Eden Construction Pty Limited v State of New South Wales

Supreme Court of NSW|2003-11-25|Before: Einstein J, Handley JA

CITATION : Eden Construction Pty Limited v State of New South Wales [2003] NSWSC 1098 HEARING DATE(S) : 24/11/03, 25/11/03 JUDGMENT DATE : 25 November 2003

JURISDICTION: Equity Division Technology and Construction List JUDGMENT OF : Einstein J DECISION : Summons to be struck out in part.

CATCHWORDS : Practice and Procedure - strike out application - immunity of Crown in the right of the State of New South Wales from suit in respect of alleged contravention of Trade Practices Act Part V - Special Federal Matter for purposes of Jurisdiction of Courts (Cross Vesting) Act 1987 insofar as proceedings seek Part IV Trade Practices Act relief Fair Trading Act 1987 (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987 LEGISLATION CITED : Limitation Act 1969 (NSW) Supreme Court Rules Trade Practices Act 1974 (Cth) Trade Practices Amendment Act (No 1) 2001 (Cth Act No 63 of 2001) Bottom v Cureton (1937) 54 WN (NSW) 88 Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 NT Power Generation Pty Ltd v Power Water Authority [2001] FCA 344 CASES CITED : Pannizutti v Trask (1987) 10 NSWLR 531 Rajski v Powell (1987) 11 NSWLR 522 R.T & Y.E Falls Investments Pty Ltd v The State of New South Wales [2001] NSWSC 1027 Spellson v George (1992) 26 NSWLR 666 Sidebottom v Cureton (1937) 54 WN (NSW) 88a State of New South Wales v R.T & Y.E Falls Investments Pty Ltd [2003] NSWCA 54 Webster v Lampard (1993) 177 CLR 598 PARTIES : Eden Construction Pty Limited [ACN 054 090 372] (Plaintiff) State of New South Wales (Defendant) FILE NUMBER(S) : SC 55025/03 COUNSEL : Mr T Bland (Plaintiff) Mr R Hunt (Defendant) SOLICITORS : Johninfo Lawyers (Plaintiff) Bartier Perry (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

Tuesday 25 November 2003 ex tempore Revised 2 December 2003

55025/03 Eden Construction Pty Limited v State of New South Wales JUDGMENT

The notice of motion 1 There is before the Court a notice of motion filed on 5 September 2002 seeking orders for the dismissal pursuant to Part 13 Rule 5 for the striking out pursuant to Part 15 Rule 26 of the Supreme Court Rules of a number of the claims made in the Amended Summons filed on 26 August 2003.

The principles 2 The principles to be applied in the exercise of the Court's discretion on such applications are reasonably well known. The exercise of the Court's discretion is instant specific but recognises that it is a very serious matter to deny to a litigant the right to have his or her case heard at trial, so that extreme care must be used when deciding to make use, for example, of the power to strike out under Part 13 Rule 5: cf Spellson v George (1992) 26 NSWLR 666 per Young AJA at 678 (with whom Handley JA and Hope AJA agreed). Since the effect of an order of the type here sought will bring the proceedings to an end insofar as the particular sections of the Amended Summons under attack are concerned, the exercise of the power conferred by the Rules is only appropriate where the defects in the plaintiff's claim are clearly established. A party will not be denied a trial unless the absence of a cause of action is clearly demonstrated: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. Once it is apparent that there is a real question to be determined the court does not deal with the matter summarily: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. The test to be applied has been variously described as whether the matter is "so obviously untenable that it cannot possibly succeed", "manifestly groundless", "so manifestly faulty that it does not admit of argument", one which "the court is satisfied cannot succeed", one where "under no possibility can there be a good cause of action", or one which "would involve useless expense": General Steel at 129; Pannizutti v Trask (1978) 10 NSWLR 531 at 536; Rajski v Powell (1987) 11 NSWLR 522 at 524; Brimson v Rocla Concrete Pipes Limited [1982] 2 NSWLR 937 at 942. As appropriate and where the instant exercise of the discretion is informed by other considerations, these will be referred to below.

