Bluesky Communications Ltd v Attorney-General [2007] WSSC 58 (31 July 2007)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

BLUESKY COMMUNICATIONS LIMITED
(a wholly owned subsidiary of AST Telecom, LLC) a duly incorporated company
having its registered office at Matafele.
Plaintiff

AND:

ATTORNEY-GENERAL
for and on behalf of the State of Samoa.
First Defendant

AND:

ATTORNEY-GENERAL
for and on behalf of the Minister of Communications and Information Technology
Second Defendant

AND:

ATTORNEY-GENERAL
for and on behalf of the Office of the Telecommunications Regulator.
Third Defendant

AND:

COMPUTER SERVICES LIMITED
a duly incorporated company having its registered office at Apia.
Fourth Defendant

Counsel: G M Latu for plaintiff
R Wendt and M Betham-Annandale for first, second and third defendants
P A Fepulea’i for fourth defendant

Hearing: 11 July 2007
Judgment: 31 July 2007

JUDGMENT OF SAPOLU CJ

To assist in understanding the issues in these somewhat complex proceedings, I have decided to set out my judgment under ten PARTS. PART A will set out the factual background to these proceedings; PART B will set out the plaintiff’s causes of action; PART C will explain the nature of the proceedings; PART D will explain the legal approach to be applied to these proceedings: PART E will deal with whether the defendants have been correctly cited as parties; PART F will deal will the tender process which is the main issue in these proceedings; PART G will deal with the doctrine of executive necessity; PART H will refer to the disclaimer clause; PART I will deal with the question of whether the plaintiff’s cause of action should be struck out; and PART J will set out the conclusions.

PART A

Factual background

In 2005, the then Minister responsible for communications and information technology was appointed as Regulator on an interim basis under s.6 of Telecommunications Act 2005 pending the appointment of a full-time Regulator. Around the same time the Ministry of Communications and Information Technology determined to issue another mobile digital cellular licence. The opposing affidavits from the plaintiff on one hand and the first, second and third defendants are in conflict as to whether that would be the second or third of such licence in Samoa.

Apart from determining that another mobile digital cellular licence should be issued, the Ministry of Communications and Information Technology also determined that a competitive process should be adopted for the selection of an entity to whom the new licence was to be issued. This competitive selection process was called "The Tender Process". It is at the heart of these proceedings.

How the tender process came about is as follows. A preliminary notice was given out by the Ministry of Communications and Information Technology (MCIT) that it plans to issue a "second mobile telecommunications licence in Samoa". In this preliminary notice MCIT invites companies or consortia with mobile telecommunications experience and with the technical and financial capability to construct a digital cellular telecommunications network and provide cellular service in Samoa to register their interest with the Ministry if they wish to do so. Two addresses are provided in the preliminary notice for interested companies or consortia to send their requests for registration. These are the addresses of the MCIT and the overseas advisers to the MCIT. The preliminary notice was received by the plaintiff on 20 January 2005.

On 28 September 2005, the MCIT published another notice which is headed "Tender Documents for New GSM Licence". This second notice again invites companies or consortia with mobile telecommunications experience and with the technical and financial capability to construct a digital cellular telecommunications network and provided cellular service in Samoa to register as prospective applicants. Interested parties were to deliver requests for registration together with the required registration fee to any of the two addresses specified in the notice within 30 days from 28 September 2005, the date of the notice. One of these addresses is the MCIT, the other is the overseas address of the MCIT advisers.

In response to the second notice published on 28 September 2005, the plaintiff put in a request for registration and paid the registration fee within the deadline. According to the affidavit filed in these proceedings by the chief technology officer for the plaintiff, this deadline was 31 October 2005. I am not clear whether 31 October 2005 was the correct deadline because the second notice which was published on 28 September 2005 states that the requests for registration and the registration fees should be delivered to any of the specified addresses within 30 days of the notice which was 28 September 2005. Perhaps the reason why the deadline is mentioned as 31 October 2005 in the affidavit of the chief technology officer for the plaintiff is because in p.32 of the document called the "Information Memorandum" issued by the MCIT on 4 October 2005, it is there stated that the "final date for registration of interested applicants-October 31, 2005."

After the second notice, the MCIT and the Office of the Regulator, established under s.9 of the Telecommunications Act 2005, issued the "Information Memorandum" dated 4 October 2005. This is a lengthy document and is in seven Sections. It is not necessary to refer to all those Sections. Clause 1.1 of Section 1 states that the Information Memorandum provides information regarding a competitive tender process for the issuance of a single digital cellular licence and related radio frequency spectrum in Samoa (the tender process). Clause 1.1 also provides that at the end of the tender process the Regulator appointed under the Act would award the new GSM licence to a successful applicant unless the tender process is terminated or unless no applicant is deemed to be qualified to receive the licence. It further provides that the Regulator will be assisted in running the tender process by the MCIT. This suggests that the Regulator and the MCIT were involved in conducting the tender process.

"Applicant" is defined in clause 1.2.1 of Section 1 of the Information Memorandum to mean a person who files an application on behalf of an entity that wished to receive the licence as the New Mobile Operating Company. "Application" is defined to mean an application filed in response to the tender process, and all related materials submitted by an applicant.

Clause 5.1 of Section 5 of the Information Memorandum states that a single digital cellular licence and related radio frequency spectrum may be awarded on completion of the tender process and a comparative evaluation method will be used to evaluate applications. Clause 5.1 also states that the Government and the Regulator "reserve the right to change, suspend or abandon the tender process at any time before or after the conclusion of the tender process." Clause 5.1 then sets out the timetable for the licence application process. Under this timetable the final date for registration was 31 October 2005, the deadline for questions and comments was 10 November 2005, the date for the pre-bid conference was the week of 21 November 2005, the date for written answers to questions and comments was the week of 5 December 2005, the date applications were due was 6 January 2006, the date for announcement of the winning applicant was the week of 16 January 2006, and the date for completion of the licensing process was the week of 6 February 2006. Clause 5.1.1 then states that applications will be evaluated on the basis of the documents that have been received by the "submission deadline". Clause 5.1.1 then concludes by saying that "registered applicants" will be advised of any changes in those dates.

Whilst "applicant" is defined in clause 1.2.1, the term "registered applicant" is not. The term "applicant" is also used in Section 1 and Section 5. The term registered applicant appears at the end of Section 5. "Registered applicant" in the context of the preliminary notice that was given out on 20 January 2005 by MCIT and the second notice headed "Tender Documents for New GSM Licence" that was published on 28 September 2005 by the MCIT would seem to mean an applicant which puts in a request for registration and paid the required registration fee before the deadline of 31 October 2005. This is important because one of the main complaints by the plaintiff is that Digicel (Samoa) Ltd which is the New Mobile Operating Company did not file for registration prior to the deadline for registration which was 31 October 2005. In other words Digicel (Samoa) Ltd is not a registered applicant.

Clause 5.1.2 states that registered applicants may submit to the MCIT questions about the tender process or requests for clarification of matters raised in the Information Memorandum within the deadline. According to the timetable in the Information Memorandum, this deadline was 10 November 2005. Clause 5.1.3 then states that registered applicants will be invited to attend a pre-bid conference in Samoa and representatives of the Regulator, the Ministry, and Samoa Tel will attend to answer questions and provide clarification on the tender process etc. Clause 5.1.4 states that the Ministry, which is MCIT, reserves the right to publish the names of "applicants" and information related to their applications. One of the complaints by the plaintiff is that pursuant to the requirement of transparency under good governance, the identity of Digicel Ltd should have been disclosed during the tender process to at least the plaintiff. This is strongly disputed by counsel for the first, second and third defendants. Clause 5.1.5 states that so long as the tender process has not been changed, suspended or terminated and it has not been concluded that no applications are suitable for the award of the new licence, the Regulator will issue the new digital cellular licence to the applicant that obtains the highest scoring in the comparative evaluation process. Clause 5.2 then sets out and explains the comparative evaluation criteria. The plaintiff has no complaint in relation to clause 5.2.

