MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No 4) [2021] NSWSC 1428

Supreme Court New South Wales

Medium Neutral Citation: MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No 4) [2021] NSWSC 1428 Hearing dates: On the papers Date of orders: 05 November 2021 Decision date: 05 November 2021 Jurisdiction: Equity - Commercial List Before: Williams J Decision: See [23] Catchwords: COSTS – no issue of principle Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.7(1) Cases Cited: MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582 MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No. 2) [2021] NSWSC 892 MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No. 3) [2021] NSWSC 1023 Category: Costs Parties: MP Water Pty Ltd (ACN 621 777 320) in its capacity as trustee of the MP Water Trust (ABN 86 561 380 647) (Plaintiff) Veolia Water Australia Pty Ltd (Defendant) Representation: Counsel: Mr J Giles SC with Mr J Hutton and Mr W Marshall Mr M Ashhurst SC with Ms J Wright and Mr F Anwar Solicitors: Gilbert + Tobin (Plaintiff) Norton Rose Fulbright Australia (Defendant) File Number(s): 2021/138389 Publication restriction: N/A

Judgment 1. These reasons concern: 1. whether orders should be made finally disposing of these proceedings following the dismissal of prayers 11 and 12 in the Summons on 13 August 2021; and 2. if so, what orders should made as to the costs of the proceedings, including: 1. the plaintiff's successful application for an interim injunction: MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582; 2. the plaintiff's unsuccessful application to amend its Summons and Technology and Construction List Statement prior to the hearing that commenced before me on 26 July 2021: MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No. 2) [2021] NSWSC 892; and 3. the hearing before me, following which the plaintiff's claims were dismissed, save for a component of its damages claim that had been ordered to be determined separately after the determination of all other issues in the proceedings, and the interim injunction was discharged: MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No. 3) [2021] NSWSC 1023 (the principal judgment). 1. These reasons assume familiarity with the principal judgment. Terms used in these reasons have the same meaning as in the principal judgment, including that the plaintiff is referred to as MP Water and the defendant is referred as Veolia. 2. The procedural history of this matter up to the date of the principal judgment is recorded at [212]-[227] of the principal judgment. In its Technology and Construction List Statement, MP Water alleged that Veolia had breached its obligations under the SPA by, inter alia, causing or allowing the May Major Service Failure to occur and/or by failing to provide the Services. MP Water alleged that it had suffered loss by reason of those and other alleged breaches, including "[a]ny liability to the Customer that MP Water has or will incur as a result of those breaches." [1] At the hearing commencing on 26 July 2021, MP Water's evidence of losses that it claimed to have suffered in the form of costs incurred in exercising step-in rights was ruled inadmissible. MP Water subsequently abandoned its claim for those losses. It was therefore not necessary to determine any issue concerning quantum of damages at that stage because the Court had made an order on 11 June 2021 for separate determination of "the quantum associated with the claim against the plaintiff by a customer" after determination of all other issues at the hearing commencing on 26 July 2021. This is referred to at [215]-[216] of the principal judgment. 3. At the time of the hearing that commenced on 26 July 2021, the Customer had not made a claim for damages against MP Water in respect of any losses suffered by the Customer as a result of the May Major Service Failure. Nevertheless, consistently with the order made on 11 June 2021, the hearing proceeded on the basis that the issues to be determined included whether Veolia had breached its obligations under the SPA, including by causing or allowing the May Major Service Failure to occur and/or by failing to provide the Services. Neither party suggested that any alternative course should be adopted. The issues to be determined were: [2] 1. whether there was a Services Provider Default as alleged in the 11 May SPA Default Notice; 2. if so, whether "the prevention principle" precluded MP Water from relying on the Services Provider Default by issuing in the 11 May SPA Default Notice; 3. if "no" to (2) above, whether Veolia failed to "diligently pursue" the 11 SPA May Default Notice within the meaning of clause 44(2)(a) of the SPA; 4. whether clause 44 of the SPA obliged Veolia to assist MP Water by complying with MP Water instructions or directions requiring Veolia to perform the Services; 5. whether orders should be made in relation to the 13 May Step-in Notice in the