Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2015] NSWCA 397 Hearing dates: 26 November 2015 Date of orders: 15 December 2015 Decision date: 15 December 2015 Before: Bathurst CJ at [1]; Ward JA at [2]; Tobias AJA at [88] Decision: 1. Grant an extension of time for the filing of the summons, insofar as the summons seeks leave to appeal from the decision of Bergin CJ in Eq of 10 December 2012, to 13 July 2015. 2. Dismiss the summons seeking leave to appeal with costs Catchwords: APPEAL – leave to appeal – separate determination of question – construction of joint venture agreement – delay – no point of principle – whether fairly arguable case APPEAL – leave to appeal – interlocutory decision – issue estoppel – orders made by consent – whether any arguable error in application of the principles of issue estoppel on the facts of the case CONTRACT – construction – joint venture agreement to conduct beach polo event – implied term – whether term should be implied to give business efficacy to clauses in joint venture agreement Legislation Cited: Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW), ss 101, 103 Uniform Civil Procedure Rules 2005 (NSW), r 28.2 Cases Cited: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 Clarke v State of New South Wales [2015] NSWCA 27 Jaycar Pty Limited v Lombardo [2011] NSWCA 284 Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd [2015] NSWSC 756 Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2012] NSWSC 1518 Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 Category: Principal judgment Parties: Polo Enterprises Australia Pty Limited (Applicant) Pinctada Hotels and Resorts Pty Limited (First Respondent) Cable Beach Polo Pty Limited (Second Respondent) Representation: Counsel: D Higgs SC with Ms E Peden (Applicant) WAD Edwards (Respondents) Solicitors: Clear Lawyers (Applicant) John DeMestre & Co (Respondents) File Number(s): 2015/00205053 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2012] NSWSC 1518; [2015] NSWSC 746 Date of Decision: 10 December 2012 Before: Bergin CJ in Eq & Rein J File Number(s): 2012/00306533 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This Headnote is not to be read as part of the judgment] On 28 March 2011, Polo Enterprises Australia Pty Limited (Polo), a company established to promote the sport of polo in Australia, and Pinctada Hotels and Resorts Pty Ltd (Pinctada), a company involved in the hospitality industry in Broome, entered into a joint venture agreement to conduct a beach polo event in Broome in May 2011 (the Agreement). Clauses 1.2-1.5 of the Agreement governed the circumstances in which the term of the Agreement might be extended to 2015 (cl 1.2) or otherwise "revived" (cll 1.3-1.5). The latter provided that if either party wished to conduct a consecutive event, it must offer the other party the "exclusive first right of refusal" to conduct such an event upon the same or substantially the same terms as the Agreement (cl 1.3). If that party failed to exercise such an option then the other party would be "at liberty" to conduct the event in that year or any subsequent years independently, and the terms of cll 1.3 and 1.5 inclusive would cease to bind either party (cl 1.6). Although the parties contemplated holding a beach polo event together in 2012 that did not eventuate. There were disputes between the parties and Polo formed the view that the joint venture had broken down. In April 2012, Polo gave Pinctada notice of its intention to stage an event in May 2013 and offered Pinctada the first right of refusal to conduct the event with Polo (pursuant to 1.3 of the Agreement). Subsequently, an entity associated with Pinctada, Cable Beach Polo Pty Ltd (Cable), applied for, and was granted, approval by Broome Shire Council to hold a beach polo event in May 2013. Polo brought proceedings against Pinctada and Cable in the Equity Division of the Supreme Court seeking orders restraining them from conducting the 2013 event and/or from conducting a polo event within 50km of Broome in 2013, and damages from Pinctada for alleged breaches of the Agreement. It was common ground in the proceedings that the term of the Agreement was to be treated as having been extended to June 2012. In December 2012, the question of Polo's entitlement to injunctive relief was determined as a separate question in the proceedings. The primary judge did not accept the construction of cll 1.3-1.6 of the Agreement advanced by Polo, namely, that it was an express or implied term of the Agreement that a party who failed to exercise the option in cl 1.3 (i.e., here, Pinctada) would not be at liberty to conduct the event in the year in which the option was exercised, and that it was an implied term that in the event a party became obliged to give notice of its intention to hold a beach polo event, that party was not entitled to conduct the event in the subsequent year without giving notice or accepting an option offered by the other party. That part of Polo's summons was dismissed. Other claims for alleged misleading and deceptive conduct remained on foot. At the hearing in