Section 6 of the Information Memorandum contains instructions to applicants. Clause 6.1 is the disclaimer of liability to the applicants. It is somewhat detailed and I do not propose to refer to it in detail.

It states:

"This Information Memorandum is prepared for general information purposes only. It is made available on the understanding that the recipient will use it, and the information contained in it, for the sole purpose of assisting the recipient to determine whether it wishes to participate in the tender process, and if so, how"

Clause 6.1 then goes on to state:

"The Information Memorandum does not constitute an offer, recommendation or invitation to participate in the tender process, nor does it constitute the basis of any contract that may be concluded in relation to the tender process or in respect of any grant of licence or assignment of radio frequency spectrum."

Clause 6.1 further goes on to state:

"The Ministry and the Regulator reserves the right to change, suspend or terminate the tender process at any time and shall be under no obligation to award the digital cellular licence to any person.

"All persons participating in the tender process acknowledge: (i) that the Regulator shall be entitled to make any decision to award the digital cellular licence, or to suspend or terminate the tender process, at its sole and complete discretion, and (ii) that the Ministry and the Regulator shall be under no obligation to supply reasons or other justification for any such decision."

Clause 6.2 which is headed "Restrictions on Participation" then states:

"Only applicants that have registered as applicants and paid the required fee shall be qualified to submit applications."

Clause 6.2 then goes on to state:

"The tender process and the licence to be awarded by it are not open to participation by Samoa Communications Ltd (Samoa Tel), Telecom Samoa Cellular Limited (TSCL) or any affiliated company of Samoa Tel or TSCL."

One of the main complaints by the plaintiff, as earlier mentioned, is that contrary to clause 6.2 of the Information Memorandum, the new digital cellular licence was awarded to Digicel (Samoa) Ltd which was not a registered applicant because it did not file a request for registration and paid the required registration fee prior to the expiry of the deadline which was 31 October 2005. According to the affidavit of the chief technology officer of the plaintiff, how the plaintiff came to know that Digicel Ltd was not a registered applicant was that, at the pre-bid conference that was held on 24 November 2005 and attended by a representative of the plaintiff, there was no representative of Digicel Ltd. The plaintiff inferred from that, that Digicel Ltd was not a registered applicant.

The response given by counsel for the first, second and third defendants was that the tender process was open to companies as well as consortia. An application was put in by Computer Services Ltd (CSL), the fourth defendant, and Digicel Ltd as a joint venture or consortium. That joint venture was awarded the new digital cellular licence. They then formed Digicel (Samoa) Ltd which is the current mobile operating company. However, counsel for the first, second and third defendants was not in a position to tell the Court whether that joint venture put in its request for registration and paid the registration fee prior to the expiration of the deadline of 31 October 2005. This is really what the plaintiff is complaining about. It is clear from the affidavit of the plaintiff’s chief technology officer that a representative of Computer Services Ltd (CSL), the fourth defendant, attended the pre-bid conference that was held on 24 November 2005. That implies that the fourth defendant was a registered applicant. What has not been made clear is whether the representative of the fourth defendant attended the pre-bid conference as a representative of the fourth defendant alone or as representative of the joint venture between the fourth defendant and Digicel Ltd. It seems to me that the plaintiff suspects that the said joint venture might have only been formed after the deadline of 31 October 2005. That is only a suspicion at this stage.

The other main complaint by the plaintiff is that clause 6.2 of the Information Memorandum states that the tender process was not open to certain companies including any "affiliated company of Samoa Tel". According to the plaintiff, the fourth defendant was at all material time an affiliated company of Samoa Tel but somehow it became one of the registered applicants. The plaintiff further claims that even if the joint venture between the fourth defendant and Digicel Ltd had properly become a registered applicant by filing a request for registration and paying the registration fee within the specified deadline, the fact remains that the fourth defendant was an affiliated company of Samoa Tel and therefore the tender process was not open to its joint venture with Digicel Ltd in terms of clause 6.2.

After the Information Memorandum dated 4 October 2005 was issued, the plaintiff received an e-mail on 4 January 2006 from the Office of the Regulator advising that a request for a further extension of the deadline of 6 January 2006 when applications were due had been received from one of the "bidders" (tenderers). This e-mail also sought the views of the plaintiff and other tenderers on the request for extension of time. The plaintiff did not agree to an extension of time. A notice was published, apparently on 6 January 2006, wherein it was announced by the Regulator that the deadline for applications to be due was extended from 6 January 2006 to 20 January 2006. As it appears from the affidavit of the chief technology officer of the plaintiff, the deadline was again extended from 20 January 2006 to 10 February 2006 by another notice from the Regulator. The reason given in both notices for the extension of the deadline when applications will be due was to permit registered bidders (tenderers) the opportunity to obtain more information to prepare their applications. On 10 February 2006 the plaintiff submitted its application.

On 13 February 2006, the sealed applications were opened by the Tenders Board in the presence of all the applicants. According to the affidavit of the plaintiff’s chief technology officer, that was the first time the plaintiff became aware that Digicel Ltd was an applicant. To be accurate, the applicant was the joint venture between the fourth defendant and Digicel Ltd and not Digicel Ltd alone. The plaintiff, as earlier mentioned, complains that the identity of Digicel Ltd should have been disclosed during the tender process in the interests of transparency and good governance. Furthermore, the plaintiff claims that had it known that Digicel Ltd was going to submit an application, it would have sought to enter into a consortium with a company that had more operating experience and stronger finances than Digicel Ltd. Counsel for the first, second and third defendants submitted there was no obligation on the Regulator or the MCIT to reveal the identity of any tenderer. In any event, it was open to the plaintiff all along to form a consortium with another company because the notices that were published in 2005 expressly invited companies and consortia with the necessary experience and financial capabilities to lodge requests for registration.

I am somewhat concerned about what is said in the affidavit by the chief technology officer of the plaintiff that during the pre-bid conference which was held in the week of 21 November 2005 the plaintiff was able to conclude that only one of the registered applicants was capable of satisfying the evaluation criteria of the tender process as the other applicants would be eliminated due to their lack of relevant experience. That registered applicant was not the plaintiff. In other words, the plaintiff became aware at the pre-bid conference that it did not possess the relevant experience which implies that it knew at that time that it was unlikely to be awarded the new digital cellular licence. Nonetheless, the plaintiff put in an application on 10 February 2006. As it turned out, the plaintiff was not awarded the new licence.

After the tenders were opened on 13 February 2006 by the Tenders Board, the tenders were referred for evaluation to a Select Bid Evaluation Team which subsequently submitted a report with recommendations to the Tenders Board. Afterwards, the Regulator, presumably on the advice of the Tenders Board, announced on 8 March 2006 the award of the new digital cellular licence to the joint venture between the fourth defendant and Digicel Ltd. This joint venture, as earlier mentioned, then formed Digicel (Samoa) Ltd which is the current mobile operating company.

PART B

The plaintiff’s causes of action

The plaintiff pleads two causes of action against the first, second and third defendants. These are for breach of contract and estoppel. The plaintiff also pleads a third cause of action for breach of contract against the fourth defendant.

(a) First cause of action

The plaintiff’s first cause of action for breach of contract against the first, second and third defendants relies on certain clauses in Sections 5 and 6 of the Information Memorandum. These are referred to in the statement of claim as express terms of the tender agreement. It would have been preferable to refer to those terms as express terms of the Information Memorandum and then go on to allege that those terms constituted a binding contract between the plaintiff on one hand and the first, second and third defendants on the other because it is seriously in dispute whether the Information Memorandum constituted a binding contract between the parties which the defendants have breached. One of the main issues in these proceedings is whether the Information Memorandum constituted a process contract between the plaintiff and the first, second and third defendants.

As I read the statement of claim, it is clauses 5.1 to 5.1.5 of the Information Memorandum regarding the tender process that the plaintiff is claiming to have been breached by the first, second and third defendants. Clauses 5.2.1 to 5.2.6 which refer to the comparative evaluation criteria for the selection process are not the subject of complaint. Clause 6.2 of Section 6 refers to the restrictions on participation in the tender process. I have already set out to these clauses of the Information Memorandum in PART A of this judgment.

