Supreme Court of the ACT|2000-10-18

Mba Land Holdings Pty Ltd v Gungahlin Development Authoity & Ors [2000] ACTSC 89 (18 October 2000)

MBA LAND HOLDINGS PTY LTD v GUNGAHLIN DEVELOPMENT AUTHOITY & ORS [2000]

ADMINISTRATIVE LAW - Statutory Authority - Tender for development of land - successful tenderer would be offered lease of land - after closure date authority requested tenderers provide bids inclusive and exclusive of Goods and Service Tax - in response ultimately successful tenderer substantially increased bid specified exclusive of GST whilst its initial bid unspecified whether inclusive or exclusive of GST - whether decision to award offer of lease amenable to judicial review under (ACT) - whether grant of lease ultra vires because bid less than "full market value" and thus breach of s 169 Land (Planning and Environment) Act 1991 (ACT) - whether grant of lease ultra vires as to process because (inter alia) authority's acceptance of revised bid after closure date - whether authority amenable to judicial review at common law - whether relief should be declined on discretionary grounds.

WORDS AND PHRASES - "full market value" - "market value" - "special value" -

Gungahlin Development Authority Act 1996 (ACT), ss 5, 6, 7, 8, 11

Land (Planning and Environment) Act 1991 (ACT), ss 29, 161, 169, 282

Australian National University v Burns [1982] FCA 191; (1982) 43 ALR 25

Bayley v Osborne (1984) 4 FCR 141

General Newspapers Pty Ltd v Telstra Corp [1993] FCA 473; (1993) 117 ALR 629

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Gerah Imports Pty Ltd v Minister for Industry, Technology and Commerce (1987) 14 ALD 351; 17 FCR 1

Hawker Pacific Pty Ltd v Freeland [1983] FCA 139; (1983) 52 ALR 185

Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418

Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083

Brisbane Water County Council v Commissioner of Stamp Duties (NSW) [1979] 1 NSWLR 320

Boland v Yates Property Corp Pty Ltd [1999] HCA 64; (1999) 167 ALR 575

_Kennedy Street Pty Ltd v Ministe_r [1963] NSWR 1252

Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia [1947] HCA 10; (1947) 74 CLR 358

R v Wells; ex p Ansell (1982) 41 ACTR 31

Crouch v Commonwealth [1948] HCA 41; (1948) 77 CLR 339

Forster v Jododex (Australia) Pty Ltd [1972] HCA 61; (1972) 127 CLR 421

Nagle v Feilden [1966] 2 QB 633

R v Electricity Commissioners; ex p London Electricity Joint Committee Co Ltd (1920) Ltd [1924] 1 KB 171

Dyson v Attorney-General [1911] 1 KB 410

Simmonds v Newport Abercan Black Vein Steam Coal Co Ltd [1921] 1 KB 616

Hanson v Radcliffe Urban District Council [1922] 2 Ch 490

Attorney-General (Vic) v Commonwealth [1945] HCA 30; (1945) 71 CLR 237

Law v National Greyhound Racing Club Ltd [1983] EWCA Civ 6; [1983] 1 WLR 1302

R v Lloyd's of London; ex p Briggs & Ors [1993] 1 Lloyd's Rep 176

Mercury Energy Ltd v Electricity Corporation of New Zealand [1994] 1 WLR 521

State of Victoria v Master Builders' Association of Victoria [1995] VicRp 47; [1995] 2 VR 121

Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274

Williams Construction Ltd v Blackman [1995] 1 WLR 102

R v Panel on Take-overs and Mergers; ex p Datafin PL [1986] EWCA Civ 8; [1987] QB 815

Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; (1997) 146 ALR 1

Wade Administrative Law (7thed.) Clarendon Press, Oxford, 1994

MBA LAND HOLDINGS PTY LIMITED v GUNGAHLIN DEVELOPMENT AUTHORITY and KATHERINE CARNELL, GARY HUMPHRIES, WILLIAM STEFANIAK, BRENDAN SMYTH and MICHAEL MOORE Constituting the ACT EXECUTIVE

AND: KATHERINE CARNELL, GARY HUMPHRIES, WILLIAM STEFANIAK, BRENDAN SMYTH and MICHAEL MOORE Constituting the ACT EXECUTIVE

1. The decision made by the Gungahlin Development Authority (GDA) to offer to grant Landco Pty Ltd (Landco) a lease of Block 2 Section 1 Gungahlin is invalid and is set aside ab initio.

2. The GDA acted unlawfully in considering the tender of Landco as if the price offered by it for the said lease was $6,080,000 (exclusive of GST) rather than $5,700,000 (whether inclusive or exclusive of any GST).

1. This is an application by MBA Group Pty Limited (MBA) seeking relief against the Gungahlin Development Authority (GDA). MBA is a developer of land with considerable experience in planning, developing and marketing residential housing estates and commercial centres. GDA is a statutory authority established pursuant to the Gungahlin Development Authority Act 1996 (ACT) (the GDA Act).

2. Under s 5 the GDA is a body corporate. It may acquire, hold and dispose of real and personal property. It may sue and be sued. It is an agency of the Australian Capital Territory Government (the Executive). The principal object of the GDA, according to s 6 of the GDA Act, is:

" . . . to ensure that the Gungahlin Central Area is developed in accordance with the principles and policies for that area set out in The Territory Plan in order to provide for the social and economic needs of the community."

