McMullan Construction Law

Alliance Contracting Electronic Law Journal
Expert Determination Electronic Law Journal

Level 4, 111 Coventry Street, South Melbourne, VIC Australia 3205
Tel: +61 1300 126 400
Fax: +613 9909 7649

Email: john@mcmullan.net

Documents For Download:

Author Archives: angela.vaccari@mcmullan.net

Lance’s Action Headed for Federal Court Determination

On 10 July 2012, Lance Armstrong’s lawyers re-filed the  (Amended) Complaint  seeking Orders as follows:

a.       An injunction staying the USADA requirement that by 14 July 2012 Lance elect to go to AAA arbitration or accept sanctions (this date was later extended, by agreement with USADA, for 30 days, to allow this Federal Court proceeding to be determined).

b.       A permanent injunction staying USADA from imposing sanctions (including disqualification of previous results) on the basis of the facts in the USADA charging letter.

c.        Declarations that USADA lacks jurisdiction to bring the charges asserted in the USADA charging letter.

d.       Damages against USADA.

e.        Costs.

 

The Amended Compliant is attached below.

 

Lance’s team makes multiple arguments in the Complaint, including:

  1. USADA’s procedures, designed primarily for cases where there have been positive results, do not afford Armstrong due process.
  2. Armstrong has not had a charging document that fairly tells him the claims that he must defend (not even when they occurred, which rules apply?).
  3. Armstrong has no guarantee of a hearing by the Tribunal with final say (the AAA panel is appealable to CAS, which need not decide to hold a hearing).
  4. Armstrong has no right to cross-examine his accusers (citing the Greg Lemond example, where Floyd Landis was refused the right to cross-examine, yet the Lemond statement was accepted).
  5. Armstrong has no right to an impartial arbitration panel (CAS members all appointed, limited term, paid, by USOC, incentivised therefore to side with USADA, very limited examples of athletes succeeding).
  6. Armstrong would have no right to exculpatory evidence, contrary to the legal position in a criminal trial.
  7. Armstrong would have no right to disclosure by USADA of witness agreements, contrary to the legal position in a criminal trial.
  8. Armstrong would have no right to disclosure by USADA of investigative witness statements, contrary to the legal position in a criminal trial.
  9. Armstrong would have no right to obtain full disclosure by USADA of laboratory analyses, nor impartial assessment whether the laboratory procedures are accurate (and the panel can be comfortably satisfied that any improper procedure did not cause an adverse finding).
  10. Under USADA’s procedures, Armstrong has no right of review by a USA court.
  11. The charges are outside the 8 year limitation period.
  12. USADA improperly induced witnesses, in violation of the WADA Code provisions (requiring reduction in ineligibility periods on this ground only after charges are brought and a period of ineligibility has been determined). Further, the offering of inducements violates federal law in relation to offering inducements for sworn testimony.
  13. The Review Board process, meant to be a check on abusive charging decisions, was circumvented, in USADA hand-picking the neutral experts, not providing the evidence supporting the charges to the Review Board, and having ex parte communications with the Review Board. The Review Board did not issue a considered evaluation. Armstrong was not given adequate notice of the charges or opportunity to respond.
  14. USADA is using information collected I the grand jury process.
  15. Lance having retired, USADA does not have jurisdiction, UCI does.

 

The key argument, it seems to me, is that USADA’s processes would deny Lance his right to due process under the Fifth Amendment, particularly relevant given that Lance is substantially (massively) affected by the outcome, and is in the extra-prone to injustice category of the “non-analytical positives” (athletes charged albeit that they have not had a positive test result against them.

 

Noting that USADA has not yet been required to respond, the arguments look (to me) strong in favour of Lance’s request for interim court intervention. If this assessment is right, we can expect a temporary stay, and Orders giving USADA the chance to respond, sometime before 12 August 2012 (within the 30 days agreed extension between Lance and USADA).

 

 

 

Lance (and UCI) further argues the USADA Jurisdiction

On 3 August 2012, Lance Armstrong’s legal team filed a response to USADA’s 19 July 2012 Motion to Dismiss.

