Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154
The New South Wales Court of Appeal found that no binding contract was formed following Council's acceptance of a tenderer's tender offer. However the case does highlight that a contract may be formed regardless of whether the parties have a signed contract in place.
Woollahra Municipal Council (Council) issued an invitation to tender for the management of four car parks. The invitation to tender included a draft management agreement.
In December 2010, Secure Parking Pty Ltd (Secure) submitted a tender offer to Council (Tender). Afterwards, the parties' continued discussions. Relevantly, a representative of Secure agreed in correspondence to provide a 'Performance Guarantee Bond for the amount of 2 months' and a representative of Council replied that he would recommend a '2 month bank guarantee' in his report to Council. Secure did not respond.
On 15 March 2011, Council's solicitors notified Secure of the Council's acceptance of the Tender and enclosed an amended management agreement (amended agreement) for Secure's signature. The amendments included a variation to the initial bank guarantee reflecting the amount of 2 months and a commencement date for the management of the car park. The commencement date had not been agreed by the parties.
Council alleged there was a binding contract, purported to terminate the contract for repudiation and commenced proceedings seeking a declaration as to the existence of the contract, it being validly terminated and claiming damages.
The primary judge at first instance held that a contract was formed upon Council's acceptance of the Tender, Council was entitled to terminate that contract for repudiation and awarded Council damages. The primary judge also rejected both parties' claims for misleading and deceptive conduct.
The Court of Appeal held that no binding contract was formed between the parties
In any event, Council was not entitled to terminate the contract. The Court of Appeal found that the primary judge erred in finding that:
- Secure had varied its tender offer so as to offer a bank guarantee. Rather, Secure had offered a performance bond for the increased amount of 2 months and a reasonable bystander would have understood that there was a difference in substance between what was sought by Council and offered by Secure. The fact that Secure did not reply to Council did not amount to an agreement to provide a bank guarantee;
- Council's acceptance corresponded with the Tender offer. A condition of Council's acceptance was that a bank guarantee be provided and Secure had not agreed to provide a bank guarantee. The parties therefore did not reach consensus that was capable of supporting the contract alleged by Council to have been made on 15 March 2011;
- there was an agreement as to the manner in which the commencement date would be determined. The Court of Appeal found that there was no consensus between the parties as to the commencement date and no express or implied term provided for how that date would be determined absent the parties' agreement; and
- Council was entitled to terminate the contract. The Court of Appeal found that even if a contract had been formed, Council was not ready and willing to perform its own obligations under the contract.
The Court of Appeal upheld the primary judge's findings that neither party had engaged in misleading and deceptive conduct. Secure had not represented it intended to enter into and perform an agreement by acknowledging it understood the tender terms and conditions and there was no basis for a reasonable expectation that Council would disclose information concerning the redevelopment of one of the car parks.
The case highlights some of the risks that may arise during a tender process, including potential claims as a result of a party's conduct and/or representations made.