June 2015 (following various amendments which had been made to the pleadings) the judge then hearing the matter held that Polo was bound by way of issue estoppel in respect of the findings as to the construction of the Agreement that had been made in December 2012 and therefore was not entitled to run its case for breach of contract based on Pinctada's alleged non-compliance with cll 1.3-1.6 of the Agreement. Polo then sought leave to appeal (though it did not concede that leave was necessary) from both the December 2012 and June 2015 decisions. Held refusing leave to appeal (per Ward JA, Bathurst CJ and Tobias AJA agreeing): 1. The delay in seeking leave to appeal, and the fact that no point of principle or general importance was raised in the appeal, did not warrant the grant of leave to appeal ([54], [86]). The only aspect on which there may have been an argument as to the construction of the Agreement related to the question whether cl 1.6 should have been read as giving Polo an exclusive right to stage the beach polo event in 2013 (not in any subsequent years) ([54]). The December 2012 decision was not shown to have been more than arguably wrong and even then, any such argument depended on a constructional implication argument that was first raised during the leave application ([54], [86]). 2. no arguable error was demonstrated in the application of the principles of issue estoppel on the facts of the case; the appeal against that decision was hopeless ([57]). Judgment 1. BATHURST CJ: I agree with Ward JA and with her Honour's reasons. 2. WARD JA: Polo Enterprises Australia Pty Limited (Polo) seeks leave to appeal from two decisions in the Equity Division of the Supreme Court. The first is a decision of Bergin CJ in Eq in December 2012 (Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2012] NSWSC 1518) in which her Honour dismissed with costs an application by Polo for a permanent injunction to restrain the first respondent, Pinctada Hotels and Resorts Pty Limited (Pinctada), from staging, in 2013, a beach polo event in or within 50km of Broome. The second is a decision of Rein J in June 2015 (Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd [2015] NSWSC 756) in which his Honour gave a procedural ruling that Polo was bound by way of issue estoppel in respect of her Honour's findings as to the construction of the parties' joint venture agreement and ought not be permitted to seek relief in respect of a claimed breach of cl 1.6 of that agreement. 3. In its written submissions in this Court, Polo did not concede that it was required to seek leave in respect of an appeal from either of those decisions and indicated that it had filed its summons for leave to appeal in respect of both decisions, and for an extension of time with respect to the first of the decisions, in the event that it were to be wrong in its contention that leave to appeal was not required. Nevertheless, in oral submissions Polo did not argue that leave was not necessary. Rather, its argument was that leave to appeal (and the necessary extension of time for the filing of its summons) should be granted. Pinctada maintains that leave to appeal is required in respect of both decisions and opposes the grant of leave. Background 1. Polo is a company which was established in 2006 to promote the sport of polo in Australia. Pinctada is a company that is involved in the hospitality industry in Broome. 2. The dispute between the parties relates to the arrangements pursuant to which Polo and Pinctada together conducted a beach polo event on Cable Beach in Broome in 2011 (they having jointly staged such an event the year before in accordance with what was then only an informal agreement in place between them). 3. After the 2010 beach polo event, Polo and Pinctada entered into a joint venture agreement on 28 March 2011 (the Joint Venture Agreement) to reduce to writing the terms of what they described as their unincorporated joint venture (defined as the "Joint Venture") for the conduct of the "Beach Polo" event (defined as the "Event") to be staged in Broome between 8 and 15 May 2011 (recital A). Recital B to the Joint Venture Agreement recorded that the agreement set out "all the terms and conditions governing the operation and conduct of the Joint Venture". The Joint Venture Agreement was governed by the law of Western Australia. It is not suggested that anything turns for present purposes on the parties' choice of the governing law for their agreement. 4. Pursuant to cl 1.1 of the Joint Venture Agreement, it was to commence on the date of execution and to conclude on 12am, 30 June 2011 (unless terminated earlier in accordance with the provisions of clause 18, which conferred a right of termination in certain events). Relevantly, for present purposes, cll 1.2-1.5 dealt with the circumstances in which the term of the Joint Venture Agreement might be extended to 2015 (cl 1.2) or otherwise "revived" (cll 1.3-1.5). 5. As it is the critical provision, I set out cl 1 of the Joint Venture Agreement here in full: 1. TERM 1.1 This agreement shall commence on the date of execution of the Agreement and conclude on 12.00am 30 June 2011 unless terminated earlier in accordance with the provisions of Clause 18 below of this Agreement (Term). 