Australia: Watch this space: High Court challenge to validity of Government contract

Last Updated: 29 December 2015
Article by Timothy Gordon and Emily Costello

Key Points:

If the Acquista appeal is upheld, there could be more challenges to seemingly valid contracts by third parties such as disgruntled competitors, unsuccessful tenderers and public interest bodies.

The High Court will in 2016 consider a challenge to the validity of a Government contract in a case which may have very important implications for the risk profile of parties entering into contracts with Government, particularly where statutory processes are involved. The case may provide helpful guidance when a Government agency has failed to follow statutory requirements and will be of particular interest to parties involved in public procurement activities.

The Acquista case

The High Court granted special leave to appeal the South Australian decision of Acquista Investments Pty Ltd v Urban Renewal Authority on 13 November 2015.

The Acquista case concerns 407 hectares of Crown land north of Adelaide, known as the Gillman land. A statutory authority, the Urban Renewal Authority (URA), was responsible for the redevelopment of the Gillman land. The URA had developed a marketing and pricing policy to ensure that property sales were properly benchmarked and that appropriate sales processes were undertaken. In accordance with that policy, the URA usually offered parcels of land to developers through a competitive tender process.

In 2013, several parties approached the URA seeking to purchase part of the Gillman land. On 6 March 2013, the appellants, a joint venture business trading as Integrated Waste Services (IWS), approached the URA with an unsolicited proposal to fill the land and construct the necessary earthworks. In June 2013, the URA received a proposal for the redevelopment of the Gillman land as an "oil and gas hub" from Adelaide Capital Partners Pty Ltd (ACP).

When IWS became aware of ACP's proposal, it wrote to the URA asking for confirmation that it would be included in any process for the sale of the Gillman land. In December 2013, following detailed consideration, including at Cabinet level, the URA entered into a contract with ACP, granting it an option to purchase and redevelop the Gillman land.

This decision effectively shut out other potential developers, such as IWS, without giving them an opportunity to tender for the Gillman land.

Challenge to the validity of the contract

IWS initiated a judicial review to challenge the URA's decision to sell the land by entering into a deed with ACP, arguing that:

  • the decision was unlawful, as the URA failed to comply with various mandatory obligations under section 11(1) of the Public Corporations Act 1993 (SA). As a public corporation, the URA must perform its commercial operations in accordance with prudent commercial principles and use its best endeavours to achieve a level of profit consistent with its functions. Many statutory authorities across the country (including electricity businesses, port authorities and statutory insurers) have similar obligations to act in in accordance with "prudent commercial principles" or to "act commercially"; and
  • the decision was unreasonable (in the sense that the decision was so unreasonable that no reasonable decision-maker could have come to it) because of insufficient investigation of the land's value and of the alternative option of selling the land on the open market.

Court rulings

The trial judge accepted some of IWS' arguments, finding that the decision to enter into the deed failed to comply with the Public Corporations Act and was unreasonable. However, based on the reasoning in the High Court's decision in the Project Blue Sky case and subsequent cases, the trial judge held that while the URA's decision to sell the land to ACP without considering alternative bids was not in accordance with prudent commercial principles as required by the Public Corporations Act, this non-compliance did not render the resulting contract void or unenforceable.

IWS appealed the decision to the Full Court of the Supreme Court of South Australia. In a 2-1 judgment the appeal was dismissed, with Justices Vanstone and Lovell finding that:

  • IWS did not have standing and the decision was not amenable to judicial review;
  • the deed entered into with ACP was not unlawful, as section 11 of the Public Corporations Act provided a rule for the internal governance of the URA, and was not aimed at restricting the powers of the Authority; and
  • the decision to enter the contract with ACP was not unreasonable even if a higher rate could have been achieved by going to open market. It was not for the Court to assess a commercial decision made by Cabinet (as delegate) for the URA involving wider questions of policy and strategy.

In dissent, Justice Debelle found that there was a failure to comply with section 11(1) of the Public Corporations Act and the decision was unreasonable, so the deed should be declared invalid. Justice Debelle held that a prudent vendor would have carefully examined the advantages of the land, the likely demand for the land as well as the merits and expected result of selling the land by a form of competitive process before deciding whether to accept the unsolicited offer.

Why should you be interested in the High Court's consideration of this issue?

The decision to enter into a contract with Government, or indeed any private entity, requires a consideration of the risk profile associated with that transaction. When challenges are made to Government contracts, as in the Acquista case, this has the potential to undermine the certainty which a party requires when entering into a contract with Government that their contract will be valid and enforceable.

If the appeal in the Acquista case is upheld by the High Court, it is likely that there could be an increase in the challenges that are made to seemingly valid contracts by third parties such as disgruntled competitors, unsuccessful tenderers and public interest bodies.

There has already been significant public debate over the process that was undertaken by the Government and URA to enter into the contract with the ACP. A report provided by the South Australian Auditor-General in 2014 concluded that a key deficiency of the Gillman site transaction process was the absence of a dedicated policy framework for the consideration and assessment of unsolicited proposals. The SA Government has now issued "Guidelines for the Assessment of Unsolicited Proposals". A range of other State and Territories have also recently updated their guidelines for unsolicited proposals.

The Acquista case shows the importance of ensuring that Government decision-makers at all levels comply with statutory requirements and guidelines made in support of those requirements, particularly when the decision-maker is statutorily required to carry out their activities in accordance with prudent commercial principles.

Written submissions are due to be filed in the High Court for the Acquista case in December and January with the matter to listed for hearing later in 2016. We will keep you informed of any further developments with this case.

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.