What the plaintiff is effectively claiming is that under clause 5.1.5 of the Information Memorandum the first, second and third defendants undertook that the new digital cellular licence will be awarded to the applicant that obtains the highest scoring in the comparative evaluation process. However, Digicel (Samoa) Ltd which is the current mobile operating company was not an applicant in terms of the Information Memorandum because it did not put in a request for registration and paid the required registration fee within the deadline which expired on 31 October 2005.

As it appears from the affidavit of the chief technology officer, as earlier mentioned, during the pre-bid conference that was held in the week of 21 November 2005, the plaintiff was able to conclude that only one of the registered applicants was capable of satisfying the comparative evaluation criteria of the tender process as the other applicants would be eliminated due to their lack of relevant experience. The registered company which the plaintiff concluded was the only one qualified to satisfy the comparative evaluation criteria was not the plaintiff. It was another registered company. So at the time of the pre-bid conference, the plaintiff knew that in terms of relevant experience it did not satisfy the evaluation criteria of the tender process. Clause 5.1.5 upon which the plaintiff is relying for its complaint states that the new digital cellular licence will be awarded to the applicant that obtains the highest scoring in the comparative evaluation process. By reason of what is said in the affidavit of the plaintiff’s chief technology officer, that applicant could not have been the plaintiff. So what is the plaintiff really complaining about?

If the plaintiff’s real complaint, as it also appears from the affidavit of its chief technology officer, is that the identity of Digicel Ltd as one of the parties to the said joint venture should have been revealed so that the plaintiff before the close applications would have sought to form a consortium with a company that had more operating experience and stronger finances than Digicel Ltd, then there was no obligation on any of the defendants to disclose the identity of Digicel Ltd or any other tenderer for that matter before the opening of the tenders. In fact clause 5.1.4 of the Information Memorandum states that the MCIT reserves the right to publish the names of applicants and information relating to their applications. The notices that were published in 2005 also expressly invited companies and consortia to send requests for registration to the two addresses specified in those notices. So it was open to everyone including the plaintiff to form a consortium with another company with considerable operating experience and strong finances and sent in a request for registration. That the plaintiff did not so, is not a reason for it to complain now.

The other complaint by the plaintiff that the Digicel (Samoa) Ltd or the joint venture between the fourth defendant and Digicel Ltd was not a registered applicant in terms of the Information Memorandum has not been satisfactorily answered as counsel for the first, second and third defendants were not in a position to do so. Effectively, the complaint by the plaintiff is that Digicel (Samoa) Ltd, the current mobile operating company or the joint venture between the fourth defendant and Digicel Ltd was not a registered applicant in terms of the Information Memorandum because neither entity sent in a request for registration and aid the required registration fee within the deadline that expired on 31 December 2005. Clause 6.2 of the Information Memorandum states that only applicants, meaning registered applicants, are qualified to apply for the new digital cellular licence. It follows, according to the plaintiff, that neither Digicel (Samoa) Ltd nor the joint venture between the fourth defendant and Digicel Ltd was qualified to apply. As a consequence, the first, second and third defendants were in breach of clause 6.2 by awarding the new licence to Digicel (Samoa) Ltd or the said joint venture.

What is clear is that when the pre-bid conference was held in the week of 21 November 2005 a representative of the fourth defendant was present which suggests that the fourth defendant was a registered applicant. What has not been made clear is whether that representative of the fourth defendant was present on behalf the joint venture between the fourth defendant and Digicel Ltd so as to remove any doubt whether the joint venture was a registered applicant which is what the plaintiff is really complaining about here. When the tenders were opened on 13 February 2006 by the Tenders Board, there was a tender by the joint venture between the fourth defendant and Digicel Ltd. One would have thought that given the existence of the tender from this joint venture at the time the tenders were opened, the joint venture must have sent in a request for registration and paid the registration fee before the expiry of the deadline on 31 October 2005. However, given the claim by the plaintiff that neither Digicel (Samoa) Ltd nor the joint venture was a registered applicant, the point is now in dispute.

The next complaint by the plaintiff, as earlier mentioned, is again based on clause 6.2 which states, inter alia, that the tender process and the licence are not open to certain specified companies or any affiliated company of Samoa Tel or TSCL. The plaintiff claims that the fourth defendant was at the material times an affiliated company of Samoa Tel. Therefore, the tender process and the licence were not open to the fourth defendant. Similarly, the tender process and the licence were not open to the joint venture of which the fourth defendant was a party. Previous counsel for the fourth defendant in his motion to strike out the plaintiff’s cause of action for breach of contract against the fourth defendant denied that the fourth defendant was an affiliated company of CSL. He was not, however present in these proceedings to elaborate on his denial as he has withdrawn as counsel for the fourth defendant.

The plaintiff also claims that apart from express terms, the alleged contract also contains an implied term that the first, second and third defendants were to act fairly and in good faith in conducting the tender process. It is then alleged that these defendants were in breach of that implied term.

(b) Second cause of action

The plaintiff’s second cause of action against the first, second and third defendants effectively alleges estoppel by representation. The plaintiff relies on four representations alleged to have been made by the defendants. The first representation is claimed to be contained in the notice dated 20 January 2005 from the first, second and third defendants to the plaintiff. It is pleaded that in that notice the defendants represented to the plaintiff that they intended to issue a new digital cellular licence to a successful applicant following a competitive tender process. The plaintiff in reliance on that representation took steps to prepare a tender and incurred substantial costs. The second representation is said to be contained in the notice published on 28 September 2005, wherein the first, second and third defendants represented to the plaintiff that applicants for the new licence were to register within 30 days from 28 September 2005 and pay the registration fee. In reliance on that representation, the plaintiff incurred expenses and costs to get itself registered. The third representation is said to be contained in the Information Memorandum dated 4 October 2005 wherein the first, second and third defendants represented to the plaintiff "that prospective applicants who register an application for the new licence on or before 31 October 2005 would be entitled to apply for a new licence." In reliance on that representation the plaintiff took steps to prepare a tender and incurred substantial costs. The fourth representation is said to be that on 24 November 2005 the first, second and third defendants represented to the plaintiff that the applicants were the only persons capable of being awarded the new licence. In reliance on this representation, the plaintiff took steps to prepare a tender and incurred substantial costs. In respect of all four representations, it is alleged that the defendants knew or ought to have known that the plaintiff would act in reliance on those representations and incur costs and expenses. In view of the circumstances of this case, only the first, second and third representations need to be considered but not the fourth representation.

In an action which relies on estoppel by representation, it is highly desirable that the words used by the representor be quoted and not paraphrased. This means in this case the exact representations used in the notice of 20 January 2005, the notice of 28 September 2005, and the Information Memorandum dated 4 October 2005.

I will return to the first and second causes of action against the second and third defendants in the course of this judgment.

(c) Third cause of action

The plaintiff’s third cause of action which is also for breach of contract is against the fourth defendant. What is claimed here is that on 6 October 2005 the plaintiff and the fourth defendant agreed to participate in the tender process. This agreement is said to be contained in the Information Memorandum. This is the Information Memorandum dated 4 October 2005 that was issued by the MCIT and the Office of the Regulator. It is then alleged that it is a term of the said agreement that an affiliated company of Samoa Tel could not take part in the tender process. The fourth defendant being an affiliated company of Samoa Tel nonetheless participated in the tender process contrary to clause 6.2 of the Information Memorandum. In so doing, the fourth defendant was in breach of the said agreement. It is also claimed by the plaintiff that clause 6.3 requires every applicant when it sends in its application to also send a cover letter which confirms that it is not an affiliated company of Samoa Tel. It is then alleged that the fourth defendant did not comply with that requirement.