 

USADA’s substantive arguments:

  1. The Ted Stevens Olympic and Amateur  Sports Act (“Sports  Act”) (an Act establishing arbitration as the exclusive forum for eligibility disputes in sports) pre-empts Armstrong’s claims.
  2. Armstrong has failed to exhaust his administrative remedies (a strong historical, factor relevant to the court’s discretion, against granting an injunction).
  3. Armstrong’s claims must be arbitrated (Lance, like all athletes, has regularly contracted to be bound by the arbitration process).
  4. Armstrong’s claims fail on the merits.

Armstrong’s key arguments in response:

1.        UCI, not USADA, has jurisdiction under the UCI Anti-Doping Rules (on which USADA relies in its charging letter) because:

a.       UCI collected the samples relied upon by USADA;

b.       UCI “discovered” the claimed violation (WADA Code, Article 15.3: “results management and hearings are the responsibility of and shall be governed by the procedural rules of the Anti-Doping Organization that initiated and directed Sample collection”).

c.        UCI has jurisdiction over Lance, as retired cyclist, as the organisation having jurisdiction at the time of claimed violations (pre- 13 August 2004, UCI’s anti-doping rules provided that they alone apply to international events, the charging letter refers to violations between 1996 and 2005, no specific conduct alleged after 13 August 2004);

d.       UCI asserts jurisdiction and has directed USADA not to proceed further. (In fact, UCI released a written statement on 7 August, following exhibiting its correspondence to USADA in this case on 6 August 2012 , confirming its direction to USADA, and publicly criticizing the due process aspects of USADA’s process in relation to Lance Armstrong and the 5 related respondents).

e.        UCI also has exclusive jurisdiction under the WADA Code

f.         USADA has no jurisdiction to bring a consolidated action against 6 people (There is no WADA Code violation for participating in an alleged doping conspiracy).

2.        The Sports Act applies only to amateur athletes, not Lance.

3.       Even if the Sports Act applied, it would not pre-empt this challenge, ie a common law and Fifth Amendment due process challenge (not an eligibility dispute).

4.      Armstrong should not have to go through the arbitration process, where that arbitration process is the subject of challenge over jurisdiction.

5.     Armstrong did not, in fact, agree to the arbitration process, saying:

a.       USADA has the burden of proving any agreement to arbitrate;

b.       USADA has not established any agreement to arbitrate (the USADA Protocol relied upon by USADA do not apply to Armstrong, his annual international licence are governed by the UCI Anti-Doping Rules);

c.        Armstrong’s membership of USA Triathlon has no relationship to the matters alleged in the charging letter.

 

USADA argue that the courts have traditionally taken the view, in previous cases (eg Mary Decker Slaney’s case), that Congress has determined, in clear terms, that USOC and USA Cycling are the bodies best able to deal with such disputes. The court, in Mary Decker Slaney’s case, had, in fact, veered away from a review of the validity of a drug test: “an endeavour (a court) cannot partake in”). Armstrong, in response, refers to the Tonia Harding case, and other cases, where the court had concluded that judicial intervention was warranted : “where the association has clearly breached its own rules, that breach will imminently result in serious and irreparable harm tp the plaintiff, and the plaintiff has exhausted all internal remedies”.

 

The USADA  jurisdiction argument took a dramatic twist over the weekend. UCI released a statement on Saturday (7 August), disputing that USADA has jurisdiction, and directing USADA to refer its files to UCI. Surprisingly, UCI went beyond this and expressly condemned USADA’s processes, on the basis of due process, in particular:

  1. 3 respondents banned for life, because they did not respond to USADA charging letter;
  2. USADA refused to provide UCI with evidence that the 3 respondents had received the USADA charging letter;
  3. no neutral review of the evidence relied upon by USADA;
  4. the 3 respondents banned for life were not given the evidence relied upon by USADA;
  5. the 2 respondents due to file a defence by 15 August 2012 have not been given the evidence relied upon by USADA;
  6. according to the World Anti-Doping Code and UCI’s Anti-Doping Rules that USADA claims to apply, the UCI is the authority having results management for this case.

