Supreme Court of the ACT|2012-08-03

Wagdy Hanna and Associates Pty Ltd v National Library of Australia [2012] ACTSC 126 (3 August 2012)

WAGDY HANNA AND ASSOCIATES PTY LTD v NATIONAL LIBRARY OF AUSTRALIA

[2012] ACTSC 126 (3 August 2012)

TENDER PROCESS - Confidential information - Alleged disclosure to third party - No direct evidence of disclosure - Disclosure implied - Similarities between plaintiff's tender and building designed by third party - Plaintiff must demonstrate no other rational explanation for similarity - Evidence of other rational explanations - Relevant differences between tender and building constructed - Positive denial of disclosure - No evidence to support disclosure.

DUTY OF CONFIDENTIALITY - Confidentiality of tender documents - Tender process contract - Term implied into contract that tender material of each tenderer confidential - No breach of contract.

EQUITY - Duty of confidence - Fiduciary relationship between contracting parties - Commercial parties contracting at 'arms length' - Where contract relevantly prescribes respective powers and duties of contracting parties - No fiduciary obligation.

EQUITY - Unjust enrichment - Underlying or unifying concept - Not an independent basis for liability.

LIMITATION OF ACTIONS - Limitation Act 1985 (ACT) s 11 - "cause of action" extends to equitable claims - Limitation period expired - Proceedings statute-barred.

LIMITATION OF ACTIONS - Limitation Act 1985 (ACT) s 33 - Fraud, deceit or deliberate concealment - Meaning of "based on fraud" - fraud a necessary ingredient of the cause of action - no suggestion of fraud or deceit on plaintiff's case - Meaning of "deliberate concealment" - Requirement for "intended" or "active" concealment - What plaintiff must prove - No evidence to support basis for application of s 33.

ESTOPPEL - "Anshun" estoppel - Where alleged obligation so related to previous proceedings that it should have been included - Previous proceedings terminated by settlement - No res judicata - Estoppel not applicable.

DEEDS - Deed of settlement - Release - Construction of deed - Objective test - Where "the discontinued proceedings" construed to mean the facts or matters stated in the pleadings filed in the previous proceedings - Meaning of "arising out of" - Phrase wide enough to include the conduct of the tender process - Proceedings within the terms of the deed of settlement - Plaintiff released defendant from liability - Covenant not to sue - Breach of covenant.

ESTOPPEL - Whether defendant estopped from relying on terms of deed - Alleged disclosure of deed terms by defendant - Proprietary estoppel and estoppel by record or writing not applicable - No evidence that criteria for operation of promissory estoppel met.

REMEDIES - Breach of covenant - Specific performance and injunction not available - Damages - Defendant entitled to actual costs of defending the proceedings.

COSTS - Indemnity costs - Where appropriate - Not appropriate for "marginal" cases - Not a punitive measure - Compensatory - Where commencement and continuation of proceedings has no prospects of success.

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UK Law Reform Committee, Limitation of Actions, Report No 21 (2001)

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1. Judgment be entered for the defendant on the plaintiff's claim.

2. Judgment be entered for the defendant against the plaintiff on the defendant's counter-claim.

3. As damages, the plaintiff pay the defendant's costs of the plaintiff's claim and the defendant's counter-claim on an indemnity basis.

1. On the south-west shores of Lake Burley Griffin in the Canberra suburb of Parkes sits a magnificent edifice built in the style of a large Greek temple, the National Library of Australia, a Canberra icon.

2. The casual observer might conclude that such a large building houses the whole of the national collection of materials, but with the massive amount of such material, both in print and in other media, produced each day, not to mention the statutory deposit provisions of s 201 of the Copyright Act 1968 (Cth), there is a need for and there are repositories, no doubt less pre-possessing buildings, situated elsewhere in Canberra.

3. This case concerns one of those repositories. On 25 September 1996, the defendant, in a Request for Tender, invited tenders for the provision of another such repository (called in the Request for Tender, and in these reasons, a storage facility) to be available in the first half of 1997.

4. The plaintiff submitted a tender along with other companies. The plaintiff's tender was not accepted. The plaintiff complained about the process and commenced proceedings in the Federal Court of Australia. These were subsequently compromised and a Deed of Settlement entered into between the parties, setting out the terms of the compromise.