The Eden Construction companies 3 It is convenient to commence by shortly describing the Eden Construction companies as a threshold question arises in this regard.

Eden Construction Pty Limited [ACN 054 090 372] 4 Eden Construction Pty Limited ["Eden Construction 1991"] was registered on 28 October 1991 as a shelf company. On 29 October 2001 Mr Antonio Filardo and Mr Antonio Pisano became company directors. In 1994 Mr Raffaele Filardo became a director. On 30 January 1996 Mr Cesare Filardo became a director and is presently the sole director of the company.

Eden Constructions Pty Limited 5 Eden Constructions Pty Limited ["Eden Constructions 1973"] was incorporated in 1973 and remained in business until 1990. The directors of Eden Constructions 1973 were Mr Cesare Filardo and his wife Mrs Immacolata Filardo.

Eden Constructions (NSW) Pty Limited 6 Eden Constructions (NSW) Pty Limited ["Eden Constructions (NSW)"] was incorporated on 26 June 1984 and ceased operating in 1995. The directors of Eden Construction (NSW) were Mr Cesare Filardo and his wife.

The proceedings 7 Eden Construction 1991 is the plaintiff. The Amended Summons was filed on 26 August 2003. It seeks a number of orders against the State of New South Wales which is the defendant. 8 The heart of the dispute appears to lie in the plaintiff's complaints concerning what is said to have been its treatment at the hands of the system for contractor and consultant performance review maintained by the Department of Commerce (formerly the Department of Public Works and Services, and prior to 1995 the Public Works Department) ["the Department"]. The system is generally described in an affidavit made by Mr Wood on 12 September 2003 in the following terms: "8. The Department maintains a system for contractor and consultant performance review. The Department has a Contractor and Consultant Provisional Review List and a Contractor and Consultant Review List, which contains the names of contractors and consultants that require special consideration and/or further investigation before being considered for business with the Department. A true copy of instructions for these Lists is annexed and marked 'G'.

Contractor performance reports are designed to assist in the assessment of the technical and management capabilities and commitment of contractors, the establishment of Panels of Selective or Pre-registered Tenderers (where appropriate), the assessment of open tenders, alerting superintendents to areas of a contractor's performance which need extra attention during the contract period, and determining the need to take steps for placing contractors on the Contractor and Consultant Provisional Review List or the Contractor and Consultant Review List.

To my knowledge from 25 years experience of government procurement with the Department, it has not charged any fee in respect of the Contractor and Consultant Provisional Review List or Contractor and Consultant Review List or carried on a business in keeping those Lists.

The policy on exchange of information between the Department was promulgated by Procedure Circular number 103 dated 28 July 1994, a true copy of which is annexed and marked 'H'.

Following the adoption of new contractor performance reports form 1 May 2001, the policy on release of information to outside bodies was promulgated in section 5.61 of the Department's Contracts Manual. A true copy of section 5.61 of the Manual is annexed and marked 'I'.

As part of its function for government and local government bodies, the Department calls tenders for some government construction work. Annexed and marked 'J' is a true copy of the standard provision in the Conditions of Tendering regarding the exchange of information between government agencies.

To my knowledge from 25 years experience of government procurement with the Department, it has not charged any fee in respect of provision of any information pursuant to the policies referred to in paragraph 11 to 13 above or otherwise, or carried on a business of providing any such information." 9 The system was also the subject of documentary material appended to the further affidavit made by Mr Wood on 18 November 1993 and in particular in the document entitled "A guide to performance reporting on Construction contractors and all categories of consultants". 10 Whilst the Amended Summons has several major textual and other difficulties, it is tolerably clear that the plaintiff inter alia seeks to litigate a case to the effect that representations were made by the defendant to third parties in negative form when the defendant was from time to time approached by third parties [for example, third parties to whom the plaintiff may have submitted a tender] to report as to the competence or reliability of the plaintiff. In other fields requests for such reports are colloquially described as requests for a reference. Obviously, if in any particular case there be actionable legal wrongdoing in and about the misuse of the practice of the defendant to so report, the party who suffers by reason of such legal wrongdoing may be dramatically affected and suffer real loss and damage. 11 As will appear from what follows, the plaintiff seeks to establish such legal wrongdoing by several routes. The motion presently before the Court seeks to close off a number of those routes. As will also appear from what follows, the first route is clearly inapt for the simple reason that the plaintiff seeks relief in respect of a contract to which it was not on the evidence shown to have been a party.

