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[1999] FCA 1792
Federal Court of Australia
1999-12-20
Cooper J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The applicant is a provider of employment related services including training. 2 In July 1999 the Department of Employment, Workplace Relations and Small Business ("the Department") issued Tendering Conditions, Application Requirements and a Draft Contract for the Employment Services Request for Tender 1999. The documentation, in section 1.1 of the General Information and Service Requirements for the Employment Service Request for Tender 1999, and in the draft contract Appendix 7, states that it is the Commonwealth of Australia which is the body calling for tenders and which will be the contracting party in respect of any contracts let in consequence of the tender process. The documentation and the draft contract state that the Commonwealth is "acting through and represented by" the Department. 3 The applicant lodged a tender dated 28 July 1999, receipt of which was acknowledged by the Department by letter dated 13 August 1999. 4 On 3 December 1999 the applicant was advised by the Department that its tender to provide intensive assistance in the Brisbane area was rejected as a non-conforming tender. The tender price submitted by the applicant was less than the minimum fee for the provision of intensive assistance at a level prescribed by the contract requirements. Compliance with the minimum bid provision was a requirement of section 1.7.2 of the conditions of tender. 5 On 15 December 1999 the applicant filed an application for an order for review. The respondents to the application are the Secretary of the Department, as first respondent, the Employment Services Regulatory Authority ("ESRA") as the second respondent, and the Commonwealth of Australia as third respondent. Significantly, the applicant sought relief against each respondent in the alternative. 6 The application states : "Application to review the decision of the First or Second or Third Respondent that : 1. There be included in the tender conditions for the Employment Services Request for Tender 1999 clause 1.7.2. 2. The tender by the applicant for the provision of Intensive Assistance Services pursuant to the Employment Services request for Tender 1999 was a non-conforming tender by reason of non-compliance with clause 1.7.2 of the Tendering Conditions. 3. Contracts for the provision of such Intensive Assistance Services be entered into for the regions of Brisbane and Moreton with persons other than the applicant. The applicant is aggrieved by the said decisions because: 4. The applicant's tender for the said Intensive Assistance services has been ruled a non-conforming tender. 5. The applicant has lost the opportunity to obtain contracts for the provision of such services. The grounds of the application are: 6. In respect of the decision referred to in paragraph 1 hereof, the decision was an improper exercise of power in that it required tenderers to undertake to contravene s.75AU of the Trade Practices Act 1974 in order to be regarded as a conforming tenderer. 7. In respect of the decisions referred to in paragraphs 2 and 3 - - (a) the decisions were improper exercises of power in that the tender by the applicant was ruled to be a non-conforming tender because the applicant did not undertake to contravene s.75AU of the Trade Practices Act 1974; or alternatively (b) the decisions involved an error of law in that the decision-maker wrongly construed the Conditions of Tender as obliging the applicant to calculate the minimum price level for the provision of Intensive Assistance Services by reference to a percentage figure nominated by the respondents as the percentage price increase which would result from the implementation of the Goods and Services Tax legislation. The applicant claims: (1) A declaration that clause 1.7.2 of the said Tendering Conditions is invalid. (2) An order that the applicant's tender for Intensive Assistance Services be treated as a conforming tender and considered in accordance with the Conditions of Tender." 7 On 15 December 1999 the applicant sought interlocutory relief as follows : "1. That until the trial of this action or earlier order, the respondents be restrained from entering into any contract for the provision of Intensive Assistance Services with tenderers other than the applicant pursuant to the Employment Services Request for Tender 1999 in respect of the regions for which the applicant tendered to provide Intensive Assistance Services, namely the Brisbane and Moreton regions. 2. Such further order as to the Court seems just. 3. That the costs of this application be costs in the proceedings." 8 The tender condition relating to bidding for intensive assistance was contained in section 1.10.7.5. It provided : "You may bid to provide Intensive Assistance services to all eligible clients and/or a specific group or groups of clients (specialist bid). In bidding to provide Intensive Assistance services for all eligible clients or to submit a specialist bid, you must submit two unit prices per bid range: one for level A clients and one for level B clients (see appendix 3 of the Service Requirements book for details categories). You will need to state the number of job seekers you are able to help at each site at any point in time (this is your contracted capacity). Details of minimum prices for level A ($4,628) and for level B ($9,150) are specified in sections 4.6.3 and 4.6.4 of the Service Requirements book." 9 The tender conditions in section 1.10.7.8 dealt with price components. It stated in part : "At the time of the release of this RFT, the New Tax System Bills are still before Parliament. It is intended that the New