5. The plaintiff later took the view that there had been a breach of the confidentiality that he expected would be maintained as to the content of his tender and, later, a breach of the terms of the Deed of Settlement and commenced these proceedings on 8 May 2003.

6. An analysis of the pleadings shows that the case for trial is as follows.

7. The plaintiff is an incorporated company and the defendant is a statutory authority. Both have the legal capacity to sue and be sued. These matters were not in issue in these proceedings.

8. The plaintiff claims that the defendant invited tenders for the storage facility. It says these were invited on or about 3 October 1996; the defendant says they were first invited by an advertisement in The Canberra Times on 25 September 1996. Nothing turns on that difference and it appears that the plaintiff accepts the defendant's statement of the date.

9. The plaintiff claims, in a letter dated 14 August 2003 from the plaintiff's solicitors providing particulars to the defendant's solicitors, that it submitted a tender comprising twenty-four documents. With a minor disagreement about the description of one of those documents, the defendant admits this fact. While the tender was one exhibit, it was not in bound form as an exhibit. The plaintiff also provided a letter to the defendant with enclosures after the closing date for tenders and then also tabled some documents at the interview with the defendant on 31 October 1996, all of which were exhibited before me but it is not clear whether these additional documents are to be considered as included in the tender as pleaded though they were clearly intended to be taken into account in the defendant's consideration of the plaintiff's tender.

10. The plaintiff claims and the defendant admits that other parties tendered, including Decoin Engineering Pty Ltd (Decoin) and U-Stow-It Pty Ltd (U-Stow-It).

11. The plaintiff then claims that his tender proposed that the storage facility be built in a certain way and compared that with the proposals in Decoin's tender. The defendant does not admit these details, but relies on the tenders actually submitted. I shall have to deal with these issues below.

12. The plaintiff claims that there was a term "implied into the tender process" that the defendant would keep confidential certain matters, including design concepts in the plaintiff's tender and documents submitted with it. The defendant denies that there was any such contractual term and says that the existence of any other term or "type of term" is a matter of law.

13. The plaintiff says and the defendant admits that it was informed on or about 8 May 1997 that the tender by Decoin had been accepted. The defendant adds that the principal of the plaintiff had been advised of this earlier by telephone.

14. The plaintiff then claims that the storage facility as actually constructed incorporated a number of features of the plaintiff's tendered proposal which the defendant, in breach of the alleged duty of confidence, had revealed to Decoin in discussions with it prior to finalising its choice of tender. The defendant does not admit that such features were incorporated into the storage facility and denies that it revealed any such matters to Decoin.

15. The plaintiff claims that the breach has resulted in loss and damage to it, including the profit it would have derived from having its tender accepted instead of that of Decoin. It seeks to recover compensation for the loss and damage. The defendant denies any such breach or that any such breach caused a loss or damage, denies that it would have accepted the plaintiff's tender and says that, if it had not accepted the Decoin tender, it would have accepted that received from U-Stow-It.

16. The plaintiff makes what appears to be pleaded as an alternative claim, which the defendant also denies, that, by the defendant's breach of confidentiality, the defendant has been unjustly enriched by receiving the benefit of the features of the plaintiff's tender which were incorporated into the final design of the storage facility. It claims recovery of that amount by which it says the defendant has been unjustly enriched and the defendant denies that claim.

17. In addition to its denials as mentioned, the defendant raises three additional defences. In the first place, it claims that the plaintiff's action is not maintainable by reason of the Limitation Act 1985 (ACT) (the ACT Limitation Act). The plaintiff says in reply that the wrongful disclosure of the confidential material in its tender amounted to fraud or deceit or deliberate concealment of relevant facts by the defendant and, if the cause of action arose prior to 8 May 1997, then s 33 of the ACT Limitation Act extends the time within which the action could be brought.

18. The defendant also claims, as a defence to any claim by the plaintiff, that the Deed of Settlement in respect of the Federal Court proceedings released the defendant from any such claim. The plaintiff, in reply, claims that the defendant had, in breach of its terms, publicly disclosed the terms of the Deed of Settlement which estopped it from relying on its terms.

