Murphy v State of Victoria and Anor [2014] HCATrans 215 (29 September 2014)

Last Updated: 1 October 2014

[2014] HCATrans 215

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M95 of 2014

B e t w e e n -

ANTHONY MURPHY

Applicant

and

STATE OF VICTORIA

First Respondent

LINKING MELBOURNE AUTHORITY

Second Respondent

Summons for interlocutory relief

CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON MONDAY, 29 SEPTEMBER 2014, AT 11.45 AM

(Continued from 26/9/14)

Copyright in the High Court of Australia

MR R. MERKEL, QC: If your Honour pleases, I appear with my learned friend, MR J.W.K. BURNSIDE, QC, and, with your Honour’s leave again, MS S. GORY, for the applicant. (instructed by Fitzroy Legal Service)

MR S.G.E. McLEISH, SC, Solicitor-General for the State of Victoria: If the Court pleases, I appear with my learned friends, MR M.F. WHEELAHAN, QC, MS K.E. FOLEY and MR P.D. HERZFELD, for the first respondent. (instructed by Victorian Government Solicitor)

MR N.J. YOUNG, QC: If your Honour please, I appear with my learned friend, MR R.A. HEATH, for the second respondent. (instructed by Clayton Utz Lawyers)

MR M.D. WYLES, QC: If your Honour please, I appear for the intervener, East West Connect. (instructed by Herbert Smith Freehills)

HER HONOUR: Yes, Mr Merkel.

MR MERKEL: Your Honour, this morning the Court of Appeal allowed the appeal. I am not sure whether your Honour has seen a copy of the reasons yet.

HER HONOUR: No, I have not. I am relying on the parties to provide me with that, Mr Merkel.

MR MERKEL: Yes, I think we tried to get them scanned but something did not quite work, your Honour, and they are the reasons, but can I, just in summary - - -

HER HONOUR: Should I put them aside for one moment?

MR MERKEL: Yes, your Honour. In summary, the Court of Appeal allowed the appeal substantially on the grounds that the trial judge failed to accord procedural fairness to the applicant by, in effect, requiring to have a trial on the substantive issues without having the opportunity to get discovery and test public interest immunity claims. Their Honours also said that his Honour necessarily erred in his approach to the three questions because he determined the answers to the questions on incomplete facts and their Honours, in effect, laid down a pathway which would allow any judge coming to the matter to be unburdened by what his Honour had decided by stating certain principles. Importantly, their Honours remitted the matter to a different trial judge on the ground that apprehended bias would prevent the matter from going back to the same trial judge.

HER HONOUR: What is in contemplation now, Mr Merkel? They will be calling on notices to produce, arguments about public interest immunity and then an application for interlocutory injunctive relief.

MR MERKEL: No, your Honour. We are here on the basis that the matter in this Court has proceeded entirely on the basis of assumptions in our favour on all the substantive issues and my learned friend, the Solicitor-General, reiterated and confirmed that before their Honours, so what we did - - -

HER HONOUR: I thought the assumptions were made in your favour on the basis that once notices to produce had been called upon, public interest immunity claims determined there would then ultimately be an application for interlocutory injunctive relief in front of the trial judge. I mention that only because I have noticed in your written outline, which conveniently of course you provided as soon as you possibly could, that there is reliance on Paringa.

MR MERKEL: Yes, your Honour. What has happened is that the prospect of interlocutory relief is now forever precluded by reason of the Court of Appeal’s decision on the amended summons, which was that there is no serious prospect of getting final relief, therefore there is no basis for interlocutory relief. Prior to that - - -

HER HONOUR: Well, no basis for interim relief, as I understood it.

MR MERKEL: Interim or interlocutory. I should say, your Honour, before the Court of Appeal today we carried out the necessary tasks of applying to their Honours for holding relief on the basis of new circumstances, namely that this Court will hear the application for special leave on 17 October.

HER HONOUR: So you have run your Burgundy Royale point.

MR MERKEL: We have run our Burgundy Royale point and their Honours – I think I am doing justice to reasons given off the cuff, your Honour, which were to the effect that we remain of the view that we had in the interim summons, the judgment that there is no prospect of final relief and the matter is now before your Honour and it was inappropriate for the court to, in effect, intercept the matter, it being before the High Court.

HER HONOUR: So you have made your application for a stay in relation to them. That has been refused earlier this morning.

MR MERKEL: Yes, for holding relief, not a stay, for an injunction until the 17th.

HER HONOUR: Yes. Now, as I understand it, on Friday, as I recollect it, Mr Moshinsky was appearing for the State of Victoria and proffered an undertaking not to sign contracts until noon today.

MR MERKEL: Yes.

HER HONOUR: That was the point of a return of the adjourned hearing of the summons till 11.45.

MR MERKEL: So what we would ask your Honour is that either that assurance be extended till 5 o’clock today or we would be applying for your Honour for an order to that effect so that we can present this application to your Honour.

HER HONOUR: I will ask Mr McLeish.

MR McLEISH: Your Honour, in terms of how long the assurance should be extended for, I do have instructions to make an extended assurance but in terms of how long it should take, the State is anxious to sign these contracts and anxious that the assurance be as short as is necessary. At the same time, of course, I do not want to put your Honour under any pressure and I wonder if it would meet the needs of the circumstances to offer to extend that assurance until 4 o’clock or any earlier rising of the Court today?

HER HONOUR: That seems to me to meet it, does it not, Mr Merkel?

MR MERKEL: Yes, your Honour.

HER HONOUR: Because that covers the determination of the summons, hopefully. If we need further time we will think about it then.

MR MERKEL: Yes, your Honour. Thank you. I am indebted to my learned friend for that.

HER HONOUR: Thank you, Mr McLeish.

MR MERKEL: So, your Honour, the situation that we are confronted with - and I should tell you that the special leave points that we wish to agitate which are the two interrelated questions of: has trade and commerce under the Australian Consumer Law become a norm of conduct subject to definitions which require reconsideration of concrete constructions, the first question, the Court of Appeal said concrete constructions continues to apply, notwithstanding the changed regime, and their Honours gave - - -

HER HONOUR: Do you mean in the substantive judgment their Honours - - -

MR MERKEL: In the substantive judgment.

HER HONOUR: So I put that to one side, do I not, for the purposes of the special leave application in relation to the refusal to give interim relief for longer than a short period?

MR MERKEL: But importantly, your Honour, your Honour has seen in our outline of submissions that the issues we say are special leave issues are that because the Court of Appeal assumed all of the facts in our favour, and I need to articulate that with care to your Honour, two questions of law arise which are no different from a demurrer. In fact, it is almost a pure demurrer application. Their Honours – I am not sure whether I got round on Friday to explain the three representations that form the basis of the claim, your Honour.

HER HONOUR: I am not sure you did, but over the weekend thankfully I had the opportunity to read the exhibits to Ms Fitzgerald’s affidavit, so of course I have read the further amended statement of claim.

MR MERKEL: Good.

HER HONOUR: But let me test whether I do fully appreciate the case about the misrepresentations. Let me just make a reference to my notes. As I understand it, the applicant is pursuing this case, not on his own behalf but to protect the public interest.

MR MERKEL: Correct.

HER HONOUR: That is done on the basis that the scope of the relevant legislation is wide and he is not required to show special interest. It is not required that he will suffer any loss or damage. Now, as I understand the matter, there are four representations, are there not, which were made in three publications and have been republished on websites? Is that how it goes?

MR MERKEL: In part. Can I ask your Honour for present - - -

HER HONOUR: Shall I just convey to you, Mr Merkel, my notes from reading on the weekend because I wish to have any misapprehensions corrected. The gist of the applicant’s case appears to be that the net economic benefit of the project has been misrepresented – I am having trouble reading my own handwriting – because it is alleged the overall project will make losses.

MR MERKEL: Yes, your Honour.

HER HONOUR: That is the gist of it. I understand, of course, there may be detail. There is an affidavit been sworn by an expert, Mr William McDougall, and he challenges the methodology used by the respondents to assess the project’s overall economic benefit.

MR MERKEL: Correct.

HER HONOUR: It seems at this stage – and I wish to be corrected if I am wrong – that the applicant’s case at trial will involve contesting the economic modelling which has been used by the respondents to calculate the future economic returns of the project. I noticed a period of 30 years mentioned at one stage but I will just put that aside, but is that it in a – have I got that in a nutshell? I am not trying to capture all the detail. I just want to make sure I understand what is the case the applicant wishes to proceed with ultimately on the remitter.

MR MERKEL: Can I endeavour to encapsulate it briefly, your Honour, without complexity?

HER HONOUR: Yes, certainly.

MR MERKEL: Can I put to one side the traffic modelling and traffic projections because they are incidental and I do not want to worry about those for present purposes - - -

HER HONOUR: Very well.

MR MERKEL: - - - and we did so in the Court of Appeal.

HER HONOUR: Yes, I see. I did not appreciate that. Thank you.

MR MERKEL: So we put that to one side, your Honour.

HER HONOUR: So that gets us down to three representations.

MR MERKEL: Three representations.

HER HONOUR: Yes.

MR MERKEL: The first is the cost benefit representation which is 1.4.

HER HONOUR: Just let me make a note, if I may. So there is the cost benefit representation which is 1.4. As I undertake it, is that 1.4 benefit per $1 or something, is it?

MR MERKEL: Yes. For every dollar spent, 1.4 will be returned, but they are on net present value terms.

HER HONOUR: Yes.

MR MERKEL: That is significant because what they have done is taken the totality of the expected income over the totality of the expected expenditure - - -

HER HONOUR: Yes.

MR MERKEL: - - - arrived at a ratio of 1.4 and reduced that to present value terms.

HER HONOUR: Yes.

MR MERKEL: So it defines the entirety of the project.

HER HONOUR: And what, your expert says that is wrong, does - - -

MR MERKEL: Can I do the three representations because they are all interrelated?

HER HONOUR: Yes, certainly.

MR MERKEL: The second is the net benefit representation which is that the project will yield $1.476 billion net benefit to the State.

HER HONOUR: Over how many years is that?

MR MERKEL: Over its life, which we are not sure of because we do not know the detail but that is not relevant.

HER HONOUR: When you say “that is not relevant”, I noticed in the further amended statement of claim it is certainly intended by the applicant, as I understand it, to give further and better particulars of the way in which the representation is said to be misleading and deceptive but, as I understand the case, that will depend on discovery.

MR MERKEL: Correct. The business case – can I say $1.476 billion over its economic life, that is sufficient because an economist will often say that a projection of more than 15 or 20 years is not a valid economic approach to a matter. So in the business case, it will tell us what that economic life is, but for present purposes it is what an economist would call is the proper economic life of the project.

HER HONOUR: But in any event it looks like at trial there will be a contest between economists about “modelling”, if I can use that word, because that is the way in which the returns on an infrastructure project are calculated.

MR MERKEL: Well, returns on any business, your Honour.

HER HONOUR: I mean there are textbooks on this. Vinson is one, is it not - on “Project Infrastructure” I think the title is.

MR MERKEL: Well, I do not think infrastructure has any magic economic principle, it is a business case.

HER HONOUR: A business case.

MR MERKEL: Which could be for a coalmine, a tollway - if Transurban did it it would be doing the same analysis.

HER HONOUR: There has been modelling in relation to the business case to make certain representations about the returns in the future.

MR MERKEL: Correct.

HER HONOUR: The applicant wishes to challenge whether those representations based on the modelling are correct and presumably Mr McDougall and possibly others will have a different opinion about how the modelling should have been done. Is that it?

MR MERKEL: I think it is – I need to take you through one or two more steps to give you a correct answer.

HER HONOUR: Also I would like to have the third representation. This is the standard methodology representation.

MR MERKEL: That is critical, yes. In saying those matters, State has said it employed standard methodology.

HER HONOUR: Mr McDougall says - - -

MR MERKEL: Standard methodology - - -

HER HONOUR: - - - wider economic benefits are real but, in his view, the methods currently subsisting are not scientifically rigorous or something – his expert view, I should say.