12 The convenient course is to deal seriatum with the attacks on the disparate sections of the pleading.

Claims made pursuant to the Settlement Agreement [paragraphs 3-12] 13 These are claims grounded upon an allegation that between approximately February 1987 and 7 January 1994 the plaintiff and the defendant were involved in a dispute in respect of commercial building works undertaken at the Norah Head Tunnel Project ["the Norah Heads dispute"]. 14 The claim is made that on or about 7 January 1994 the plaintiff and the defendant entered into an agreement for the settlement of this dispute. The plaintiff pleads what are said to have been express or implied terms of the Settlement Agreement and alleged breaches of that agreement. Damages for breach of contract appear to be the subject of this claim. 15 The defendant seeks to strike out each of the subject paragraphs upon the following bases: · the 'Norah Heads dispute' was between the defendant and Eden Constructions (NSW) Pty Limited (ACN 002 800 544), and not the plaintiff (ACN 054 090 372); · the 'Norah Heads dispute' was the subject of proceedings no. 11266 of 1988 commenced by Eden Constructions (NSW) Pty Limited in this Court, in which judgment was given in the defendant's favour in the amount of $112,000 plus interest and costs, and in which an appeal against that judgment was dismissed with costs (no. 40452 of 1989); and · the "Settlement Agreement" which is relied upon by the plaintiff was between the defendant and Eden Constructions (NSW) Pty Limited (ACN 002 800 544), and is said not to be enforceable by the plaintiff (ACN 054 090 372).

Holding 16 There is absolutely no doubt but that on the evidence, the defendant's submissions in relation to this issue are of substance and require to be accepted. It is unnecessary to go further than to simply adopt the following submissions of the defendant as correct: · The evidence in relation to the parties to the Norah Heads dispute is contained in paragraphs 2, 3 and 4 (and Annexures A, B, C and D) of the affidavit of Mr Stuart Wood sworn 12 September 2003, which is unchallenged in the affidavits of Mr Cesare Filardo sworn 21 September 2003. · The evidence in relation to the parties to the Settlement Agreement of the Norah Heads dispute is confirmed in paragraphs 197 (last sentence), 198 and 408 of Mr Filardo's long affidavit, in which he says:

'197 ... In about 1994, subsequent to the High Court action, the PWD and Eden Constructions (NSW) Pty Limited signed a Settlement Agreement.

198 Now produced and shown to me at the time of swearing this my affidavit is a two page document marked "C F 29". That is the Settlement Agreement entered into between the PWD and Eden Constructions (NSW) Pty Limited….

408 As a result of these communications a settlement of the action between Eden Constructions (NSW) Pty Limited and the PWD was agreed to on 7 January 1994.' · It is readily apparent on the face of the Settlement Agreement (Annexure C to the affidavit of Mr Wood sworn 12 September 2003) that the reference to "Eden" or "Eden Constructions" in that document is a reference to Eden Constructions (NSW) Pty Limited, as can be seen from the following:

the document is headed 're Norah Head Contract' and refers to the parties agreeing 'to resolve outstanding differences on the following principal terms' : There were no 'outstanding differences' to which the plaintiff (ACN 054 090 372) was a party; - the reference to "Eden" in paragraph 2 can only be a reference to Eden Constructions (NSW) Pty Limited, given the reference to 'settlement of both its and the PWD's claims and rights under the contract or arising out of the Norah Head project' ;