19. Finally, the defendant pleads that the plaintiff is estopped from prosecuting its claim because it had not raised in the Federal Court proceedings the claims it is now making, even though it was aware of them, and that such claims could and should have been included in the Federal Court proceedings, the defendant having, in those proceedings, foregone its right to recover costs and disbursements from the plaintiff when it discontinued the Federal Court proceedings, by reason of the compromise established in the Deed of Settlement. The plaintiff denies that the defendant was entitled to rely on any such estoppel, but, if it was, it is not so entitled because of its conduct. I was not provided with any particulars of that conduct.

20. The defendant then pleaded a counter-claim against the plaintiff. In it, the defendant claims and the plaintiff agrees that, by the Deed of Settlement, the plaintiff covenanted not to sue the defendant in respect of any matters "arising out of or in any way related" to the Federal Court proceedings. It claims, and the plaintiff denies, that these proceedings breach that covenant and that, as a result, it has suffered loss and will suffer further loss.

21. In the alternative, the defendant claims, and the plaintiff denies, that the Deed of Settlement did not reflect the intention of the parties that matters such as the plaintiff's claim in these proceedings would be included within the ambit of the release in the Deed of Settlement, or, in the alternative, that the release would extend to any cause of action connected to the allegations made in these proceedings, and that, as a result, the defendant is entitled to rectification of the Deed of Settlement and that the present proceedings are brought in breach of the intentions of the parties that should have been incorporated in the Deed of Settlement, thereby causing the defendant loss and continuing loss.

22. In further defence to the defendant's counter-claim, the plaintiff denies that the Deed of Settlement encompassed the claims made in these proceedings. The plaintiff also claims that it was a fundamental term of the Deed of Settlement that its terms were to be kept confidential and that the plaintiff has breached that term by disclosing to The Canberra Times certain details of the terms of the compromise, thereby rendering the Deed of Settlement void or, in the alternative, terminated by the defendant, or, in the alternative, releasing the plaintiff from being bound by its terms.

23. The plaintiff further denies that the parties intended that the Deed of Settlement extended to matters such as were encompassed in the cause of action pleaded in these proceedings and that, if it was the defendant's intention that it do so, it was not the common intention of the parties and that the plaintiff (though, I think in error, referred to as the defendant in par 8(f) of the Amended Defence to Counter-Claim) did not have that intention, but intended only that the Deed of Settlement should be limited to the allegations set out in the recitals to the Deed of Settlement, the terms of it being read and construed subject to the recitals.

24. Accordingly, it seems to me that the following issues arise for determination in this action:

(i) Was there a duty of confidentiality reposed in the defendant in respect of any of the contents of the plaintiff's tender?

(ii) If so, what were the specific matters in the plaintiff's tender that were subject to any duty of confidentiality on the part of the defendant?

(iii) In that event, did the defendant breach that duty of confidence by revealing to Decoin, before it chose Decoin as its successful tenderer to provide the storage facility, the confidential matters that it was bound not to reveal from the plaintiff's tender? This, perhaps, requires an answer to the question of whether any feature of the storage facility as constructed by Decoin incorporated any features that were confidentially included in the plaintiff's tender?

(iv) If so, what loss has been suffered by the plaintiff and how should it be assessed?

(v) When did the plaintiff's cause of action arise and did any act of disclosure by the defendant amount to deliberate concealment such as to extend the time for in the ACT Limitation Act?

(vi) Did the Deed of Settlement release the defendant from the claims made in these proceedings?

(vii) If not, should the Deed of Settlement be rectified so as to include a release that encompassed claims such as those made in these proceedings?

(viii) Is the plaintiff estopped from bringing these proceedings because they should have been included in the Federal Court proceedings?

(ix) If so, does the defendant's conduct prevent it from relying on any such estoppel in these proceedings?

(x) Has the plaintiff breached the Deed of Settlement by bringing these proceedings?

(xi) Is the Deed of Settlement void, or in the alternative, terminated by the defendant, or, in the alternative, is the plaintiff released from its terms?

(xii) Has the defendant suffered loss from the alleged breach of the Deed of Settlement by the commencing and prosecuting of these proceedings? If so, how should that be calculated?

25. It may not be necessary to consider every one of these issues. Clearly, a central issue is whether the defendant revealed to Decoin confidential matters in the plaintiff's tender.