MR MERKEL: Correct, because that takes us to a critical matter which is before your Honour today on balance of convenience and on the ultimate issue as well. All of the economic evidence that we are aware of, including from Infrastructure Australia and the State of Victoria’s own Economic Evaluation for Business Case Technical Guidelines published in August 2013 state that because of the uncertainty of calculating wider economic benefits – so this is not Mr McDougall on a foray of his own, he is in the comfortable territory of Commonwealth infrastructure policy and the State of Victoria Department of Treasury and Finance guidelines, that a cost benefit ratio should exclude wider economic benefits. You can state them separately, and I will explain to your Honour why, but if you - - -

HER HONOUR: Of course, this is not the occasion to go into the merits precisely, Mr Merkel.

MR MERKEL: No, it is important for balance of convenience because the bottom line is that on the present case we are putting, if this contract is signed it is committing Victoria to hundreds and hundreds of millions of dollars of loss on any economic modelling by its own standards.

HER HONOUR: So it is committing Victoria to loss on economic modelling.

MR MERKEL: Of the Victorian Government’s own economic modelling standards.

HER HONOUR: Yes.

MR MERKEL: So that employing a standard methodology on the government’s own documentation which includes WEBs is not standard methodology. Now, so they are the - - -

HER HONOUR: So let me just get a handle on this. Your prima facie case for injunctive purposes, as I understand it, is that what you are telling me today is that the economic evidence, you believe, will illustrate that your criticisms of the economic modelling will be made good at trial.

MR MERKEL: Does illustrate it at this point because one of the exhibits is the Department of Treasury’s own guidelines.

HER HONOUR: That is an exhibit to - - -

MR MERKEL: It is in the material. Look, your Honour, it is probably not in the exhibit before your Honour but it is the material which is before the Court of Appeal and over lunch I will get the relevant part handed up to your Honour but it is before the material that would go before a Full Court but for reasons I will come to this has all been assumed in our favour, I just need to explain that. But the real point of taking your Honour down this pathway is that on the case that we have put, which the Court of Appeal has assumed entirely in our favour for the purpose of dismissing our summons for interlocutory relief, this is a project which on cost benefit ratio principles calculated on standard methodology will lose 20 cents in every dollar invested which in terms of a 6 to 8 billion project must run to hundreds of millions of dollars.

HER HONOUR: Well, that is what you hope to prove.

MR MERKEL: Well, we hope to prove it but your Honour is not burdened by any of this, nor is the High Court, because for reasons I will endeavour to articulate, the Court of Appeal assumed all these matters in our favour which left as on a demurrer pure questions of law – and I will come back to that in a moment.

HER HONOUR: Yes, go on.

MR MERKEL: When we were before their Honours this morning, my learned friend, the Solicitor-General, quite accurately and correctly in resisting our application, said your Honours have assumed for the entirety of this application, prima facie case balance of convenience, all of the matters put by the applicant in his favour which must mean – does mean that this is a point 8 which is the pleaded cost benefit ratio which is a loss project.

HER HONOUR: So you are putting to me that I do not need to be concerned about the prima facie case.

MR MERKEL: Correct, this is not - - -

HER HONOUR: That is not in a sense being contested by the respondents.

MR MERKEL: The prima facie case for final relief is not contested. The narrow point that is in contest on the application to this Court, which is the special leave issue, is whether under the Australian corporation law, assuming a serious and egregious breach of section 52 now in section 18, the Court has power or jurisdiction to grant the relief we seek which is to restrain the project based on this false business case.

HER HONOUR: Now, I saw in the papers somewhere, and I am sorry I did not make a note of it, but I saw somewhere and I think it was you, Mr Merkel, in the transcript, saying something along the lines, look, the applicant does not object to the project per se, the applicant objects to the business case and the applicant is seeking to restrain entry into the contracts and any ancillary conduct because the applicant wants the business case to be ordered to be rectified at some point. Is that right or wrong, Mr Merkel?

MR MERKEL: Can I take you to what I think your Honour saw. It is in our written submissions and I think there is a footnote, if I can just find them, your Honour.

HER HONOUR: That may be right.

MR MERKEL: What we said – I will take your Honour to the footnote. It is footnote 18 which is at paragraph 15.

HER HONOUR: Yes.

MR MERKEL: But it is important to read the whole of paragraph 15, with respect, your Honour, because what we – so 15 sets out the case we make. Then it is because this project is based upon this business case, which we say on the assumptions made the publication of which has deceived the public of Victoria and other third parties, the nature and extent to which we have yet to ascertain because that is an ongoing matter, but - - -

HER HONOUR: So there are some aspects of your case that you need to ascertain?

MR MERKEL: Well, yes, but not for the purposes of the matter before this Court because everything – the refusal for interlocutory relief the court properly and fairly made all the assumptions in our favour because we have been denied the opportunity unfairly - - -

HER HONOUR: So is the narrow contest here about the balance of convenience? It seems to me that the Court of Appeal took into account losses or evidence in relation to losses including confidential evidence, so is the position therefore that the Court of Appeal assumed the prima facie case had been made out, assumed ultimate success at trial on behalf of the applicant here on the summons, but then declined to grant interim injunctive relief to restrain the entering into the contracts and belated conduct on the basis that it was not satisfied that the applicant’s prima facie claim outweighed the balance of convenience taking into account the losses and so on to the respondents and the third party, the preferred bidder?

MR MERKEL: Broadly, yes, although it went in two parts, your Honour, and it is the first part that really is critical. Having made all the assumptions in our favour, including the assumption that this is a loss project on standard economic evaluation principles, that section 232 based upon the history of section 80 of the TPA, does not authorise the court or give the court jurisdiction or power to grant the relief stopping the project because there is not a sufficient relevant connection but what their Honours said is that as a matter of power the court cannot grant this relief and therefore the prospect of granting it is so low that there is a bare prima facie case which means very little balance of convenience would lead them to refuse the relief.

HER HONOUR: Now, it seems to be put, I think in Mr Young’s submissions, that you contended before the Court of Appeal that there does need to be some sufficient nexus.

MR MERKEL: That is correct, but we had put something quite different. What we had put, your Honour, is that under the new legislative regime of the ACL, which we have articulated in our submissions - - -

HER HONOUR: Yes, and I understand you say the scope is wider and the verbiage is different – yes.

MR MERKEL: - - - and importantly two subsections have been added with an explanatory memorandum that says we would say is to the effect that the previous debate about sufficient relevant connection and how limiting that might be under section 80 no longer applies. We had said a sufficient relevant connection is established by the business case being misleading and the project proceeding on the business case, and we gave their Honours examples such as a company with a prospectus which was seriously misleading. The only effective relief is to stop the business because it is too late for any other way to protect the investors or the public interest.

HER HONOUR: Now, there are no investors here, are there?

MR MERKEL: No. One of the big questions here is if the State of Victoria is carrying on business, what is the public interest in that context? The private interest are the investors, the preferred bidder, but we say that the public – and this has not been considered to our knowledge by this Court – we say in the context of the State carrying on business under the consumer law provisions and the Fair Trading Act law provisions, the public interest has to be viewed by taking into account the public. So if the State is going to embark upon - - -

HER HONOUR: Did the Court of Appeal in the substantive judgment have anything to say about those issues of which I should be aware?

MR MERKEL: No, your Honour. I think it is fair to say that they, in effect, repeated in substance at a more general level what they said in the decision under appeal. So the decision under – on the relief point, I think that the court did not travel a long way. I have only read it quickly and your Honour may have a look at that, but I think what their Honours are saying is that the substantive changes that we say have been made have not been made, so that on trade and commerce and relief their Honours are still applying the section 80 principles which we say is the special leave point because we say that the added subsections, for example, the power – and I need to develop this a little more fully to your Honour, but the very power to grant relief there was a debate between Justice Gummow’s view and Justice Lockhart’s view in ICI and even now it seems unresolved as to whether under section 80 relief must be restricted to conduct that is contravening.

HER HONOUR: Well, I think Justice Lockhart used the words “the power to grant relief is wide but it must be granted judicially and sensibly”.

MR MERKEL: Yes, and - - -

HER HONOUR: I do not think Justice Gummow demurred from that. Justice Gummow was concerned with different issues.

MR MERKEL: Your Honour, that is harder to pick up because his Honour in ICI said as a principle that under section 80, based on Thomson Publications, but you cannot enjoin conduct, some of which is a contravention, some of which is not and Rural Press beguilingly cited Justice Gummow but without articulating it.

HER HONOUR: Yes.

MR MERKEL: So it is fair to say, your Honour, that the issue of a narrower – I think it has been accepted in Foster that Justice Gummow expressed a narrower view, Justice Lockhart a broader one, and the Full Court in Foster adopted the broader approach but the Rural Press citation of Justice Gummow at page 267 of ICI has this Court with four Judges adopting a narrower approach.

HER HONOUR: Now, in a representative democracy like Victoria has, Mr Merkel, contested policy decisions of an incumbent government are normally not justiciable and I am just – would you explain to me a little better what you – are there likely to be section 78B notices if special leave is granted about the ambit of the power?

MR MERKEL: No, we have not seen any constitutional issue at all because the point about the special leave issue, your Honour, is simply this, that the assumptions made are the State of Victoria is carrying on business - - -

HER HONOUR: Yes.

MR MERKEL: It has made the three representations in the course of carrying on business - - -

HER HONOUR: And I read “and they egregiously deceived the public”.

MR MERKEL: Yes, as pleaded.

HER HONOUR: As pleaded.

MR MERKEL: Now, your Honour, there is no constitutional issue any more than there was under the previous legislation.

HER HONOUR: Well, I just wondered if there is a constitutional issue in relation – I need to better understand your nexus point, I think, Mr Merkel. You say under these current provisions the test about a sufficient relevant connection is possibly now different. Do you say no nexus is required or what do you say?

MR MERKEL: No. What we have done, your Honour, the essential difference that we say exists between ourselves and the Court of Appeal approach is the influence of Truth about Motorways. In Truth about Motorways, four Judges analysed the standing under section 80 in terms of the public interest that was to be protected, and we have set out the paragraphs in our submissions. But we particularly go to Justice Gaudron because her Honour, without looking at section 80 specifically, regarded the broadest ambit for nexus to constitute a matter is for the relief to be “appropriately related”, using her Honours words, to the contravening conduct.

HER HONOUR: Now, no one is taking a point here that there is no matter, are they?

MR MERKEL: No, no, but it is important, your Honour, because what we are saying is that in the new statutory context Parliament intended relief to be given the broadest possible operation and we use her Honour’s analysis to say the broadest possible operation, at least at a Commonwealth level but we are prepared to accept that because it is both Commonwealth, State and Territory legislation, meaning appropriately related to the public wrong and that constitutes a matter and we say that the legislative intent could not discern any further limitation and “appropriately related”, your Honour, looks at the matter in a broader way than the previous jurisprudence under section 80 which was always limited by ICI and Justice Gummow versus Justice Lockhart, and I do say “versus” advisedly because Justice Gummow’s judgment was said to be ambiguous by the Full Court in Foster but there was no such qualification in Rural Press where it was cited.

So that what we perceive is that there is a difference in this Court and the Full Federal Court at the present time on the ambit of section 80, but we say whatever the difference was on section 80 it is removed both by the additional subsections in section 232 which unambiguously give the court power to issue injunctions in respect of conduct that is necessarily non-contravening. There is a specific - - -

HER HONOUR: Well, now, accepting the power is wide, accepting for present purposes what Justice Lockhart said, it is a very wide power under 80 but equally under section 232, you accept that the discretion to grant interim relief has to be exercised judicially and sensibly. So we then get into the situation, do we, where you are urging me to treat the power widely and grant interim relief by balancing, if you like, the applicant’s concern for the public interest against the losses which are said to flow to the respondents if the interim relief is granted. Have I captured that?