 

A copy of the UCI statement is attached. The most damning (for USADA) part of the UCI statement:

 

For the UCI it is clear that USADA claims an authority that it does not have and uses procedures that violate basic principles of due process.

 

This action is listed for hearing on 10 August 2012 (before the 30 day agreed USADA extension runs out). Judge Sparks, of course, may or may not prefer the long-held view argued by USADA. Either way, we can expect to see an appeal from the Judge’s ruling on this important legal argument, referred by whoever loses, in the Appeals Circuit.

 

John McMullan

6 August 2012

Krstic v State Trustees Ltd [2012] VSC 344

In Krstic, Mark Stefan & Krstic, Nicholas Thomas v State Trustees Limited (ACN 064 593 148) (who is sued as the executor of the will and estate of Peter Krstic, deceased)  [2012] VSC 344, the Supreme Court (McMillan J) was considering the interpretation of two clauses in a will (relating to contingent gifts). Her Honour reviewed the principles to be applied to the construction of a will:

‘A detailed and succinct summary of the principles is set out in Fell v Fell.  Prima facie, the written words in the will must be given their ordinary meaning, with the Court making a determination of the issue by reference to the words used by the testator in the will, having regard to any established rules of construction and construing a ‘will as trained legal minds would do’.

 

 

Alabakis v Alabakis [2012] VSC 437

In Alabakis v Alabakis [2012] VSC 437, the Supreme Court (Macaulay J) was considering a Testator’s Family Maintenance claim by a daughter of the deceased’s second marriage, where the deceased was survived by his second wife, her daughter, three children from his first marriage, and two stepchildren. The plaintiff was the only child to receive nothing under the Will (though she had earlier received a substantial land gift).

Macaulay J adopted the principles set out by Hargrave J in McCann v Ward & Burgess [2012] VSC 63:

  1. Section 91 of the Administration and Probate Act 1958 (Vic)gives the court power to make an order for provision out of the estate where:
    1. the deceased had responsibility to make provision for the proper maintenance and support of the applicant; and
    2. the court is of the opinion that the will of the deceased does not make adequate provision for the proper maintenance and support of the applicant for the order.
  2. Whether the will makes adequate provision for the proper maintenance and support of the applicant is to be assessed by “‘by a consideration of the facts existing and the eventualities which might reasonably have been foreseen at the date of the testator’s death”.
  3. The court is to consider the matters set out in Section 91(4) (e)-(p) in considering the jurisdictional questions and the amount of any order.
  4. In determining the questions, the court must consider: “what provision a wise and just testator would have thought it was his or her moral duty to make for the applicant”.
  5. The testator is imputed to have been, at the time of death: “fully aware of all the relevant circumstances, including reasonably foreseeable eventualities existing at the date of death, whether or not actually known to the testator”.
  6. Should the two jurisdictional requirements be made, the court is to assess what order for further provision should be made, by reference to the state of facts as at the hearing date.
  7. The court should not transgress unnecessarily upon the testator’s freedom of testation but should proceed: “rather carefully and conservatively according to current community perceptions of the provision which would be made by a wise and just” testator.
  8. However, where an order for further provision will not unduly prejudice other beneficiaries for whom the deceased had a responsibility to make provision, the court adopts a reasonably generous approach, such that any further provision: “should be sufficient to free the mind from any reasonable fear of any insufficiency as age increases and strength may gradually fail”. Further: “where the size of the estate permits and there will be no serious prejudice to the rights of other beneficiaries, the court may order further provision beyond the immediate and likely future needs of the applicant”, providing a “nest egg” to guard against unforseen events.
  9. No inflexible approach can be taken in assessing the two jurisdictional questions or the amount of any order to be made for further provision, as each case will depend on its own facts.

