Fields Group Pty Ltd v Wilson Security Pty Ltd

Judgment

1. MACFARLAN JA: The appellant ("Fields") is an "Indigenous enterprise" for the purpose of the Commonwealth Government's Indigenous Procurement Policy. It is in the business of supplying security guards and other security services on a contract basis. In 2015 the Department of Foreign Affairs and Trade ("DFAT") awarded Fields a contract for the supply of security services at DFAT's Canberra and Sydney Airport locations and other ad hoc sites nationally.
2. In the present proceedings, Fields alleged that the respondent ("Wilson"), which is also in the business of supplying security services, agreed to assist Fields to fulfil its obligations to DFAT and also to provide other subcontract security work to Fields. The parties accepted that Wilson assumed contractual obligations of this character but differed as to the terms of the obligation to provide other subcontract work.
3. In his judgment of 30 April 2019, Parker J, sitting in the Commercial List of the Equity Division, rejected Fields' contention as to the extent of Wilson's obligation to supply that subcontract work to it and therefore dismissed Fields' claim ([2019] NSWSC 475).
4. For the reasons given below, I consider that Fields' appeal against this judgment should be dismissed.

Factual circumstances

1. It is sufficient for the purposes of the appeal to refer to the following aspects of the dealings between the parties. A more detailed description of them can be found in the judgment below at [25] to [63].
2. In late 2014 Fields commenced discussions with representatives of DFAT regarding the provision of security services by Fields to DFAT.
3. On 18 February 2015 Fields sought expressions of interest from security services suppliers in providing assistance to Fields to fulfil the contract it was hoping to enter into with DFAT for the supply of such services.
4. Following Wilson's submission of an expression of interest on 21 February 2015, representatives of Fields and Wilson met to discuss it.
5. By letter of 4 March 2015 Wilson provided to Fields a statement of Wilson's position. In the litigation that ensued, Wilson contended that this letter, along with the contract between them (see [19] below), defined the extent of the contractual obligations it assumed to Fields.
6. The letter contained the following presently relevant statements: "Preferred Supplier Status Commitment Wilson Security and the Fields Group have already commenced discussions around bolstering the subcontracting arrangement between the two organisations. Should the Fields Group and Wilson Security be successful in this opportunity Wilson Security will appoint the Fields Group as a Preferred Wilson Security Supplier. This status will allow the Fields Group to be appointed into current subcontracted works to a value equal in hours to this service conditional on the Wilson Security procurement guidelines being met. The Wilson Security procurement guidelines establishes four tests which must be met: 1. The transfer must meet the commercial viability test - have no impact on the customer relationship 2. The transfer must meet the financial viability test - have no impact on the financial performance 3. The transfer must meet the enterprise risk test - have no negative impact on the enterprise risk rating 4. The transfer must meet the service viability test - demonstrate continuity of service in the service location Wilson Security will work with the Fields Group to assist it in meeting the four procurement tests. Delivery To realise the above commitment to Fields Group Wilson Security expect the following to occur. The approach to realising commercial benefit through preferred supplier status is a phased approach as outlined below. Wilson Security are committed to ensuring the provision of reciprocal value in service hours to the Fields Group both for compliance to DFAT requirements as well as increasing participation of Indigenous owned SME within Wilson Security: Phase 1 - Current Fields Group capability • Within 7 days of the execution of the Wilson Security and Fields Group - DFAT subcontract agreement the Fields Group will provide Wilson Security with a detailed capability summary outlining geographic service areas of strength, number of available staff for deployment and qualifications of staff and applicable charge rates for the supply of staff. • Within 7 days of receipt of the capability summary Wilson Security will overlay the current Fields Group service capability against current subcontracted works and identify phase 1 transition targets. A planning meeting will be held with the Fields Group where Wilson Security will work through procurement tests 2, 3 and 4 with Fields Group identifying any gaps and strategies to close the gaps. Should no gaps exist Wilson Security will engage with its target customers to meet procurement test 1. • Wilson Security notes it has already had discussions with 2 large national customers who have agreed to consider a change to their supply chain post DFAT award. • It is expected that phase 1 will focus on key service areas of the Fields Group being the Central Coast of NSW and Sydney