MR MERKEL: Well, what happened, your Honour, we – to a large degree but our point is more precise in the way we would express it, with respect, your Honour, and it is this. What happened in the Court of Appeal judgment is their Honours gave an underpinning to a sufficient relevant nexus, which is limited to a narrow view based on section 80 cases, but a narrow view of Truth about Motorways. We say that their Honours encapsulate this in five paragraphs in their Honours’ reasons. Does your Honour have the judgment?

HER HONOUR: I will just turn to it, if you will just give me a moment. Yes, in five paragraphs.

MR MERKEL: Yes, at paragraph 12. So from - - -

HER HONOUR: Yes.

MR MERKEL: Paragraphs 8 through to 11 - or 10 - sets out our submissions but particularly paragraphs 8 and 9 and their Honours accept that there is force in those submissions and they are yet to be authoritatively determined.

HER HONOUR: Yes.

MR MERKEL: So that is where we start at the higher level. Then at 12, their Honours then remove the underpinning by saying:

First, Truth About Motorways, was pre-eminently about standing, as opposed to remedies, and as Gleeson CJ and McHugh J took care to make clear –

not in anything they said expressly but –

by reference to Bowen CJ’s judgment in Phelps v Western Mining Corp Ltd, one thing is by no means the same as the other.

Now, what we say is that a proper reading of Truth about Motorways cannot divorce the standing from seeking relief for the purpose from which that standing is given which is to protect the public interest, and as this Court has pointed out on many occasions since Truth about Motorways, standing and whether there is a matter, which includes the relief and the basis for it, are interrelated very closely.

So what we say, properly understood, Truth about Motorways gives standing to any person, then under section 80 and now under the broader section 232, for the purpose of protecting the public interest, with private interests being incidental. So the first point at which we join issue is the suggestion which later reappears that Truth about Motorways is not so broad as to protect the public interest as we would have it.

HER HONOUR: Now, if you look at paragraph 17, their Honours say that:

the chance of establishing sufficient relevant connexion between the impugned conduct and the relief which is sought cannot be excluded unless and until there has been discovery –

You would agree with that, I dare say, Mr Merkel?

MR MERKEL: That is so, your Honour, but - - -

HER HONOUR: Discovery is going to be an important element of this case, as I understand matters, because you wish to have further and better particulars after discovery in relation to these publications of what it is contended are misleading and deceptive representations.

MR MERKEL: Yes, your Honour, but in a practical sense no judge in the light of the Court of Appeal’s judgment could say there is any prospect of success of granting the relief we seek. What their Honours were referring to by reference to Wickstead v Browne, is that there is no utility in striking out the injunctive relief because it will not in any way narrow the ambit of the claim. Is your Honour familiar with Wickstead v Browne?

HER HONOUR: Yes.

MR MERKEL: So that it was not struck out and it remained in issue and their Honours did not say it was so hopeless it should be struck out but what their Honours said it was – I think the way it was put was that it was so tenuous and lacking in logical connection so that no trial judge in the light of this judgment could possibly grant interim relief given the situation - - -

HER HONOUR: Well, not interim relief in the terms in which it is sought but other interim relief might be available, I suppose.

MR MERKEL: Not that we can think of, your Honour, because the project will have gone ahead and the real point of the case - - -

HER HONOUR: Do you not want the business case amended?

MR MERKEL: What we have sought, your Honour, is we sought at trial the substantive issue that could have resulted in the business case being rectified by corrective advertising before the project was implemented, and that was the first thing we sought from April, but by July when it became clear his Honour was proceeding in a pathway that meant a trial in September was never going to occur, we had to reformulate in the light of a trial not occurring and the only meaningful relief to the deceptive business case assumed by the Court of Appeal was to restrain the project proceeding on the basis of that business case, no other relief.

The parties have really accepted this by the undertaking to extend the time for the contract to be signed that the status quo in this case, in a practical sense, required that the matter not proceed to a third party tenderer contract until this had been resolved and, with respect, the Court of Appeal has resolved it against us and that is the issue of appeal, whether the Court of Appeal erred in saying that the power under section 232 is as narrow because I took you to Truth about Motorways - - -

HER HONOUR: Have they not said at paragraph 18 “that an injunction in the terms sought” - only talking about restraining the signing of the contracts and any ancillary conduct - “would be likely to have profound consequences” and then they deal with the losses in relation to €100 million and interest rate fluctuations. Then they move to the undertaking as to damages and I think you properly conceded on the last occasion that it could not be called upon realistically if damages were considerable.

MR MERKEL: Correct, but can I take your Honour to the last line in paragraph 14?

HER HONOUR: Yes, certainly.

MR MERKEL: What their Honours said based upon the previous jurisprudence – sorry, paragraph 13 requires “it is not lightly to be supposed” in the third line, that ACL:

is directed to protecting any broader class of persons than those who do or may act to their detriment in reliance upon misleading or deceptive conduct –

So that the public interest that we put is effectively being put out of the ring based upon the rejection of – the wider view we put of Truth about Motorways in paragraph 13. So that was the old reliance requirement which as a matter of private interest would always be required, but we say whether it is required in the public interest is a very, very big question.

HER HONOUR: Are you saying, Mr Merkel, that once you have a litigant who has the public interest at heart and who alleges misleading and deceptive conduct in a pleading and who hopes to make good those pleaded allegations, once discovery has occurred, can restrain respondents whatever the loss and damage likely to be experienced by the respondents?

MR MERKEL: No, no, we do not say that at all, your Honour. What we say is that that person has standing and the court has power to grant the relief. Whether it would be granted - - -

HER HONOUR: Yes. Is this not a debate about the discretion, the exercise of the discretion?

MR MERKEL: No, no, not at all, your Honour, because the finding at the last line of paragraph 14, based upon two propositions which are legal in paragraphs 11 and 12, is that there is a third proposition in 14 that the impugned conduct must – the case we must put must prevent or eradicate “harm to which the remedy is directed”, but then their Honours go on and – and harm to the public is rejected in the two preceding paragraphs:

any connexion between the impugned conduct and such harm . . . is at best fortuitous and logically very tenuous.

Now, that is really the point – there is no discretion involved in that. What their Honours have done is assumed we will win our case on every point, but what they are saying is that the jurisdiction conferred under section 232 does not extend to protecting the public interest by granting a remedy appropriately related to a public wrong.

Now, that is a pure question of power, your Honour, there is no discretion. Because their Honours were starting with a fortuitous and logically tenuous claim for relief, it took the most marginal balance of convenience to bring the matter to a negative conclusion, but had their Honours correctly approached the jurisdiction and power point under section 232, the balance of convenience question would have been entirely different because their Honours have already assumed in our favour this is a loss-making project, but because it was such a tenuous claim based on the analysis of 232, any risk of harm was sufficient to reject the application.

So what we say, your Honour – and their Honours make it clear in 16, and can I say this? Mr Murphy’s case, if the public are recognised as those to be protected under section 232, and if this Court considers a matter never yet considered to our knowledge, is that when you have a government carrying on business is the public interest capable of extending to protecting the public from harm by the government running a project which is a loss-making project.

Can I give your Honour an example which is not this case? If the government were fraudulently entering into a business project with some person by expending money in a way that was going to give this person a private benefit and it was doing it by misleading and deceptive conduct which a fraud necessarily encapsulates, on this analysis Mr Murphy or a member of the public would have no right to come to the court to restrain that conduct from being carried through or to order the repayment of the money because that harm is not regarded as harm to the public. It is harm to the State.

We say that the very important and very significant question is does the State get any special protection because it is carrying on business under the umbrella of the State Crown that a private entity would never get? Justice Nettle in the course of argument gave an example, well, if BHP had gone out to a country town and made representations about its business, it was going to employ people and it was going to do all sorts of things, give money to the town, and that was its business case and then it went ahead and ignored all of it, would there be an arguable claim that it is in trade and commerce? We say clearly it would be, but more importantly would there be an arguable claim by a person in that town who had gone in and supported the project to say “You cannot engage in this business now in breach of all the misleading misrepresentations you have made because the business case you have presented has been deceptive of the public and the public interest is going to be harmed by that”. Now, that is an employment - - -

HER HONOUR: But in this case, Mr Merkel, the applicant takes the view that the economic modelling utilised by the respondents can be challenged and that it alleges in a pleading that the net benefits which the respondents have asserted in relation to the future of this project are misleading and deceptive. Now, at trial there is going to be a contest about that, is there not?

MR MERKEL: Yes.

HER HONOUR: I am not saying there is not a wide power, a wide discretionary power to preserve the subject matter of proceedings pending an appeal. I am not asking you to debate that. I am asking you to accept that I accept that, but we are in the circumstances here that the applicant wishes to contest a policy decision made by an incumbent government on the basis of utilising the consumer protection legislation, and the cases would suggest he is entitled to do that. He does not have to show any special interest, he does not have to show that he would be suffering loss, but at the end of the day there will be a contest about the policy decisions which underlie the – I am sorry, the economic modelling which has led to a policy decision.

Now, I am just trying to understand how it is that you put the case that at this stage before that context is resolved, the balance of convenience must be – must fall down on the applicant’s side, notwithstanding loss and damage which may be suffered by the respondents. I just want to understand how that is put. I understand as prospectuses and the analogy and I accept, of course, that it is a good analogy.

MR MERKEL: Your Honour, if there was anything normal about the procedure followed in this case and we were here on an interlocutory injunction refusal, your Honour would be quite right in approaching it on the basis, well, what is the prima facie case likely to be at trial and what is the balance of convenience established.

HER HONOUR: It is more – it is not that, Mr Merkel, because you have told me, and I accept from you, that I am entitled to proceed on the basis that there is no challenge to the prima facie case. It is more looking at the nature of the injunction sought, the nature of the interim relief sought.

MR MERKEL: Your Honour, I think what I have to emphasise to your Honour – I hope I am not repeating myself too much on this but because we were deprived of a hearing of the kind that your Honour has mentioned, and the Court of Appeal has now found that was so, the time for us to challenge the contract has now shrunk to a day or so through no fault of our own and what we said in our submissions, and the Court of Appeal has accepted this, that if it was to refuse the injunction it must make all the assumptions in our favour of our case.

That, with respect, is the starting point of the matter in this Court, so that, your Honour, with respect, on our case there was no policy decision of government. The government in the course of carrying on a business published representations in trade and commerce as those words are defined however they may be ultimately defined at trial, it is accepted now, in a way that had no grounds. The egregious misleading conduct was based upon no grounds for the representations. Their Honours had to do that as a matter of fairness because we had been deprived of any capacity to make good that case.

So their Honours put our case at its highest, properly and fairly, leaving open one question. If we proved all of that at trial which does not involve one element of policy, the only policy decision was to publish on that analysis a misleading business case and that is not policy. So the issue that your Honour has raised has already been overtaken by the assumptions. Those assumptions take us out of the area of government regulation or policy and lead us to one question only. If we make good all that, is there power and jurisdiction in the court in those circumstances to grant the relief sought to protect the public interest from harm in respect of a public role by a person who has been given standing to do so?

Now, on the Court of Appeal’s reasoning which applied the section 80 approach we say that was erroneous, so therefore we have never had that question answered according to law as we would have it. That is the issue that we seek to agitate in this Court. If your Honour assumed we could succeed on that, the matter would necessarily be remitted to a single judge or to the Full Court for reconsideration according to this Court’s ruling.

The reason we say this is of profound importance, your Honour, and it is unlikely to come to this Court in as pure and pristine state as this, is because this is an ongoing matter of agitation in the courts some 40 years after the enactment of the Trade Practices Act and the Court of Appeal has now handed down the decision, in effect no change to the norm of conduct in 52 and no change to the injunction power. Now, if the Court of Appeal is wrong, we will be suffering an egregious and irreparable injustice, and the only reason it is so irreparable and it is so egregious - - -

HER HONOUR: When you say “we” do you mean the public of Victoria?

