Murphy v State of Victoria & Linking

Melbourne Authority East West Link – From ‘Done Deal’ to Dead End*

*Headline from the Northsider Online News 21 May 2015

Murphy’s case

The public private partnership through which the East West Link was to be built was said to involve the State in ‘carrying on a business’ & the representations as to the Benefit Cost Ratio (NCR) and Net Economic Benefit (NEB) of the project published in the Short Form of the Business Case made were made in the course of ‘trade and commerce’ as per the ACL

It was alleged that the representations were misleading, unless based on reasonable grounds, and that the absence of reasonable grounds could be assumed until evidence was adduced to the contrary

It was further stated on behalf of the Plaintiff that further particulars would require discovery of documents

Outcomes sought

Declarations of misleading conduct against the defendants under section 18 of the Australian Consumer Law

Injunctions restraining the defendants from making the representations in trade and commerce (e.g. tendering, seeking funding, finance) & entering into a contract with a third party in circumstances where the representations had been made to or in the course of the procurement process.

I.e. to force transparency in relation to the financial (and initially traffic modeling also) aspects of the ‘sell’ & to stop the project proceeding until such time as those issues had been ventilated.

The team & the networks

- Plaintiff Tony Murphy

- Counsel - Ron Merkel QC, Melinda Richards SC, Julian Burnside QC, Simona Gory, Matthew Albert

- Solicitors – Hollie Golding (then Trainee Lawyer) and myself Fitzroy Legal Service, Paula Shelton of Shine Lawyers

- Interest groups – local, environmental, political

RATS (Residents Against the Tunnel), Yarra Council Trains Not Toll Roads, YCAT (Yarra Campaign for Action on Transport), Tunnel Picketers & Socialist Party, Yarra Climate Action Now (YCAN), Public Transport Users Association (PTUA), Protectors of Public Lands Victoria Inc (PPLV), Kensington & Flemington residents’ associations, Royal Park Protection Group, The ALP, The Greens

- Engaging with the Media

Take 1 - Supreme Court The writ was filed on 23 April 2014.

In May the State and LMA sought orders for the filing of partial defences and sought a trial on the basis of separate questions, assuming the representations were misleading.

In mid June the plaintiff issued notices to produce for documents required to particularise the pleadings.

In late June 2014, the State applied to set aside the notice to produce on grounds of abuse of court process, relevance, public interest immunity. Soon after, the Linking Melbourne Authority sought orders that it not be required to comply until the application for separate questions had been determined, or in the alternative, on the basis of public interest immunity and relevance.

In July the respondents filed partial defences (later partially amended), and the plaintiffs sought orders to have the defencesstruck out.

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The first judgment by Justice Croft was handed down on 8 August

2014, wherein it was held the matter would be determined on the

basis of separate questions, that the onus lay on the plaintiff to

fully articulate allegations of misleading conduct, and that the

questions of discovery versus public interest immunity would be

heard only subsequent to determination of separate questions.

Subsequent to a two day trial judgment was handed down 10

September 2014. No statement of facts was agreed to, and the

respective pleadings formed the factual matrix on which the

decision was based. The separate questions assumed the

representations in the short form of the business case were

misleading, and then asked whether that was conduct engaged in

as part of carrying on a business, in trade and commerce, and

whether the final relief would be available in any event.

The answer given to these questions: NO, NO & NO.

The court of public opinion?

The relevance of the case to public discourse somewhat different.

- Public debate became increasingly focussed on government transparency as opposed to ‘rabble rousing’ protesters.

- The position on whether the road was a ‘good idea’ was overtaken with suspicion regarding the maintenance of secrecy.

- The concept that the position of Murphy and his supporters was radical and outlandish was gaining less traction.

Tom Elliot ‘If it’s stupidity you want, welcome to the party’,

Herald Sun, 17 August 2014

‘Finally, a major battleground on which the Victorian election will be fought

is the $8 billion East West Link project. Dr Napthine’s Government loves the

idea, while Labor rejects it on the basis that the money would be better

spent on a cross-city rail tunnel.

‘Leaving aside my personal views on the Link (I think it makes sense to join

the Eastern Freeway with the Tullamarine one), any project this big demands

a publicly scrutinised business case before large sums of money are

committed. Yet for reasons no one outside the state Cabinet understands,

access to the business case (which does exist) is blocked by spurious

Freedom of Information rules.

‘How is that a smart idea? If the numbers surrounding the East West Link

stack up, the Government should shout them from the rooftops. If, however,

the road doesn’t make financial sense, the project should be shelved. But to

push ahead while maintaining ill-advised secrecy? That’s politically dumb.

‘Should we be surprised?’

Productivity Commission Inquiry into Public

Infrastructure (14 July 2014)

The findings of the Commission ran contrary to the State’s position regarding public interest immunity regarding the business case.