3. Pursuant to s 7 of the GDA Act the functions of the GDA are:

"(a) to be an agency for the provision, development and management, on behalf of the Territory, of land in the Gungahlin Central Area;

(b) to undertake, promote and co-ordinate the development of land in the Gungahlin Central Area;

(c) to exercise such functions on behalf of the Executive as it is authorised to exercise by a law of the Territory or by an instrument;

(d) where appropriate for the purpose of discharging its other functions - to construct buildings, structures and facilities (including community facilities) and to manage and maintain them, or to participate in such construction, management or maintenance; and

(e) to act as a concurring authority for controlled activities for the purposes of the Land (Planning and Environment) Act 1991 and as an advisory body in relation to implementation plans for the purposes of the Buildings (Design and Siting) Act 1964."

4. The exercise of those functions are enjoined to be performed:

"7. (2) The Authority shall perform its functions -

(a) in a manner that is consistent with the social and economic needs of the Territory;

(b) in accordance with prudent commercial principles;

(c) in consultation with residents of the Territory and, in particular, of Gungahlin;

(d) in a manner that exhibits a sense of social responsibility by having regard to the interests of the community in which it operates; and

(e) where its activities affect the environment - in compliance with the principles of ecologically sustainable development."

5. Subsection 7(3) further defines "ecologically sustainable development".

6. By s 8 the GDA is granted powers to (inter alia):

* grant leases of land on behalf of the Executive (s 8(2)(a))

* enter into any contract (or arrangement) with any person for the doing of anything that the GDA is authorised to do under the GDA Act.

7. The GDA could, if it chose, itself plan and carry out building developments of the kind now under consideration (see s 8(2)(c), (d), (e), (f), (i)).

8. The GDA decided to call tenders for the development of a tract of land in the Gungahlin area, Block 2 Section 1 Gungahlin, to be known as Yerrabi Estate - Stage 1 (the land). The successful tenderer would be offered a lease of the land.

9. The GDA caused tender documents to be prepared and issued accordingly.

10. The tender called for proposals for the development of the land (an area of 24.44 ha) so as to provide "a maximum of three hundred and forty (340) residential dwellings". The "Introduction" declared that the GDA was:

" . . . seeking a range of exciting housing options that will cater for the different life styles and needs of the community and optimise the liveability of the Estate".

11. Tenderers, in submitting their tender, were to agree to certain terms. Clause 2.3 provided:

"Tenders received after 4.00 pm on Friday, 4 February 2000 will not be accepted."

12. That was over-stamped "FRIDAY 18 FEBRUARY 2000" as a result of a request made on 1 December 1999 from MBA for an extension of time.

13. The tender documents were prepared and advertised on 20 November 1999. There were some addenda published in late December 1999.

14. Pursuant to cl 2.4 tenderers agreed that they had made their own "enquires" (sic) as to all relevant matters including "the potential impact of the Goods and Services Tax (GST)".

"The Authority will not enter into any negotiations whatsoever, before determining the preferred tenderer."

16. Tenderers were, however, before that determination permitted to seek "clarification" of the conditions of tender. Similarly, the GDA was permitted to seek clarification of the response of tenderers thereto.

17. The GDA, under cl 2.6, clearly recognised that it might be desirable, if not necessary, to circulate questions asked of or by individual tenderers and the responses thereto to all other tenderers. That would require the exercise of judgment whether those questions and answers were such as might impact on the form of the response from tenderers or, after receipt of responses, give an unfair advantage to a tenderer.

18. That same requirement for fairness was recognised under cl 2.7 (amendment of Request for Tender). Any amendment of the tender documents by the GDA was to be subject to "concurrent advice to Tenderers".

19. Clause 2.17 set out "Tender Evaluation Criteria". They were,

"(a) The amount offered for the lease;

(b) Demonstrated financial and management capacity to undertake the proposed development;

(c) Experience in the development industry and capacity to undertake a development of this quality and nature; and

(d) Overall response to the Authority's stated objectives for the development of Yerrabi Estate Stage 1 (as set out in paragraph 3.4.1 of this document and Clause 2.4.1 of Annexure 2 to the Draft Deed of Agreement at Attachment 4) which takes into consideration such factors as -

* design excellence;

* innovation;

* commercial feasibility; and

* public benefit."

20. The criteria noted above were said to be in no particular order of priority.

21. Clause 2.18 expressly stated that the GDA was under no obligation to accept the highest or any particular tender. It also stated -

"The Authority reserves the right to negotiate with the tenderer of the highest amount offered, however it will be under no liability if it chooses not to do so."

"Unless and until an offer is accepted by the Authority's entry into a written contract, no contractual relationship exists between a Tenderer and The Authority."

23. The successful tenderer, under cl 3.2, would be required to enter into a "Holding Lease" and a "Deed of Agreement". The "Holding Lease" was to continue whilst the agreed works remained to be completed. On completion, land would progressively be surrendered and made the subject of individual residential leases.

24. Clause 3.3 "GOODS AND SERVICES TAX" has some relevance. It provided:

"The Tenderer should note that The Goods and Services Tax (GST) may apply to goods delivered and services performed after 1 July 2000.

The sale of the site is conditional upon the Lessee designing and constructing at its own cost the Works as set out in the Deed of Agreement. Neither the Authority nor the Territory accepts any responsibility for any costs (including GST) incurred in the construction of the Works."

25. The draft Deed (Attachment 4) was consistent with the notified conditions of Tender. It reiterated that, in submitting a tender, tenderers were relying on their own understanding of the documents and their own skill and judgment.

26. Clause 6.18 of the draft Deed made it clear, if clarity was needed that the GDA was empowered to vary the specified Works.

27. Annexure A1 (List of Works) makes it plain that in tendering, a tenderer was offering not only to take up a lease at a premium but also to carry out infrastructure and off-site works (the off-site Works). Whilst the developer would, no doubt, construct and sell dwelling units for profit, the price to be paid for that commercial opportunity was not only the price to be paid for the lease but also the value of the off-site Works.