With respect, I do not see an agreement here between the plaintiff and the fourth defendant that was breached by the fourth defendant. The alleged agreement between the plaintiff and the fourth defendant was that they will participate in the tender process. Clause 6.2 of the Information Memorandum issued by the MCIT and the Office of the Regulator was not a term of the agreement between the plaintiff and the fourth defendant. It was simply a clause of the Information Memorandum issued by the MCIT and the Office of the Regulator. Clause 6.3 of the Information Memorandum which requires an applicant to show that it is not an affiliated company of Samoa Tel was also not a term of any agreement between the plaintiff and the fourth defendant. Clause 6.3 was simply a clause in the Information Memorandum requiring applicants to show that they were not affiliated companies of Samoa Tel.

It follows that since clauses 6.2 and 6.3 were not terms of any agreement between the plaintiff and the fourth defendant, the plaintiff cannot sue the fourth defendant on any of those clauses for breach of contract. It also follows that even if one assumes that the fourth defendant contravened clause 6.2 as alleged by the plaintiff, or clause 6.3 for that matter, that is not a breach of any agreement between the plaintiff and the fourth defendant.

PART C

Nature of proceedings

These proceedings are concerned with two motions to strike out the plaintiff’s statement of claim. The first motion is by the first, second and third defendants and the second motion is by the fourth defendant and was filed by its previous counsel.

Because of the amendment to the statement of claim sought by counsel for the plaintiff at the start of these proceedings which was granted, the remaining grounds of the strike-out motion by the first, second and third defendants as elaborated in the written submissions of their counsel are threefold. These grounds may be stated as: (a) the first, second and third defendants are not proper defendants to be sued; (b) the statement of claim discloses no reasonable course of action against the first, second and third defendants; and (c) the plaintiff’s claim is an abuse of process because it has been brought for an improper purpose. This last ground of abuse of process was not actively pursued during the hearing of these proceedings. I will therefore not to deal with it.

The grounds of the fourth defendant’s strike-out motion which still appear relevant are: (a) the statement of claim discloses no reasonable cause of action against the fourth defendant; and (b) the fourth defendant was not an "affiliated company" of Samoa Tel in terms of the Information Memorandum as alleged by the plaintiff. Because of the change of counsel for the fourth defendant, it was not explained why it is said that the fourth defendant was not an "affiliated company" of Samoa Tel in terms of Information Memorandum. I will therefore not deal with this ground.

PART D

Approach to the defendants’ strike out motions

The approach which the Samoan Courts have adopted to a motion to strike out a statement of claim for disclosing no reasonable cause of action has been stated and applied in numerous cases that it is well understood by now. It is that the summary jurisdiction to strike out a statement of claim for disclosing no reasonable cause of action is to be sparingly exercised. It will only be exercised in a plain and obvious case where it appears from the material before the Court that the plaintiff’s cause of action is so clearly untenable that it cannot possibly succeed and is certain to fail: see, for example Peter Meredith & Company Ltd v Drake Solicitors Nominee Co Ltd [2002] WSSC 32.

What constitutes a "cause of action" was explained in Letang v Cooper [1964] EWCA Civ 5; [1965] 1 QB 232 where Diplock L J said at p.242 that a "cause of action" is simply a factual situation the existence of which entitles a person to obtain a remedy from the Court. In Concorde Enterprises Ltd v Anthony Motors (Huth) Ltd [1976] 1 NZLR 741, Somers J said at p.748 that a "cause of action" means the act on the part of the defendant which gives the plaintiff the cause for complaint or every fact which would be necessary for the plaintiff to prove to support his right to the judgment of the Court. Those cases were cited in Peter Meredith & Company Ltd v Drake Solicitors Nominee Company Ltd [2002] WSSC 32.

In relation to the use of affidavits for the purpose of a motion to strike out a statement of claim for disclosing no reasonable cause of action, I referred in Peter Meredith & Company Ltd v Drake Solicitors Nominee Company Ltd (supra) to the decision of the New Zealand Court of Appeal in Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641. In that case, Gault J stated at p.646:

"In the recent judgment in CED Distributors (1988) Ltd v Computer Logic Ltd (CA 345/90 and 5/91, 26 July 1991) it was said:

"There will be occasions when brief affidavit evidence may assist a proper understanding of a pleading, may exhibit a pleaded document or may deal with factual material that is undisputed. This is appropriate for failure to disclose a cause of action will not attempt to resolve genuinely disputed issues of fact or consider evidence inconsistent with the pleading.’

"We see no justification for any broader approach to the question of whether pleadings disclose a cause of action..."

At p.646, Gault J went on to say:

"[Lengthy] and contentious affidavits are not to be encouraged and are more likely to lead to an award of costs against an applicant than to the success of the strike out application."

I have decided to refer to those matters as they arose in the course of the argument in these proceedings though not in a major way.

PART E

The first, second and third defendants as parties

Senior counsel for the first, second and third defendants argued in her oral and written submissions that the first, second and third defendants have been incorrectly cited as parties in the plaintiff’s statement of claim and there is no reasonable cause of action against any of them. I will deal under this PART of the judgment with the question of whether the first, second and third defendants have been incorrectly cited as parties and leave the question of whether there is a reasonable cause of action against any of them until later.

In respect of the first defendant who is the Attorney-General sued on behalf of the State of Samoa, one has to bear in mind that the causes of action against the first, second and third defendants are for breach of contract and estoppel. The estoppel pleaded is estoppel by representation. For the cause of action for breach of contract to succeed against the first defendant, the plaintiff must show that the State of Samoa was a party to the contract alleged to have been breached and that the contract was in fact breached by the State of Samoa either alone or jointly with the second and third defendants.

Article 1 clause (1) of the Constitution provides:

"The Independent State of Samoa (hereinafter referred to as Samoa) will be free and sovereign."

Article 3 of the Constitution defines "the State" by providing:

"In this Part, unless the context otherwise requires, ‘the State’ includes the Head of State, Cabinet, Parliament and all local and other authorities established under any law."

It was not argued that in the context of these proceedings the term "the State" requires a different meaning from that given under Article 3.

From the pleadings in the statement of claim and what is said in the affidavits that were relied upon by the plaintiff and the defendants, it is clear that it was the MCIT which determined to issue a new mobile digital cellular licence and that a competitive process should be adopted for the selection of the entity to whom the new licence would be awarded. The preliminary notice that was issued and received by the plaintiff on 20 January 2005 was issued by the MCIT. The second notice that was published on 28 September 2005 was also published by the MCIT. The Information Memorandum dated 4 October 2005 which was issued providing information about the tender process was issued by the MCIT and the Office of the Regulator. In the pre-bid conference that was held in the week of 21 November 2005, only representatives of the Regulator, the MCIT, Samoa Tel and the applicants were present. When the tenders were opened they were opened by the Tenders Board. When the tenders were evaluated, they were evaluated by the Select Bid Evaluation Team. The new licence that was granted, was granted by the Regulator. In none of these activities was the State of Samoa involved or participated as a party. In fact no counsel raised that any of the personalities or entities involved in those activities was the State of Samoa. It was also not raised that any of the personalities or entities involved was acting as an agent of the State of Samoa. I have therefore come to the conclusion that the State of Samoa should not have been cited as first defendant. In any event, it would be best to leave the State of Samoa out of this.

As to the cause of action founded in estoppel against the first defendant, it is again clear from the material before the Court that none of the representations relied upon by the plaintiff was made by the State of Samoa. So that cause of action in estoppel cannot possibly succeed against the State.

The first defendant is accordingly struck out of these proceedings.

In respect of the second defendant who is also the Attorney-General sued on behalf of the Minister of Communications and Information Technology, it is clear from the material before the Court that the involvement of the Minister in the matters raised in these proceedings was in his capacity as Regulator appointed on an interim basis and not as Minister. It will be more accurate to cite the Regulator as second defendant instead of the Minister. I have decided that the plaintiff should amend its statement of claim by substituting the Regulator for the Minister.

In relation to the third defendant who is again the Attorney-General sued on behalf of the Office of the Regulator, I have decided not to strike out or order an amendment in respect of that defendant. There was clearly some involvement of the Office of the Regulator in the tender process. For instance, the Information Memorandum was issued by the MCIT and the Office of the Regulator. So the third defendant remains as it is. I have still to consider later in this judgment whether there is a reasonable cause of action against the second defendant (to be amended) or the third defendant.