In this case, His Honour concluded that the deceased did have a responsibility to make provision for the plaintiff. Ultimately, taking into account the financial resources and needs of the plaintiff, the second wife, and the other children, and the size and nature of the estate, His Honour concluded that the plaintiff was entitled to a further provision of $475,000.

Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2012] QSC 185

In Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2012] QSC 185, (10 July 2012), the Queensland Supreme Court (Applegarth J) was considering the terms of a Collaborative Consultancy Agreement (CCA) in relation to the Airport Link, Northern Busway (Windsor to Kedron) and East-West Arterial Gateway Projects, between Thiess John Holland (TJH) and Parsons Brinkerhoff Australia (PBA). TJH had engaged PBA as consultants for the design of the project. His Honour was asked to resolve whether, under the CCA, certain values of multipliers specified in the CCA were values agreed between the parties or were subject to audit by the Collaborative Agreement Auditor. His Honour concluded in favour of PBA, that the values were agreed between the parties and not subject to audit by the Collaborative Agreement Auditor.

His Honour considered the interpretation principles, reasoning as follows:

The proper interpretation of the contract is not determined in this case simply by competing contentions about which interpretation is the “more commercially sensible” construction. It is determined by the words of the agreement that were chosen by the parties, and the structure of Schedule 7.

His Honour reasoned in relation to the request for rectification:

These and other authorities appear to support the following propositions:

  1. The actual intention of each party is relevant in deciding whether they had the alleged common intention.
  2. The actual intention must have been disclosed.
  3. In determining whether there was the alleged common intention and the terms of the “prior consensus”, a Court is not confined to communications between the parties and their conduct from which the relevant intention may be inferred. Evidence of their subjective intention, including statements about their understanding of what was agreed, is admissible, and in some circumstances may be decisive.
  4. Where, however, the evidence given by a party about his or her subjective intention is inconsistent with the terms of their correspondence and/or conduct it may carry little weight.
  5. The existence or otherwise of a “common intention” (or prior consensus or prior concluded agreement) is determined on the basis of an objective assessment of the parties’ communications and conduct. Whilst evidence from a party about his or her subjective intention is admissible as to whether the alleged consensus was reached, the question of whether such a consensus existed and continued involves an objective assessment. The authorities suggest that the test is what an objective observer would have thought the intentions of the parties to be. In this regard, it is not the inward thoughts of the parties which matter but whether the alleged intention has been objectively manifested. To adopt the words of Street J, the intention on each side must be manifested “by some act or conduct from which one can see that the contractual intention of each party met and satisfied that of the other. On such facts there can be seen to exist objectively a consensual relationship between the parties.”

TJH had argued that there was a reasonable expectation that the multiplier was a genuine or reasonable estimate and that PBA had been acting in good faith in originally proposing them, and further, that it had a reasonable expectation of an auditor’s examination, and that if there was to be no such examination PBA would have disclosed this to TJH. His Honour summarised the cases:

[215] Silence or non-disclosure of information can be misleading or deceptive in various circumstances….. Whether silence constitutes misleading or deceptive conduct depends on all the relevant circumstances, and it is dangerous to essay any principle by which they might be exhaustively defined. However, “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant facts exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist” …… Asking whether a reasonable expectation of disclosure exists is an aid to characterising non-disclosure as misleading or deceptive and has been described as a practical approach to the application of the prohibition in s 52.

[216] Sometimes a reasonable expectation of disclosure will not exist because parties to a commercial negotiation are not expected to disclose information which is confidential, and the starting point for their negotiations is the caveat emptor doctrine. On other occasions, a reasonable expectation of disclosure will exist because of the nature of the relationship, or because positive conduct or statements in the course of negotiations imply that a certain fact or matter exists or does not exist. A failure to qualify a statement made earlier in negotiations may be misleading or deceptive in the circumstances. Where, however, this is not the case, the reasonable expectation of disclosure of a certain fact must be found elsewhere. In this case, TJH seeks to source it by reference to the negotiation and entry into the Pre-Bid Agreement and the parties’ subsequent negotiations in relation to the commercial framework and the terms of Schedule 7, as pleaded in paragraph 85 of the second further amended defence and counterclaim. Whether conduct is misleading or deceptive or likely to mislead or deceive must be assessed on the basis of these facts and all the relevant circumstances.