28. Annexure A2 contained "Special Project Conditions", including some prescriptive provisions. For example, at A 2.1.2 (sheet 5), it is stated:

"Proposals which result in the number of dwellings specified for the Estate exceeding 340 dwelling units will not be accepted."

29. An "addendum", issued 22 December 1999, made some minor amendments to the requested proposal. Tenderers were informed that:

_"Double garages with entry from the street address on blocks less than fifteen (15) metres are not preferred." (_Indeed at the bottom of Sheet 11, it was stated that the same "will not be permitted.")

30. There was a further addendum relating to blocks of less than 10 meters width.

31. Between 14 December 1999 and 7 February 2000 Mr Peter Brady, Projects Director of GDA, met with various prospective tenderers or their representatives to provide explanations of issues associated with the tender process.

32. MBA had formed a consortium for the purposes of tendering, known as Canberra Estates Consortium (CEC). Mr Ken Ineson (of MBA) was appointed Project Manager. It was his responsibility to prepare the tender.

33. Mr Ineson noted that no relative weighting of the criteria in cl 2.17 of the tender document was specified. He was unsure, for example, whether priority should be given to offering increased value of off-site Works (public benefit) or an increased lease premium.

34. On 17 December 1999, Mr Ineson consulted with Mr Brady. He was told there was no prior weighting assigned to the assessment criteria. Mr Brady offered the advice that it was to be "a holistic assessment".

35. Mr Ineson consulted again with Mr Brady on 25 January 2000 "to try and determine the planning and urban design features which might appeal to the GDA".

36. Mr. Ineson met with Ms Anne McGrath, Chief Executive Officer of the GDA, on 1 February 2000. This was to further clarify the advice from Mr Brady. Ms McGrath is an administrator not an expert. Mr Ineson was given some information contradictory of that given by Mr Brady. It is not necessary to refer particularly to those contradictions (for example, urban housing "preferred" (Ms McGrath) - "no view" (Mr Brady)).

37. Mr Ineson prepared and, on 18 February 2000, submitted a tender on behalf of CEC.

38. The price offered for the proposed lease was $6,410,000. It was expressed as "inclusive of GST". It became apparent to Ms McGrath, on inspecting the tenders after the closure date, that not all tenderers had expressed a view as to whether their price was inclusive or exclusive of GST.

39. Accordingly, she wrote to each tenderer on 23 February 2000 asking those who had not done so to specify their price inclusive and exclusive of GST.

40. So far as the GDA was concerned the only issue for it was whether the tender price included a notional collection of GST for the holding lease, if granted after 30 June 2000, or for the subsequent grant of individual leases as the development proceeded.

41. GST to be collected by the developer on sales or paid by the developer to suppliers was no concern of the GDA.

42. On 23 February 2000, MBA responded that CEC's price was inclusive of GST but it was concerned that the granting of the holding lease might be delayed beyond 30 June 2000. It, therefore, reserved the right to withdraw its tender if the contract had not been awarded after 45 days. Mr Ineson recognised the possibility that the GDA may have had to account for GST on the price paid for the holding lease if it was granted after 30 June 2000, making CEC's price less attractive after that date than a price exclusive of GST.

43. The GDA had already recognised that there was doubt about whether the grant of the holding lease was a taxable transaction so that it might attract a GST obligation.

44. At this time, MBA was unaware of the price bid by the other tenderers. In fact Landco Pty Ltd (Landco), the tenderer ultimately preferred, had bid $5,700,000. On receipt of Ms McGrath's enquiry, it responded by advising that its price "exclusive of GST" was $6,080,000.

45. In truth, this amounted to an increase of the tender price by $380,000 plus any GST payable. That, coincidentally, made Landco's price the next highest after CEC. It was, however, an objectively untruthful statement. If Landco's original price had included an allowance for liability for GST then, unless it was increasing its offer, the price exclusive of GST would be less, not more than $5,700,000. If it was exclusive of GST, then the price was $5,700,000 plus GST. On no view, is $6,080,000 "exclusive of GST" the same as $5,700,000 whether inclusive or exclusive of GST. It is clear that, accidentally or otherwise, Landco was permitted, in breach of the terms of tender, to substantially raise its offer price after tenders had closed.

46. There is, I must emphasise, no evidence of bad faith on the part of the GDA, merely a failure to analyse and understand the possible impact of a GST on the price it was being offered. As to whether Landco understood that it was, in essence, "ringing the changes" on the GDA, I cannot determine.

47. Ms McGrath recognised that changes in the conditions of tender needed, at least as a matter of probity, to be notified to each tenderer for response. For example, one tenderer was prepared to pay more if Stage 1 could be expanded by 30 blocks. Had that been permitted, Ms. McGrath accepted that each tenderer would have had to have been offered the same opportunity.

48. An issue was raised by one tenderer on 10 March 2000 seeking, after tenders had closed, to offer a higher than requested level of "interdependent and `off-site' works".

49. The GDA responded, somewhat curiously, by asking each tenderer to specify the cost of its proposal for off-site Works. The price which tenderers had been requested to offer was the premium for the lease and the construction of (at least) specified `off-site' Works. The value of those off-site Works to the GDA was not measurable by reference to the cost thereof to the developer. Nor was it clear what, if any, off-site Works additional to those specified were being referred to. Thus MBA asserted in its response, whether or not commercial confidentiality was a problem, that cost to the developer was irrelevant, (save, perhaps, to reassure the GDA that the developer had made a realistic offer). That was a realistic and correct response. Further, the GDA's response to the unidentified (to the Court) tenderer's request was not relevantly reactive to the request.

50. Each of the tenderers was invited to make a presentation to the GDA. Mr Ineson made a presentation on behalf of CEC on 16 March 2000. He reiterated the point concerning the relevance of the cost of off-site Works. The other tenderers had provided cost estimates for the off-site Works as requested by GDA.