Rec 2.3 “All governments should commit to subjecting all public infrastructure investment proposals above $50 million to rigorous cost–benefit analyses that are publicly released and made available for due diligence by bidders. In general, analyses should be done prior to projects being announced. If a project is announced before analysis is done, for example, in the lead-up to an election, this should be conditional on the findings of a subsequent analysis.”

Re commercial in confidence - ‘the benefits created through transparency are likely to be substantial and significant effects on bids are unlikely, provided there is effective competition in procurement.” Private participants should understand that the “normal presumption of transparency should prevail as a condition of involvement in government-backed projects”.

Take 2 – Court of Appeal

Six days after our brutal loss, an appeal the to the Supreme Court was lodged, seeking to have the judgment set aside in whole on the basis that the plaintiff had been denied a fair trial, and procedural fairness, having been unable to have the opportunity of requiring production of documents & adducing evidence he wished to rely on in the trial of separate questions.

It was put on behalf of the plaintiff that each of the separate questions should have been deemed ‘inappropriate to answer’.

Contrary to popular belief, the appeal was won.

Media focus (and ours) was on the ongoing injunctive relief preventing the signing of the contract whilst the matter was remitted back to trial, which was not granted.

A short summary…Re separate questions & discovery: “It is one thing to make an allegation without any

basis for it - which is plainly impermissible – and quite another to make allegations - as

the appellant did in this case — which ex facie were soundly based on the best

particulars which could be given until after discovery… In a case like this, where ex

hypothesi the documents needed to prove the appellant’s allegations were within the

respondents’ exclusive possession or power, and the respondents refused to produce

them, the appellant not only had no option other than to plead his case as he did but

was perfectly entitled to do so. The propriety of so proceeding is established by a long

line of authority dating back to the nineteenth century.”[35]

Re overarching obligation that costs be reasonable and proportionate: “… to foreclose

a plaintiff’s opportunity of obtaining discovery from the State in order to prove a case

which is ex facie implied by so many of the documents as are presently available to

him would be to subvert the justice process. It would mean that, whenever the State

is party to litigation of this kind, it could effectively eliminate the scrutiny of executive

action which the curial process is calculated to deliver by the simple device of claiming

public interest immunity and then pleading that the time required to determine the

validity of that claim would add unacceptably to the costs and delays of the litigation.

Carrying on business/ in trade and commerce’ within the meaning of the

ACL: “…the word ‘business’ is an ‘etymological chameleon’ which takes

its meaning from the context in which it appears and from the purpose

of the statute in which it is found....it’s meaning is informed by the

purpose of 2B of the Competition and Consumer Act 2010 which is

ensure that the Crown in right of the State of Victoria should in its

commercial activities be subject to the same regime as corporations and

other private entities.[47-48]

Governmental versus business function: “.. As is established by authority,

there is a distinction between those functions of a government which

are purely governmental or regulatory and those which may entail the

carrying on of a business, it is important to keep in mind that, in some

cases, the two may co-exist… between those extremities conceivably lies

a range of possibilities of mixed governmental and business activities

which, depending on all the facts and circumstances of the particular

case, may yield a conclusion that the State is carrying on a business in

conjunction with or at the same time as discharging its purely

governmental functions. [58]

Remedies sought: The relief that the appellant might

obtain following a trial may well depend on a number of

factors that cannot be fully if at all evaluated at this stage.

Repetition of conduct is one such factor. The seriousness of

any particular breach is another….. in the absence of all of

the evidence and remembering that the appellant alleges

continuing and ongoing contraventions, the judge should

not have excluded the possibility of a particular remedy

that might be show, upon a full consideration of all facts, to

have the necessary nexus with an established

contravention of section 18 of the ACL. [105]

All questions found – inappropriate to answer.

Almost there… Take 4 & 5

To the High Court & then back to the Supreme Court

• An application for special leave to appeal was heard and refused in Sydney.

• The focus was on the extension of the injunction preventing the signing of the contracts, and the alleged failure to take the harm to the public as a relevant factor into account in assessing where the balance of convenience lay.

• It was held the matter could be agitated following full hearing in the Supreme Court. The contracts were signed that afternoon.

• Back in the Supreme Court, it was argued on behalf of the State and the Linking Melbourne Authority that the public interest would be harmed by release of the full business case, even with Harman undertakings in place.

• A change of government, and the business case was released to the public in the public interest, and commitments to transparency in government decision making in infrastructure projects affecting Victorians were reinforced by the incoming government as a central platform.

Reflections

• Case as a political case in the traditional sense, but key message was governance for the people not for corporations

• Democratic obligations of transparency & accountability

• The power of people to exercise their political will in unity despite disparate interests

• The determination of people to engage in complex litigation on a shoe string if there is a sense of shared ownership & faith

• The long term impact on environmental concerns

EAST WEST LINK: FROM ‘DONE DEAL’ TO DEAD

END