MR MERKEL: Yes, the public of Victoria whose interest is represented by the applicant. The reason I say it is so egregious is that if this matter had come before this Court without the unfair – if this matter had been able to be explored and appealed to the Court of Appeal in August or July whenever it could have been but for the unfair procedures their Honours have found to be imposed on us, your Honour would not be in the situation of being told we are seeking this relief a day before they wish to sign the contract.

We have been trying to get this issue up and running and have been deprived unfairly by the court as found by the Court of Appeal at the urging of the respondents of bringing this case in a timely manner so we avoided this problem. Now, your Honour, we say it would be most unfair for that to occur, and I want to mention something about the so-called irreparable harm because we say there is none of the kind foreshadowed.

What the Court of Appeal said is there were categories of harm which we say now have to be shrunk from today to 17 October because that is the timeframe. The bidder’s contract and bid is required to be open until 5 December. Secondly, the so-called interest rate risk and foreign exchange risk was a risk assumed under that program – necessarily assumed until 5 December, whenever the contract is signed. Thirdly, for the first time just a moment before I got to my feet I was handed some affidavits that say the contract is ready to be signed.

We would require – and I need to deal with this before the adjournment – we would require as a condition for those affidavits to be relied upon for the contract relevantly – and I will explain that in a minute – to be produced because that is said to be the document from which irreparable harm will flow if those affidavits are to be relied upon.

I should say this for two reasons, your Honour. In one of the affidavits there is reference that the conditions precedent will take one to two weeks to satisfy, so that the contract on signing on that affidavit will not be binding because conditions precedent to take one to two weeks need to be satisfied. One to two weeks takes us beguilingly close to 17 October, so that the foreshadowed 1 October exchange rate risk, whatever that might mean, is going to be suffered in any event because the conditions precedent may not be satisfied.

Secondly, your Honour, there have been reports, and we say we are entitled to have this brought before the Court, that if the contract is not proceeded with there is something called a “$500 million kill fee” that has been reported in the press. Whether it is a rumour or not we will know from the contract, but we say this document, if it is to be signed and relied upon, should be produced for us so we can put to your Honour that if it is going to take two weeks for the conditions precedent therefore the so-called gates of Armageddon that are going to open at 4 o’clock today are illusory.

Likewise, with the interest rate risk, your Honour. The affidavits were presupposing that this project may not proceed altogether, or may not proceed before the caretaker period, or may not proceed by 5 December. Your Honour created a very, very different situation on Friday when you said the application will come on on 17 October, so the position is quite different. Are these so-called losses really losses that are going to be suffered by enjoining the contract being signed the conditions precedent can be given effect to over the next week or two.

It may even be that a Full Court might be able to deal with the matter earlier rather than have this matter go by default, but the reason why we have really put Re Paringa as a central point in our submissions is that while it is fair to say the court made these assumptions in our favour and denied us on a question of law, the timing of that process has effectively enabled our opponents to come to your Honour and say the balance of convenience all goes one way, but properly analysed that means it is just too late for a party who has suffered delays in the administration of justice, not through their fault but through the fault of the court and our learned friends, should be denied the opportunity to say that the injunctive relief that is sought here is proper and is a valid application.

So we say that those are very big matters, your Honour, and quite frankly, if you look at how long it took for the TPA to sort itself out in terms of section 52 and section 80, and we say section 80 is still up in the air but no longer relevantly, we say it must be of the most fundamental national importance that the ACL as a law of the Commonwealth and every State and Territory applied by higher and lower courts and tribunals on a day-to-day basis requires the guidance that took so long for the TPA which can be given in this case.

That is why we say it is a matter of quite significant importance and the Court of Appeal’s judgment very clearly articulated the two lines between the two approaches. Same as before versus a broader public interest of a very broad kind because the relief we are seeking is expressly provided for.

Your Honour, I notice it is a quarter to 1. We would ask if the affidavits are to be relied upon that we be given a copy of the contracts but not the geological or the technical or drafting detail, only the detail that goes to conditions precedent, any penalties that might apply, just the commercial terms, so that both your Honour and ourselves will be better placed to see whether there really is a serious risk, but once we saw conditions precedent and one to two weeks, 1 October becomes an illusory loss risk because it is going to be suffered anyway.

Interest rate risk is again illusory because we understand there is no threat. I think the Reserve Bank and economists have said there is no threat to any change in interest rates in the next week or two and the next six months or so. So that these so-called “costing risks”, your Honour, are not real, given the 17 day or 18 day timetable we are confronted with. So we say they are matters of quite significant importance which we have tried to outline in our submissions. I notice it is an adjournment time but we would ask if we could have a look at the contract over lunchtime, your Honour.

HER HONOUR: Yes, certainly. Does that otherwise complete what you wished to say, Mr Merkel?

MR MERKEL: Could I have a look at my notes over lunch, your Honour?

HER HONOUR: Mr McLeish, how long do you think you will be?

MR McLEISH: About half an hour, your Honour, but it depends how long my learned friend is after looking at his notes, but based on what has been submitted so far, about half an hour I expect, your Honour.

HER HONOUR: Yes. What about you, Mr Young?

MR YOUNG: We are likely to adopt what Mr McLeish says and I expect we may have one point to add in about five minutes.

HER HONOUR: Yes, thank you. Mr Wyles?

MR WYLES: Approximately five minutes, your Honour.

HER HONOUR: Yes. In all the circumstances, the Court will adjourn until 1.30.

MR MERKEL: Before your Honour – could we get an indication as to whether we would be able to look at this contract over lunch?

HER HONOUR: I take it that is a matter you need to sort out with others.

MR MERKEL: Thank you, your Honour.

AT 12.49 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 1.32 PM:

HER HONOUR: Yes, Mr Merkel.

MR MERKEL: Your Honour, we had asked for the production of the contract and that has been refused.

HER HONOUR: Yes.

MR MERKEL: Can I just say this, your Honour. There are just one or two last points I would seek to make.

HER HONOUR: Certainly, Mr Merkel.

MR MERKEL: Without the contract being produced, your Honour cannot be satisfied, particularly as to the preconditions, that any loss will be suffered if it is not signed prior to at least two weeks, which is almost at the date on the special leave hearing because the material says by the bidder that it will take seven to 14 days to get conditions precedent satisfied. So we say that the conditions precedent can all be satisfied in that period so that we are now looking no longer at a time period even of 18 days. We are looking at a time period of some few days whereby this Court has accommodated in an extraordinary way the parties to bring on an application with expedition.

As I said just before lunch, your Honour, the so-called risks, including the risks of the Connect East Consortium, are not affected by this short holding time because 1 October will have passed before the contract becomes operative, subject to conditions precedent. Secondly, interest rate risk is entirely illusory because there is no real risk and they were all foreshadowed anyway and the affidavit material of holding costs or private loss by the Connect Consortium, the costs they undertook irrespective of when the contract was being signed – and they no doubt have arrangements for reimbursement and can deal with that in their negotiations with the State, so the State may have to be responsible for that – in that context, your Honour, can I just remind your Honour in Truth about Motorways which is at tab 6 of the authorities folder - - -

HER HONOUR: Yes, thank you, Mr Merkel.

MR MERKEL: - - - at paragraph 17 in the judgment of Chief Justice Gleeson and Justice McHugh when their Honours said, in the second sentence of paragraph 17:

one for the protection of the public interest. The same may be –

Well, I will put to side 163A because that is not relevant here, but –

Any public protection of the applicant’s own business or other interests is incidental or collateral.

We say that even the Connect Consortium’s private interests, while not irrelevant, must be balanced against the public interest. We particularly relied on Justice Gaudron, your Honour, at paragraph 41 – sorry, I should say before leaving 17, there is nothing in that paragraph that would give it the narrow reading that the Court of Appeal did, which said it is all about standing, not relief which is the central error which founds the special leave application. Once you are into protection of the public interest, one is in the heartland of what Mr Murphy is seeking in the present case. Then her Honour Justice Gaudron at paragraph 41, talking in terms of judicial power in Chapter III – this is in the middle of 41:

But save to the extent that it finds that resonance, there is no reason why [the judicial power] cannot be abrogated by the Parliament so as to allow any person to represent the public interest and, thus, institute legal proceedings with respect to a public wrong.

HER HONOUR: Certainly there is no challenge to standing in this case, is there?

MR MERKEL: No, but the challenge coming out of the Court of Appeal’s decision is the public interest in challenging a public wrong – and can I just take your Honour to paragraph 50 – and we say this is the way it ought to be approached, where her Honour says:

Provided there is a remedy which is appropriately related to the wrong in question . . . nothing in Ch III of the Constitution prevents Parliament from modifying the general rule -

Now, we say when we were before the Court of Appeal we had put Justice French’s sufficient relevant nexus in the context of the new statutory regime stripped of the previous burdens that had been attached to that test. The Court of Appeal adopted the previous burdens and we are said now by challenging what the Court of Appeal found, which was a rejection of our wider view, we have somehow resiled from our position.

The position we have resiled from, your Honour, is that we have not resiled from any position. We say that the burdens previously are gone and relevant nexus was in that context and now that has been construed by the Court of Appeal to mean the nexus that was required under section 80. That is a rejection of our submission, so we have not resiled from our position. We just say that sufficient relevant nexus in the sense used by the Court of Appeal is the wrong test and what really we say to give effect to the new subsections (5) and (6) which all put to bed the Justice Gummow point about not restraining conduct that is and is not a breach, that must necessarily be at an end because subsections (5) and (6) by their express terms do not require the conduct to be a contravening.

So we say the proper way of approaching it is asking, in terms of such remedy as may be appropriate, picking up what her Honour said, the outer ambit or the boundaries are now is the remedy appropriately related to the wrong in question. We say that our real grievance here, your Honour, is that we have a special leave application, on the best view some days after this contract would become binding, and the effect of refusing the holding relief will render nugatory the outcome of our application for special leave, but, more fundamentally, will necessarily render nugatory our action for that relief. I

If it is – without us having the opportunity to have this Court consider a question of fundamental importance, and that is have the previous limitations on section 80 now been altered under this new regime, and if it were found by this Court to be in our favour in principle, we say that would be an egregious wrong.

Now, your Honour, against that rendered nugatory which is, if erroneous, is also the loss to the public on the assumptions made which their Honours never balanced up because they took a view that there was no harm to eradicate by this injunction. But the harm we seek to eradicate on the assumptions their Honours made is a loss of 20 cents in every dollar. That was not weighed up by their Honours and given any weight whatsoever, notwithstanding the assumption in our favour.

With respect, given the few days that we are talking about, if we are right on that wider view of the operation of sections 18 and 232, we say that we are entitled to have that weighed in the balance and that has been denied us by the Court of Appeal’s judgment. So we say, on the other side, are private interests and we say the State - - -

HER HONOUR: That goes to the merits, of course. Now, the prima facie case has been assumed, has it not?

MR MERKEL: Not the prima facie case for injunctive relief. Sorry, the prima facie - - -

HER HONOUR: It has been assumed that, Mr Merkel, in relation – their Honours, on one view, accepted the prima facie case - I think you have taken that to me emphatically this morning – and then did what is, on one view, orthodox in the context of the principles to be applied for the grant of interlocutory relief and that is to then go to the balance of convenience. Now, I had assumed that for the purposes of today’s application, I also am to assume there is no contest about the prima facie case.

MR MERKEL: Your Honour, that is correct, but we say that is too narrow a view because the Court of Appeal assumed in our favour that the mistake - our pleaded error was made, namely that the real business case – business case on orthodox principles was 80 cents in the dollar. The ratio is one to point 8 so there is 20 cents loss.

HER HONOUR: Yes.

MR MERKEL: That goes to the public loss.

HER HONOUR: These are all matters to be proved ultimately at trial, but were assumed from the point of view of the merits not being able to be determined at an interlocutory stage.