the reference to 'Eden' in paragraphs 3(b) and 6 (as well as the reference in 'each party' in paragraph 5) can only be a reference to Eden Constructions (NSW) Pty Limited, as they clearly relate to the Norah Head project given the reference to 'settlement of both its and the PWD's claims and rights under the contract or arising out of the Norah Head project' ;

in that context, the reference to 'Eden' in paragraph 4 should properly be construed as a reference to Eden Constructions (NSW) Pty Limited, given there is nothing in the document to suggest that the term should be construed differently to the sense in which it is used elsewhere in the document. 17 In light of the authorities which support the proposition that once it appears that there is a real question to be determined, whether of fact or law, and that the rights of the parties depend upon it, it is a rare case indeed where the Court would dismiss an action as frivolous and vexatious or as an abuse of process where such a question requires to be determined. I have paid very close attention indeed to the submissions put by the plaintiff to the effect that there is a question of fact which here requires to be determined and which should be permitted to be litigated. In that regard the plaintiff has sought in particular to draw the Court's attention, for example, to letters of 8 February 1993 by the plaintiff to the Public Works Department and by the Public Works Department of 15 March 1993 to the plaintiff, respectively to be found as Exhibits C1 and C2 to the affidavit of Mr Filardo of 21 September 2003. Notwithstanding those submissions, the plaintiff on the evidence to which Mr Filardo himself swore before the Court, has quite clearly established that the Settlement Agreement was an agreement entered into between Eden Constructions (NSW) Pty Limited and the State of New South Wales/Public Works Department. To my mind this is a situation in which the position, for reasons earlier given, is simply on the evidence before the Court so very clear that, not withstanding the general reluctance of the Court on a summary application for dismissal to determine a question which does raise a question of fact, this is a case which warrants the striking out of the relevant paragraphs. It follows that the plaintiff not having been a party to the Settlement Agreement has no locus standi to sue on any cause of action based upon the Settlement Agreement. It is appropriate to order that paragraphs 3 to 12 of the Amended Summons be struck out. Tendering Representations [paragraphs 13-22] 18 This bracket of the pleading sets out a number of representational cases leading inter alia to claims that the defendant's conduct was misleading and deceptive and therefore constituted a contravention of section 52 of the Trade Practices Act 1974 (Commonwealth) ["TPA"]. 19 The defendant seeks to strike out this bracket of the pleading for the reason that it claims to be immune from suit in respect of any alleged contravention of the provisions of Part V of the TPA.

Holding 20 That this immunity exists is clear from the terms of section 2B(1) of the TPA which is in the following terms:

" Application of Act to States and Territories 2B (1) the following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory: (a) Part IV;

(b) Part XIB; (c) the other provisions of this Act so far as they relate to the above provisions." 21 It is plain that there is no substance in the plaintiff's proposition that in some fashion section 2B(1)(c) can be said to import a reference to Part V. The submission is that the provisions of Part V may be said to "relate" to the provisions of Part IV of the TPA. The submission is clearly without substance. Were it otherwise, it would have been a simple matter for the legislature to include an express reference to Part V. The enforcement and remedies provisions in respect of contraventions of Part IV to be found in Part VI provide an obvious, although not necessarily exclusive, example of matters to which subsection 2B(1)(c) was intended to refer. 22 For this reason the appropriate order is to strike out paragraph 21(b) of the Amended Summons where the allegation is made that the so-called Tendering Representations constituted a contravention by the defendant of section 52 of the TPA. 23 I note that there is also a limitation issue raised by the defendant which submits that: · The transitional provisions contained in Item 21 of the Trade Practices Amendment Act (No. 1) 2001 (Commonwealth) exclude: '(2) The amendment made by item 20 (i.e. extension of limitation period to 6 years) also applies in relation to conduct engaged in before the commencement of that item (i.e. 28 June 2001), but only if the period that: (a) relates to the conduct; and