PART F

Tender process

The issues to be considered under this PART of the judgment are whether the tender process gave rise to what is called a process contract between the plaintiff and the second and third defendants so as to form the basis of a cause of action for breach of contract, and whether the tender process gave rise to an estoppel upon which a cause of action in estoppel can be founded against those defendants.

(a) Contract

Traditionally an invitation for tenders is an invitation to treat and not an offer. The tender is the offer. When a tender is accepted a contract is then formed. Counsel for the plaintiff in his helpful submissions argued that the tender process may give rise to a process contract which is referred to in some cases as a preliminary, collateral, subsidiary or class A contract. This is different from the principal contract which comes into existence when the tender is awarded to the successful tenderer. This principal contract is referred to in the Canadian cases cited by counsel for the plaintiff as a class B contract. In other words, the tender process may give rise to two types of contract, a process contract and a principal contract. In support of his argument, counsel for the plaintiff referred to the decision of the Supreme Court of Canada in The Queen v Ron Engineering 1981 CanLII 17 (SCC); [1981] 1 SCR 111. In that case, the owner of works to be performed called for tenders. In the tender documents, one of the conditions was that if a tenderer withdrew his tender within a specified time, the owner was entitled to retain the deposit. The respondent contractor put in a tender but then subsequently wanted to withdraw its tender within the specified time. The owner then retained the deposit. The respondent contractor took the owner to Court. In the Supreme Court of Canada it was held that the owner was entitled to retain the deposit. In delivering the judgment of the Court, Estey J said:

"There is no question when one reviews the terms and conditions under which the tender was made that a contract arose upon the submission of a tender between the contractor and the owner whereby the tenderer could not withdraw the tender for a period of sixty days after the date of the opening of the tenders. Later in these reasons this initial contract is referred to as contract A to distinguish it from the construction contract itself which would arise on the acceptance of a tender, and which I refer to as contract B."

This analysis of the tender process differs from the traditional position that a tender process generally involves only an invitation to treat and no contract arises until the tender which is the offer is accepted. The New Zealand Courts picked up this analysis provided in Ron Engineering Co in two cases that were also cited by counsel for the plaintiff.

The first of these cases was Markholm Construction Co Ltd v Wellington City Council [1984] NZHC 232; [1985] 2 NZLR 520. The second case was Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 where Gallen J said at pp.478-479:

"Authority makes it clear that the starting point is that a simple uncomplicated request for bids will generally be no more than an invitation to treat, not giving rise to contractual obligations, although it may give rise to obligations to act fairly. On the other hand, it is obviously open to persons to enter into a preliminary contract with the expectation that it will lead in defined circumstances to a second or principal contract...Whether or not the particular case falls into one category or the other will depend upon a consideration of the circumstances and the obligations expressly or impliedly accepted."

In the case of Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 (CA) the defendant Council issued an invitation for tenders. The plaintiff, one of the three tenderers, submitted within the permitted time a tender which conformed with all the requirements of the tender process. However, its tender was marked "LATE" by mistake by the defendant Counsel. As a consequence, the plaintiff’s tender was not considered. The defendant Council then considered and accepted the tender from one of the other two tenderers. The plaintiff brought an action against the defendant Council for breach of contract. In issue was whether there was a preliminary contract between the plaintiff as tenderer and the defendant which issued the invitation for tenders. It was submitted by counsel for the defendant that an invitation for tenders was an invitation to treat and not an offer capable of acceptance; therefore no contract of any kind came into existence until the defendant chose to accept a tender or offer. Bingham LJ in a judgment concurred in by the other members of the Court held that the defendant was under an implied contractual obligation to consider the plaintiff’s timely and conforming tender in conjunction with the other conforming tenders or at least the plaintiff’s conforming tender should be considered if the other tenders were. The plaintiff also had a right to the same effect. Effectively, Bingham LJ held that there was a preliminary contract between the plaintiff and the defendant that the defendant would consider the plaintiff’s conforming tender in conjunction with the other conforming tenders that were considered.

More recently in Transit New Zealand v Pratt Contractors Ltd [2002] NZCA 391; [2002] 2 NZLR 313, McGrath J in delivering the judgment of the New Zealand Court of Appeal said:

"[1] This appeal concerns an engineering contractor who twice submitted the lowest tender bid but did not get the contract. It addresses the tension inherent in the relationships between those who call for tenders for construction contracts and those who submit them. The former generally seek to retain the fullest freedom to decide whether or not to accept, and if so which. The latter, who must commit time and expense to preparation of tenders, have the expectation that the competition for the contract will be conducted, and a contract awarded, in a principled way. That is especially so if they are dealing with a public agency.

[2] Traditionally the law of contract treated the tendering process as one of preliminary communication prior to contractual commitment. Since 1980 in a number of cases in Commonwealth jurisdictions, including New Zealand, there has been a fresh analysis of the nature of duties owed to each other by invitors and tenderers during the period prior to letting of construction and engineering contracts. The trend in these decisions has been towards a greater readiness by the Courts to recognise that parties may become bound by a preliminary contract to the processes that will be followed. The scope of the terms of such process contracts, express and implied, itself however can give rise to difficulties. At their heart lies the different interests of the parties in tender situation and the practical problems they can give rise to."

McGrath J then went on to say:

[63] Historically the process of procuring tenders was not treated by the Courts as contractual in nature. The freedom of the invitor to accept or reject any tender was regarded as fundamental to the tender concept. Invitations to submit tenders were almost invariably treated as preliminary communications which took place before any contractual offer was made. While tenderers might be involved in considerable work and expense in tender preparation they were understood to assume the full risk that no contractual entitlement would eventuate from their efforts. The position was different if there were a particular stipulation in the invitation to tender, such as one binding the invitor to accept the lowest (or, as the case might be, highest) offer, but otherwise the invitor was not regarded as having an intention to become contractually bound in any way prior to its acceptance of a particular tender."

Further on McGrath J said:

[77] Whether a request for tenders gives rise to a process contract, once a conforming tender is submitted, is in all cases a question of whether all the elements of contractual formation are made out at that point. Analysis of the terms of the invitation to tender is the starting point. Where the request makes no express commitment concerning the manner in which tenders received will be addressed, that may indicate the invitation was no more than an offer to receive them. On the other hand, as Blackpool and Fylde Aero Club indicates, the rigorous and comprehensive expression of requirements to be complied with by tenderers may give rise to an implied promise by the invitor to consider a conforming tender if others are considered. The law does not, however, have a policy which inclines towards enforcement of implied promises by invitors, even if they are public bodies, and whether there has been a binding promise as to process is to be ascertained by applying general principles of contract law concerning contract creation and implied terms."

It is recommended that Transit New Zealand v Pratt Contractors Ltd [2002] NZCA 391; [2002] 2 NZLR 313 be read n full. That case went on appeal and was affirmed by the Privy Council in Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 433; [2003] UK PC 83.

In the more recent case of Prime Commercial Ltd v Wool Board Disestablishment Co Ltd [2006] NZCA 295, William Young P in delivering the judgment of the New Zealand Court of Appeal said:

[15] The law as to the circumstances in which the calling for tenders gives rise to a process contract was extensively reviewed in Transit New Zealand v Pratt Contractors Ltd [2002] NZCA 391; [2002] 2 NZLR 313 at [63]- [77] (CA), affd sub nom Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 433 (PC). The primary rule is that a tender process involves simply an invitation to treat on the part of the party calling for tenders with no contractual obligation crystallising until an offer is accepted, see Shivas & Westmark Investments Ltd v BTR Nylex Holdings NZ Ltd & Others [1997] 1 NZLR 318 (HC). But tender processes will sometimes create process contracts between the party calling for tenders and the tenderers, see for instance Blackpool & Fylde Aero Club Ltd v BTR Nylex Holdings New Zealand Ltd & Others [1990] 1 WLR 1195 (CA) and Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 (HC). As noted by this Court in Quay Stevedoring Services Ltd v ENZA Ltd CA 214/00 15 November 2001, a party alleging a process contract must establish the ‘necessary elements’ of offer and acceptance and intention to enter a binding contract. Where there is a process contract the obligations under it on the party calling for tenders will, of course, depend upon what was agreed expressly or by implication. An assertion that the tendering party is not obliged to accept the highest or any offer must be respected but is not necessarily inconsistent with that party being subject to obligations as to the process by which tenders are to be evaluated.