terms sought by MP Water; and 6. whether Veolia breached its obligations under the SPA by: 1. causing or allowing the May Major Service Failure to occur; 2. failing to comply with the 11 May SPA Default Notice; 3. failing to comply with the 11 May SPA Direction; 4. failing to comply with the 13 May Step-in Notice; and 5. otherwise failing to provide the Services in accordance with the SPA. 1. Issues 1 to 3 were relevant to the question whether the circumstances giving rise to the May Major Service Failure, and Veolia's response to the 11 May Default Notice issued under clause 42 of the SPA, entitled MP Water to issue a step-in notice under clause 44 of the SPA. Those issues were determined in favour of MP Water. [3] 2. Issues 4 and 5 concerned whether clause 44, properly construed, entitled MP Water to issue the 13 May Step-in Notice in the terms that it did and to require of Veolia the assistance demanded in the 13 May Step-in Notice. Those issues (together with issue 6(d)) were determined in favour of Veolia, and MP Water's claims for injunctive relief in prayers 11 and 12 of the Summons were consequently dismissed. [4] 3. Issues 6(a), (b) and (e) were determined in favour of MP Water. Issue 6(c) was abandoned by MP Water. 4. Because the quantum of MP Water's loss flowing from the Customer's foreshadowed claim for damages had been reserved for later determination by the orders made on 11 June 2021, the matter was stood over for directions in relation to the future conduct of the proceedings in relation to that separate question. Costs were reserved on the basis that it was not known whether the determination of issues 6(a), (b) and (e) would result in any award of damages in favour of MP Water, and that would be relevant to the question of costs. 5. It remains the case that the Customer has foreshadowed, but has not yet made, a claim for damages against MP Water in respect of losses that the Customer claims to have suffered as a result of the May Major Service Failure. 6. When the proceedings were listed for directions on 6 September 2021 following publication of the principal judgment, MP Water submitted that the proceedings should be adjourned for a period until the status / timing of the Customer's foreshadowed claim became clearer. Alternatively, if the proceedings were dismissed, MP Water submitted that any dismissal should be on terms that ensured MP Water would be entitled to bring fresh proceedings in the future in respect of any loss suffered by MP Water as a result of a claim for damages made by the Customer in respect of losses caused by the May Major Service Failure, and that in any such future proceedings MP Water and Veolia would be bound by the findings in relation to issue 6 in these proceedings. 7. Veolia expressed concern about the length of time that may be taken for the Customer to make any claim for damages against MP Water. Veolia proposed that the proceedings be dismissed if MP Water were not able to file and serve its evidence concerning the quantum issue that was the subject of the order made on 11 June 2021. Veolia submitted that: "If and when the Customer brings a claim against MP Water, MP Water can commence fresh proceedings. All parties will have the benefit of the existing judgment and the issue estoppels that arise therefrom. In those circumstances, there is simply no reason to not complete the Proceedings now." 1. Hammerschlag J directed the parties to provide written submissions setting out their positions in relation to "giving and accepting an undertaking by the defendant not to take an Anshun point on the potential damages claim from the customer." Contrary to the submissions that the parties have now provided, his Honour did not require Veolia to provide any particular undertaking. His Honour also made directions to facilitate the determination of the costs of the proceedings on the papers (on the assumption that the proceedings were to be dismissed and any claim by MP Water for damages for loss flowing from the Customer's foreshadowed claim would be the subject of fresh proceedings). 2. The parties exchanged written submissions on 16 and 17 September 2021 and further written submissions on 29 October 2021 in response to my request for the parties to clarify certain matters arising from the submissions. 3. Veolia has offered the following undertaking: "The Defendant undertakes to the Court that it will not claim any form of estoppel defence (consistent with the principles considered in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) in respect of any subsequent proceedings commenced by the Plaintiff that seeks damages or indemnification from the Defendant in respect of the 'reserved' claim described in order 1 made by this Court on 11 June 2021." 