26. The plaintiff accepts that there is no direct evidence of this; it says that this is to be inferred from the uniqueness of its tender and the similarity between the building that Decoin built, particularly given the differences between Decoin's tender proposal and the building it built, that can only be explained by the alleged disclosure.

27. In order to deal with these issues, it is necessary to outline the circumstances under which the relevant issues arise.

THE HISTORY OF THE TENDERS FOR THE NEW STORAGE FACILITY

28. Before I set out the relevant history for the purpose of these proceedings, I note that the plaintiff and some of its witnesses expressed great concern about the perceived lack of integrity of the tender process followed by the defendant. There were suggestions that U-Stow-It also expressed such concerns. These matters, however, are not the subject of these proceedings. They were, to some extent, the subject of the Federal Court proceedings. Despite the expressions of concern by the plaintiff and its witnesses and of some criticism of or challenges to the tender process during the hearing of these proceedings, this is not within the terms of these proceedings and I do not consider such matters further.

29. The relevant history commences in August 1996, when a Steering Committee was established by the defendant to implement a Storage Strategy agreed to by the Council of the defendant for transfer of a part of the defendant's overseas print collection to a second off-site storage facility and to allow for expansion and retention of Australian materials held by the defendant at the library building at Parkes.

30. Functional specifications for the storage facility were prepared after consultation with the Steering Committee and mechanical and electrical engineers. The specifications were designed to maximise the possible number of persons or bodies that may be interested in providing the facility, by permitting either modification of existing premises or "greenfields" development proposals.

31. The Steering Committee formed a Sub-Committee of three to be responsible for interviewing and selecting the successful tenderer.

32. The defendant caused advertisements to be published in The Canberra Times on 25 and 27 September 1996, inviting persons to tender for the proposed facility, "A Warehouse Facility". Mr Wagdy Hanna, principal of the plaintiff, saw the advertisement on or about 3 October 1996.

33. He made inquiries and collected a copy of the Request for Tender, comprising a number of documents, including Specifications, consisting of some sixteen pages.

For these proceedings, relevant provisions of the Specifications were:

The Location of the proposed offsite facility should be either on a direct motor vehicle route between the National Library of Australia's main building situated in Parkes, ACT and its existing leased warehouse at Hume, ACT, or within fifteen minutes extra travelling time of that route.

A further requirement of the proposed site would be that neighbouring buildings or sites carrying out noxious or dust producing industrial processes are sufficiently distant from the proposed site, that any by product of such industry or activity would not permeate the proposed site.

...

2.1 BASE BUILDING

2.2 ELEMENTS

The construction shall be from materials and employed techniques to effectively exclude the penetration of moisture, condensation, dust and prevent access by animal or insect pests.

...

2.4 MATERIALS

To minimise heat flow through the structure, the external walls and roof should house the following minimum (composite) 'U' or transmission coefficient values:

...

2.5 CLEAR SPAN

The minimum span between vertical structural members will be governed by the configuration of the nominated shelving system, the clearance required at the ends of the shelving ranges and access requirements listed elsewhere in this specification. The offer must reference the columns in context of the shelving configuration.

...

2.8 FLOOR AREA TO ACCOMMODATE

The type of shelving proposed with the offer will determine the footprint of the building for that section dedicated to shelving storage. Additional floor space of 560 m2 will remain a constant regardless of the shelving configuration proposed. This additional floor area will be required to accommodate the following spaces:

Staff work area inclusive of a photocopying room 110m2

34. There were specifications for shelving configurations, which, obviously, were a very important consideration. The preamble to this section provided as follows:

3.2 SHELVING CONFIGURATIONS

The National Library of Australia will consider shelving systems that are manually oriented systems and/or mechanically guided and operated systems. Standard height floor mounted single tiered bays will be considered along with multi-tier industrial stacks (high racking).

The secure area shelving described at 3.5 of this specification, shall be standard height single tiered notwithstanding the shelving system offered for the main shelving storage area.

The type of shelving and any attendant materials handling equipment proposed with the offer will determine the footprint of the building for that section dedicated to shelving storage.