Tax System legislation will come into effect quite early in the second Employment Services contract period. Based on advice provided by the Treasury, tenderers need to build into their tender prices for all Job Network services the effects of the Government's tax reform measures - including the abolition of a range of indirect taxes and the introduction of a GST. You are strongly encouraged to seek professional advice on how the taxation reform package may affect your circumstances. The prices that you tender for all Job Network services should be inclusive of the GST. You will also need to show your calculation of the percentage impact of the Government's tax reforms on your prices. In calculating these prices, you may wish to consider the Government's modelling of the price effects of its tax reforms. The Government estimates that, on the assumption that cost and price effects are fully passed on, the price impact on the broader industry sector 'Other Business Services' - which includes employment services - is expected to be an increase of 6.4 per cent. It is therefore expected that tenderers will not simply seek to add the 10 per cent GST to their prices but rather will calculate the cost savings to their operations that will come about through the removal of embedded Wholesale Sales Tax and state-based taxes. ... ..... For the period of the contract until the Government's tax reforms are implemented you will be paid pre-GST prices. To calculate these pre-GST prices, DEWRSB will use your estimate of the percentage impact of the Government's tax reforms and apply that percentage to your tendered post-GST price. All fixed prices in this tender are expressed as post-GST prices. Appendix 6 provides a comparison of pre-GST and post-GST fixed prices. ..." 10 Appendix 6 stated : "The following table lists the fixed price payments to be provided to Job Network members under the terms of this tender. Pre-GST and post-GST prices are shown. Post-GST prices will come into effect on implementation of the proposed New Tax system legislation. The adjustments are based on Government modelling that estimates the price impact of the proposed tax reforms on the industry sector 'Other Business Services' - which includes employment services - to be an increase of 6.4 per cent. Reference in Service Payment Pre-GST price Post-GST price this RFT Service Requirements, section 4.6.4 Intensive Intensive Assistance minimum $3350 $3564 Assistance competitive price (up-front service $6600 $7022 fee and primary interim outcome payment): - Funding level A - Funding level B Service Intensive Intensive Assistance fixed final $1000 $1064 Requirements, Assistance outcome fee: $2000 $2128 Section 4.6.4 - Funding level A - Funding level B
11 The minimum prices of $4,628 for level A and $9,150 for level B are calculated by adding the post GST price of competitive price (up-front service fee and primary interim outcome payment) to the fixed final outcome fee for each respective level. 12 After the issue of the original Employment Services Request for Tender an addendum was produced. This was necessary because of changes in the final content of the New Tax System legislation from that which was originally proposed and which was used to model the impact of the proposals at the time the tender request was released. The addendum stated that the price impact of the New Tax System was now estimated as being in the order of 7.2 percent. Accordingly, Appendix 6 of the Tendering Conditions was amended to reflect the estimated changes of the tax impact. The addendum also advised that, because of the revised post-GST figures, the minimum prices for Intensive Assistance would rise to $4,663 and $9,219 respectively. 13 The applicant received the addendum before completing and submitting its tender. The applicant received professional advice that the estimated impact of the tax changes to its business was to increase prices by 7.1 percent and it included this item in its tendered price. The prices tendered by the applicant were above the minimum figures as originally set. However, they were slightly under the amended minimum figures. 14 The applicant contends that to compute the minimum price by using a tax component higher than that estimated by the applicant forces it to take the difference between the two rates as profit, which it claims will amount to price exploitation in breach of s 75AU of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act"). This, it says, it was not prepared to do because it would expose the applicant to proceedings under the Trade Practices Act. 15 The first difficulty confronting the applicant is to demonstrate that there is an arguable case that this Court has jurisdiction to review each of the decisions specified in the application. The applicant contends that the relevant decisions are reviewable under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). 16 For the decisions to be reviewable by this Court, they must be decisions of an administrative character made under an enactment. The applicant submits that the decisions were made, or that there is an arguable case that they were made, under s 58 of the Employment Services Act 1994 (Cth) ("the ES Act"). 