51. Having requested and received those cost estimates, however, Ms McGrath, according to her evidence, decided not to take them into account. She does not indicate why that decision was made. It may have been a belated realisation that the value of the off-site Works, which GDA could assess for itself, was the relevant consideration as MBA had suggested.

52. There was reference in the evidence to a person referred to as the "Probity Auditor". The role of that person is obscure. If it was to ensure the fairness of the tender process, it does not seem to have been entirely successful. Indeed, the very involvement of that person and the secret advice he or she may have offered is a cause for concern. The advice given by the Probity Auditor does not seem to have alerted the GDA to a possible lack of relevance or fairness in some aspects of the evaluation process it was undertaking.

53. There is also reference to the use of "Morris Consultants" to assist the Authority to evaluate the tenders. Their role differed from that of the "Probity Auditor".

54. Morris Consultants, according to Ms McGrath's evidence, were engaged to advise on the weightings to be placed on the various evaluation criteria so as to support the GDA's conclusion that Landco's tender was the best.

55. Ms McGrath was unable to offer any rationale for the use of this process to evaluate tenders other than that it enabled the GDA to give the appearance of having made an objectively rational decision whether or not that was indeed the case.

56. It was Ms McGrath's contention that the GDA had agreed, before Morris Consultants were engaged, to use a 40:40:10:10 weighting for the four enumerated criteria exposed in the tender documents. The 40% weightings were to be given to "price" and "overall response to the GDA's requirements". The 10% weightings were to be accorded to "financial stability" and "project management expertise".

57. At this time, it appears that Mr Bob Winnel, managing director of MBA, became concerned that CEC's refusal to provide costings of off-site Works might be viewed adversely by the GDA.

58. On 29 March 2000, he faxed a letter dated 28 March 2000 to the GDA expressing concern that if the GDA took account of the stated cost to tenderers of off-site Works, it might distort the tender process by permitting a tenderer, by exaggerating those costs, to appear to be offering a higher "package" of benefits to the GDA in dollar terms.

59. Mr Winnel also sought to be advised if, as he had heard from undisclosed sources, CEC was the highest conforming tenderer. If so, he requested an opportunity "to discuss any perceived weaknesses in our tender (if there are any)". The source of Mr Winnel's belief was not explored in the evidence. It does create some doubts about the efficacy of the GDA's information security systems (if any).

60. That afternoon, Ms McGrath and Mr Brady of the GDA met with Mr Hans Sommer of MBA. Mr Sommer was reassured by them that the lack of costings of off-site Works would not be viewed adversely. They further advised that tenders would be considered and a decision as to the successful tenderer made at the GDA's next meeting on 13 April 2000. The successful tenderer would be advised by 19 April 2000.

61. Mr Winnel's letter of 28 March 2000 was formally "withdrawn" at the meeting of 29 March 2000. Mr Winnel sought to confirm this withdrawal on 30 March 2000, both orally and in writing.

62. On 11 April 2000, Mr Winnel wrote again to the GDA. This time it concerned the "weightings" to be accorded to the four criteria notified to tenderers.

63. This caused another curious anomaly to be revealed. It will be recalled that, between the March meeting of the GDA and the April meeting at which the successful tenderer would be decided, the GDA had engaged Morris Consulting to advise on the evaluation of the tenders. The GDA had already, by then, at least informally, decided that the Landco tender was preferred. To what extent, if any, this decision was influenced by the increase in the lease price offered by Landco after tenders had closed was not addressed in the evidence.

64. The minutes of the GDA's meeting of 16 March 2000 contain no record of any decision, before Morris Consulting had been engaged, to accord the 40:40:10:10 weightings referred to. Nevertheless, Ms McGrath stated in evidence that she had, before that meeting concluded, proposed that those weightings be adopted. She stated that they were adopted accordingly. Mr Brady was the minute secretary. He did not record this apparently significant event. The minutes of the March meeting as drafted by Mr. Brady were considered by Ms McGrath before the 13 April meeting, but she claimed she failed to notice the omission of this matter from them. She explained that the omission occurred because Mr Brady was temporarily out of the room. She omitted to inform him of the adoption of the resolution after his return.

65. The consultants were engaged on 28 March 2000.

66. Their area of consideration seems to have been the mathematics of various models of evaluation. They did not address the "score" to be given to any individual tenderer. The result of their evaluation was, Ms McGrath said, only useful as a "tool" to explain any decision taken. She stated that she did not, in any event, understand the modelling process used by them.

67. Ms McGrath conceded that the "numbers" arrived at by the consultants really did not matter. The overall result had already been agreed. The "numbers" were used and adjusted so as to provide some apparently objective justification for the result already arrived at. The substantive question addressed was, in truth, whether the extra dollars offered by CEC made it worth accepting their proposal with all its deficiencies, (as the GDA perceived them) rather than the Landco proposal. In each case, of course, it was open to the GDA to later request amendments to the proposal of the successful tenderer.

68. Although Ms McGrath's evidence was somewhat unpersuasive as to whether weightings of the selection criteria had been adopted before Morris Consulting was engaged, there seems no reason, in my view, to doubt that the GDA genuinely preferred the Landco proposal to that of CEC. Nevertheless it seems strange that a significant amount of public money would be devoted to a process which was not, apparently, designed to effect any useful purpose.

69. On 11 April 2000, Mr Winnel wrote to the GDA concerning the "weighting of the tender criteria". He had assumed, from something Ms McGrath had said that all four tender criteria were to be given equal weighting.

70. On 13 April 2000, the Chair of the GDA, Mr Laurie Willett, responded somewhat cryptically to Mr Winnel:

"I am advised that [Ms McGrath] did not indicate to any external party the priorities allocated to the selection criteria."

