Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd [2015] NSWSC 756

Supreme Court New South Wales

Medium Neutral Citation: Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd [2015] NSWSC 756 Hearing dates: 15 June 2015 Date of orders: 16 June 2015 Decision date: 16 June 2015 Jurisdiction: Equity Division Before: Rein J Decision: See [23] Catchwords: EQUITY - Estoppel - Issue estoppel - Attempt to re-litigate issue after interlocutory judgment on separate question Legislation Cited: Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) Cases Cited: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) [1939] HCA 23; (1939) 62 CLR 464 Dimitrovski v Australian Executor Trustees Ltd [2014] NSWCA 68 Polo Enterprises Australia Pty Ltd v Pinctada Hotels & Resorts Pty Ltd [2012] NSWSC 1518 Texts Cited: N/A Category: Procedural and other rulings Parties: Polo Enterprises Australia Pty Ltd ABN 30117622 (Plaintiff) Pinctada Hotels and Resorts Pty Ltd (First Defendant) Cable Beach Polo Pty Ltd (Second Defendant) Marilynne Pamela Paspaley (Third Defendant) Representation: Counsel: D. Higgs SC/ E. Peden (Plaintiff) A. d'Arville (Defendants)

Solicitors: Clear Lawyers (Plaintiff) John De Mestre & Co (Defendants) File Number(s): 2012/306533 Publication restriction: Nil

Judgment 1. These proceedings relate to a joint venture agreement formed in 2010 ("the JVA") between Polo Enterprises Australia Pty Ltd ("Polo Enterprises") and Pinctada Hotels and Resorts Pty Ltd ("Pinctada") for the years 2010, 2011, 2012 and 2013. The facts and history of the matter are relayed in the judgment of Bergin CJ in Eq delivered on 10 December 2012 ([2012] NSWSC 1518) ("the judgment"). 2. Polo Enterprises makes a number of claims against Pinctada (and a company and individuals connected with Pinctada) arising out of Beach Polo Competitions on Cable Beach, Broome, Western Australia organised by the joint venture for 2010 and 2011, and those which were organised by Pinctada in 2013, 2014 and which are yet to be held in 2015, 2016 and 2017. The claims can be categorised as: 1. a claim for damages for breach of contract (ie the JVA) by Pinctada both in respect of the 2013 and 2014 Events and damages for future loss in respect of the 2015, 2016 and 2017 Events 2. a claim that Pinctada in submitting accounts for reconciliation with Polo Enterprises has wrongly claimed amounts of expenditure for certain items 3. that in obtaining the council's agreement to the hosting by Gazmedia Pty Ltd ("Gazmedia") (the Second Defendant) of the polo Events between 2013 and 2017 the Pinctada defendants engaged in misleading and deceptive conduct and that Polo Enterprises should be compensated for the loss of opportunity to Polo Enterprises to host the Events by the imposition of an amount for damages 1. The defendants dispute all three claims on various bases but the claims set out in 2(a) are resisted, inter alia, on the ground that Bergin CJ in Eq has determined the issue of breach of contract adversely to Polo Enterprises and that it is not open to Polo Enterprises to seek any damages in that regard there being an issue estoppel. 2. I need to set out a little more of the history and make reference to the judgment: 1. the hearing before Bergin CJ Eq was actually the determination of a separate issue framed in orders made by Pembroke J: "Pursuant to UCPR r28.2 order that the question of whether the plaintiff is entitled to the relief sought in Orders 1 and 2 of the Summons filed 3 October 2012 be determined separately from other questions in the proceedings ("Separate Question")" 1. the plaintiff was ordered to file a Statement of Claim by 30 October 2012. It did file a Statement of Claim on 1 November 2012 1. Orders 1 and 2 sought in the Summons were amended and those together with order 3 are found in the Amended Summons filed on or about 15 November 2012: "The Plaintiff seeks the following orders: 1. An order that the First Defendant, whether directly or indirectly through any interposed body corporate, related company, agent, servant or shareholder, and/or the Second Defendant, be restrained, until the conclusion of 2013, from conducting a polo event within 50km of the City of Broome. 2. Alternatively, an order that the First Defendant, whether directly or indirectly through any interposed body corporate, related company, agent, servant or shareholder, and/or the Second Defendant, be restrained from conducting in 2013 the polo event described in the application to Broome Council made in the name of the Second Defendant. 3. As against the First Defendant, damages for breach of the joint venture agreement." 1. In the judgment found at pp 69- 96 one finds as the conclusion of her Honour: "[61] I am not satisfied that cl 1.6 of the JV Agreement can be construed as a restraint (express or implied) as pleaded in the Statement of Claim. [62] Paragraphs 1 and 2 of the Amended Summons are dismissed with costs. The defendant is released from the undertaking given to the court in respect of the 2013 Event." 