(Emphasis in original)

35. Specifications were then provided at 3.3 for the case where "standard height single tiered bays" were to be proposed. Such standard shelving was, according to the evidence of Ms Janet Smith, Manager, Stock Services of the defendant, 2.1m high, though the Request for Tender did refer to shelving of units 2.375m and 2.475m high. The Specifications, however, permitted an alternative to such shelving as follows:

3.4 NON STANDARD HEIGHT SHELVING

The National Library of Australia will consider an offer based on the supply and installation of multi-tier industrial stacks (high racking) at a greater height than listed at 3.3 above. The shelving system offered at this option shall provide the means to prevent books falling through the backs or ends of the bays.

Motorised materials handling equipment suitable to the retrieval/reshelving task must accompany the offer with this option. The lowest recommended shelf height by the equipment manufacturer must be considered within the offer.

3.4.1 300mm MINIMUM DEPTH SHELVING QUANTITIES

20,580 shelf metres with a minimum shelf clearance of 308mm

5,460 shelf metres with a minimum shelf clearance of 350mm

540 shelf metres with a minimum shelf clearance of 440mm

3.4.2 500mm MINIMUM DEPTH SHELVING QUANTITIES

3,070 shelf metres with a minimum shelf clearance of 160mm

The requirement of Building Code of Australia path of travel to fire exits matched to the offer's proposed shelving configuration will govern the stack range length.

The operational parameters of the offer's proposed motorised materials handling/retrieval equipment will determine the minimum width of aisle.

The offer must describe the equipment in terms of lift capacity motor power source, safety features, manoeuvrability, extent of use within existing installations of a similar nature and hourly continous operational life of the energy source. Allowances shall be made within the offer to provide a purpose built operator's platform. The equipment supplied will be required to service an item retrieval/reshelving to a maximum of 600 actions per day. Any power source, specialised floor treatments, safety railing access restriction devices, platform, fixed lighting, maintenance arrangements, back-up equipment arrangements, dedicated parking areas, ventilation requirements etc deemed necessary for the operation or servicing of the offered equipment shall be detailed with the submission and be included in the financial offer.

Details of available operator training and licence requirements shall be detailed with the submission and be included in the financial offer.

The optimum operations height for item retrieval/reshelving of library items is estimated to be a maximum of 6 metres. However if the building economics, the configuration of the shelving of the offered system or other matters considered by the offerer to reduce or increase this limit, the National Library will consider such proposals against the benefits offered.

...

3.6 SHELVING SPECIFICATION

Shelving shall be supplied and installed in accordance with ASA 2143 and ASA 4084 should high racking be the nominated shelving system.

(Emphasis in original)

36. Twenty-six companies responded to the advertisements and a number who requested it were briefed by Mr Trevor Pidd, the then Manager, Building Management Section, Contracts and Facilities Branch, Corporate Services Division of the defendant. An open information briefing was also conducted at the defendant's off-site repository at Hume, ACT.

37. At the closing date for tenders, six tenders were received. The plaintiff lodged one of these, as did Decoin and U-Stow-It.

38. The plaintiff, in preparing for the tender, made inquiries of various commercial property agents and selected a site in Hume. It also carried out a number of other investigations with various suppliers of items or services to be used in the facility. There is no doubt that the plaintiff and its principal, Mr Hanna, put a lot of effort and care, not only in making these inquiries and obtaining firm quotations, but in thinking about and identifying how the facility could be built and its operation. While that hard work is to be applauded, it does not by itself justify the case for the plaintiff.

39. The Steering Committee considered the tenders and, in some cases, sought further information from them. In particular, Mr Pidd wrote to the plaintiff on 24 October 1996, seeking further information; ten specific requests were made. In the letter, he then added:

At this point of constructing this questionnaire I recognise that evidence of compliance with a major part of our specification needs to be solicited. Perhaps our collective efforts would be served in the most efficient way by your response to the items listed above followed by a schedule of specification clause specific, construction detail response in a text format with reference to sketches where necessary.

40. The letter then requested "[p]articular emphasis on the following clauses" and listed 24 clauses in the Specification.

41. This was the first request for further information of those that were sent to a number of the tenderers.

42. The plaintiff prepared a response to this letter and Mr Hanna delivered it personally on 25 October 1996. Further material was tabled when the plaintiff was interviewed.