1.2 Following completion of the Event in May 2011 and depending on the outcome of the Event, PEA [Polo] and PHR [Pinctada] agree to negotiate in good faith as to the basis and terms on which the Term might be extended to 2015. The terms and conditions of such extended term are subject to agreement between the parties and the execution of a formal agreement recording the terms as may be agreed, including but not limited to: 1.2.1 Governance of the Joint Venture, including: (a) the decision making process of the Joint Venture, including something more formal, in terms of meetings, between the Joint Venture Partners, or their representatives; (b) management of the Joint Venture and dealings with third parties: (c) financial administration; 1.2.2 the respective roles and obligations of the Joint Venture parties in planning, promoting and executing the annual event; 1.2.3 the respective financial and other contributions to be made by each party; 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. (my emphasis) 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. (my emphasis) 1. It is relevant also to note that cl 20 of the Joint Venture Agreement contained express restraint provisions, surviving termination of the agreement, relating to the use of information concerning each other's business or affairs. 2. Following the May 2011 beach polo event, on 20 June 2011 Pinctada communicated to Polo its intention to hold a beach polo event the following year (i.e., in 2012) and sought Polo's agreement thereto. Although Polo did not accept that this amounted to formal notification for the purposes of the notice provisions in cll 1.3 and 1.4 of the Joint Venture Agreement, it agreed to proceed with a joint beach polo event in 2012 and advised Pinctada in August 2011 that the "next step" was to address the terms of the Joint Venture Agreement. From this it might be inferred that Polo was contemplating the negotiation process provided for in cl 1.2 with a view to the extension of the term of their agreement to 2015. 3. The parties did not, however, reach agreement as to the terms of any extension of the Joint Venture Agreement (as contemplated by cl 1.2). Disputes arose between them in relation to the finalisation of both the 2011 budget and the prospective 2012 budget. Nevertheless, at least as at March 2012, it was asserted by Pinctada (and not disputed by Polo) that the parties were operating under the terms of the Joint Venture Agreement, in the absence of a new agreement, and that it had been in some fashion "resurrected". 4. In the proceedings in this Court (as it was in the Equity Division proceedings) it was common ground between the parties that the terms of the 2011 Joint Venture Agreement applied up to 30 June 2012 as a consequence of the correspondence that had been entered into between the parties in relation to the proposed 2012 event. 5. The proposed 2012 beach polo event did not ultimately proceed. In the course of correspondence between the parties through their lawyers (in which, among other things, it was alleged by Pinctada, and denied by Polo, that Polo had repudiated the "2012 Agreement") Polo asserted that there had been a breakdown of the joint venture. 6. Notwithstanding this, on 21 April 2012, Polo wrote to Pinctada giving formal notice of its intention to stage the next Broome Beach Polo event on 18 May 2013 and offering Pinctada the first right of refusal to conduct the event with Polo, pursuant to cl 1.3 of the Joint Venture Agreement. Polo asserted that the letter constituted notice under cl 1.4 of that agreement. Polo further stated that the notice was issued without prejudice to its existing rights in relation to Pinctada's breaches of the Joint Venture Agreement. 7. Pinctada's response was to the effect that the Joint Venture Agreement was subject to an implied term of mutual trust and confidence between the parties and that such mutual trust and confidence no longer existed. Its position was that it could never have been contemplated by the parties that a situation could arise whereby: one party (i.e., Polo) could make various allegations against the other and thereby undermine the requisite trust and confidence between them; that party (Polo) could give notice to the other (Pinctada) of its intent to conduct the event in a year, thereby offering the first right of refusal to the other party to conduct the event with it; and that, because of the situation created by the first party (Polo), the other (Pinctada) would not exercise the option and the first party would thereby create for itself the right to conduct the event itself "in that year and any subsequent years". 8. Pinctada expressed the opinion that, even if the parties prima facie continued to be bound by the terms of the Joint Venture Agreement, the first right of refusal could not arise under cl 1.3 because there could not be a "consecutive Event", there not having been an event in 2012; and said that, as a result, "the right under clause 1.6 would not arise". 