(b) applied under subsection 82(2) of the Trade Practices Act 1974 before the commencement of that item (i.e. 3 years); had not ended when that item commenced." · Applying that provision, any cause of action under the Trade Practices Act 1974 (Commonwealth) which accrued prior to 28 June 1998 is statute barred. · Accordingly, claims under the Trade Practices Act 1974 (Commonwealth) in respect of the reliance alleged in paragraph 20 of the Amended Summons are statute barred insofar as they are based on entering into the Settlement Agreement in 1994 or costing works or lodging tenders prior to 28 June 1998. 24 It is unnecessary to deal with the submission in the light of the ruling that the defendant is immune from suit in respect of any alleged contravention of Part V of the TPA. 25 Speaking generally, however, limitation defences are not necessarily the wherewithal pursuant to which the Court will summarily dismiss a proceeding. A limitation defence can be pleaded.

Third Party Reference Representations [paragraphs 23-34] 26 This bracket of the pleading alleges certain representations to have been made by the defendant to third parties leading inter alia to claims that the representations were misleading and deceptive and/or likely to mislead or deceive and therefore constituted contraventions of section 52 of the TPA. 27 Here again the defendant relies upon its immunity from suit in respect of any alleged contravention of TPA section 52.

28 For the reasons given in relation to the Tendering Representations it is appropriate to strike out paragraph 33(c) of the Amended Summons where the allegation is made that the so-called third party reference representations constituted a contravention by the defendant of section 52 of the TPA. 29 The defendant also raises a limitation claim as follows: · In relation to paragraphs 30, 31 and 32 of the Points of Claim, any claims under the Trade Practices Act 1974 in respect of alleged reliance by third parties on any such representations prior to 28 June 1998 are statute barred, by operation of item 21 of the Trade Practices Amendment Act (No. 1) 2001 (Commonwealth). · Claims under the Trade Practices Act in respect of the reliance alleged in paragraphs 30, 31 and 32 of the Amended Summons are statute barred insofar as they are based on any alleged reliance by third parties prior to 28 June 1998. Accordingly, the plaintiff's claim in respect of the Warriewood Valley Trunk Drainage project is statute barred, as the alleged reliance was in about February 1998 (see first item in Schedule C to the Amended Summons). 30 By reason of the above-described approach it becomes again unnecessary to deal with these limitation issues.

Paragraph 20 of the Amended Summons 31 It is further appropriate to order that the following sections of paragraph 20 of the Amended Summons be struck out: · the words "and/or its director" appearing on line 3; and · sub paragraph 20(a). 32 The reference to actions by the director of the plaintiff in the pleading is misconceived. The plaintiff's director is not a party plaintiff. 33 For the reasons given in relation to the plaintiff not having locus standi to sue as party to the Settlement Agreement subparagraph (a) of paragraph 20 requires to be struck out.

Misuse of Market Power in breach of section 46 of the TPA [paragraphs 35-43] 34 This bracket of the Amended Summons seeks to raise a series of allegations each culminating with the claim that the defendant's conduct, so described, constituted breaches of section 46 of the TPA. The threshold allegation pursued is that the defendant was a corporation within the meaning of section 46 of the TPA and/or was subject to this section in its capacity as the State of New South Wales in the course of carrying on a business. 35 No section of the notice of motion dealt with a jurisdictional threshold issue which I raised with the parties on the hearing of the motion. I refer here to the fact that jurisdiction to hear actions alleging a contravention of a Part IV TPA "special federal matter" is conferred on the Federal Court so that under the cross-vesting scheme, if such a matter arises in proceedings in a State, the proceedings must be transferred to the Federal Court unless there are particular circumstances which make the transfer inappropriate. The effect is that the Federal Court in those situations has de facto exclusive jurisdiction in relation to Part IV of the TPA. 36 In the result the parties addressed further submissions to the jurisdictional issue. This caused the focus to change from the pleading issues. 37 I propose, not withstanding the jurisdictional issue, to first comment on the pleading issues. 38 The principal submission put by the defendant in terms of the strictly pleading approach to the motion was that the plaintiff's claim that the defendant had misused its market power in breach of section 46 of the TPA, was defectively pleaded. This was said to be the case for the reason that, albeit that the pleading went the distance of describing the business which the defendant was alleged to have been carrying on, it failed to plead that the conduct complained of took place in the course of the carrying on of the business. 39 The focus here is on the wording of paragraph 37 of the Amended Summons. That paragraph and the current particulars to it read as follows:

"Further or alternatively, at all material times the Defendant was carrying on the business of letting and administering commercial tenders, entering into commercial dealings and administering and supervising contract works and tenders for Government procurement and Local Council works in New South Wales.

PARTICULARS The commercial and business nature of the activities of the defendant was undertaken in an ongoing and repetitious manner. Schedule C attached hereto outlines the various projects that touched and concerned both the defendant and the plaintiff. The nature of the defendant's activities is inherently in the course of trade and commerce and can be evidenced by the following activities performed by the defendant:

(1) Administering, supervising and funding NSW Government works in New South Wales: Generally, but see Schedule C for projects which touched and concerned both the Plaintiff and the Defendant together

(2) Letting of commercial tenders for all Government procurement works in the Market

(3) Acting as Principal, Superintendent or Superintendent's Representative in respect to Local Council works (4) Managing and supervising Local Council and Government tenders and contract works

(6) Influenced the decision of other entities in their choice of contractors and subcontractors.

The influence referred to is particularised in Schedule C annexed hereto and in paragraph 52 of this Amended Summons and includes the giving of advice with respect to the suitability or otherwise of the plaintiff. In each case as particularised in Schedule C where the Defendant is alleged to have provided a reference or advice to a principal or third party, that reference or advice was given by the Defendant in the course of the tender process for which the Defendant was funding, supervising, directing and administering in the ordinary course of trade and business.

Specific instances of business activity which is the subject matter of this dispute is outlined in Schedule C attached hereto." 40 To the extent that the submission has substance I would have been disposed to grant leave to the plaintiff to amend paragraph 37 to make express the allegation that the subject business said to have been carried on by the defendant included the giving of references to third parties under the Department's system for contractor and consultant performance review earlier described. Paragraphs 5 and 6 to paragraph 37 come sufficiently close to making such an allegation to make it, as it seems to me, a proper exercise of the Court's discretion to grant leave to the plaintiff to so amend. 41 The further matter which the defendant sought to agitate went to the proposition that pursuant to section 2B of the TPA, the State of New South Wales is immune from suit in respect of any alleged contravention of section 46 of the TPA except so far as it is appropriately described as 'the Crown [carrying] on a business'. 42 Subject to the jurisdictional question [that is to say if the proceedings remain to be heard by this Court] I would not have been disposed on a summary dismissal basis to determine the question of fact sought to be litigated by the defendant, namely whether or not the conduct complained of by the plaintiff in the Amended Summons comprised conduct in the carrying on of a business within the meaning of section 2B of the TPA. 43 In State of New South Wales v R.T & Y.E Falls Investments Pty Ltd [2003] NSWCA 54, the New South Wales Court of Appeal had occasion to examine the similar wording to be found in the Fair Trading Act 1987 (NSW) ["the FTA"] where the appellant contended that the conduct complained of had not occurred during the course of anything which could be described as "carries on a business", within section 3(1) of the FTA. Relevantly: · Spigelman CJ at 24 said:

"It is necessary to identify with some degree of precision the particular conduct in issue in proceedings, in order to determine whether that conduct can be characterised as having been performed "in trade or commerce" or in the course of "carrying on a business". · Sheller JA at 47 said:

"The concept of the Crown carrying on a business even though section 4(1) of the Fair Trading Act defines business to include "a business not carried on for profit" is a difficult one in borderline cases. The present is an example. The answer tends to be more intuitive than the product of a process of reasoning." 44 Notwithstanding that there are authorities supporting the proposition that the Court may deal on a summary disposal basis with factual parameters, there is abundant authority in support of the proposition that once it appears that there is a real question to be determined, whether of fact or law, and that the rights of the parties depend upon it, it is a rare case indeed where the Court would dismiss an action as frivolous and vexatious or as an abuse of process where such a question requires to be determined. In Webster v Lampard (1993) 177 CLR 598, after citing with approval a passage from Dey set out above, Mason CJ, Deane and Dawson JJ said, at page 603:

'Nowhere is the need for exceptional caution more important than in a case where the ultimate outcome turns on the resolution of some disputed issue or issues of fact . In such a case, it is essential that "great care ... be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal"; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 130.' [Emphasis added] 45 In Sidebottom v Cureton (1937) 54 WN (NSW) 88a, Jordan CJ (with whom Halse, Rogers and Bavin JJ agreed) said, at page 88:

'Summary judgment should not be granted when any serious conflict as to (a) matter of fact, or any real difficulty as to (a) matter of law arises'. 46 The essential burden of the defendant's submission was that there is simply no real single 'real question' or 'some disputed issue or issues of fact' or 'serious conflict as to any matter of fact' in relation to the facts necessary to determine whether the conduct complained of by the plaintiff in paragraphs 41 and 42 of the Amended Summons was conduct in carrying on a business within the meaning of section 2B of the Trade Practices Act 1974. I reject the submission. To my mind the evidence establishes that there is a real question of precisely this nature. The pleadings make plain that such a question arises. And finally the plaintiff's submissions on the motion make plain that such a question arises, those submissions including the following:

"The Defendant in conducting its business, offers services to Government and non Government agencies, lets tenders and administers contract works. It pays Commonwealth and State taxes, pays a dividend to its owner and charges a commercial fee for everything it does.

The activities of the Defendant's fall within the ambit of the indicia outlined by Palmer J in R.T & Y.E Falls Investments Pty Ltd v The State of New South Wales & Ors [2001] NSWSC 1027 (15 November 2001), those indicia relevantly being stated as follows: "A number of cases have examined the principles upon which a government department or agency will be held to be carrying on a business for the purposes of the Fair Trading Act and the corresponding provisions of the Commonwealth Trade Practices Act. From those cases, the following propositions can be derived: a government department or agency will be carrying on a business for the purposes of the Fair Trading Act and the Trade Practices Act when it is doing what any private trader might do, such as supplying goods or services for remuneration or buying and reselling goods; That the proceeds derived from the activity are not commercially adequate or are calculated to produce a loss does not, in itself, detract from the character of the activity as a business. The definition of business in the Fair Trading Act and the Trade Practices Act includes a business not carried on for profit. Government departments or agencies may be expected in many cases to be carrying on a business not for the purpose of profit but to achieve a policy objective of government, ultimately at the expense of the public purse. The concept of carrying on a business requires that the subject activity be conducted with a degree of system, continuity and repetition. A single instance of the activity or engaging in the activity on in an ad hoc response to infrequent occurrences or circumstances will not normally indicate that a business is carried on;

System, continuity and repetition in carrying out an activity are not sufficient on their own to characterise the carrying on of a business. There must always be present some element of commerce or trade such as a private citizen or trader might undertake. What is a sufficient degree of commerciality is a question of fact in each case

A person claiming under the Fair Trading Act or the Trade Practices Act in respect of a dealing with a government department or agency which carries on a business must show that the dealing occurred in the course of , and as part of, the carrying on of that business."

It is the Plaintiff's submission that the nature of the Defendant's activities could not be characterised as simply being carried out in a "business like way" and nothing more. There is that something more in the Defendant's conduct and objectives that constitutes the carrying on of a business.