Metro NSW. Phase 2 - New Fields Group capacity • Within 30 days post transition of the DFAT service the Fields Group will attend a future capability workshop in Sydney facilitated by the Wilson Security GM Strategy and Development to build plans for the further development of the Fields Group capacity both geographically and by capability. • The focus of this workshop is to assist the Fields Group to identify key target areas and build robust plans to allow Wilson Security to support the Fields Group in developing their capability in aligned geographic markets. • Once Fields Group are established in new markets Wilson Security will continue to support through the application of the procurement process as outlined in Phase 1. Indigenous staff employed by Fields Group would progress to being able to perform Duties at DFAT. The subcontract agreement will create a pathway, via various subcontracting opportunities in line with the preferred supplier status for career progression. I.e. guard starts as a static guard on a basic site, as their skills are identified and develop, progression is made to more senior roles and clearances (i.e. being able to subcontract on say a defence site) - baseline - nv1 - nv2."
7. Thereafter the letter supplied further information under the headings "Transition Assistance", "System changeover and Transition Out", "Risk and Reward Program" and "Pricing".
8. On 7 August 2015 Fields submitted a tender to DFAT, referring, inter alia, to the assistance to be provided by Wilson to Fields to assist Fields to fulfil its obligations under the prospective contract with DFAT. Wilson played a role in the preparation of the document but the extent of that role is not entirely clear. An email from Ms Amanda Hunt of Wilson to Mr Brendan Paramore of Fields of 4 August 2015 suggests that Mr Paramore prepared an "outline" of the document and that Ms Hunt, who described herself as "Tender Coordinator", prepared a draft based on it.
9. On 6 August 2015 Ms Hunt sent an "updated draft" of the document to Mr Paramore for him "to review". An hour later Ms Hunt sent Mr Paramore a "completed version" of the document, copying in Mr Pickens of Wilson. In the covering email Ms Hunt indicated that "Brett [Pickens] is happy with the document".
10. At the hearing in this Court, counsel for Fields submitted that by these acts Wilson assumed contractual obligations to Fields in terms of the descriptions in the DFAT submission of the proposed role of Wilson.
11. Fields' tender submission to DFAT of 7 August 2015 (which in relevant respects accorded with the draft Ms Hunt had sent to Mr Paramore on 6 August 2015) included the following presently relevant statements: "Strategic Partnership Fields Group will deliver the required services with the support of Wilson Security. In order to reduce the perceived risk of dealing with an SME, Fields Group have established a robust strategic business relationship with Wilson Security who have the capacity and capability to assist us in delivering the contract. If Fields Group is awarded prime contractor status, Wilson Security will perform some of [the] services required under a subcontractor agreement with Fields Group. Capability and Capacity With the support of Wilson Security, we are able to provide all the requirements of this contract including the provision of guarding and escort services nationally as circumstances require. The pool of selected security personnel currently deployed into the security logistics department will maintain NV2 security clearances and be available for deployment on armed escort projects. Across the country Wilson Security has over 800 Security Officers cleared to Negative Vetting 1 or above (plus over 400 pending NV1 or NV2). This support will enable Fields Group to delivery [sic] beyond expectation the services of the contract with highly trained personnel, with contingency back up plans for HIGHTENED ALERTS, change of personnel etc. … Genuine Indigenous Benefit Should the Fields Group be successful in being awarded this contract with Wilson Security as subcontractor, Wilson have committed to: • Subcontracting to equal number of hours to this contract. This will not only grow the business of Fields Group, but as a result this will provide an additional 68,000 hours per annum which can be filled by Indigenous Security Guards where possible. • Committed to recruiting Indigenous employees wherever possible, with a target of 10 per cent of all positions to be filled by Indigenous staff on this contract. This is additional to the roles on this contract which are directly employed by Fields Group. Indigenous staff employed by Fields Group will have the opportunity to progress to being able to perform Duties at DFAT. The subcontract agreement with Wilson Security will create a pathway, via various subcontracting opportunities in line with the preferred supplier status for career progression. I.e. a guard starts as a static guard on a basic site, as their skills are identified and develop, progression is made to more senior roles and clearances (i.e. being able to subcontract onto another government site, baseline - nv1 - nv2)" (emphasis added).