71. On 17 April 2000 another letter emanated from MBA. In it, Mr Winnel raised concerns about possible bias on the part of a particular adviser to GDA. That matter has not been subsequently pursued and, to my mind, nothing turns on it.

72. The offer of lease to the successful tenderer was to be made on 20 April 2000. There was a subcommittee appointed by the GDA, which was authorised to make the final decision. A "first report" of the subcommittee was not prepared until 20 April 2000.

73. At page 3, that report ranked Landco No.1 and CEC No.3 in the order of preference. The identities of other tenderers was not revealed in the document tendered in evidence. It stated:

"The sub-committee is unanimously of the view that the Landco submission is superior to all others and the Top Dec modelling supports this."

74. It may be observed that the "Top Dec modelling", the process undertaken by Morris Consulting, only supported the proposition that the mathematical expression of the "marks" allocated to the tenderers for the various aspects of their tender supported the conclusion if the weighting ratios 40:40:10:10 were adopted. The same conclusion would have followed without the need for any "modelling".

75. So far as the cash price offer was concerned, the report noted (p 4):

"The cash return per block of the highest ranked tenderer is $17,882. This is a good return per block for this estate, noting that at least $1.6 m is being invested in off-site works . . ." (emphasis added).

76. That indicates that the subcommittee did precisely what the GDA had assured CEC that it would not do; that is, to assess the cost of off-site Works to the developer rather than their value to the Territory. As against that, it did, also, favourably remark on the "quality" of the off-site Works proposed by Landco and their relationship to the overall design of the estate.

77. In effect, the subcommittee was attracted more by the Landco proposal than the CEC proposal. It recommended, in light of Landco's assertion that its price of $6.08 m for the lease was "exclusive of GST", that the GDA should vary the price if GST was imposed so as to add to the tender price any GST payable by it.

78. The evaluation of the tenders then proceeded on the basis (p 4) that "all tenders are assumed to exclude GST". That effectively ignored CEC's statement that its price included GST. It further overlooked the adjustment by Landco to its tender price allegedly to take account of GST.

79. The report of the subcommittee provides no objective reasons for the subcommittee's collective preference for the Landco proposal rather than the CEC proposal. Of course, that is not, in itself, surprising. Matters of taste and value judgment played, no doubt, a significant role in their conclusion.

80. It has been submitted that, compared with CEC's tender, the Landco tender offered a response that failed, in a number of respects, to address what were stated to have been essential or nearly essential requirements of the GDA. That submission will be addressed later. It raises a question as to the scope of any review of the GDA's decision.

81. The offer of lease was accepted by Landco on 27 April 2000. Landco tendered, and the GDA accepted, a $608,000 deposit.

82. On 30 April 2000, MBA, on behalf of CEC, obtained an interim order restraining further steps being taken to perfect the award of the tender to Landco.

83. On 15 May 2000, the GDA filed and delivered to MBA, pursuant to an order made by Crispin J on 9 May 2000, a statement of "Reasons" for its decision to prefer Landco as the successful tenderer.

84. I will later consider whether the decision made by the GDA was a decision to which the Administrative Decisions (Judicial Review) Act 1989 (ACT) (ADJR Act) applies.

85. The "Statement of Reasons", proffered on the basis that the ADJR Act might be applicable, set out the background to the receipt and evaluation of tenders generally.

86. In that Statement, the GDA asserted that it had accorded a 40:40:10:10 weighting to selection criteria. It had, it said, paid due regard to its objectives as set out in the GDA Act.

87. It noted that CEC had been ranked third. The evaluation of the second tender was not referred to. It did, however, submit that, because CEC was not ranked second, its claim was futile. That submission will also be later considered.

88. There followed then, in paragraphs 31-40, a positive description and evaluation of the Landco proposal. Paragraphs 41-51 set out and commented upon the CEC proposal. The GDA acknowledged that whilst CEC had offered a conforming tender, it noted that:

"CEC's submission is, overall, a poor response to the Authority's objectives for the Estate. The concept plan does not compare favourably with the preferred tenderer and others in a number of critical areas . . ."

89. Further criticisms were that the CEC submission did not offer "strong integration" of the development with the town centre. It "resists", it was said, the "development of more urban housing in key locations". The "significance of structure generators for the estate is weakened". The critique continued. Though the proposed landscaping was "satisfactory", it was "less" so than Landco's proposal. There was "poor resolution of urban design problems". The "Hub" proposal, central to the design concept, was considered "flawed".

90. These criticisms are all matters concerning perceived design aesthetics or dynamics. No doubt other relevantly qualified persons would disagree with these criticisms. It is clear that some do.

91. Even if this was a merits review, there is no way a non-expert tribunal, such as this Court, could adjudge that the criticisms of the CEC proposal compared with Landco's, were inappropriate or mistaken. They certainly cannot be said to be so unreasonable that no tribunal of fact could lawfully adopt them. No principle of law is relevant to the "design" choice made by the GDA.

92. It must be remembered that the scope of this review is more limited than a merits review. It is, essentially, limited to the substantive fairness of the process and identification of any error of law.

93. There is no error of law in the conclusion to which the GDA came that the urban design reflected in the Landco proposal was superior to that of CEC.

94. This, of course, was not an end to the process. Landco's offer of a cash sum was $330,000 less than that of CEC. That sum was itself the result of an impermissible increase in the Landco offer after tenders had closed which narrowed the gap between them by $380,000 (assuming no GST). It was further confused by the GDA's unilateral decision that all tenderers would be regarded as tendering a price "exclusive" of GST, even if, as CEC did, it was stated otherwise.