43. On 28 October 1996, the Steering Committee considered all six tenders received (in respect of the plaintiff's tender presumably with the plaintiff's letter of 25 October 1996) and excluded all but the tenders from Decoin, U-Stow-It and the plaintiff. It was agreed to invite each to a meeting with its Sub-Committee.

44. Letters were then sent to Decoin and U-Stow-It, described as "offer specific letters" which sought further information on a number of issues similar to the letter sent to the plaintiff referred to above (at [39]).

45. Interviews were then conducted by the Sub-Committee on 31 October 1996 with representatives of each of the three tenderers. At the meeting of the Sub-Committee after the interview was conducted with the plaintiff, it was agreed that the plaintiff was not regarded as complying with certain of the selection criteria and was eliminated from the process.

46. On 5 or 6 November 1996, the Sub-Committee met and agreed that it would recommend Decoin as the preferred tenderer. That decision appears to have been formalised on 11 November 1996 when a recommendation to that effect was put to the delegate of the defendant who had authority to accept the successful tender and submit it to the Minister for final approval.

47. A contract was entered into with Decoin and the defendant in May 1997. The facility was then constructed by Decoin and that construction has been completed. A number of the witnesses who appeared before me had inspected the completed facility.

48. In early 1997, Ministerial approval had been given to the awarding of the tender contract to Decoin and the defendant set about notifying the unsuccessful shortlisted tenderers, the plaintiff and U-Stow-It.

49. An officer of the defendant, Francis Noel Cross, telephoned Mr Hanna of the plaintiff on 18 February 1997 and advised him that the plaintiff's tender had not been successful. Mr Hanna asked him about the site at which the successful tenderer was to build the storage facility and its tender price.

50. On the same day, the plaintiff wrote to the defendant seeking details of the sites of the tenders received by the defendant and "proposed rentals for each bid." The defendant replied saying that it considered the information requested to be commercial-in-confidence and could not be made available.

51. Subsequently, as noted above, the plaintiff commenced proceedings in the Federal Court of Australia on 29 June 1998 alleging that the defendant had breached the "tender process contract" that regulated the submission and consideration of tenders, had engaged in deceptive and misleading conduct and had breached a duty of care it owed to the plaintiff.

52. Subject to the comment I made above (at [9]), the plaintiff's tender can be considered for the purpose of these proceedings, in order to determine its content and the qualities on which the plaintiff relied, to have comprised of:

(a) the Tender Documents delivered on 22 October 1996;

(b) the response to the letter seeking further information, that response being dated 25 October 1996;

(d) a document dated 31 October 1996, tabled at the interview with the Sub-Committee had with the plaintiff on that day.

53. These are an extensive number of documents, including plans, making a summary of its contents somewhat of a challenge. A problem for such a summary in this context is that it is clear from the evidence in this case that the plaintiff and defendant have quite differing perspectives as to the important features of the tender from their respective interests.

54. Nevertheless, I can say that, relevantly, the plaintiff's tender proposed for the storage facility:

(iii) annual rental of $477,200 (including $325,000 for the "Base Building");

(iv) net lettable area of 2,500 sq m (including 2,000 sq m of storage area);

(vi) prefinished double layer walls of heavy duty colourbond with internal insulation (unspecified);

(vii) shelving of 7.5 m from Brownbuilt which supplied a quotation for "high rise shelving ... similar to our Universal Channel" with a brochure, included in the tender, but subsequently in the letter of 28 October 1996 said to be Universal Channel shelving;

(viii) two "Crown" stockpicker motorised handling equipment, Crown also supplying a quotation and a brochure;

(ix) a plan provided with the material tabled on 31 October 1996 showing a larger building with more storage space, but which was subsequently said by Mr Hanna to show how the original design could be expanded, though it did not indicate that anywhere on the plan;

(x) shelves in the storage area that were in parallel rows facing the short sides of the rectangular building with, in the original plans, a relatively large aisle on one side with shelves above 3m clearance for the last 5 rows, though in later plans the shelves above 3m clearance extended the length of the building; and

Wagdy Hanna and Associates Pty Ltd v National Library of Australia [2012] ACTSC 126

At a glance

Court

Decision date

Source

Judgment (677 paragraphs)

Wagdy Hanna and Associates Pty Ltd v National Library of Australia [2012] ACTSC 126 (3 August 2012)

Parties

Legislation Cited (8)

Cases Cited (44)