12. The submission then stated a "Total Price" of $2,906,187.37 which, at the stated wage rate per hour of $42.45, assumed the provision of approximately 68,000 hours of labour. The tender stated that 24% of the staff would be provided by Fields and 76% by Wilson.
13. The statements quoted at [15] above under the "Genuine Indigenous Benefit" were repeated and expanded upon later in the document, again under the heading "Genuine Indigenous Benefit" as follows: "Genuine Indigenous Benefit Should the Fields Group be successful, with Wilson Security awarded the work as subcontractor, Wilson have committed to: • Subcontracting to equal number of hours to this contract This will not only grow the business of Fields Group, but as a result this will provide an additional 68,000 hours per annum which can be filled by Indigenous Security Guards where possible through areas of most need of Indigenous engagement. Areas of particular interest include Regional NSW, Regional Qld and Regional SA. This will mean that if DFAT awards the contract to Fields Group Security it will be directly responsible due to the opportunities to the value of $2.8 Million per annum. • Committed to recruiting Indigenous employees wherever possible, with a target of 10 per cent of all positions to be filled by Indigenous staff on this contract This is additional to the roles on this contract which are directly employed. As Fields Group is the Prime Contractor for the DFAT services, Fields Group management through the leadership of Shane Fields will manage the identification and development of indigenous personnel coming through the ranks. Upskilling and gaining clearances over the term of the contract is and will be a priority. • Indigenous staff employed by Fields Group will have the opportunity to progress to being able to perform Duties at DFAT The subcontract agreement with Wilson Security will create a pathway, via various subcontracting opportunities in line with the preferred supplier status for career progression. I.e. a guard starts as a static guard on a basic site, as their skills are identified and develop, progression is made to more senior roles and clearances (i.e. being able to subcontract onto another government site, baseline - nv1 - nv2) 5.1 Indigenous Businesses and Personnel Benefit Fields Group security started this business with one aim in mind: to provide education and opportunity to indigenous individuals and communities. With DFAT awarding this contract to Fields Group we are able to: a) Commit to the recruitment and training of indigenous persons in regional QLD and NSW with Wilson's Security to the same value of the DFAT contract - this will have direct impact on the recruitment and career opportunity to indigenous individual's [sic] in remote areas - contracts will be advised to DFAT to show the impact that this contract has across multiple communities. b) Provide employment opportunities to indigenous individuals in remote areas with our partnership on this DFAT contract with Wilson's Security - As part of this contract we will be recruiting employing an indigenous trainee based in Canberra to learn and gain experience in contract management under the guidance of Shane Fields and Wilson's Management. c) Provide scholarship donations to NAISDA Indigenous Dance College in NSW d) Provide scholarship donations to the Arthur Beetson Foundation in QLD" (emphasis added).
14. On 21 September 2015 DFAT advised Fields that its proposal was accepted "subject to the negotiation of a mutually acceptable contract". In turn, on 28 September 2015 Fields advised Wilson that it "accepted your offer". Subsequently, on 12 October 2015 Fields entered into a formal contract with the Commonwealth for the provision of security services. The contract provided inter alia: "13 Security Clearances 13.1 The Contractor and all employees and subcontractors of the Contractor (i.e. Specified Personnel) must obtain and maintain an Australian Government security clearance to a minimum of the Negative Level 2 (NV2) level prior to commencement on-site. 13.2 Notwithstanding 14.1, for security guards based in Canberra, it is acceptable to DFAT for the Contractor's proposed personnel to initially hold a Negative Vetting Level 1 (NV1) security clearance, provided they have submitted all documentation for a (minimum) NV2 clearance upgrade before the commencement date of the Contract or within three (3) months of commencing on site."
15. On 5 October 2015 Fields and Wilson entered into a contract for the provision by Wilson of assistance to Fields in fulfilling Fields' obligations to DFAT. The contract did not deal with the separate obligation of Wilson to provide subcontracting work to Fields which the parties agreed was elsewhere defined. Wilson contended that it was defined in its letter of 4 March 2015 (see [9] to [11] above) and Fields contended that it was in Fields' submission to DFAT of 7 August 2015 (see [15] to [17] above).
16. It is unnecessary to describe the subsequent events except to say that Fields contended that Wilson did not make available all the subcontracting work it was obliged to provide and Wilson contended that it had fulfilled its obligations.