1. The JVA contains the following relevant clauses: "1.3 Notwithstanding clause 1.2 above, and subject to clause 1.6, if either PEA or PHR (directly or indirectly, or through any interposed body corporate, related company, trust, principal, agent, shareholder, beneficiary or in any other capacity) wish to conduct a consecutive Event, or any other polo related event within 50km of the City of Broome, in the subsequent year, or years, that party must offer the other party to this Joint Venture the exclusive first right of refusal to again conduct such an event pursuant to the Joint Venture, upon terms the same as, or substantially the same as, contained in this Agreement. 1.4 The party which intends to conduct a consecutive Event pursuant to clause 1.3 above must express that intention to the other party in writing, and the other party has 30 days within which to accept the option in writing, and thereby revive the Joint Venture. 1.5 Upon the parties agreeing to continue the Joint Venture pursuant to clause 1.4 above, the parties will execute a subsequent Agreement, in which the roles of the parties are substantially as provided for in this Agreement, and the terms are otherwise in accordance with the terms as provided for in, or agreed pursuant to, clause 1.2 1.6 If either PEA or PHR, whichever is applicable, fails to exercise the option referred to in clause 1.3 and 1.4 above, the other party will be at liberty to conduct the Event in that year and any subsequent years, independently, or with such other third parties as it deems appropriate, and the terms of clause 1.3 and 1.5 inclusive will cease to bind either party." 1. At [34] of the judgment there is reference to the fact that on 21 April 2012 Polo Enterprises wrote to Pinctada offering Pinctada the right of first refusal to conduct the 2013 Event "pursuant to clause 1.3 of the [JVA]". At [35] there is reference to Pinctada's indication that it did not see the clause as having any continued operation in the circumstances which had transpired and implicitly declining the opportunity to participate. 2. Both Polo Enterprises and Gazmedia applied for approval to hold the 2013 Event and Gazmedia was successful. 3. Her Honour did not accept Pinctada's contention that because there was no 2012 Event the 2013 Event was not caught by the JVA but did not accept Polo Enterprise's contention that clause 1.6 of the JVA gave to Polo Enterprises the exclusive right to conduct the 2013 Event: see [53]. Her Honour said: "[56] The concept of being "at liberty" in the context in which that expression is used in cl 1.6 of the JV Agreement means that the plaintiff is free to proceed without having to be in a joint venture with the defendant. It is free to proceed in the future, in 2013 and any subsequent years, either alone or with others. That conclusion is supported by the concluding words of cl 1.6 that "the terms of clause 1.3 and 1.5 inclusive will cease to bind either party". In other words, the plaintiff is not obliged or bound to advise the defendant of its future intentions in relation to conducting any further Events. It is at liberty (it is free) to conduct an Event without reference to the defendant. [57] The plaintiff submitted that the defendant misunderstood the nature of the claim it was making in respect of cl 1.6. It was submitted that the Restraint term as pleaded in para 6 of the Statement of Claim is not a term to be implied into the JV Agreement, but rather an express provision of the Agreement. In other words the plain meaning of cl 1.6 in context is that the party who does not take up the option is restrained from holding the Event the following year. I do not accept that it is an express term. It would have to be implied from the use of the words "at liberty" in cl 1.6 and in the context of the whole of the JV Agreement, but in particular cl 1. The alleged term to be so implied is that the party who has made the unaccepted offer of the first right of refusal has the exclusive right to conduct the Event the subject of the offer in that years and any subsequent years and that the party that did not accept the option is prohibited from conducting the Event in that year and any subsequent years. [58] The defendant submitted that the alleged implied term fails the classic test identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282–283 (as adopted in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 347 per Mason J). I agree with that submission in that it is not so obvious that it goes without saying; and it is not necessary to give business efficacy to the JV Agreement. Clauses 1.3–1.6 provided: (1) a mechanism whereby the parties could "revive" their Joint Venture and proceed to conduct another Event together; and (2) to free each other from being bound to