95. Nevertheless, apart from the legal impact, if any, of the price revision Landco achieved for itself, it was not an error of law for GDA to consider that the perceived design excellence of Landco's proposal compared with CEC (and the second ranked tenderer) outweighed the apparent dollar difference between their respective offers. It does mean that the issue as to whether that design excellence, given the GDA's power to propose amendment of the submitted design of the preferred tenderer, would have outweighed a $710,000 difference in favour of CEC's tender, was not addressed.

96. The amended application for review of the GDA decision was lodged 11 May 2000. It was further amended on 24 May 2000. The original application was dated 1 May 2000.

97. That application was made pursuant to s 5 or, in the alternative, s 6 of the ADJR Act. The former relates to a "decision" made under an enactment. The latter to "conduct for the purpose of making a decision" under an enactment. The "decision" referred to in either case is alleged to be a decision by the GDA, pursuant to a statutory power given to it by the GDA Act, to grant a lease of the subject land under s 161 of the Land (Planning and Environment) Act 1991 (ACT) (the "Land Act").

98. Six grounds were relied on in the application for review:

"1. That a breach of the rules of natural justice occurred in connection with the making of the decision.

Particulars

a) Failing to indicate to all tenderers that the criterion "overall response to the Authority's stated objectives" would be given equal weight with the criterion "the amount offered for the lease".

b) Giving information concerning the criterion "overall response to the Authority's stated objectives" to individual tenderers privately and not supplying that information to all tenderers.

1A. Procedures that were required by law to be observed in connection with the making of the decision were not observed.

Particulars

a) The respondents were required by section 169 of the Land (Planning and Environment) Act 1991 to obtain payment for the lease, which is not less than market value.

b) In accordance with paragraph 7(2)(b) of the Gungahlin Development Authority Act 1996 the 1st Respondent was required to perform its functions in accordance with "prudent commercial principles".

c) The 1st Respondent breached these requirements as follows.

i) It declined to accept the highest tenderer as a result of the following process of tender evaluation.

ii) It evaluated the successful tenderer, Landco by reference to the assumed value of off-site and interdependent works.

iii) Its evaluation was based upon certain "preliminary plans" and an "indicative site layout" when no subsequent obligation would arise upon a successful tenderer to complete works upon the lease in accordance with those plans or that layout.

d) The tender documents failed to indicate a priority between the criteria against which tenders were to be assessed thereby reserving a discretion to the 1st Respondent as to which tenderer would be selected.

2. The making of the decision was an improper exercise of the power conferred by the enactment under which it was purported to be made in that it took irrelevant considerations into account and failed to take relevant considerations into account.

Particulars

a) The 1st Respondent took into account tenderers' costing of offsite and interdependent works.

b) The 1st Respondent failed to take into account that there is no obligation upon a successful tenderer to build the works in the "preliminary plans" and an "indicative site layout".

c) The tender assessment failed to take into account that the plans submitted by the successful tenderer, Landco involved the construction of houses on land which was not part of the lease for which tenders were called to wit the triangular shaped piece of land opposite Yerrabi Pond Island and marked for open space in Annexure A1 Sheet 1 of 2 in the tender documents.

d) The 1st Respondent failed to take into account whether it was obtaining market value for the lease.

e) The plans submitted by the successful tenderer Landco included the provision of road intersections which were not controlled in accordance with ACTCode element 6 performance measure 6 as required by section 3.4.1 of the tender documents.

f) Failing to assess traffic control measures of the Landco plan - the plans submitted by the successful tenderer Landco did not comply with PALM Energy Guidelines referred to under A2.1.2(g) of the Deed of Agreement in the tender document and ACTCode element 1 performance measure 3.

g) Failing to assess the solar access of houses proposed in the Landco plan by reference to block orientation.

h) The tender assessment fails to take into account that the plan submitted by Landco proposed in excess of 340 residential blocks in breach of the tender conditions.

i) The tender assessment fails to take into account that the Landco tender will not preserve trees in Precinct B in accordance with the tender document.

j) Failing to consider the provisions of the Variation to the Territory Plan for Gungahlin Town Centre in particular sections 2.2 and 2.3 of the Variation.

3. The making of the decision was an improper exercise of the power conferred by the enactment under which it was purported to be made in that the exercise of the power was so unreasonable that no reasonable person could have so exercised the power.

Particulars

a) Evaluating the tenders by reference to works which ultimately did not have to be built by the successful tenderer.

b) Evaluating the tenders by reference to the costing of works which ultimately did not have to be built by the successful tenderer.

c) Drawing the conclusions about the appellant's tender as set out in paragraphs 30 and 31 of the affidavit of Mr Ineson.

4. The decision involved an error of law or was otherwise contrary to law.

Particulars

a) The decision did not comply with the requirements of section 169 of the Land (Planning and Environment) Act 1991 and was not undertaken in accordance with paragraph 7(2)(b) of the Gungahlin Development Authority Act 1996.

b) The 1st Respondent failed to obtain market price for the lease granted.

c) The 1st Respondent decided to grant the lease on the basis that the figure offered by Landco "was within the range of reasonable value for the estate" rather than it was for payment of an amount which was not less than market value.

d) The decision breached section 161 of the Land (Planning and Environment) Act 1991 in that it was not the result of a valid tender because:-

i) the tender document had not indicated to prospective tenderers the weighting of the criteria against which the tenders were to be judged; and

ii) by reserving to the 1st respondent a discretion to determine the weighting of the criteria it would use for assessing the tenders until after the tenders had closed, the purported tender document preserved an unfettered discretion to the 1st Respondent to nominate the successful tenderer.

e) The decision breaches the principles of fair dealing which are implied into the tender in that:-

i) by reserving to the 1st Respondent a discretion to determine the weighting of the criteria it would use for assessing the tenders until after the tenders had closed, the purported tender document preserved an unfettered discretion to the 1st Respondent to nominate the successful tenderer;

ii) the plans submitted by the successful tenderer, Landco involved the construction of houses on land which was not part of the lease for which tenders were called to wit the triangular shaped piece of land opposite Yerrabi Pond Island and marked for open space in Annexure A1 Sheet 1 of 2 in the tender documents and the appellant was not informed that it could submit a plan with houses on the same piece of land;

iii) the appellant was informed that the 1st Respondent had no preference for rear lanes when subsequently rear lanes were regarded as a positive feature;

iv) for the reasons set out in paragraphs 34 and 35 of the affidavit of Mr Ineson;

v) permitting the successful tenderer to increase the amount offered after the close of tenders from 5.70m to 6.08m.