The Judgment at First Instance

1. The primary judge described as follows the principal issues that crystallised between the parties in the course of the hearing at first instance (referring to Fields as "FG" and Wilson as "WS"): "21 In the course of the hearing, FG narrowed its case [concerning the type of work that Wilson was obliged to subcontract to it]. It contended that WS' commitment was to provide work totalling a specified number of hours which could be performed by security guards who did not hold NV1 or NV2 security clearances. WS accepted that it had not provided the specified number of hours of that type, but maintained that, on a proper construction of the commitment, it had no obligation to do so. Accordingly any contest about breach disappeared. 22 The result is that for the purposes of FG's claim, the issue to be determined in this judgment is limited to determining what, on its true construction, the scope and terms of the commitment by WS was."
2. The effect of the primary judge's conclusions was that, even if Fields' 7 August 2015 submission to DFAT contained a description of Wilson's contractual obligations, the obligations so described did not conform with those that Fields alleged, with the result that Fields did not establish any breach by Wilson of its obligations. His Honour's observations and conclusions included the following: "71 Counsel for FG relied on the version of WS' commitment as recorded in FG's response to the [Request for Tender] in August 2015. The commitment was described as a commitment to subcontract to FG an 'equal number of hours to this contract' which would 'provide an additional 68,000 hours per annum which can be filled by Indigenous Security Guards where possible through areas of most need of Indigenous engagement'. 72 Counsel contended that in signifying that it was content for the proposal to be provided to DFAT in this form, WS was effectively agreeing to fulfil a commitment in these terms. Counsel further contended that it was implicit in such a commitment that the hours of work to be provided would be for security officers who did not hold NV1 and NV2 security clearances. This implication was said to arise from the circumstance that FG's Indigenous security guards did not hold such security clearances. … 90 I should say at once that I do not accept FG's contention that it was implicit in the terms of the August proposal that the work to be provided by [Wilson] was work which did not require an NV1 or NV2 security clearance. The relevant passage in the August proposal spoke only of providing employment opportunities to 'Indigenous' persons. It hardly needs to be said that there is no legal impediment to an 'Indigenous' person obtaining an NV1 or NV2 security clearance. Elsewhere in the August proposal, FG spoke of encouraging its 'Indigenous' employees to become more employable by achieving higher levels of security clearance. That is quite inconsistent with the idea that the work provided by WS from which FG's 'Indigenous' employees might benefit necessarily excluded work requiring an NV1 or NV2 security clearance for the whole life of the contract with DFAT. … 94 The key sentence in the proposal contained the words 'where possible'. The introduction of those words made the drafting clumsy. But when the whole sentence is read carefully, the words were important. They were clearly designed to qualify any representation FG might otherwise have appeared to have been making that all of the work which it would receive under the subcontracts from WS would be allocated to employees who were 'Indigenous'. The words were a let-out for FG. They underlined that FG was using the language of aspiration rather than of commitment. 95 This does not mean that it was impossible to put the commitment, as it was referred to in the proposal, into contractual language as between FG and WS. But the only way of doing so would be to read it as a commitment by WS that the specified number of hours to be provided by WS would be hours which it would be possible for FG to allocate to 'Indigenous' employees."