17 Section 58 of the ES Act provides : "Engagement 58(1) ESRA may engage an accredited case manager to: (a) provide case management services to participants in the case management system referred to the accredited case manager under Part 4.3; and (b) perform functions conferred on case managers under this Act. An accredited case manager engaged under this section is to be known as a contracted case manager. Terms and conditions - general (2) The terms and conditions of the engagement are to be set out in a written agreement between ESRA and the contracted case manager. The terms and conditions must be consistent with the accreditation scheme. Conditions of accreditation taken to be conditions of engagement (3) Without limiting subsection (2), each condition of the accreditation of the contracted case manager is taken to be a condition of the engagement. Cancellation or surrender of accreditation terminates the engagement (4) Without limiting subsection (2), the cancellation or surrender of the accreditation of the contracted case manager terminates the engagement without giving the case manager any entitlement to compensation or damages." 18 The ESRA is the second respondent. It is a body corporate established by s 68(1) of the ES Act with the functions and powers contained in s 69 and s 70 of that Act. The principal function of the ESRA is to regulate the case management system established under the ES Act. Although the ESRA may be subject to Ministerial direction (s 71), ordinarily the policy, direction and performance of the ESRA are determined and controlled by an independent Board appointed under the ES Act: s 74, s 75. 19 There is absolutely no material to link the ESRA to the Employment Services Tender 1999. There is no evidence that the ESRA was the decision maker of any of the decisions in respect of which review is sought. 20 There is no evidence that the Commonwealth of Australia was acting under an enactment at all when determining to call for tenders for the provision of employment related services. Rather, the material prima facie purports to be an exercise by the Commonwealth of Australia of its executive power to make contracts, made in the normal course of administration of the affairs of government, which does not require express authorisation by statute. As His Honour Justice Neaves said in N McDonald Pty Ltd v Hamence (1984) 1 FCR 45 at 50 : "There are many activities in the ordinary course of administering the affairs of government that may be carried on independently of any statutory provision expressly or impliedly authorising the particular activity." See generally New South Wales v Burdolph (1934) 52 CLR 455; Commonwealth of Australia v Rian Financial Services and Developments Pty Ltd (1992) 36 FCR 101 at 106; Enid Campbell, "Commonwealth Contracts" (1970) 44 ALJ 14 as to the power of the Commonwealth to contract without express statutory authorisation. 21 Similarly, there is no evidence that the Secretary of the Department made any of the relevant decisions and the applicant does not point to any enactment under which it is alleged the Secretary made any relevant decision. 22 Section 58 of the ES Act is limited in its operation to the ESRA. It is not the source of any relevant statutory power for the first or third respondents to make any of the decisions in respect of which review is sought. 23 In my view, on the material presently before the Court, there is no serious question to be tried that any of the respondents made a decision which satisfies the requirements of s 5, and the definitions in s 3, of the ADJR Act for a reviewable decision. 24 In the absence of there being demonstrated on the material in support of the interlocutory injunction that there is a serious question to be tried, the other issues raised by the application do not fall for determination: Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 at 29. 25 On the hearing the applicant put an alternative argument for injunctive relief based upon alleged misleading and deceptive statements in the tendering documents which required tenderers to estimate the effect of the new Tax Act provisions on them and to adjust the tender price to take such estimated effect into account. It was submitted that if the decisions specified in paragraphs 1, 2 and 3 of the application were not of an administrative nature made under an enactment, then the conduct of the respondents, or the third respondent, was conduct engaged in in trade and commerce to which s 52 of the Trade Practices Act applied: s 2A. 26 In my view there is no serious question that the Commonwealth by and through the department by issuing the request for tender and in dealing with prospective tenderers was engaged in carrying on the business of providing employment-related services, including training to jobseekers. The conduct of the Commonwealth, so far as is revealed from the material before the Court, was no more than an exercise of executive power in respect of employment. I agree with the reasoning of Emmett J in J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356 - 357 in concluding that there is no serious question to be tried that the conduct complained of was conduct engaged in in the carrying on of a business by the Commonwealth of Australia. 27 There is no evidence that the secretary or the ESRA was engaged in any conduct which was in trade and commerce and subject to the operation of s 52 of the Trade Practices Act. 28 Accordingly, no serious question to be tried of an infringement of s 52 of the Trade Practices Act is made out against any of the respondents. 29 For the above reasons the applicant has not made out a case for the interlocutory relief claimed. The application will be dismissed. 30 The parties are agreed that costs should follow the event. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.
Associate: Dated: 20 December 1999 Counsel for the Applicant: S Couper QC with P Hackett Solicitor for the Applicant: Toogoods
Counsel for the Respondent: J A Logan SC Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 16 December 1999 Date of Judgment: 20 December 1999
Team Employment & Training Network Pty Ltd
Secretary Department of Employment Workplace Relations & Small Business
(1984) 1 FCR 45
(1934) 52 CLR 455
(1992) 36 FCR 101
(1997) 77 FCR 337