MR MERKEL: But the merits on balance of convenience as well as our prima facie case, your Honour, because what their Honours assumed was they assumed that misrepresentation had occurred and that the fact was point 8, but they did not regard that as a harm protectable under section 232 because of the passage I took you to where they said the public interest does not go that far. It can eradicate harm, but it was not harm caused to the public as we put it. It was the State’s harm to itself.

We say that, in effect, renders nugatory the operation of the Act for State conduct because the irony and the most fundamental point raised by this litigation is the State can somehow operate with impunity because it can mislead the public egregiously. The more egregiously it does so and the greater the financial harm, the greater the impunity because no one can come with an undertaking as to damages and it can say well the harm is suffered by the State, not the public and therefore, there is no balance of convenience.

Now, we say that if that is correct it gives the State a special protection under this Act, which the legislative policy would be disavowing from the outset because we have jumped over your Honour’s policy concern by them having to be carrying on business, et cetera, et cetera. So we say that these are questions of fundamental importance, your Honour, which would be virtually steamrolled if this application is not granted.

HER HONOUR: Yes.

MR MERKEL: I want to stress, your Honour, we give the undertaking as to damages but accept its limitation. We also offer the undertaking to expedite the prosecution at the special leave application and comply with all timetable directions given by the Court for the hearing of 17 October.

HER HONOUR: Thank you.

MR MERKEL: If your Honour pleases.

HER HONOUR: Thank you, Mr Merkel. Yes, Mr McLeish.

MR McLEISH: If your Honour pleases, we have filed an outline of submissions which hopefully your Honour saw. It was filed after the decision of the Court of Appeal this morning.

HER HONOUR: Yes.

MR McLEISH: I will not be going right through those submissions, although of course we do rely on them. Your Honour, the applicant here is invoking an extraordinary jurisdiction and needs to establish exceptional circumstances in order to get the interlocutory relief that he is seeking from your Honour today. That is the well-known test stated, for example, by Chief Justice Mason in Smith Kline and your Honour is familiar with the principles.

The reason the jurisdiction is extraordinary is because the Court is asked to exercise it before special leave has been granted and while there is no pending proceeding in the Court. For that reason, the authorities, including Burgundy Royale, establish that an applicant must demonstrate a substantial prospect of obtaining special leave as part of the - - -

HER HONOUR: Is there any real difference between those principles?

MR McLEISH: No difference. The substantial prospect of obtaining special leave is an aspect of the Burgundy Royale requirement of the exceptional circumstances test. It has been described as the most important aspect or even a threshold aspect, but your Honour does not need to go there because my first submission is that there is negligible, if any, prospect of the Court granting special leave in this case. Without my learned friend establishing a substantial prospect of a grant of special leave, the application must fail.

Nothing was submitted to your Honour as to why this was a suitable case for special leave. When one looks at the nature of the decision sought to be appealed from, it is immediately an unusual case in which special leave was granted – would be granted. That is because it is an interlocutory matter. It is a matter on practice and procedure and it concerns the exercise of a discretion by the Court of Appeal.

The decision which is sought to be appealed was a decision to refuse interlocutory relief pending the Court of Appeal’s own determination of its appeal. That emerges from the way the relief is described, both in the headnote to the judgment but also in the discussion of the principle of preserving the subject matter of the appeal in paragraph 3, for example, of the reasons. Evidently an appeal on that basis would be futile and the Court of Appeal has, as it transpires, delivered its judgment in the appeal.

My learned friend also sought, from the Court of Appeal, sufficient time in any event to approach this Court upon the refusal of that application for interim relief. The court indicated that the assurance that the State had given until 10.00 am this morning was sufficient to enable the applicant to go to this Court. So the subject matter of the decision which it is sought to have this Court hear an appeal in respect of, following a grant of special leave, is actually spent – so it is a further reason why there is no prospect, it is submitted, of special leave being granted.

Your Honour, something has been said already about the argument about nexus that was not raised and, indeed, as we have noted in the submissions, expressly conceded below. As I understand it, Mr Young is going to make submissions as to that, but can I say two things. Firstly, in attempting to explain the difference in treatment which has been identified by the respondents on the part of the applicant in this regard, my learned friend, in effect, I submit, put to your Honour that it was the manner in which the test was understood by the Court of Appeal that was incorrect, rather than that the test no longer applied. If so, the complaint that has been made is simply about the application of the test to the facts of this particular case which raises no special leave point.

In this context reliance has been placed on Justice Gaudron’s judgment in Truth about Motorways. All I want to submit about that is that paragraphs 51 and 52 of that judgment demonstrate that her Honour was addressing, not the question of remedies, but just the question of matter. For what it is worth, if she was addressing the question of remedy, the formulation she used was appropriately related which bears a marked similarity to Justice Gummow’s formulation in respect of section 80 in ICI which, as your Honour has been told, was the subject of favourable citation by the majority of the Court in the Rural Press Case.

The other argument upon which special leave is sought was it was submitted that the Court of Appeal had said that there was no power under section 232 to grant the relief sought in this case in relation to the signing of contracts. That was not what the Court of Appeal held. The Court of Appeal, in fact, assumed that, indeed, section 232 did create a new norm of public conduct. There was no finding that there would be a lack of power to grant the relief - - -

HER HONOUR: This is section 18 creating the new norm of conduct, is it?

MR McLEISH: The new norm, yes. I am sorry, your Honour, yes, section 18. It was assumed, as is said in paragraph 8 of the judgment, that that new norm of honest dealing was created. The conclusion though at paragraphs 12 and following which we would respectfully submit is plainly correct, was that even if there was such a norm in this particular case – and I am reading from the end of paragraph 14:

any connexion between the impugned conduct and such harm as it is alleged might be suffered by reason of the construction of the motorway is at best fortuitous and logically very tenuous.

Their Honours go on to say at paragraph 16, again, with respect, correctly, it is submitted, that:

it cannot be that the ACL’s conception of public interest protection goes as far as –

the applicant submitted.

To grant an injunction to achieve that consequence –

namely, to prevent the entry into a contract –

rather than to preserve interests which the legislation was designed to protect, would be an abuse of the legislation.

So their Honours were not saying there was no power or addressing the question of any difference between section 80 or section 232 at that point. Their Honours were really saying, on any view, the relief that is sought in this particular case was unlikely to be granted. True it is their Honours said it cannot be excluded. The critical point for the disposition of the injunction application was that it was logically very tenuous and at best fortuitous.

That conclusion is reinforced – I will not take your Honour to it, but at paragraph 105 of this morning’s judgment, in the final judgment, their Honours indicate again that – I will take your Honour to it since it is there - - -

HER HONOUR: Paragraph 105.

MR McLEISH: Yes, 105.

HER HONOUR: Yes, thank you.

MR McLEISH: This is where their Honours are saying the question of relief, interlocutory injunctive relief must ultimately go to trial. Their Honours said – I am reading from line 4:

Although the judge regarded it as highly unlikely that the plaintiff could ever persuade a court to make orders of the kind sought in paragraphs B(b) and B(c) of the Prayer for Relief, (and for the reasons we gave when refusing interim relief, we are not inclined to disagree) –

et cetera. So that - - -

HER HONOUR: That seems to be comment upon the strength of the prima facie case.

MR McLEISH: It is a comment on the likelihood of relief, your Honour, not so much – their Honours never assumed that the relief would be granted. Their Honours only assumed that the breaches would be established, the contraventions would be established. I do invite the Court to proceed on the same assumptions as the Court of Appeal did below. I need to come back to that because my learned friend said that there was an assumption made in relation to the point 8 or point 6 figure that has been bandied around and that is not the case.

HER HONOUR: Now, Mr Merkel, as I understand it, is suggesting that when dealing with the balance of convenience it is necessary to consider the applicant’s case that there is a loss of 20 cents in every dollar.

MR McLEISH: Well, there was no material before the Court of Appeal to establish that, and there is no material before this Court and it is not pleaded.

HER HONOUR: Is the position then that – that is what the applicant is seeking to establish.

MR McLEISH: That is what the applicant says - - -

HER HONOUR: That is the pleaded case, is it?

MR McLEISH: No, it is not, your Honour. There is no pleading in relation - - -

HER HONOUR: The pleading is the obverse, is it, that 1.4 as a return is misleading and deceptive?

MR McLEISH: Indeed.

HER HONOUR: Yes, I see.

MR McLEISH: It is the misleading and deceptive nature of the 1.4 figure. There is nothing about a daily loss. That is something that has been asserted today from the Bar table, your Honour. If it is convenient, I will come to the balance of convenience.

HER HONOUR: Thank you.

MR McLEISH: Although, as I have submitted, if there is no substantial prospect of special leave being granted, one does not get to the balance of convenience. Firstly, as the Court of Appeal identified, part of the relief that would be rendered nugatory is only part of the relief sought in this case. The relief flowing from establishing misrepresentations, including rectification for relief or declarations, would still be available and that is relevant to the balance of convenience.

Secondly, as your Honour is aware, there has been no meaningful undertaking as to damages and damages in this case stand to be very considerable. Thirdly – these are elaborated on in the written submissions, your Honour - but the third point is that it is not suggested that there is any injury to the applicant himself. The injury that is asserted is to the public interest but it is not able to be quantified.

We then come to the risk of significant harm to the State and it is in this context that I need to take your Honour to the affidavit of Mr Webster, which is exhibit 10 to Ms Fitzgerald’s affidavit. This was an affidavit filed by the State in the Court of Appeal.

HER HONOUR: Yes.

MR McLEISH: It has formed the basis for the findings of facts which the Court of Appeal made in relation to loss, in particular those that appear at paragraph 18 of their Honours’ judgment where their Honours say that it is plain that an injunction for anything longer than a few days would be likely to have profound consequences. Mr Webster deposes to those consequences starting at paragraph 10 on page 3 of the affidavit. The unchallenged evidence before the Court of Appeal was that these consequences flowed upon signing of the contracts which is the way in which they are described by Mr Webster, not from satisfaction of any conditions precedent.

Your Honour sees paragraph 10. There are foreign exchange implications if the contracts are not signed by 1 October. If the contracts are not signed by this date the State will assume foreign exchange risk on approximately €100 million. Secondly, in paragraph 11 the pricing is only open until 5 December and, as their Honours found in the Court of Appeal, that risk is actually enlivened earlier because of the commencement of the caretaker period on 4 November 2014. Thirdly, in paragraph 13, Mr Webster talks about service charges – I am sorry, yes, starting at line 5: “It is a standard practice in PPPs that service charges - - -

HER HONOUR: Yes, I see that.

MR McLEISH: So there is a risk of interest rate fluctuation. He says that the one per cent increase in interest rates prior to signing the contracts would cost the State $130 million. My learned friend says from the Bar table that that is not going to happen but there is no evidence, of course, of that. In any event, whether or not the exchange risk or the interest rate risk translates into an economic loss for the State is beside the point. The taking on of the risk is itself a gamble to which the State will be exposed if the contracts are not signed as Mr Webster deposes, a gamble which the State would otherwise not be taking and which it wishes not to take.

Mr Webster also goes on – and these are matters which the Court of Appeal did not specifically address – to deal with flow-on consequences to the State. Of course, unquantifiable but implications, in particular in paragraph 23 of his affidavit, talking about future damage to the State and that is explained in the paragraphs preceding which talk about the competitive manner in which companies and entities compete for large infrastructure projects, the importance of certainty in that regard and the consequences of inefficiency which include, in paragraph 19, the perception of additional risk leading to consortia seeking an increased return on their investment and being discouraged from assigning their best staff or increasing their margins, for example. Those are flow-on effects more generally to which the State apprehends.

Now, none of this evidence was challenged in the Court of Appeal and in the respects I have identified the Court of Appeal made findings of fact as to that and it is not open, it is submitted, to the applicant, to seek now to invite the Court to find differently in relation to those same matters.

The question of the contract or conditions precedent is not a new matter that is of any – there is nothing different now to what the situation was in the Court of Appeal in relation to those matters and our learned

friends should be taken to be bound by the way in which they conducted this matter below, especially given the discretionary nature of the relief which is sought and the fact that ultimately the applicant needs to establish a substantial prospect of special leave based on the findings of fact below, not based on any different findings that he might now be inviting this Court to make.