[16] Cases in which the Courts have concluded that there were process contracts have often involved very formal tender procedures with one or more of the following characteristics: registration of interest by tenderers; detailed specification which tenders must comply with; a prescribed methodology (often detailed) for the evaluation of tenders; and an express or implied commitment to choose the successful tenderer based on such evaluation. We are not suggesting that process contracts can only come into effect in those circumstances. Indeed, the Blackpool & Fylde Aero Club case shows that this is not so. But the less formal the tender process, the less scope there is for implying any, or at least any onerous, obligations on the party calling for tenders."

That the existence of a process contract is not automatic upon a tenderer submitting a tender to an invitation for tenders but depends upon an analysis of whether the elements of offer, acceptance, and an intention to create binding contractual relations are present was stated explicitly in Dockpride Pty Ltd & Anor v Subiaco Development Authority [2005] WASC 211 where Le Miere J in the Supreme Court of Western Australia said:

"[109] The existence of a pre-award or process contract in tenders is not automatic. Whether or not a process contract exists depends on the intention of the parties; Cubic Transportation Systems Inc v State of New South Wales [2002] NSWSC 656 at [31]- [44] per Adams J; Transit New Zealand v Pratt Contractors Ltd [2002] 313 at [77]-[78]."

In relation to the implied obligation to act fairly and in good faith, McGrath J stated in Transit New Zealand v Pratt Contractors Ltd [2002] NZCA 391; [2002] 2 NZLR 313:

"[91] In this context the implied duty of equal treatment, that is, even handedness, should not be expanded by further implication to found obligations in relation to Transit’s administration of tenders over and above those actually stipulated in the conditions of tender unless they meet the general requirements for implied contractual terms, including necessity for business efficacy, as expressed in such decisions as Devonport Borough Council v Robbins [1979] 1 NZLR 1 and BP Refinery (Westport) Pty v Shire of Hastings [1910] ArgusLawRp 71; (1977) 16 ALR 363. The concept of fair dealing is more often likely to be of importance in considering whether there has been compliance with contractual terms in tender process administration, rather than as a source of new terms." (emphasis mine)

In Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 435 (PC); [2003] UKPC 83, Lord Hoffman in delivering the judgment of the Privy Council stated:

"[45] The nature of the implied duty to act fairly and in good faith has been the subject of a good deal of discussion in Commonwealth authorities. In Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469, 483, Gallen J said that fairness was a ‘rather undefinable term’. In Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; (1997) 146 ALR 1, 36-37 Finn J said that the duty in cases of preliminary procedural contracts for dealing with tenders is a manifestation of a more general obligation to perform any contract fairly and in good faith. This is a somewhat controversial question into which it is unnecessary for their Lordships to enter because it is accepted that, in general terms, such a duty existed in this case. The issue is rather as to its specific content in relation to the particular acts required to be performed by Transit in evaluating the tenders.

"[46] In relation to this question, Finn J (at p.42) emphasised that such an implied term-

‘"does not as such impose on (the employer) under the guise of contract law, the obligation to avoid making its decision or otherwise conducting itself in ways which would render it amenable to judicial review of administrative action.’

"[47] This observation was adopted by McGrath J in the Court of Appeal at p.338, para 98, and their Lordships agree with it."

Lord Hoffman then went on to discuss the application of the implied duty to act fairly and in good faith to the function of making an assessment of the tenders. As the plaintiff’s complaint in this case is not directed at the evaluation or assessment of the tenders but to the procedure and requirements prior to the evaluation and assessment of the tenders, I need not quote further from this part of Lord Hoffman’s judgment. At the end of the judgment, Lord Hoffman stated:

"[49] It follows that their Lordships do not think that the findings of fact justify a conclusion that there was a breach of the express or implied terms of the preliminary procedural contract at either of the tender rounds. They also agree with the Court of Appeal that even if there was such a breach in the first round, it would have had no causation effect on Pratt’s failure to obtain the contract" (emphasis mine)

The last sentence from the passage just cited is relevant to the point earlier referred to that the plaintiff was unlikely to win the tender in any event because in the affidavit of its own chief technology officer, it is stated that the plaintiff and other tenderers, except one, lacked the relevant experience. So even if there was an implied term to act fairly and in good faith during the procedural stages of the tender process and the defendants were in breach of that implied term, that was not the cause of the plaintiff’s failure to win the tender and be awarded the new licence. It would appear that the cause of the plaintiff’s failure to win the tender and be awarded the new licence was its own lack of relevant experience. However, I have not been convinced that at this stage in the development of contract law, damages is an essential element of a cause of action for breach of contract.

(b) Estoppel

The plaintiff’s cause of action in estoppel against the second and third defendants is based on representations made in the notice of 25 January 2005 issued by the MCIT, the notice of 28 September 2005 issued by the MCIT, and the Information Memorandum of 4 October 2005 issued by the MCIT and the third defendant. The type of estoppel alleged by the plaintiff is estoppel by representation. Historically, estoppel in general, including estoppel by representation, cannot be used as a cause of action. The exception is proprietary estoppel which can be used as a cause of action: see Rosita Meredith v Pualagi Pa’u [1994] WSSC 7: Paul v Tuanai [1994] WSSC 15 and the authorities cited in those cases. Counsel for the plaintiff must be aware that estoppel is a rapidly developing area of the law and therefore takes his chances on that basis.

In the case of Liuvae v Samoa Credit Union League [1997] WSSC 13, this Court stated:

"I turn now to the important question of whether estoppel generally can be used as a cause of action. With one exception, the traditional position is that estoppel cannot be used as a cause of action. It may, however, be used in a defensive way to resist a cause of action. The position is sometimes expressed in the words that estoppel can be used as a shield and not as a sword. The one exception is proprietary estoppel which is sometimes called estoppel by encouragement or acquiescence...

"With the exception of proprietary estoppel by encouragement or acquiescence which I have mentioned, common law estoppel by conduct or representation, promissory estoppel or equitable estoppel generally has traditionally not been used as a cause of action. However, there are indications that the position may be changing. Whether it will in fact change, and to what extent, is not entirely clear at this stage. Those indications of change may be found in the facts of Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 187 and the joint judgment of Mason CJ and Wilson J as well as that of Deane J in that case, and in the facts of Burbery Mortgage Finance & Savings Ltd v Hindsband Holdings Ltd [1989] 1NZLR 356 and the judgments of the New Zealand Court of Appeal in that case.

"In a paper entitled The Place of Equity and Equitable Doctrines in the Contemporary Common Law World: An Australian Perspective, published in Equity, Fiduciaries and Trusts (1993), edited by DWM Waters, Sir Anthony Mason stated at p. 20:

‘"In Verwayen (1990) 170 CLR 395, 411-413, I suggested that there is no reason why a cause of action cannot be founded on estoppel. It seems to me to be artificial to say that you are not using estoppel as a cause of action when your success on the particular cause of action pleaded depends on your capacity to use an estoppel to establish the very basis of your claim.’

"The law is still developing in this area with the High Court of Australia at the forefront of that development. That development has not settled, it is still in motion."

The judgment in Liuvae v Samoa Credit Union League [1997] WSSC 13 was delivered ten years ago. There were no submissions in these proceedings as to whether any further developments have taken place in this area, and, if so, what are those developments. In particular, whether there have been further developments which permit estoppel by representation to be used as a cause of action.

PART G

Doctrine of executive necessity

Under s.8 (1) (c) of the Telecommunications Act 2005, one of the functions of the Regulator is to design and run the process for the issuance of individual and class licences under the Act. Section 13 (1) empowers the Regulator to issue licences. Section 13 (2) provides that a licence is a unilateral grant or permission from the Regulator to provide a telecommunications service or operate a telecommunications network and for all purposes it shall not be regarded as a contract or bilateral agreement. Section 16 (1) provides that the procedures for issuing a licence shall be fair and objective. The type of licence that was issued in this case was an individual licence.

