East West

 

There is a Greek if not Byzantine twist to the controversy about a large Victorian government project called East West. I have not seen one document or opened one book, but you know something is badly wrong when a government enters into a secret deal to frustrate the decision of the courts and the verdict of the electorate. My very limited understanding is as follows.

  • A government and a builder enter into a contract.
  • The contract is hugely controversial and it becomes an election issue.  The opposition threatens to cancel it, if, as is likely, it wins government.
  • Opponents of the project also see a process issue on which to get the courts to say that the contract is invalid.  The government did not go through the right process to test the project, and the courts may well say the deal is bad.
  • With knowledge of all this, a representative of the government enters into what is called a side deal with the builder to honour the contract even if the court says that it is unenforceable.  They keep this deal secret from the public who only find out about it after the election and the new government sets about to cancel the deal.
  • If a representative of a corporation or trust purported to enter into a secret deal with a builder binding on stakeholders to honour a deal even if the courts say it should not be honoured, I think those running the corporation or trust would be obliged to do all that they could to relieve stakeholders of any liability that might flow from the secret transaction.
  • The builder looks to lack merit.  Why did it enter into the secret deal?  Was it told that it would get nothing unless it did?  Did it just chance its arm on a process that looks as desperate as it is grubby?  Above all, what in equity can it say that it has done or outlaid in reliance upon a secret deal after the event with a sinking government?  Is this just not a scheme to make taxpayers liable even though the courts say that in law they are not liable?
  • I think it is quite open to the government of Victoria to say that the previous government secretly entered into a deal purporting to say that the merry-go-round for the builder will stop for the benefit of the builders and at the expense of the taxpayers as if the courts had not ruled on the contract – now, the new government will by statute say that the merry-go- round for the builder will stop for the benefit of the taxpayers and so as to deprive the builder of unjust enrichment as if that side-deal had not been made, and as if the courts had ruled against the contract. You just extinguish a covert executive act with an overt legislative instrument. It is no contest.
  • I would have thought that such a course was not just open to the government but one the like of which it was it was obliged to undertake.
  • The rest it tactics.  The government could test the planning issue in the courts.  The previous government and the builder evidently thought that they were on a loser. Then or subsequently, they could test the validity of a deal done by a government in secret to bind taxpayers to an expense and to award a builder a gain  contrary to the ruling of the Supreme Court of Victoria.  The critical point would be the cross-examination of the signatories.  That would take place before a court whose authority they have sought to deny and whose protection of the community and the rule of law thay have clandestinely sought to avoid. Sane politicians and business people do not subject themselves to this kind of ritual humiliation. The government would have the fall-back of legislating in a case that would not attract the opprobrium such a course usually does. As I say, these are just tactical issues.
  • I would be surprised if the builder went the distance.  They are without merit or friends.  They have come by their title by underhand means. Doubtless the parties had oodles of expensive and high-powered legal advice. So did the directors of James Hardie before they sought to shaft their workers, and they were lucky not to go to jail. Grubby deals and their makers usually fall apart in the glare of daylight.