conduct another Event together in Joint Venture. The JV Agreement had ample business efficacy without the need for an exclusive right being granted to one party to conduct the Event in any subsequent years. [59] Clause 20 of the JV Agreement prevents either party from using any information concerning the business or affairs of the other to their own benefit or to the detriment of the other for a period of 3 years after the agreement is terminated or expires. That clause contains the express statement that both parties agree to the restraints within it and acknowledge them as reasonable. If a restraint as contended for by the plaintiff had been intended, it is reasonable to expect that it would have been an express provision to which the parties stated their consent and in respect of which the parties acknowledged its reasonableness. The absence of such an express provision militates against the parties having intended such a restraint. [60] If the plaintiff's contentions were correct, it would mean that the defendant could never stage the Event again because the plaintiff has the exclusive right to do so for "any subsequent years". I am satisfied that the parties did not intend that outcome." 1. After her Honour had given judgment on the separate issue, the defendants' solicitors wrote to the plaintiff's solicitors asserting that the plaintiff's claim for damages as a result of the alleged breach of the JVA was based on claimed express and implied terms, and that no damages could be claimed in the light of dismissal of paragraphs 1 and 2 of the Amended Summons leaving only the claim for relief for misleading and deceptive conduct, asserted in the Statement of Claim but not claimed in the Amended Summons: see letter 8 February 2013 from Jarman McKenna to Gilbert + Tobin (part of Exh A). The solicitors for the plaintiff responded by letter of 19 February 2013 asserting: "The claim for breach of contract is distinct from the claim determined by Bergin CJ in Eq. It is based on your client's failure to provide our client with the first right of refusal pursuant to clause 1.4 of the contract. The breach has caused our client damage by depriving it of the opportunity to stage the 2013 event. As there is no dispute that your client failed to offer the first right of refusal, the only matter remaining for the Court to determine will be quantum of damages." 1. Jarman McKenna responded by, inter alia, threatening to have the Statement of Claim struck out: see 21 February 2013. By letter of 31 May 2013 Jarman McKenna sought particulars to which the plaintiff's solicitors responded. A defence to the Statement of Claim was filed late and it did not raise the point concerning the effect of Bergin CJ's judgment. 2. In May 2015 the matter came before Hallen J there being, I was informed, a Notice of Motion from the plaintiff seeking to join as third defendant Ms Marilynne Pamela Paspaley. His Honour, at the request of the defendants, directed that the plaintiff notify the defendants which, if any, of its claims in the Amended Summons it was not pursuing. On 5 June the defendants, through counsel, were informed that the plaintiff was not pressing relief in paragraphs 1 and 2 of the Amended Summons. The following week the defendants, by Mr d'Arville's submissions made clear that Pinctada did not accept that Polo Enterprises could seek any relief for breach of the JVA. 3. Mr Higgs accepted that Pinctada is entitled to run the defence that the plaintiff is precluded from maintaining the claim, notwithstanding that the point, although raised in correspondence, was not pleaded until now but he contended that Polo Enterprises is not precluded from running the claim because of the following matters: 1. he contended that her Honour was dealing only with injunctive relief with a hearing date given only a short time after the commencement of proceedings. He asserted that her Honour was not given all the material which might bear on the construction of the contract as a 'matrix of facts' 2. he contended that damages were not determined by her Honour and that since the only claim in the Amended Summons related to the 2013 Event the fact that her Honour did not refer to damages in her judgment is significant 3. he claimed that her Honour was concerned only with the 2013 Event and not the later Events 4. at a later point in submissions he contended that her Honour was dealing only with the failure of the defendant to agree to join in the JVA and not the failure of Pinctada to give notice under clause 1.4 of the JVA to Polo Enterprises to join with it in a joint venture. Mr d'Arville accepted that her Honour did not expressly refer to clause 7 of the JVA but he submitted that if Polo Enterprises was in effect asserting that a reason why relief should have been granted to it was that Pinctada had not issued a notice then that was a matter caught by Anshun estoppel, and that