There is additionally the impact upon the tenderer itself. I will not say much as to that because, of course, Mr Wyles will address your Honour on that subject, but it suffices for me to say that loss of a contract to the value of $6 to 8 million it is plainly a matter of great significance to that third party.

Your Honour has been told by our learned friend that it is no fault of the applicant that the time for challenging the signing of this contract has now shrunk to a day or so. We contest that characterisation of events. As your Honour pointed out at the start of this hearing, the representations were first made in about July of 2013. It was a year before the plaintiff’s statement of claim sought the relief in relation to the signing of the contracts, having commenced the proceeding in April of 2014, some nine months after their representations.

Ms Fitzgerald swore an affidavit in the Court of Appeal which provided some background to that delay in commencing the proceeding, but ultimately there is no real explanation for the delay and given the urgency that is now created in relation to the proceeding, the delay on the part of the applicant is it is submitted, significant. Thank you, your Honour, those are the submissions for the State.

HER HONOUR: Thank you, Mr Solicitor. Yes, Mr Young.

MR YOUNG: Your Honour, we wish to make basically one point. We adopt our written submissions. We also adopt the written and oral submissions of the State. The point we wish to add is really an enlargement of what Mr McLeish had to say concerning the absence of any real prospect of the applicant obtaining special leave on the points it has identified.

The way in which the special leave application is framed suggests that the applicant wishes to contend that the best way of expressing the necessary connection between the cause of action and the form of relief sought is to use Justice Gaudron’s phrase “there must be an appropriate relationship between the two”. That is different from their position below where they repeatedly embraced the need for a sufficient relevant connection, but whatever phraseology is used, the applicant has accepted at every point of time that there needs to be an appropriate connection, a sufficient connection between the cause of action for misleading conduct and the form of relief that is sought.

In this Court this morning Mr Merkel told your Honour that he was not contending there does not need to be a nexus. Now, when one steps back, it is quite clear that this application will not raise a pure question of law contrary to the applicant’s submissions. It will raise a question of fact, namely what is the relevant connection or nexus on the facts of this case between the cause of action for misleading conduct and the forms of relief that are sought?

So there is no question of power. It is a question of applying a requirement for a nexus to the facts of the case. That means that this case is a most unsuitable vehicle for the High Court to consider the alleged issues of principle. It would have to consider arguments about the nature and extent of the nexus required without the full facts and that is the very point made by the Court of Appeal in both of its judgments. Can I go to the interim judgment, the interim order judgment of 24 September, your Honour?

HER HONOUR: Yes, I have that.

MR YOUNG: Your Honour has been taken to this paragraph, but if your Honour goes to paragraph 17, the court did not foreclose the possibility that a “sufficient relevant connexion” might be established. Indeed, their Honours say it “cannot be excluded unless and until there has been discovery”. Then the final sentence is important:

Nothing which we say in these reasons is intended to foreclose the issue if the matter is remitted for trial.

In today’s judgment – can I ask your Honour to go to the passages under the heading “Relief” that commence - - -

HER HONOUR: What page is that?

MR YOUNG: It is page 41, your Honour.

HER HONOUR: Thank you.

MR YOUNG: It commences with paragraph 93.

HER HONOUR: Yes.

MR YOUNG: What the court does is to refer to the authorities that the appellant itself cited at paragraphs 95 and 96, including ICI and

Justice French’s decision in paragraph 100 in the Real Estate Case. Paragraph 101 makes the point we made at the outset of our written submissions:

While the appellant accepted that the authorities concerning s 80 . . . have application in respect of cases concerning s 232 of the ACL, the appellant contended that s 232 of the ACL is . . . in more favourable terms –

and they specifically refer to subsections (5) and (6). But, crucially, in paragraph 102, the court comes back to the need to demonstrate a nexus. They do observe that those authorities remain relevant.

HER HONOUR: I notice they have used Justice Lockhart’s locution.

MR YOUNG: Yes, but cases in this Court say nothing different, your Honour – Lenah Meats, O’Neill. They all make it clear that for interim relief you need to have a sufficient connection with a final relief. But critically what their Honours said is that to undertake an exploration of that nexus, the court needs facts. That appears in the first sentence of paragraph 103 and in paragraph 105 – Mr McLeish went to this, but the passage continues, immediately after the brackets in the middle of the passage, the nub of their Honours’ observation follows:

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 shown, upon a full consideration of all of the facts, to have the necessary nexus with an established contravention of s 18 of the ACL.

Now, what the Court of Appeal did, in accordance with orthodox principle, was to weigh up all of the matters going to the existence of a substantial issue to be tried, which was assumed, but then they addressed whether there was a prospect of a necessary nexus being made out, losses to third parties and the State and the balance of convenience in a quite orthodox fashion.

What we do say is that this Court would not grant special leave to explore the nature and extent of the nexus established in this case because it would be operating in a vacuum if it tried to undertake that exercise. So for those reasons there is no real prospect of special leave and this would not be a suitable vehicle to raise any issues of principle. That is all we wish to add, your Honour.

HER HONOUR: Thank you, Mr Young. Yes, Mr Wyles.

MR WYLES: Thank you, your Honour. The Consortium would adopt and endorse the submissions made on the part of the State and the LMA, but importantly, your Honour, the position of the Consortium is as the party, the innocent party to be directly affected should any form of interim relief go. We have filed, your Honour, initial submissions of the preferred bidder seeking leave to appear. I note in passing, which is sufficient for the present time, your Honour, that the extraordinary jurisdiction which your Honour is being called upon to exercise by the applicant, brings with it an extraordinary burden for the applicant and a burden which the applicant has thus far in submissions failed to discharge.

We would ask your Honour to also weigh the position of the third party. In circumstances where, and, your Honour, we have had an affidavit sworn by Vaughan Alexander Wallace this day, which I trust has reached the Court - - -

HER HONOUR: Yes.

MR WYLES: Your Honour will see that today, in addition to the evidence which Mr Wallace gave on Friday, the position is that the Consortium, in circumstances where all of the terms of the project agreement have been agreed with the State, is ready and willing to enter into that project agreement and wishes to do so. If inhibited from doing so the Consortium will commence to incur losses of which Mr Wallace gives evidence, which are in the vicinity, your Honour, of $435,000 a week from today.

No undertaking as to damages which has substance is proffered. The plaintiff has chosen not to provide any security to support such an undertaking and that puts us in the position recognised by this Court in Patricks where the interests of a third party are to be affected by the interim relief sought, your Honour. Those interests weigh very heavily. They weigh all the more heavily in circumstances where, if the interim relief goes, there will be no compensation if ultimately our learned friends are unsuccessful at trial. Can I just say something about 17 October, your Honour?

HER HONOUR: Yes.

MR WYLES: With respect, fixing upon that date does not assist because we are not speaking about 17 October as being a date when all things can come to an end. They may or they may not. We will not know. The reality is, your Honour, that the Consortium is ready and willing to enter into the contract. It is an innocent third party which has done no more than comply with the demands of the State in the tender process, and ultimately it looks to be successful.

I understand my learned friend, Mr Merkel, fixes upon Mr Wallace’s evidence that the special conditions may take one to two weeks, but the reality is that the harm will commence to be incurred by the Consortium immediately. So, your Honour, although 17 October would take us much closer to the caretaker period, that is, with respect, not a satisfactory date at all. The extraordinary jurisdiction that my learned friend, Mr Merkel, seeks to have invoked is to be exercised now or to be not exercised.

We say, your Honour, that there are overwhelmingly compelling reasons, which I do not need to repeat - your Honour has had to sit through sufficient today - but we say, your Honour, that those overwhelmingly compelling reasons, against the grant of any form of interim relief, are made all the more so by the harm to the innocent third party which cannot, on any view, be redressed. If your Honour please.

HER HONOUR: Thank you. Yes, Mr Merkel.

MR MERKEL: Your Honour, can I go straight to the central submission by my learned friends, the Solicitor-General and Mr Young, that we do not enjoy sufficient prospects of special leave?

HER HONOUR: Yes.

MR MERKEL: That obviously is the threshold question. The way Justice Brennan referred to it in Burgundy Royale is his Honour granted interim relief pending special leave on the basis that the prospects were not insubstantial. So that is the first and critical threshold.

Your Honour, with respect to both of my learned friends, the point that we make is that this is a special leave application which is a demurrer – indistinguishable from a demurrer and does not involve any questions of discretion. It involves purely the issue of whether section 52 creates a new national norm of conduct which should be given effect to in the widest of terms under section 80 by reference to the power of the Court to grant an injunction appropriately adapted to a public wrong to protect the public interest and, secondly, whether harm to the public interest can result from the facts assumed by the Court of Appeal, all of which were rejected by the court.

Can I take your Honour to I think it is exhibit MF-2 which is the statement of claim because a matter stated by my learned friend, the Solicitor-General, unintentionally, I accept, was wrong.

HER HONOUR: This is the further amended statement of claim?

MR MERKEL: Yes, your Honour.

HER HONOUR: Yes, I have that.

MR MERKEL: Your Honour will recall in paragraph – it just pays to go back to the words – paragraph 6 of the judgment of the Court of Appeal last week - - -

HER HONOUR: Yes, I have that also.

MR MERKEL: The assumption is the applicant:

will succeed in establishing the misleading and deceptive conduct which he alleges.

HER HONOUR: Yes.

MR MERKEL: On the issue of the point 8 it is specifically pleaded in paragraph 6 – sorry, I have the wrong paragraph. I think it is 35(f), your Honour, if you go to paragraph 35.

HER HONOUR: Yes, I will just turn over to find (f). Yes, I see. This is the 1.4?

MR MERKEL: Yes, your Honour. So it goes in similar steps, all of which I have indicated to your Honour.

HER HONOUR: Yes.

MR MERKEL: The orthodox technology of not separating out wider economic benefits, which your Honour has been informed about from Mr McDougall’s affidavit, was not adhered to and then in (f):

the inclusion of WEBs resulted in the predicted BCR of 1.4 and the predicted net economic benefit of $1.746 billion being at least 70 to 80% higher than the BCR and net economic benefit that would be predicted using standard methodology –

That translates, your Honour, 1.4 being the equivalent of more or less point 8.

HER HONOUR: Yes.

MR MERKEL: So their Honours have assumed, for all aspects of the interlocutory application, both on prima facie case and balance of convenience, that on standard economic methodology this is a loss-making project of significant proportions. Now, your Honour, more importantly than just that, our case in its central allegations, not read down by particulars, has been accepted by the Court of Appeal for the purposes of its decision as putting our case at the highest we could ever establish before the trial judge because, going back to paragraph 6, their Honours said:

We also assume for the sake of argument, as we were asked to do by counsel for the appellant, that the impugned representations will be found to be egregiously misleading in the sense that the impugned representations were not only not based on reasonable grounds but were without any basis –

which had some support from Mr McDougall. Now, your Honour, those assumptions were made for a very specific reason and it was to overcome the Re Paringa situation because if we were denied the injunctive relief to render our appeal to the court nugatory, now our appeal to this Court nugatory or our application for leave to appeal, we would have stood fairly and squarely, in the words of the High Court in Paringa, of having our claims rejected without proper consideration of the claims on the merits on the case that the plaintiff wished to put.

We had said to their Honours, when their Honours said in paragraph 4, when we made the assumptions, as we were asked to do by counsel for the appellant, the reason they were asked to make those assumptions is that if they were not made, the applicant now, the appellant there and the plaintiff below, will have had his claims dismissed without any consideration and would have been in a worse position than Paringa because Paringa had a trial judge hear and determine the interlocutory application for an injunction and reject it. We would not have had that opportunity.