In the alternative, the Defendant seeks to draw a parallel between the business and non business activities discussed in NT Power Generation Pty Ltd v Power Water Authority [2001] FCA 344 and the facts in the current matter before the Courts. Such a parallel is not applicable in the present instance.

In this regard, firstly, the matters complained off by the Plaintiff cannot be so simply described by the Defendant as "giving references" or "keeping a contractor review list" as the conduct, including this conduct, goes well beyond this to involve the vetting and letting of tenders through these activities. The vetting of tenders - through these various means, appears repeatedly in Schedule C to the Amended Summons.

The matters complained off extend well beyond what limited references to conduct the Defendant has made in its submissions, to the totality of the Defendant's conduct as pleaded and particularised in Paragraph 37 of the amended Summons and Schedule C to that summons.

Secondly, the Defendant's function of "giving references" and keeping contractor review lists, is so repeatedly and constantly intermingled with its business activities, so as to constitute part of its business. There can be a clear distinction drawn in this regard between this matter and NT Power Generation Pty Ltd v Power Water Authority [2001] FCA 344." 47 In clear contradistinction to the situation which faces the plaintiff in relation to the question of the parties to the Settlement Agreement earlier dealt with where the Court has here exercised special care to ensure that the matter is so clear against the plaintiff to require that paragraphs 3-12 of the Amended Summons be struck out, the position in relation to whether or not the subject conduct complained of by the plaintiff in paragraphs 41 and 42 of the Amended Summons was conduct in carrying on a business within the meaning of section 2B of the Trade Practices Act 1974 does raise a question requiring to be litigated and which it would be an inappropriate exercise of the Court's discretion to refuse the plaintiff its day in court.

The jurisdictional issue 48 The jurisdictional issue having been raised, the plaintiff seeks an order pursuant to section 6(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 ["the Cross Vesting legislation"] that the proceedings be determined by this Court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceedings other than reasons relevant to the convenience of the parties. Clearly enough a formal notice of motion will require to be filed by the plaintiff to seek such an order. Likewise the provisions of section 6(4) of the Cross Vesting legislation requires that before making an order under subsection (3), the Court must be satisfied that a written notice specifying the nature of the special federal matter has been given to the Commonwealth Attorney-General and to the Attorney-General of the State of New South Wales and requires the Court to be satisfied that a reasonable time has elapsed since the giving of the notice for the Attorneys-General to consider whether submissions to the Court should be made in relation to the proceeding. 49 The proceedings will require to be stood over, on appropriate directions being given, to permit the plaintiff to file the necessary motion and to give the necessary notices.

Rulings in relation to evidentiary matters 50 The Court reserved its decision in relation to the admissibility on the motion of the material sought to be mobilised by both parties. Ultimately only a limited section of that material is seen to be relevant to the motions before the Court. The defendant's submission had been that the motion could be decided upon the pleadings save that the two areas in respect of which evidence was said to be permissible which concerned the facts going to the so-called Settlement Agreement and the factual question going to whether or not the conduct complained of by the plaintiff in its Amended Summons was conduct in carrying on a business within the meaning of section 2B of the TPA. 51 Generally this submission is accepted and in particular, save to the extent referred to in the judgment [as for example where reference is made to so much of the affidavit of Mr Filardo as concerns the three Eden Construction(s) companies or as concerns the circumstances of entry into of the Settlement Agreement], that affidavit which extends to cover 1002 paragraphs across 118 pages is simply irrelevant to any issue raised on the motions and is therefore inadmissible. Having said that, there is nothing in that affidavit which even if it be regarded as having been read, would have resulted in any different holding on the motion.

Short minutes of order 52 The parties are to bring in short minutes of order when costs may be argued.

I certify that paragraphs 1 - 52 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 25 November 2003 ex tempore and revised on 2 December 2003

      Susan Piggott
      Associate

2 December 2003

Last Modified: 12/09/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Supreme Court Rules Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (63 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (10)

Cited By (2)