. Furthermore, there is no reference to the issue in Mr Aitken's note of his conversation with Dr Cox on 4 February 1998. I would expect Mr Aitken to have made some note of the matter if it had been discussed on that day.

120 The Invitation to Tender was issued to Westpoint. Westpoint did not submit a tender. No process contract was made between the Authority and Westpoint. Westpoint guaranteed Dockpride's performance of the contract, if it was awarded to Dockpride but that does not give rise to a contract between Westpoint or the Authority of the sort pleaded.

121 No Invitation to Tender was issued to Dockpride. Therefore, the submission by Dockpride of its tender did not constitute the acceptance of an offer by the Authority constituted by its Invitation to Tender. However, the subsequent conduct of the Authority may be construed as an acceptance by the Authority of an offer by Dockpride. Alternatively, a contract may be made without the formalities of offer and acceptance. A contract may be inferred from the acts and conduct of parties: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 per McHugh JA.

122 Dockpride and the Authority conducted themselves on the basis that there was a contract between Dockpride and the Authority. Dockpride submitted its tender together with a bank cheque in favour of the Authority's agent for the tender fee of $121,880, being one per cent of the tendered purchase price, in accordance with the terms of the Authority's Invitation to Tender. The Authority accepted, in the sense of receiving, Dockpride's tender. The Authority accepted and banked the bank cheque tendered by Dockpride. The Authority proceeded to consider Dockpride's tender and to hold meetings and communicate with Dockpride, or its representatives, in relation to Dockpride's tender.

Dockpride Pty Ltd & Anor v Subiaco Redevelopment Authority [2005] WASC 211

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Judgment (359 paragraphs)

Dockpride Pty Ltd & Anor v Subiaco Redevelopment Authority [2005] WASC 211 (22 September 2005)

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Legislation Cited (3)

Cases Cited (22)