Ultimately, His Honour concluded that there was no misleading and deceptive conduct in this instance, concluding that PBA should have the declaratory relief it sought.

 

 

 

Skilled Group Ltd v CSR Viridian Pty Ltd & Anor [2012] VSC 290

In Skilled Group Ltd v CSR Viridian Pty Ltd & Anor [2012] VSC 290 (4 July 2012), Vickery J was considering a claim by Skilled Group for  monies due by way of a restitutionary quantum meruit for engineering work it performed , under a subcontract that was never executed between Skilled and Pilkington, at a glass manufacturing plant in Dandenong owned by CSR. Skilled said that no concluded subcontract had been made between Skilled and Pilkington because, the parties had never agreed on two essential terms of the proposed subcontracts, namely the dates for practical completion and the proposed milestone dates for the purposes of calculation of liquidated damages.

His Honour noted previous cases where, though no contract had been executed, by the parties proceeding to perform  the work, a contract had been formed. In relation to the formation of a contract, His Honour said:

94 In any determination as to whether a binding contract exists, it is the objective intent of the parties, as revealed in the factual context, that is the paramount consideration. The fact of agreement and its content is to be determined by the communications between the parties considered objectively. It is also legitimate to consider the factual context in which the communications took place. Regard may also be had to communications between the parties subsequent to the date of the alleged contract, at least to the extent to which those communications may inform the meaning of the language used by the parties in earlier exchanges between them which evidenced the fact of agreement and its content and defined the commercial context.

95 The subjective intention of the parties, as it may be expressed, for example in internal memoranda, or statements made by individuals as to as to subjective intention in the course of giving evidence, is generally inadmissible. However, in some circumstances such expressions of intention may amount to admissions and be admissible on that basis. However, care needs to be exercised in determining the content of any such admission.

His Honour considered the so-called “fourth class” of cases discussed in Masters v Cameron, where parties are content to be bound immediately and exclusively by the terms which they had agreed upon while at the same time expecting to make a further contract in substitution for the first contract, containing, additional negotiated terms, referring to Lord Loreburn, in Love & Stewart v S Instone & Co:

 

It was quite lawful to make a bargain containing certain terms which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with he full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, none the less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain.

 

 

His Honour concluded:

 

In my opinion, the parties reached agreement in this case in conformity with the fourth limb of Masters v Cameron as described by the High Court in Sinclair Scott. Their conduct clearly manifested an intention to elevate their commercial relationship beyond the clutches of the third class. …. By early May 2008 the parties reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms. At the same time the parties proposed to make a further contract in substitution for the first contract, containing negotiated additional terms relating to dates for practical completion of the three Sub-contracts and agreed milestone dates, upon which it was intended that the Sub-contracts would be formally executed……. 117 The factual analysis I have described, involving as it does the application of the fourth limb of Masters v Cameron, also goes to explain the negotiations between the parties which continued from early May 2008 as to dates for practical completion and milestone dates. What the parties were not about during this period was negotiating towards a set of original binding Sub-contracts, for by early May 2008 they were already bound to a concluded, but limited suite of bargains. What they were about was the negotiation of a new set of Sub-contracts in substitution for the already binding ones. The fact that the parties continued to negotiate for an alternative regime of dates, and this continued beyond early May 2008, had no bearing on the concluded bargains which were already in place. ……

 

In the light of the conduct described, I find it irresistible to conclude otherwise than implied contracts on the terms of the three Sub-contracts are to be inferred from the evidence and that these implied contracts operated to govern the Skilled works on the Project from the outset of their engagement.

 

His Honour concluded, therefore, that concluded subcontracts had been formed. Though no longer required, His Honour further concluded that, were it not possible to imply the existence of binding agreements, Skilled would have been estopped from denying the existence of the agreements as reflected in the three subcontracts.