5. In the event that a decision to grant the lease has not been made, the preceding grounds are repeated as the conduct of the 1st Respondent against which the application is brought."

99. The response of GDA to those allegations is, first, that no reviewable decision was made or was in prospect. Thus any defect in the tender process adversely impacting on CEC could only be the subject of proceedings for breach of an implied agreement to carry out the tender process differently. Judicial review under the ADJR Act is not open.

100. Even if the tender process was open to judicial review, the GDA contended that no defect appeared in it sufficient to vitiate the result of the tender process.

Is the "decision" to award the offer of a lease amenable to judicial review?

101. The land in question is "Territory Land" within the meaning of s 28 of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) (PALM Act).

"(1) The Executive, on behalf of the Commonwealth:

(a) has responsibility for the management of Territory Land; and

(b) subject to section 9 of the Seat of Government (Administration) Act 1910, may grant, dispose of, acquire, hold and administer estates in Territory Land.

(2) The Executive shall perform its functions under subsection (1) subject to enactment and in accordance with the principles

(a) that new estates in Territory Land shall be granted only in accordance with procedures that are notified to the public; and

(b) that appropriate classes of decisions relating to the administration of estates in Territory Land shall be subject to just and timely review without unnecessary formality.

(3) The term of an estate in Territory Land granted on or after Self-Government Day shall not exceed 99 years or such longer period as is prescribed, but the estate may be renewed.

(4) The Authority may intervene in any proceedings for review of a decision relating to the administration of an estate in Territory Land."

103. Both the Land Act and the GDA Act are "enactments" for the purposes of the ADJR Act.

104. The GDA is a statutory corporation empowered to act on behalf of the Executive (inter alia) in granting a lease of Territory Land (see s 7(1)(c) of the GDA Act). Its powers under s 8 of the GDA Act are wide enough to include a decision to call tenders for the disposal of Territory Land in the Gungahlin area and, then, to grant a lease of that land on behalf of the Commonwealth to a preferred tenderer.

105. The Territory legislature has empowered the Executive to grant leases of Territory Land on behalf of the Commonwealth subject to s 161 (inter alia) of the Land Act. That provides (relevantly) that the Executive may grant such a lease by "calling tenders for the grant of the lease" (s 161(1)(b) Land Act).

"... include provisions -

(a) requiring the lessee to develop the land comprised in the lease or any unleased Territory Land in a specified way." (s 161(2)(a))

107. The GDA relied upon Australian National University v Burns [1982] FCA 191; (1982) 43 ALR 25. The ANU, under its incorporating statute, had power to engage and terminate the appointment of staff. Professor Burns sought review of the decision to terminate his contract of employment. Bowen CJ and Lockhart J, at 32, said:

"In our opinion the rights and duties of the parties to the contract of engagement were derived under the contract and not under the University Act. Section 23 empowered the council to enter into the contract on behalf of the appellant. Even if the council, in considering the position of the appellant under the contract, might be said to be acting under s 23, the effective decision for dismissal taken and notified to the respondent was directly under the contract."

108. Burns' case (supra) was applied to a decision to transfer a police officer, appointed pursuant to the Australian Federal Police Act 1979 (Cth), taken by the Commissioner in the exercise of the power of general administration granted by the GDA Act (see Sellars v Woods [1982] FCA 281; (1982) 45 ALR 113). The latter was held not to be a reviewable decision. A direction to work standard hours was also held not to be a reviewable decision (see Bayley v Osborne (1984) 4 FCR 141).

109. The specific matter of the calling and evaluating of tenders was considered in General Newspapers Pty Ltd v Telstra Corp [1993] FCA 473; (1993) 117 ALR 629. The "decision" in that case was one not to call tenders but instead, to enter into a contract with an existing supplier.

110. Davies, Gummow and Einfeld JJ held that review was not open under the ADJR Act (Cth). At 636-7, Davies and Einfeld JJ stated:

"A contract entered into by a corporation under a general power to enter into contracts is not given force and effect by the empowering statute. The empowering statute merely confers capacity to contract, whilst the validity and effect of the contract is determined by the ordinary laws of contract."

111. That decision was followed by Neaves J in CEA Technologies Pty Ltd v Civil Aviation Authority [1994] FCA 1180; (1994) 122 ALR 724 in respect of a decision, pursuant to a call for tenders, to award a contract otherwise than to the applicant. The CAA in that case was constituted similarly to the GDA.

112. Numerous other cases have followed and applied the General Newspapers (supra) decision.

113. That is not to say that the tendering process undertaken by public authorities such as the GDA will always be outside the scope of judicial review. Davies and Einfeld JJ recognised this in General Newspapers at 637:

"It is unnecessary to consider the exceptional case where it may be proper to bring a proceeding under the ADJR Act because an act or thing, such as a contract, may have been entered into for an ulterior purpose, such as private gain, and the validity of the act is challenged by reference to the statute under the general aegis of which the act or thing is done. If the challenge to validity is made by reference to a federal [read "Territory"] enactment, then the challenge may be appropriate, even in relation to a contract because the statute affects the force and effect of that which was done. Nor do we suggest that there may not be instances under the ADJR Act where relief could include the setting aside or the declaring void of a contract."