So the only reason the Court of Appeal were able to sidestep the Paringa point and did so advisedly was they had to assume the case we sought to make in our favour and that is the case at its highest and broadest as pleaded in that statement of claim. Your Honour, there is nothing discretionary about that case and that is why the questions of law that we have sought to articulate in our special leave application and in our submissions to your Honour rise fairly and squarely on the pleading. My learned friends did not go to one aspect of the pleading to say why there is anything discretionary here.

What the Court of Appeal was concerned about was because of Wickstead v Browne the claim for injunctive relief may take some shape or form and, therefore, should not be a strikeout but, your Honour, no trial judge could possibly grant the injunctive relief we seek here on the basis of the judgment of the Court of Appeal from which we are appealing. Their Honours recognised as much.

The discretion a trial judge may have will be somewhere other than that area. Their Honours recognised that if our statement of claim is put at its highest, which is the best we can do, that relief cannot be granted so no trial judge can overcome “logically tenuous”, the words the Court of Appeal used in its judgment. The particular words were “at best, fortuitous and logically very tenuous”. But more importantly, and I do not take your Honour back to it, but if your Honour reads paragraphs 12 through to 16, they are pure propositions of law based on facts that are taken to be admitted. It is not distinguishable from a demurrer.

That is why we say this is the only occasion on which this matter could be brought before the Court. I will not repeat what I said this morning, your Honour, but each of the paragraphs contains a proposition which we as a matter of law have criticised in principle which involved no discretion whatsoever. Their Honours went so far as, in 16:

it cannot be that the ACL’s conception of public interest protection goes as far as that. To grant an injunction to achieve that consequence, rather than preserve interests which the legislation was designed to protect –

which has rejected the interest for which we contended –

would be an abuse of the legislation.

That puts to bed for the purpose of proceedings under this legislative scheme throughout the country the public interest that is sought to be protected in this case because single judges are required under national legislation to follow the Court of Appeal. Courts of Appeal are obliged to follow other Courts of Appeal unless satisfied it is clearly wrong. There is only one avenue for this to be clarified and avoid the 40 years of controversy that has gone under section 80 and that is in this case.

So we say that criticism that this is not an appropriate vehicle is, with respect, misconceived. There is a further grievance we have about the submission that this was only a holding injunction until the hearing and determination of the appeal. Your Honour, I have to take you to the amended summons – would your Honour just excuse me for a moment, I will find it – the amended summons, your Honour, is tab 8, Ms Fitzgerald’s affidavit.

HER HONOUR: Yes, I have that.

MR MERKEL: Again, your Honour, like everything, context and understanding context is critical. What occurred, your Honour, is that at every stage of this litigation, as your Honour knows and has seen in this Court, the agreement not to enter into a contract was extended to a particular date which was always the coming afternoon. We took out an amended summons which sought orders, and this is the summons that was dismissed, in paragraph 2 “until further order” the two main injunctions were sought.

HER HONOUR: Yes, I see those.

MR MERKEL: Not until the hearing and determination of the appeal, but it was until further order. This is borne out fully on the transcript. What we said to their Honours we recognised that what we are seeking is – and their Honours accepted and our learned friends were told this and did not quibble at it – that the real effect of what we were seeking before the Court of Appeal was to hold the status quo until a trial judge could have the matter remitted to be determined in accordance with law so that we would not be in a Paringa situation.

The problem was that no trial judge could approach the matter fairly or objectively with the burden of Justice Croft’s decision still standing because this case was effectively thrown out as a misconceived and unwinnable case. So that until the Court of Appeal gave reasons, there was no really effective remittal. What we said to the Court of Appeal in our submissions is that in the first instance obviously the “until further order” is until the hearing and determination of the appeal because at the hearing and determination of the appeal we will have either been successful or unsuccessful.

If we were successful, we had a right then to say until remittal to the trial judge. If we were unsuccessful, we would have had an Erinford situation – Erinford Properties – we would say until we can appeal to the High Court. But it was clear that the matter was contested on the basis of a substantive application and your Honour has seen all our learned friend’s affidavits in response. They were not for a week or five days. They accepted that the injunction sought was in practical terms until a court could really conduct a full hearing of interlocutory applications, so all their evidence went up until 5 December, not for the next few days.

So that ironically then we go this morning and find we win the appeal but we say we are in an Erinford situation because we want to appeal this judgment because nothing their Honours ordered today was appealable because we won. Then we find we come to your Honour and we are told there is nothing to appeal, it has all come to an end by the notion that all their Honours did was dismiss an application for an injunction until this morning.

Nothing can be further from the reality of what has occurred in the present case. The summons that was dismissed was until further order and it has the practical consequence, your Honour, unless this Court intervenes, of rendering nugatory and unachievable the primary relief which this case has been about since July. So we say that for those reasons the criticism that has been put forward by our learned friends both on substance and form is not correct.

Your Honour, with respect to Mr Webster’s affidavit and my learned friend Mr Wyles’ client’s affidavit, we say what is put forward is a risk of loss, not actual irremediable loss, because firstly, the bid was always binding only and binding until 5 December. So the way in which the parties have proceeded is to order their affairs on the basis contractually that these risks will all be borne and will be accepted as being borne until 5 December.

If it is fortuitous they can sign earlier, then they will sign earlier and the risks will crystallise at a particular date, but they are no more than risks. I do not minimise risks but risks are not the same as an actual loss that will be incurred. Foreign exchange is a risk, interest is a risk but it is not a loss, and my learned friend Mr Wyles’ client’s running costs are risks it has incurred and there is no reason to expect or believe that it is more than a risk because no doubt in the negotiations it is entitled to seek recoupment of those costs from the State because I accept it is not Mr Wyles’ client’s fault that it is in this predicament, it is the State’s fault, if we succeed, but it is all recoverable by negotiation and there is no evidence to suggest it will not be recoverable.

Now, those risks can crystallise into a financial loss, but we have two very substantive – or three substantive responses to that financial loss that those risks might crystallise into. First, on the facts assumed in our favour and not in contest, those risks of loss totally pale against the predicted loss assumed by the Court of Appeal and which would be assumed and need to be assumed in this Court.

May I add one other matter, your Honour, not that it was necessary but we wrote to the State asking for the State to confirm for today that the cost benefit ratio without the WEBs is point 8. The source of that is public but a privileged source and therefore unable to be used or employed in the court. We said to the State as a model litigant that being in the public domain it should admit it. It did not do so and said it is subject to public interest immunity but, as it turns out, the assumptions made in the further amended statement of claim allow us to say that your Honour can only act on the basis of that point 8 having been established and assumed and, therefore, we say those risks pale against that loss.

Now, the only way in which that loss can be discounted as not a relevant loss is that the public interest served or purportedly served by Mr Murphy is not able to be taken into account by the court when it is a State incurred loss. That raises a profound question under the scheme of the ACL and FT Act and the ACL which we are seeking to agitate on special leave, but the Court of Appeal unambiguously regarded it as not a calculable or justifiable loss to take into account. That is a pure question of law.

But the enormity of the question is that the greater and more egregious the breach and the larger the project, the greater the impunity of the State if that be the correct principle. It effectively takes the State conduct outside the reach of a litigant seeking to protect the public interest. We may be wrong on that, your Honour, but the question for your Honour is, is it a significant and substantial and arguable question and, most importantly, should we be shut out from bringing that question for an application for special leave on 17 October by reason of these risks.

So we say that our learned friends cannot avoid the circularity that they are seeking to do here. They are saying half the circle is their loss, the other half of the circle of the public loss is irrelevant. Now, these are not matters – what is not in dispute, as the questions we seek to raise and we have sought to articulate them in our submissions, have not been considered by this Court. Section 80 has not been considered by the Court at all. This requires consideration of the dispute which we say, with respect, does exist about Justice Gummow versus the Justice Lockhart approach as articulated in Foster’s Case which, your Honour, we had set out in our list of authorities.

I will not take you to it but it is as tab 2, and the relevant passage is at paragraphs 23 to 35 and paragraph 28 particularly, which raises the question of which of the two views are open, thrown in the air by Rural Press. But the section 52 question which is the necessary stepping stone has been thrown into the air in a very unambiguous way by the Full Court saying that the changed legislative regime – the Court of Appeal that is – has not changed concrete constructions, again, a matter of profound importance affecting section 52 cases in every court and tribunal in this country which is a daily day-to-day jurisdiction.

How much litigation, your Honour, has there been over the words “in trade and commerce” – case after case after case. So we say, your Honour, those questions will effectively be denied consideration of this Court if our special leave application is rendered nugatory. I am not sure what my learned friend, Mr Wyles, sought to make about 17 October being irrelevant. It is his - - -

HER HONOUR: I think what he was suggesting to me, Mr Merkel, was that there may be further application for further interim relief after 17 October, depending on the outcome. I think he was just making the point that what may occur is that there may be a series of applications for interim relief sought to restrain the signing of the contracts. That is what I understood him to be - - -

MR MERKEL: Thank you for that, your Honour. If that is correct, that is necessarily a criticism of the legal framework within which parties must operate. If we satisfy the criteria on today’s application, it takes us no further than the 17th. For an extension we have to go before a Full Court as part of a special leave application and there will be a further issue in question which will be determined on that day on different principles by reference to whether or not special leave is to be granted, one of the aspects of which will no doubt be whether the subject matter of the appeal will be preserved.

But, your Honour, that is saying no more than if you come to the High Court you have to go in two steps concerning relief, but for real purposes and for the purposes of your Honour’s consideration, we say today’s application is only what is sought and that is on the undertakings we have given until 17 October so the Full Court on that date can consider how the matter should be dealt with.

Your Honour, the last matter I wanted to say is I have not really ascertained whether there is some criticism of our instructor or Mr Murphy for being slow to bring the proceeding, but Ms Fitzgerald’s affidavit which is exhibit MF-13 sets out the history of the matter and we say, your Honour, no one could suggest that there has been any what I will call culpable or relevant delay when you read that affidavit in respect of a private person bringing litigation in the public interest.

There is a sequence of facts and chronology which is entirely understandable and there could not be any fair criticism that there was delay in bringing the matter and we say that what our learned friends have no answer to, with respect, is what we say is a very important discretionary consideration which I will finish on, your Honour, that in the light of the Court of Appeal’s judgment a decision that has effectively brought us here to have to deal with this last minute defence, the gates of Armageddon are about to fall because the contract that is due to be signed tomorrow have been brought about entirely by an unfair judicial process which we opposed from the outset which was urged on the court by our learned friends and that was so held by the Court of Appeal judgment on a fair reading of it.

We say that that should not preclude us from getting the relief we seek for the very, very short time that we are seeking it for your Honour. Irreparable harm which is really what it is all about has not been established as being suffered between now and 17 October. Thank you, your Honour.

HER HONOUR: Thank you, Mr Merkel. Yes, Mr McLeish.

MR McLEISH: Your Honour, if I may just briefly, I wanted to respond to what Mr Merkel said about paragraph 35(f) of the pleading.

HER HONOUR: Yes.

MR McLEISH: Even assuming for the sake of argument that the point 6/point 8 figure can be divined from that paragraph, what that paragraph constitutes is particulars of the pleading of the inaccuracy of the standard methodology representation. There is no pleading whatsoever about loss caused to the State, so the deficiency in the evidence is not made up for by the pleading.

Moreover, to the extent that paragraph 35(f) is relied on as the pleading of some kind of loss, it is contradicted by Mr McDougall’s evidence which as your Honour observed near the beginning of today’s hearing acknowledges that there are things called wider economic benefits, the gist of his evidence is that they are difficult to measure. So even if the representation was incorrect, as the Court of Appeal assumed, it by no means follows that there is a loss to the State commensurate with the difference between a standard methodology and the methodology for which the applicant contends. If your Honour pleases.

HER HONOUR: Thank you, Mr McLeish. Yes, Mr Merkel.

MR MERKEL: Sorry, your Honour, could I say this? The figure is in the public domain on cost benefit ratio. If need be, we say it is a fact which properly read those pleadings say the cost benefit ratio reduces to point 8 from 1.4 because that is what 70 to 80 per cent does and the cost benefit ratio is the economic model used in material that looks and measures at net present value of all predicted costs including time savings. Mr McDougall sets that out.