in any event the conclusion of the Court on the separate question was that Pinctada could not be restrained; which encompassed all matters connected therewith 1. In relation to (4), at T31.47- T32.2 Mr Higgs, having become aware that the plaintiff's submissions before Bergin CJ in Eq had dealt with the failure of Pinctada to give notice, abandoned this point. Having regard to paragraphs 18(b), 40 and 41 of the plaintiff's written submissions to her Honour and the response to them by the defendants' counsel (see paras 20 and 27), I think he was right to accept that he could not maintain an assertion that the separate question was not dealing with the notice required by clause 1.4 of the JVA as well as the effect of clause 1.3 of the JVA. 2. It is true that paragraph 3 sought damages for breach of the JVA and that paragraph 3 was not struck out. This may as well have been because the Amended Summons had itself not been amended to take into account that the Statement of Claim pleaded a case not only based on breach of contract but also on the basis of breach of Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)), ie the allegedly misleading and deceptive conduct. Had attention been given to the point the Amended Summons would have had to be dismissed unless Polo Enterprises thereupon amended the submissions to include damages on the basis of the alleged misleading and deceptive conduct. 3. I do not regard the failure of the judgment to deal with order 3, particularly when that was not part of what was referred to her Honour as part of the separate question, and probably should have been, as having any significance. 4. What was sought in the Amended Summons was a permanent injunction not an interim injunction. The plaintiff sought and obtained expedition and was required to put on whatever evidence it wished in support of the issues raised in the separate questions. I do not accept that the plaintiff could rely on a failure by it to adduce relevant evidence to undermine the finality of the determination made by her Honour on the separate question. 5. The nature of issue estoppel was dealt with comprehensively in Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) [1939] HCA 23; (1939) 62 CLR 464 but it was recently reiterated in Dimitrovski v Australian Executor Trustees Ltd [2014] NSWCA 68 per Emmett JA with whom Meagher JA and Bergin CJ in Eq concurred at [74]: "[74] However, the estoppel covers only those matters that the prior judgment or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion be that a money sum be recovered or that the doing of an act be commanded or restrained or that a right to possession be declared. On the other hand, nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In relation to matters of fact, the issue estoppel is confined to those ultimate facts that form the ingredients in the cause of action that is the title to the right established. Where the conclusion is against the existence of a right or claim that, in point of law, depends upon a number of ingredients or ultimate facts, the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. However, the estoppel is not confined to the final legal conclusion expressed in the judgment or order. The earlier judgment or order is conclusive not merely as to the point actually decided, but as to any matter that it was necessary to decide and that was actually decided as the groundwork of the decision itself, even if it was not then directly the point at issue. Matters cardinal to the original point at issue cannot be raised if to do so is necessarily to assert that the former decision was erroneous (see Blair v Curran (1939) 62 CLR 464 at 531–2)." (Emphasis added) Mr d'Arville also referred to Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ: "Once an issue is determined at the interlocutory stage, and the trial continues, the primary judge's hand is tied in respect of all matters of fact and law involved in that determination. In Fidelitas Shipping Co Ltd v V/O Exportchleb (112), Diplock LJ pointed out: "Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence."" 1. Her Honour also clearly regarded the inability to rely on the clause as one which affected not only the 2013 Event but future Events till 2015 (the maximum period for which the JVA could be extended) as well: see [57]- [60] of the judgment. 2. I am unable to accept that any of the matters which Polo Enterprises contend were not ventilated before her Honour were not part of what her Honour was required to consider. Her Honour having determined those matters adversely to Polo Enterprises by the determination of the separate question it follows that the same issue cannot be reventilated before me. 3. In my view it must follow that if Pinctada was not in breach of the JVA by applying for and obtaining the 2013 Event, and the later Events, there can be no damages obtained for the claimed breaches.