114. Reference was made by way of example, to Gerah Imports Pty Ltd v Minister for Industry, Technology and Commerce (1987) 14 ALD 351; 17 FCR 1.

115. In that case an instrument made under the Customs Act 1902 (Cth) had specified a scheme for the calling of tenders for the right to enter goods for home consumption at concessional rates of duty. It was accepted by Davies J that the decision to accept the tender of the successful tenderer was open to judicial review. The application was unsuccessful for other reasons.

116. The present case differs from General Newspapers in two respects. First, in this case, tenders were in fact called. As a result, tenderers were entitled to expect a fair and even-handed consideration of their claims to be awarded the lease of the land in question. Secondly, it is not only the decision to award the contract to Landco which is subject to the claim for review, but also the decision to exercise the Executive's power under s 161 of the Land Act to grant a lease of Territory Land to Landco.

117. There are, nevertheless, two difficulties in the face of MBA's contention that the proposed decision is amenable to judicial review.

118. The first is that s 161 of the Land Act merely authorises the grant of leases of land by the Executive. It does not prescribe any particular process for the grant of a lease to a particular person. In the words of Davies and Einfeld JJ in General Newspapers, subject to some express statutory conditions, s 161 seems to me otherwise to be (at 637):

"... a mere conferral of capacity to act. The contracts [read "leases"] were not relevantly authorised or required by and were not made under an enactment. The validity of the contracts and of the acts done was governed entirely by the law of contract, not by the statutes. Thus the ADJR Act had no application to the conduct or to the alleged decision."

119. There are some legislative limits on the power to grant leases under s 161 Land Act. They may not be granted for more than 99 years (see s 29 PALM Act). They must be granted in a manner permitted by s 161 Land Act (relevantly, for present purposes, by "calling tenders"). They shall not be granted "otherwise than for payment of an amount that is not less than the market value of the lease" (see s 169(1) Land Act).

120. The second difficulty is that the Land Act itself provides for the review of certain decisions taken under it. Those decisions are referred to in s 282A Land Act. Decisions under s 161 Land Act are not included within the list of reviewable decisions. The review authorised by s 282A is a merits review by the Administrative Appeals Tribunal (ACT). It is not limited to a review for legal or procedural error. The omission of s 161 decisions from s 282A lends some indirect support to the view that decisions to grant leases under s 161 are not intended to be subject to judicial review under the ADJR Act.

121. In my view, not only is the decision of the GDA to award the development contract to Landco not open to a merits review, it is not a decision under, or conduct leading to a decision under, an enactment so as to be amenable to review under the ADJR Act.

122. In deference to the arguments of counsel and bearing in mind the possible availability of alternative means of gaining relief, assuming that the tender process has been tainted by reviewable error, I proceed to consider the respondents' submissions that MBA was not a "person aggrieved".

123. Whilst in General Newspapers the disappointed prospective tenderer was held not to be a "person aggrieved" within the meaning of ss 5 or 6 of the ADJR Act, the same cannot be said of an unsuccessful tenderer.

124. Indeed, if there had been a contractual breach of the terms of the tender by the GDA, a disappointed tenderer could sue for damages for breach of that collateral contract. A decision not to call tenders would not, ordinarily, be a matter in respect of which any particular person who might have tendered could lawfully complain (see General Newspapers).

125. Hawker Pacific Pty Ltd v Freeland [1983] FCA 139; (1983) 52 ALR 185 is an example of a disaffected tenderer, albeit not being entitled to a review of the decision to award the tender to another, being held to be a "person aggrieved" by that decision.

That the grant of lease to Landco would be beyond power

126. If the award of the lease would be an act beyond the statutory powers conferred on the GDA, it would be ultra vires for it to close. A declaration might be made accordingly. There were two grounds relied upon by MBA in support of its contention that the award of the lease, as proposed, would be ultra vires.

127. The first ground was that to do so would breach s 169 of the Land Act. It was contended that to accept Landco's tender was to agree to grant a lease for less than "full market value".

128. Second, it was submitted the process adopted for the grant of a lease in this case was not, in truth, authorised by s 161(1) of the Land Act.

129. Affidavit evidence from qualified expert valuers was presented by each side.

130. Mr John Armstrong, a valuer engaged by the GDA, opined that "market value" is:

"... the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction, after proper marketing, wherein the parties had each acted knowledgably, prudently and without compulsion."

131. He noted that seven tenders had been received by the GDA, offering premiums between $3,500,000 and $6,410,000 for the grant of the lease. The second highest price offered, he assumed, was the $6,080,000 offered by Landco. Mr Armstrong took the view that "a reasonable benchmark value" for the lease was $6,000,000. He was of the opinion that an "acceptable range for the market value is within 10% of that figure". Had he assumed that Landco's offer had been $5,700,000, it is not clear whether his estimate would have been as high as that, but I will assume that his opinion would not have been affected adversely to the GDA if that assumption had been made.

132. Mr Allan Wylucki, a valuer engaged by MBA, agreed with Mr Armstrong as to the definition of market value. He also, at least implicitly, agreed that the offers procured by the call for tenders provided relevant data for the assessment of "market value".

133. However, he disagreed with Mr Armstrong's conclusion from the sums tendered that $6,000,000 plus or minus 10% ($5.4m to $6.6m) represented the "market value".

Mba Land Holdings Pty Ltd v Gungahlin Development Authoity & Ors [2000] ACTSC 89

At a glance

Court

Decision date

Source

Judgment (337 paragraphs)

Mba Land Holdings Pty Ltd v Gungahlin Development Authoity & Ors [2000] ACTSC 89 (18 October 2000)

Parties

Legislation Cited (9)

Cases Cited (14)