1. A dispute has emerged from the parties' submissions about whether, or the extent to which, the doctrine of issue estoppel will preclude Veolia from seeking to relitigate in any subsequent proceeding issues that have been determined adversely to it in these proceedings. MP Water has proposed that Veolia should give additional undertakings in various terms to the effect that Veolia will be bound by specific findings in the principal judgment in any subsequent proceedings as if those proceedings were a continuation of the present proceedings. Veolia has declined to give any such undertakings, and says that the undertakings sought are wider that any issue estoppel that arise from the principal judgment. It is plain from Veolia's submissions that it seeks to preserve its ability to the greatest extent possible to relitigate in any subsequent proceedings those issues that have been determined adversely to it in these proceedings. 2. A transcript of the directions hearing before Hammerschlag J on 6 September 2021 is not available. However, neither party suggests that his Honour was informed that, if the proceedings were dismissed on the basis that MP Water could commence fresh proceedings in the future in respect of any claim for loss flowing from the Customer's foreshadowed claim, one or both parties would seek to relitigate in the fresh proceedings issues that had been determined in the present proceedings pursuant to the orders made on 11 June 2021 and that there would be a dispute about the doctrine of issue estoppel and/or abuse of process. 3. In my view, this would undermine the objective of the orders made on 11 June 2021 for the conduct of the present proceedings and would be contrary to the manner in which the hearing before me was conducted (with both parties' acquiescence) on the basis of those orders. It would result in significant waste of Court time in determining disputes about issue estoppel or abuse of process and potentially (subject to the outcome of those disputes) determining matters that have already been considered and determined in these proceedings. 4. MP Water proposes that these difficulties should be overcome by granting it leave to amend its Summons now to include a claim for declarations, and to make those declarations, in order that certain findings in the principal judgment might be more confidently said to create an issue estoppel. 5. Based on the manner in which the parties have conducted these proceedings to date, I assume that any formal amendment application (which has not been made), would be opposed. I do not propose to allocate scarce Court time to hear and determine a disputed amendment application made after judgment has been delivered in order to address a difficulty that does not arise if the proceedings are simply left on foot for the quantum of MP Water's loss flowing from any damages claimed by the Customer to be determined separately in accordance with the orders made on 11 June 2021. In my opinion, that is the preferable course in all of the circumstances that I have outlined above. 6. Having reviewed the parties' submissions in relation to costs, I remain of the view that, subject to one qualification, any determination as to the costs of these proceedings should be deferred pending the outcome of the further hearing in relation to the separate question. Both parties' submissions in relation to the costs of the proceedings to date misstate the effect of the principal judgment, with MP Water contending that it is the successful party because it succeeded on the majority of issues and Veolia contending that MP Water has failed entirely. Neither characterisation is correct and it is appropriate that the exercise of the costs discretion should be informed by the outcome of the proceedings as a whole, including the separate question. 7. The qualification is that MP Water accepts that it should be ordered to pay Veolia's costs of its unsuccessful amendment application: MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No. 2) [2021] NSWSC 892. There is no impediment to making that order now. In circumstances where the determination of the costs of the proceedings has been deferred as a result of the delay in MP Water's ability to prosecute the claim that is the subject of the separate question, it is appropriate in my view that MP Water be ordered to pay those costs forthwith. 8. No further orders are required at this stage, save to list the matter for directions early next year with the expectation that MP Water will be in a position by that time to propose directions for the service of its evidence in support of its damages claim that is the subject of the separate question. 9. For those reasons, I make the following orders and direction: 1. Order that the plaintiff pay the defendant's costs of the plaintiff's notice of motion filed on 16 July 2021 on the ordinary basis, as agreed or assessed. 2. Order pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 42.7(1) that the costs the subject of order 1 above be paid forthwith. 3. Direct that the proceedings be listed for further directions on 11 February 2022.