9. The response by Polo, in a letter dated 14 June 2012 from its lawyers, makes clear the expansive reach that Polo was then contending for in respect of what was later pleaded as the "restraint term" or alternative "notice term", namely that, since Pinctada had failed to exercise the option in writing or at all within the prescribed 30 day period, by necessary implication Pinctada was "precluded from staging a Beach Polo event within a 50 kilometre radius of the City of Broome, for so long as PEA [Polo] continues, or intends to continue, to stage the Broome Beach Polo event" (my emphasis). 10. I interpose to note that Polo's position has varied throughout the litigation as to the duration of the restraint (or exclusive right) is concerned. Its position as at June 2012, as noted above, was that it could have an indefinite operation. As ultimately pleaded, its damages claim for breach of the Joint Venture Agreement was for loss of opportunity to conduct the event through to 2017. In argument in this Court it was conceded in effect that Polo would have difficulty maintaining its damages claim beyond 2015. And, somewhat surprisingly (since this seems to have been Pinctada's position), in reply submissions put in the proceedings before Bergin CJ in Eq (responding to the emphasis placed by Pinctada on the concluding words of cl 1.6 as indicating an intention that each party could compete to run the 2013 event), it seems to have been acknowledged by Polo that, having served the relevant notice giving it the right to conduct the event for 2013, in the following years neither party was bound to comply with cl 1.3 or 1.5 if they wished to run the event, "which they will each be at liberty to conduct". 11. Turning back to the chronology of relevant events, on 3 May 2012, the second respondent, Cable Beach Polo Pty Ltd (Cable Beach Polo), an entity with which Pinctada's director, Ms Paspaley, was associated, made application to the Broome Shire Council for approval to hold a two day beach polo event on Cable Beach over the weekend of 18/19 May 2013. Apparently unaware that Cable Beach Polo had lodged that application, on 29 June 2012 Polo lodged its own application with the Council to hold a one day beach polo event on Sunday, 19 May 2013. (The coincidence of the proposed timing for the respective events is explicable given that there is apparently only a limited period in which the tidal conditions make Cable Beach suitable for such an event.) 12. In due course, on 11 October 2012, the Broome Shire Council approved Cable Beach Polo's application to stage the 2013 event. Shortly before that approval was given, Polo commenced proceedings in the Equity Division of the Supreme Court on 3 October 2012 by way of summons, seeking orders restraining the respondents from conducting the 2013 event and/or from conducting a polo event within 50 kilometres of the city of Broome in 2013, and damages. Equity Division Proceedings 1. On 26 October 2012, Pembroke J ordered, pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the question whether Polo was entitled to the relief sought in orders 1 and 2 of its summons (i.e., the permanent injunctive relief sought in relation to the staging of a beach polo event in 2013) be determined separately from other questions in the proceedings. 2. Prior to the hearing of the separate question, Polo filed an amended summons dated 15 November 2012, amending the terms in which the injunctive relief it was seeking was framed. Nothing turns on those amendments. Relevantly, what was still being sought in the amended summons was a final injunction to restrain the holding of a beach polo event in 2013 as well as unquantified damages against Pinctada for breach of the Joint Venture Agreement. 3. The alleged breach was elucidated in Polo's statement of claim filed 1 November 2012. There, no claim was made for breaches of the kind in respect of which Polo's cl 1.3 notice had been said to be without prejudice. Rather, Polo pleaded the breach (and proposed breach) of the following alleged terms of the Joint Venture Agreement: 6. It was an express term, or alternatively an implied term, of the 2011 JV [Joint Venture] Agreement that a party who failed to exercise the option referred to in clauses 1.3 and 1.4 would not be at liberty to conduct the Event in the year to which the option related (the Restraint term). Particulars This was the effect of clause 1.6 or alternatively an implied term necessary to give business efficacy to clauses 1.3 to 1.6. 7. It was an implied term of the 2011 JV Agreement that, in the event that a party became obliged to give notice under clauses 1.3 and 1.4, that party was not entitled to conduct the Event in the subsequent year without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses (the Notice term). Particulars This term was implied to give business efficacy to clauses 1.3 to 1.6. 