The State Government overcame one legal threat to its controversial Gillman land deal this week – and another looks closer to being resolved.
The Supreme Court this week rejected an appeal by two waste companies against an earlier judgement which found that the Gillman contract was valid.
That earlier judgement by Justice Malcolm Blue was, nevertheless, scathing of the Government’s decision to enter into a deal with Adelaide Capital Partners on 400 hectares of Government land at Gillman without going to tender.
Blue found the decision to enter into the deal was “unlawful”, ignorant and made with disregard to “prudent commercial principles”.
However, Blue found that while the contract was entered into unlawfully, it was not void.
Waste companies Acquista Investments (operating as Integrated Waste Services) and Veolia Environmental Services, who brought the original action against the Government’s Urban Renewal Authority, sought to appeal the decision and have the contract declared invalid.
They lost that case this week, in a split judgement – but there was a sting in the tail for the Government.
Justices Vanstone and Lovell rejected Blue’s argument that the deal was unlawful and legally unreasonable and set these findings aside. They also found that the decision to enter the contract and the contract itself were not amenable to judicial review.
“Even assuming that the only information before the Cabinet was that contained in the cabinet submissions, we would not accept that the decision to accept ACP’s offer and not to go to the open market was shown to be legally unreasonable,” the judgement said.
“The proposal by ACP was quite different from that associated with any other expression of interest. It was not merely to buy the land but to establish what was referred to as ‘an oil and gas hub’. It was envisaged that if that proposal were brought to fruition, it would likely involve substantial benefits to the State in terms of investment, infrastructure and jobs.
“This Court is not in a position to make any judgment as to whether the proposal was likely to come to fruition. No doubt that likelihood would have been debated in the Cabinet. We must assume that the Cabinet considered that the proposal was both genuine and viable. Once so much is assumed, then it can readily be seen that this proposal would have attraction beyond a mere sale of some or all of the Land for, presumably, waste management purposes.”
In a lengthy dissenting judgement, Justice Debelle argued that the Cabinet had no authority to execute the deal and therefore the contract should be found to be invalid.
He also criticised the responsible minister, Tom Koutsantonis, and Renewal SA management for failing to inform the board of the authority about alternative offers for the Gillman land – from Integrated Waste Services and E&A Ltd.
“The Board was, therefore, entirely unaware of the fact that at least two major companies were also interested in purchasing part or all of the Gillman land. There was no evidence why these expressions of interest were not drawn to the attention of the Board. It is extraordinary that neither the Minister, Mr Koutsantonis, nor the officers of the Authority provided the Board with information so plainly relevant to the question whether ACP’s unsolicited offer should be accepted or whether it would be better to offer the land for sale by a competitive process. It raises the question whether these important facts were being deliberately concealed from the Board. As there is no allegation of bad faith, I do not pursue that aspect of the matter.
“In my view it was, at the very least, a grave oversight, if not a grave omission, on the part of Mr Koutsantonis to fail inform the Board of the offer from IWS and E&A Ltd.”
You can read the majority and dissenting judgement here.
Meanwhile, there are signs that long-running litigation over the Gillman site brought against the State Government by the Adelaide City Council could be nearing resolution.
In 2009 the State Government compulsorily acquired Adelaide City Council’s 50 per cent stake in a 300ha section of the Gillman site, known as the Dean Rifle Range, for $1.52 million in compensation.
In 2012 the council challenged the compensation the Government offered – seeking $30 million instead – and the legal action has been ongoing every since.
However, a recent report to the council’s finance and business services committee reveals it has slashed the funds it has allocated to fighting the case.
In response to questions from InDaily, a council spokesperson said: “The original budget ‘provision’ for Gillman litigation was $500k. However, management has determined it prudent to reduce this to $200k at this stage, pending confidential discussions which are ongoing.”
InDaily understands lawyers from the council and the Government are attempting to negotiate a settlement.