If there need to be any further, it was open to the State to come forward and state a figure which we invited them to do, whether it was point 8 or 1.2. It has not chosen to do so, which means that any inference if it needs to be drawn but it does not on the assumption should be drawn in our favour. But more importantly, your Honour, wider economic benefits

on Mr McDougall’s affidavit are theoretical benefits that may occur over time which go to what might be called competitive benefits.

So the agglomeration effect is where you have, for example, a port and all transport companies agglomerate by a freeway to a port it enhances competition and that way over a long period of time there is some net economic competitive effect achieved. Time saving, so if your Honour gets to work half an earlier and the High Court gets more value out of your Honour’s time or your Honour’s associate’s time, that goes into net economic benefit. So that the agglomeration and wider economic benefits, whilst an emerging area, are well, well into the future.

The one thing that cannot be said on any fair reading is that those benefits have got anything to do between 1 and 17 October. What does exist between 1 and 17 October is 20 cents loss in every dollar and if your Honour needs to calculate that, if they are going to spend $6 to 8 billion that tells you it must run into hundreds of millions of dollars. So we say that it does not lie in the State’s mouth fully aware of what the loss is to try and argue before your Honour with any credibility that there is no way in which your Honour can assume there is a loss of the kind that economists would say is real money. If your Honour pleases.

HER HONOUR: Yes, thank you, Mr Merkel.

By an application filed Friday, 26 September 2014, the applicant, Anthony Murphy, seeks special leave to appeal from a judgment of the Court of Appeal of the Supreme Court of Victoria (Nettle AP and Santamaria and Beach JJA)[1]. The applicant has also filed a summons dated 26 September 2014 seeking an urgent interim injunction to restrain the State of Victoria and Linking Melbourne Authority (“the respondents”) from entering into any contract for the design, funding, developing, procuring or construction of the East West Link (Eastern Section) Project (“the Project”) with East West Connect Consortium, or compulsorily acquiring certain properties in connection with the Project. The application for interim relief is opposed by the respondents. It is also opposed by a third party, East West Connect Consortium, which intervenes pursuant to a grant of leave which was unopposed. The applicant also asks in his summons that the hearing of his application for special leave be expedited.

The Court of Appeal dismissed the applicant’s amended summons seeking relief in the same terms now sought from this Court. In essence, the substantive claim which the applicant is pursuing in the courts below is a claim seeking relief based on allegations that the respondents have engaged in misleading or deceptive conduct within the meaning of section 18 of the Australian Consumer Law, as applied to the Crown by section 16 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

The Court of Appeal delivered judgment this morning upholding the applicant’s appeal to that Court and remitting the further hearing of the matter to the Trial Division. On that occasion the applicant made an application to the Court of Appeal for a stay, bearing in mind Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) [1986] HCA 84; (1986) 161 CLR 681.

Ordinarily this Court will not grant special leave to appeal against a refusal by an appellate court to grant an interlocutory injunction because interlocutory decisions involving discretions and matters such as where the balance of convenience lies are unlikely to involve a question of principle. However, the Court has an undoubted and important jurisdiction to grant interim relief if it is necessary to protect the utility of proceedings: Tait v The Queen [1962] HCA 57; (1962) 108 CLR 620 at 624-625. There are also special powers to grant injunctive relief, including interim relief, under the Australian Consumer Law, section 232.

The principles to be applied in determining whether to exercise the extraordinary jurisdiction of this Court in granting a stay pending the hearing and determination of an application for special leave to appeal are identified by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) [1986] HCA 84; (1986) 161 CLR 681 and have been subsequently considered in proceedings, including Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 2) (1998) 72 ALJR 869.

In Jennings Construction [1986] HCA 84; (1986) 161 CLR 681 at 684, Brennan J noted the high threshold that must be satisfied for the Court to exercise its extraordinary jurisdiction, stating:

A stay to preserve the subject-matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted.

His Honour went on to identify a number of material considerations impacting upon the exercise of the Court’s discretion whether to grant a stay (at 685). These included:

first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending –

I interpolate to note that I put that to one side –

thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies.

The same considerations apply in circumstances where the applicant is seeking interim injunctive relief of the kind described above: see Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1991] HCA 13; (1991) 99 ALR 417 at 419.

The arguments advanced in favour of the grant of an interim injunction are first, that the special leave question involves an issue of general public importance, which is whether the criteria and principles which applied to the grant of injunctive relief under section 80 of the Trade Practices Act 1974 (Cth) require reconsideration given the differences in scope between that Act and the Australian Consumer Law. It is contended that this Court has not had the opportunity to consider the width of power to grant injunctive relief under section 232 when a person who has standing seeks to protect the public interest from harm. Secondly, it is contended that the applicant’s appeal will be rendered nugatory if the interim relief is not granted, at least until the hearing of the special leave application.

The basis of the opposition to the grant of an interim injunction is that, even if the applicant is ultimately successful, he will not likely be entitled to injunctions in the terms in which they are sought. It was submitted that the special leave question is not one of the powers which subsist under section 232, but one which turned on facts, some of which remain to be established - as the Court of Appeal recognised. Secondly, it is submitted that the loss and damage which would be suffered by the respondents would be significant, as evidenced in affidavit material filed on their behalf, some of which is confidential.

The intervener submits that it is well aware of the applicant’s claims of misleading and deceptive conduct, but it is not deterred from signing relevant contracts as the preferred bidder and, if prevented from doing so, it also will suffer significant losses.

For the purposes of dealing with the application for interim relief, the Court of Appeal assumed that the applicant will succeed upon appeal and on remitter to the Trial Division and will succeed in establishing the misleading and deceptive conduct which he alleges. The Court of Appeal also acknowledged the circumstance that novel questions were raised before it as well as questions of statutory construction yet to be authoritatively determined. The applicant complains particularly that the Court of Appeal stated that:

any connexion between the impugned conduct and such harm as it is alleged might be suffered by reason of the construction of the motorway is at best fortuitous and logically very tenuous.

The Court of Appeal went on to state that the chance the applicant might establish a “sufficient relevant connexion” between the impugned conduct and the relief which is sought cannot be excluded and that possibility was not foreclosed by any refusal to grant the interim relief until further order.

The principles to be applied in respect of the grant of injunctive relief are well settled and apply under section 232 of the Australian Consumer Law. Those principles require the determination of whether an applicant for injunctive relief has made out a prima facie case of entitlement to that relief, then it is necessary to consider the balance of convenience.

It seems clear that, whatever questions of principle might arise in respect of the precise test to establish the scope of the power to grant interim relief under 232 to a person who has standing, the Court of Appeal determined the matter as it did essentially by reference to the balance of convenience based on evidence, some of it confidential, of the loss and damage the respondents would suffer if the restraints sought were imposed. This included the circumstance that if relevant contracts are signed after 1 October 2014, the State of Victoria will assume foreign exchange risk in relation to €100,000,000 and the risk of interest rate fluctuations until certain charges are fixed under those contracts.

The parties have made submissions as to the prospect of the applicant obtaining special leave. In particular, Mr Merkel, senior counsel on behalf of the applicant, has submitted that the losses of the Project which the applicant has pleaded must be assumed, so as to avoid being deprived of an opportunity to put the applicant’s case as it wishes to. It was further submitted that the special leave application is not relevantly distinguishable from a demurrer. This appears to me to involve a misunderstanding of Paringa Mining & Exploration Company Plc v North Flinders Mines Ltd [1988] HCA 53; (1988) 165 CLR 452 which involved injunctive relief to restrain the implementation of a takeover offer at the suit of a beneficial owner of 49.96 per cent of the issued capital.

However, today is not the occasion for determining the substantive merits of the matter. It is not necessary for me to say any more today other than that, having reviewed the relevant materials urgently, I am not convinced that the decision of the Court of Appeal turned significantly on any question of law. Rather, it appears to me that weighing up the need to protect the position of the applicant, if he succeeded ultimately, against the need to protect the position of the respondents, if uncertainty is resolved ultimately in their favour, the Court of Appeal determined where the balance of convenience lay.

Furthermore, I am not persuaded that the applicant’s success on appeal would be rendered nugatory if no interim injunction was granted. The applicant seeks declaratory and other relief as well as a permanent injunction. It appears at this stage that the applicant’s case will involve contesting economic modelling used to calculate the future economic returns of the Project. In essence, the applicant seeks to restrain the respondents from entering into contracts in respect of a government infrastructure project concerning transport needs in the city of Melbourne on the basis of a prima facie case, which was accepted by the Court of Appeal, which is that the Project will in fact incur losses as pleaded.

The circumstance that the applicant has no personal interest in the Project and also will suffer no personal loss or damage if it goes ahead does not preclude him from pursuing the litigation and acting in the public interest as he perceives it. However, even to the extent that the applicant makes out his case and obtains declaratory relief, the wide powers under section 232 include powers to mandate correction of any misleading and deceptive representations so as to ensure the protection of any public interest.

Refusal of interim relief today in the terms in which it is sought does not preclude the applicant from seeking other forms of injunctive relief in due course, including mandatory correction of any misleading and deceptive statements or other relief tailored to meet the facts which are ultimately proved. The applicant remains free to pursue his case that the business case presented by the respondents in connection with the Project should be corrected in the public interest.

The third material consideration is the loss and damage to the respondents if relief were granted. This was set out in an affidavit of David James Webster, being exhibit 10 to the affidavit of Meghan Fitzgerald sworn on 26 September 2014 and filed in support of the applicant’s summons. There are also affidavits filed by Vaughan Alexander Wallace on behalf of the intervener. Mr Wallace deposes that the intervener commenced to suffer losses of $435,000 per week from today if restrained from entering contracts which are ready to be signed. Mr Merkel has submitted on behalf of the applicant that the risks have been accepted until 5 December next.

Whatever the details may be, it appears to me that, on the material I have been asked to consider urgently today, more is at risk for the respondents and the intervener if an interim injunction is granted than for the applicant if he is now refused interim relief. In that context, it must be mentioned that an unsecured undertaking was proffered. However, Mr Merkel conceded properly that that undertaking could not realistically be called upon if the damages suffered by reason of the grant of interim relief today turned out to be significant.

In all the circumstances, and having taken into account everything urged on behalf of the applicant, I am not persuaded that the applicant’s prospects of success on the special leave application outweigh the considerations of loss to the respondents and the intervener and the balance of convenience which I have identified above. However, the application for special leave will be expedited by being listed for hearing on 17 October next and the summons will otherwise be dismissed with costs reserved.

The orders I make are:

1. The applicant’s application for special leave to appeal filed on Friday, 26 September 2014, be set down for hearing in the list in Sydney on Friday, 17 October 2014.
   
2. The applicant is to file and serve a summary of argument by 4.00 pm on Friday, 3 October 2014.
   
3. The first and second respondents are each to file and serve a summary of argument by 4.00 pm on Tuesday, 7 October 2014.
   
4. The applicant has leave to file and serve any reply by 4.00 pm on Wednesday, 8 October 2014.
   
5. The applicant is to file and serve an application book by 4.00 pm on Friday, 10 October 2014.
   
6. The applicant’s summons filed on Friday, 26 September 2014 is otherwise dismissed.
   
7. The costs of the applicant’s summons be reserved.
   

Finally, I should note that I wish to reserve the right to correct the transcript of this ex tempore judgment. Yes, Mr Merkel.

MR MERKEL: Can I just express our gratitude to your Honour. We do appreciate that it is no small request on our part for the Court to convene as urgently as it has and to expedite the hearing of the special leave application.

HER HONOUR: May I express my gratitude to all counsel involved for the submissions which were of assistance to me. Adjourn the Court.

AT 3.09 PM THE MATTER WAS ADJOURNED

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[1] Murphy v State of Victoria and Anor [2014] VSCA 236.