Determination of the appeal

1. As noted earlier, Fields narrowed its case at first instance to a contention that Wilson's contractual commitment "was to provide work totalling a specified number of hours which could be performed by security guards who did not hold NV1 or NV2 security clearances" (see [21] above). The reference to "NV1" and "NV2" was to Negative Vetting Levels 1 and 2 respectively. On appeal, Fields' counsel accepted that this was an accurate description of Fields' case, subject, at the conclusion of that description, to the addition of the words "in regional New South Wales, regional South Australia or regional Queensland". As noted earlier (see [19] above), Fields contended that the source of this contractual commitment was Wilson's acceptance by its conduct of the description of its commitment as to subcontract work contained in Fields' 7 August 2015 tender to DFAT.
2. A critical aspect of Wilson's alleged commitment as described above was that the subcontract work that it had to provide to Fields was work that "could be performed by security guards who did not hold NV1 or NV2 security clearances". It was the failure of Wilson to offer this type of work that was the principal cause of the dispute that subsequently arose between the parties.
3. In the parts of Fields' tender to DFAT in which reference is made to the type of contract work to be provided by Wilson to Fields there is no such stipulation; in both parts (see the emboldened passages in [15] and [17] above) the subcontract work is simply referred to as work "which can be filled by Indigenous Security Guards where possible", with the addition in one case of the words "through areas of most need of Indigenous engagement".
4. As recorded by the primary judge (see the last sentence of [72] quoted in [22] above), Fields submitted at first instance that the requirement that the work had to be suitable for security officers who did not hold NV1 or NV2 security clearances arose "from the circumstance that FG's Indigenous security guards did not hold such security clearances". On appeal Fields did not identify any evidence that established that that proposition was correct as a matter of fact but, in any event, as the primary judge pointed out, first, it could not be suggested that Indigenous security officers are not able to obtain NV1 or NV2 security clearances and, secondly, the tender itself contemplated that Indigenous security officers in Fields' employ would be encouraged to do so (Judgment at [90]). As to the latter proposition, his Honour was presumably referring to the two references in the tender to the proposed subcontract agreement with Wilson creating "a pathway" enabling Indigenous security guards to progress from roles at basic sites to more senior roles and clearances, involving them holding NV1 or NV1 security clearances (see [15] and [17] above).
5. On appeal, counsel for Fields suggested that this latter proposition gave rise to a promise by Wilson that it would provide work that could be performed by Fields' Indigenous employees who did not have security clearances but the words relied on simply do not say that and there is no basis for implying the broader promise alleged.
6. A further reason why Fields failed to establish any breach of contract on the part of Wilson was that the relevant parts of the tender upon which Fields relied contained the words "where possible". Thus at both points where the type of work to be provided by Wilson was described, Wilson's obligation was qualified by the words "where possible" ([15] and [17] above). Assuming in Fields' favour that the words it relied upon were capable of describing a contractual commitment, no breach was established because Fields did not suggest, at least on appeal, that the evidence demonstrated that it had been possible for Wilson to subcontract the stipulated type of work yet Wilson had failed to do that.
7. Fields' difficulties are compounded when regard is had to the words that immediately follow the words "where possible" in the more detailed part of the tender, namely, "through areas of most need of Indigenous engagement" (see [17] above). Assuming again that the relevant statements were capable of describing contractual obligations, Fields did not suggest, at least on appeal, that the evidence demonstrated that not only was it possible for Wilson to subcontract work that could be done by Indigenous security guards who did not have security clearances but that it was possible for it to do it in "areas of most need of Indigenous engagement", whatever precise denotation might be given to that expression.
8. Fields also submitted that the requirement that the work had to be suitable for security officers not holdings NV1 or NV2 security clearances arose from the Commonwealth Indigenous Procurement Policy. Fields submitted that both it and Wilson "were aware that in order to secure the DFAT contract, Fields had to demonstrate genuine indigenous benefit as required by the Commonwealth Procurement Policy".
9. The first answer to that submission is that the Commonwealth Indigenous Procurement Policy that Fields relied on, being dated 1 July 2015, post-dated the critical communications between the parties. Counsel for Fields was unable to point to any evidence that demonstrated that this policy had been promulgated in draft, or any other form, prior to 1 July 2015. Counsel did say that an "Indigenous Opportunities Policy" had earlier been in force and reference is made to such a policy in the evidence but that policy was not itself in evidence.
10. Secondly, even if the parties contracted with knowledge of a policy in the form of that in evidence, the contents of that policy would not have supported a conclusion that Wilson had agreed to provide Fields with work that could be performed by security guards not holding NVI or NV2 security clearances.
11. For these reasons, the appeal should be dismissed with costs.
12. PAYNE JA: I agree with Macfarlan JA.
13. EMMETT AJA: The appellant, Fields Group Pty Ltd (Fields), claimed that the respondent, Wilson Security Pty Ltd (Wilson), had agreed to assist Fields to fulfil its obligations to the Department of Foreign Affairs and Trade for the supply of security services at Canberra and Sydney Airports and other sites. Wilson accepted that it had assumed contractual obligations to Fields but disputed the terms of those obligations. Fields commenced proceedings in the commercial list of the Equity Division seeking to enforce its interpretation of the obligations alleged to have been undertaken by Wilson. On 30 April 2019, a judge of the Equity Division, sitting in the commercial list, rejected the contentions advanced by Fields and dismissed its claim. Fields then appealed to this Court. I have had the advantage of reading in draft form the proposed reasons of Macfarlan JA for dismissing the appeal. I agree for the reasons proposed that the appeal should be dismissed with costs.

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