It was submitted for the first, second and third defendants that the power of the Regulator to issue a licence under s.13 (1) is discretionary. It was therefore argued that the Regulator’s power to issue a licence cannot be fettered by contract or representation because if the Regulator was bound in this way, he would not be able to exercise his statutory discretion in the public interest. Assuming it is correct that the power of the Regulator to issue a licence is discretionary, it appears clear to me that the plaintiff’s claim is not directed at the exercise by the Regulator of his discretion to issue a licence but at the alleged non-compliance by the defendants with the requirements and procedures of the tender process which precede the issuance of a licence. What the plaintiff is alleging is that the tender process gave rise to a process contract which is labelled in other cases as a preliminary, procedural, collateral or class A contract. This is a type of contract which comes into existence prior to the award of a tender to the successful tenderer. Section 13 (2) is directed at the stage when a licence is issued rather than to the pre-award stage. In any event, it appears from the Information Memorandum which forms the real basis of the plaintiff’s action for breach of contract that that document was issued by the MCIT and the Office of the Regulator. It does not appear that the Regulator had any personal involvement in the issuing of the Information Memorandum even though one is inclined to think that he must have had some knowledge of it given that the interim Regulator was the Minister of the MCIT and head of the Office of the Regulator and because of the importance of the new digital cellular network to the Government and to the country. Clause 1.1 of the Information Memorandum also states that the Regulator will be assisted by the MCIT in the running of the tender process.

Even though ss.13 (1) and (2) relate to the issuance of a licence by the Regulator but the plaintiff’s claim relates to the alleged existence of a process contract prior to the exercise by the Regulator of his discretion to issue a licence, I want to say something about what appears to be the legal basis of the argument for the first, second and third defendants that the Regulator cannot fetter the exercise of his statutory discretion by contract or representation. This is because of the importance of the issue which the argument for the defendants has raised. The defendant’s argument is based on what has often been called the "doctrine of executive necessity". The origin of this doctrine is often traced to the case of Rederiakticbulager Amphitrite v The King [1921] 3 KB 500 where Rowlatt J stated:

"It is not competent for the Government to fetter its executive action, which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State."

In The Amphitrite, as the case is often referred to in abbreviated form, the British Government during the First Wold War gave an undertaking to a Swedish shipowner that if its ship delivered a particular cargo to Britain the ship would not be seized and detained. When the ship arrived in Britain, the British Government withdrew its undertaking and seized and detained the ship. The shipowner sued for damages in the English Courts. Rowlatt J held that there was no valid or enforceable contract against the British Government as "it is not competent to the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the need arises".

The doctrine of executive necessity is discussed in detail in Liability Of The Crown (2000) 3rd ed by Hogg and Monahan at pp 227-233 where it is subjected to criticism. The doctrine has also been discussed in a number of Australian cases. It was the subject of criticism by Mason J in the High Court of Australia in the case of Ansett Transport Industries "Operations" Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at pp. 74-75. In Liability Of The Crown (2000) 3rd ed by Hogg and Monahan, the learned authors state at p.231:

"We acknowledge that the ‘fettering’ doctrine has been referred to and apparently applied in a number of recent Australia cases. However, even though these cases have commented favourably on the doctrine, they have stated that the original Amphitrite formulation (to the effect that the executive cannot by contract hamper its freedom of action in matters which concern the welfare of the State) is expressed too broadly. An alternative, somewhat narrower, formulation of the Amphitrite doctrine that has been raised in a number of cases states that, where a person is vested with discretionary powers under statute, a contract that purports to limit or control the exercise of that discretion at some future time is void. The contract is treated as being ultra vires, in the sense that a contract that would fetter the future exercise of a statutory discretion is said to be incompatible with the due exercise of statutory powers.

"Even if reformulated as a branch of the doctrine of ultra vires, in our view the executive necessity doctrine remains vague, overly broad and unsound in principle. It is well established that where a statute assumes or requires that a statutory discretion will be exercised in accordance with the facts of a particular case, an attempt to prevent or ‘fetter’ the genuine exercise of that discretion would be ultra vires. Of course, this limitation is not unique to the law of government contracts and would equally prevent the fettering of a statutory discretion through, for example, the issuance of binding guidelines or regulations that prevented a statutory body from properly exercising its statutory powers. But the Australian cases which have applied the ‘fettering’ doctrine in the context of statutory discretionary powers have not proceeded on this basis; instead, they appear to suggest that any attempt to limit in advance the exercise of a statutory discretion through a contract or agreement is void."

In the case of City of Subiaco v Heytesbury Properties Pty Ltd [2001] WASCA 140, Malcolm CJ, expressing a different view from that held by Professors Hogg and Monahan in Liability Of The Crown (supra), said:

"[43] This rule was stated by Rowlatt J in Rederiakticbulager Amphitrite v The King [1921] 3 KB 500 at 503 as follows:

‘"It is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State.’

"[44] Earlier, in Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623 the House of Lords had expressed similar views. In Birkdale District Electric Supply Co v Southport Corporation [1926] AC 335 at 364, it was held that a local authority, entrusted by the legislature with powers and duties for public purposes, cannot divest itself of those powers and duties and cannot enter into any contract or take any action incompatible with the due exercise of its powers or the discharge of its duties. Mason J in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 cited Birkdale District Supply Co v Southport Corporation as authority in saying (at 74)

‘"There is a general principle of law that a public authority cannot preclude itself from exercising important discretionary powers or performing public duties by incompatible contractual or other undertaking.’"

Further on in his judgment, Malcolm CJ went on to say,

"[53] It is true that some have expressed the general view that it would be unfair to enable government (local or otherwise) to act inconsistently with contractual obligations it has deliberately undertaken, and, in that event, contracts fettering executive discretion should be upheld to the extent that government should be held liable for damages. The proposition so advanced is: ‘So long as the remedies of specific performance and injunction... are withheld, the ordinary law adjusts the conflict between public purposes and private interests quite satisfactorily (see Hogg, The Doctrine of Executive Necessity in the Law of Contract, (1990) 44 ALJ 154 at 159). I do not agree with these views, however, as in my opinion, the knowledge that exercising statutory powers in the public benefit might render government liable to large sums of damages would be an effective practical fetter on its freedom of action. It is for this reason that I have above expressed the opinions that, were the City to be liable for damages for breach of contract in consequence of actions taken by it when exercising its statutory town planning powers for the public benefit, those powers would be prejudiced. I should say that there is strong persuasive authority that supports this conclusion: see Ransom & Luck Ltd v Surbiton Borough Council [1949] Ch 180..

"[55] In my opinion any contractual fetter or limitation of any kind upon executive discretion would have to be clearly and expressly stated before a Court would construe a contract as qualifying freedom of executive action."

In Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 Mason J said at pp. 76-77:

"The decisions to which I have referred are all cases in which the contract or undertaking held to be invalid was one to which the repository of the power or discretion was a party. The contract or undertaking was therefore an anticipatory fetter by that person on his future exercise of the statutory power or discretion. At the same time because the contract or undertaking was not one authorized by the relevant legislation, or was incompatible with it, the contract or undertaking was invalid or ultra vires.

"Different considerations will apply when the contract is one to which the government is a party and the contract relates to the grant of a licence or privilege which under the law depends upon the exercise of a statutory discretion by an officer who is not a party to the contract. In these cases at least it has been suggested that the free and unfettered exercise of the discretion is sufficiently preserved if the validity of the contract is upheld, provided that it is enforceable only by way of damages and not by order or injunction. Such an outcome, it is said, would work a reasonable compromise between the desirability of recognizing the binding nature of contacts and the need to preserve the free and unfettered exercise of the discretion. The assumption which underlies this approach is that the contract is one which the government is authorized to make, that it is not expressly or impliedly prohibited by statute or, if you like, incompatible with the statute."

