The case of Ipex ITG Pty Ltd v Melbourne Water Corporation [1] was litigated over a gruelling period of nine years between 2003 and 2013, primarily in the Supreme Court of Victoria, in part examining this question. It is common practice of water authorities, such as Melbourne Water, to enter into long-term contractual arrangements with their suppliers. These tenders require suppliers to invest a significant amount of time and effort into preparing a response. As part of their response a bidder have to develop an accurate cost estimate that takes into account risks associated with the type of work being performed.
Often, potential suppliers often have no knowledge of the requirements and procedures of the organisations they are tendering for, and rely heavily on the information provided in the tender documents. Ipex was one such supplier contracted to provide IT support services to Melbourne Water between August 2000 and July 2003. The service provider agreement required that Ipex assumed all risks for the duration of the contract, which included servicing an average of 433 Helpdesk calls from employees with IT issues. However, over the three years that Ipex serviced the contract, the number of calls averaged 795.
Ipex claimed that the information provided in the Melbourne Water documentation was misleading and deceptive conduct contrary to the Trade Practices Act 1974. They asked to be compensated for the extra work they had to do over the life of the contract, amounting to approximately $9.4 million. The case was decided on 11 September 2009 with the presiding judge finding in favour of Melbourne Water.
In order to succeed, Ipex needed to establish that there was representation by Melbourne Water, and that they relied on that representation, that reliance was deceptive and misleading, and finally as a result of its reliance, Ipex suffered loss. However, Ipex and their lawyers failed to present key witnesses, such as those involved in preparing the original tender response, and failed to preserve critical documentation that would have assisted them in establishing a deceptive intent. Despite this lack of evidence, the learned judge found that Melbourne Water had made a representation, and that Ipex had relied on it to prepare their tender response. In his judgement, Justice Byrne suggests clients are responsible for the information they provide in their request for tender documentation: “Melbourne Water compiled and included in its [Request for Tender] a mass of material to enable bidders to prepare their tenders… [It] intended that all tenderers rely upon the information provided to them. It cannot escape responsibility for this by hedging this information with disclaimers. The question of reliance is a question of fact, and a fact of this sort cannot be contractually deemed out of existence.”
This case implies that disclaimers, such as “self-inform” clauses, may not be sufficient to avoid client responsibility. Such clauses require bidders to inform themselves of the conditions of the work, while indemnifying the clients from responsibility for providing documentation that could form the basis of a bidder’s response.
Resources:
[1] Ipex ITG Pty Ltd v Melbourne Water Corporation (No 5) [2009] VSC 383 (https://jade.io/article/99595)
*The contents of this article do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.
QANAT 