Earlier at pp. 74-75 of his judgment, Mason J was rather critical of the doctrine of executive necessity. There are many other Australian cases, especially at the State level, which have applied and discussed the doctrine of executive necessity. It is not necessary to refer to any more of them. The picture which emerges is that even though the doctrine of executive necessity has been adopted and applied by the Australian Courts, how the doctrine is to be applied has not been finally determined. From my own research, I have not been able to find any recent judicial comment or discussion on the doctrine of executive necessity in England or New Zealand. In this type of situation, and assuming the doctrine applies to the alleged process contract in this case, it will be unwise to strike out the plaintiff’s cause of action for breach of contract at this stage on the alleged basis that the Regulator cannot fetter his statutory discretion by contract or representation. The issue needs further and mature consideration given the state of the authorities I have referred to.

PART H

Disclaimer

It would appear that one of the principal grounds upon which counsel for the first, second and third defendants rely for arguing that the Information Memorandum does not constitute any process contract between the plaintiff and the defendants is the disclaimer in clause 6.1 of Section 6 of the Information Memorandum. Clause 6.1 states that the Information Memorandum does not constitute an offer, recommendation or invitation to participate in the tender process, nor does it constitute the basis of any contract that may be concluded in relation to the tender process. Clause 6.1 also states that the MCIT and the Regulator do not accept any liability whatsoever in connection with the Information Memorandum including its publication.

The attitude of the Court to disclaimer clauses in tender contracts has been to construe such clauses narrowly. In Liability Of The Crown (2000) 3rd ed by Hogg and Monahan, the learned authors when discussing tender contracts said at p.218:

"Tendering documents commonly include disclaimers or so-called ‘privilege clauses’, which purport to grant the owner wide discretion in assessing bids or even to exclude any liability on its part towards the bidders. Courts have generally construed such privilege clauses narrowly, preferring to imply an overriding duty of fairness on the part of owners."

In Dockpride Pty Ltd & Anor v Subiaco Redevelopment Authority [2005] WASC 211, Le Miere J stated in relation to disclaimer clauses in tenders:

"129 The defendant submits that clause 6 of the Conditions of Tender is inconsistent with a process contract being intended. Clause 6 provides that the Authority is not obliged to accept the highest or any tender or precluded from accepting a tender which is not in strict conformity with the tender document.

"130 Clauses of the kind being discussed are referred to by NC Seddon in ‘Government Contract’, 3rd ed, as privilege or disclaimer clauses. Seddon writes (at p.301):

‘"There has been a tendency to read such clauses, which provide that the lowest or any tender will not necessarily be accepted, against the government party (contra proferentem) so that their protective effect is minimised... The clause does not provide protection if a contract is awarded in breach of one of the express or implied obligations of the pre-award contract (see MJB Enterprises Ltd v Defence Construction (1951) Ltd [1999] 1 SCR 619, Martel Building Ltd v Canada [2000] 2 SCR 860 at [89]’ 131 At 278 Seddon writes:

‘"Nor does the inclusion of a clause that states that the government is not obliged to award the contract to the lowest or any tender indicate a lack of intention to contract. There are plenty of cases that have held that this clause does not in any way excuse a breach of the process contract."’

The point I am trying to make here is that there are rival and competing arguments from both counsel for the plaintiff and counsel for the first, second and third defendants as to whether the Information Memorandum constitutes process contract. In view of the authorities I have referred to, I am of the opinion that it will not be appropriate to strike out the plaintiff’s cause of action on this basis at this stage. In my opinion, the issue is debatable. The summary jurisdiction to strike out will only be exercised where it is plain and obvious that a cause of action is so clearly untenable that it cannot possibly succeed and is certain to fail. That is to say, there can be no reasonable debate that the cause of action will fail.

PART I

Should the plaintiff’s causes of action be struck out?

In considering whether to strike out any of the plaintiff’s causes of action it is necessary to bear in mind the approach to be applied to a motion to strike out a claim for not disclosing a reasonable cause of action. The summary jurisdiction to strike out a claim for not disclosing a reasonable cause of action must be sparingly exercised. The jurisdiction will only be exercised where it is plain and obvious that the cause of action is so clearly untenable that it cannot possibly succeed and is certain to fail.

I have already decided, applying this approach that the first defendant, the State of Samoa, should be struck out. I have also decided that the second defendant should be amended by substituting the Regulator for the Minister of the MCIT as the second defendant.

In respect of the cause of action for breach of contract against the second defendant I wish the statement of claim was more clear on how the second defendant was a party to the alleged process contract. The preliminary notice of 25 January 2005 was issued by the MCIT; the notice of 28 September 2005 was also issued by the MCIT; and the Information Memorandum of 4 October 2005 was issued by the MCIT and the Office of the Regulator. It is somewhat difficult to envisage the second defendant not being involved in the issuance of those documents given that he was the Minister of the MCIT as well as interim Regulator. It was also the second defendant who issued the new digital cellular licence. I have decided not to strike out the cause of action for breach of contract against the second defendant. But the plaintiff, if this mater proceeds to a substantive hearing or if there is an application for further and better particulars from the second defendant, would have to clarify how the second defendant was a party to the alleged process contract. I am not satisfied that it has been demonstrated that it is plain and obvious that this cause of action is so clearly untenable that it cannot possibly succeed and is certain to fail. Similarly, I am not satisfied that it has been demonstrated that it is plain and obvious that the cause of action for breach of contract against the third defendant is so clearly untenable that it cannot possibly succeed and is certain to fail. That cause of action will remain. But the plaintiff would have to clarify how the third defendant was a party to the alleged process contract should there be an application for further and better particulars in that regard from the third defendant.

In relation to the cause of action based on estoppel by representation against the second defendant, I have decided to leave this in for the time being as estoppel is a rapidly developing area and that development does not appear to have settled. I have also not been referred to any decision since Liuvae v Samoa Credit Union League [1997] WSSC 13 as to any further developments in the law of estoppel to show that estoppel by representation still cannot form the basis of a cause of action. In other words I am not satisfied at this stage that it is plain and obvious that this cause of action against the second defendant is so clearly untenable that it cannot possibly succeed and is certain to fail. Similarly, I have decided not to strike out the cause of action based on estoppel by representation against the third defendant at this stage.

In relation to the cause of action for breach of contract against the fourth defendant, I am satisfied on the material placed before the Court that there was no contract between the plaintiff and the fourth defendant upon which the plaintiff can sue the fourth defendant. The clauses contained in the Information Memorandum upon which the plaintiff relies for this cause of action did not form part of any contract between the plaintiff and the fourth defendant. In other words, it is plain and obvious that this cause of action is so clearly untenable that it cannot possibly succeed and is certain to fail. This cause of action is therefore struck out.

The factual circumstances of this case are complex and the relevant law is not all simple and straightforward. I have attempted in this judgment to clarify those matters.

PART J

Conclusions

1. The first defendant is struck out from these proceedings.
   
2. Paragraphs 39-43 of the statement of claim are struck out as disclosing no reasonable cause of action for breach of contract against the fourth defendant. This effectively takes the fourth defendant out of these proceedings.
   
3. The plaintiff is to amend its statement of claim by substituting the Regulator in the place of the Minister of Communications and Information Technology as the party on whose behalf the Attorney-General is being sued as second defendant.
   
4. The cause of action for breach of contract against the second defendant "to be amended" is to remain for the time being but leave is reserved to the second defendant to apply again to strike out if necessary.
   
5. The cause of action for breach of contract against the third defendant is to remain but leave is reserved to the third defendant to apply again to strike out if necessary.
   
6. The cause of action in estoppel against the second defendant is to remain for the time being but leave is reserved to the second defendant to apply again to strike out if necessary.
   
7. The cause of action in estoppel against the third defendant is to remain except those parts of this cause of action which rely on the notices of 20 January 2005 and 28 September 2005 which are struck out. Leave is reserved to the third defendant to apply again to strike out if necessary.
   
8. Costs reserved.
   

CHIEF JUSTICE

Solicitors
Latu Ey for plaintiff
Attorney-General’s Office, Apia for first, second and third defendants
Fepulea’i Law Firm for fourth defendant