1. The separate question was determined in favour of the respondents by Bergin CJ in Eq on 10 December 2012. Her Honour did not accept that the "restraint term" pleaded at [6] of the statement of claim was an express term of the Joint Venture Agreement, noting that 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 Joint Venture Agreement but in particular cl 1 ([57]). Nor did her Honour accept that the classic test (set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266) for the implication of a contractual term to the effect pleaded was satisfied, this not being a term so obvious as to go without saying and not being necessary for the business efficacy of the agreement ([58]). 2. Her Honour considered that if a restraint as contended for by Polo had been intended, it was reasonable to expect that the parties would have included an express provision in which they stated their consent and in respect of which they acknowledged its reasonableness ([59]) (as was the case with the restraint provisions contained in cl 20). Her Honour was not satisfied that cl 1.6 of the agreement could be construed as an express or implied restraint as pleaded in the statement of claim ([61]). 3. At [60], her Honour said that she was satisfied that the parties did not intend the outcome that she considered would flow from Polo's construction of the agreement (that being the very outcome which Polo had itself asserted in June 2012), namely, that Pinctada could never stage the event again because Polo had the exclusive right to do so for "any subsequent years". 4. Following the dismissal of [1] and [2] of the amended summons, the proceedings nevertheless remained on foot (there being an extant claim in the amended summons, as against Pinctada, for damages for breach of the Joint Venture Agreement); as well as the claim made in the November 2012 statement of claim, as against both Pinctada and Cable Beach Polo, for damages and indemnity under ss 236 and 237 of the Australian Consumer Law by reference to alleged misleading or deceptive conduct in contravention of that legislation. 5. In the period from December 2012 to June 2015, steps were taken to progress the matter to hearing. For example, as noted by Polo in the context of its explanation for the delay in seeking to appeal from her Honour's decision, a proposed amended statement of claim was served in March 2013 (including new claims concerning Pinctada's accounting for the 2010 and 2011 events); particulars were requested and provided of that proposed amended statement of claim; the amended statement of claim ultimately was filed by consent on 17 May 2013; a request for further particulars of the amended statement of claim was then made and complied with; and, on 28 October 2013, Polo was granted leave to file a further amended statement of claim, amending the relief claimed to include relief in respect of the accounting claims for the 2010 and 2011 events and amending the particulars of the claim for damages for breach of contract (at [24]) to include loss of the opportunity to conduct "Consecutive Events" (my emphasis). 6. Pinctada filed defences to the amended and further amended statements of claim, in July and December 2013 respectively, raising (at [24A]) an allegation of repudiation of the 2011 Joint Venture Agreement, disputing the entitlement of Polo to give the cl 1.3 notice in April 2013, and a defence of estoppel in relation to the 2011 accounting claim (but not in relation to the claims made for breach of the Joint Venture Agreement). It was not until the hearing in June 2015 that Polo indicated that the repudiation defence was not pressed. 7. The parties agreed to an order for discovery on 10 February 2014. There were then disputes as to the ambit of the discovery sought by Polo. In particular, Pinctada objected to the production of certain categories of documents, including those relating to potential income and expenses for the proposed staging of the event in 2013 to 2017, on the basis that production would be onerous (not, as Polo points out, that the documents were not relevant). Polo notes that in the course of those discovery disputes both Pinctada's solicitor and Ms Paspaley swore affidavits referring to the hearing before Bergin CJ in Eq as "interim". 8. A second further amended statement of claim was filed on 1 June 2015, by leave of the Court. The relevant terms of the Joint Venture Agreement remained as earlier pleaded in [6] and [7]. The claim for damages for breach of contract was pleaded at [24] as including continuing damage if the defendants were not restrained from conducting "the 2013 Event or Consecutive Events". (By this time, a beach polo event had been held at Cable Beach by Cable Beach Polo without Polo's participation in each of 2013, 2014 and 2015.) 9. The question of issue estoppel in relation to the breach of contract claims that depended on the construction of cll 1.3-1.6 was first flagged when Pinctada's written submissions were served on 10 June 2015. 10. At the hearing before Rein J, Senior Counsel for Polo accepted that the effect of Bergin CJ in Eq's decision was an issue that had to be determined (though pointing to the need for there to be leave to amend the defence to plead an issue estoppel). Addressing that requirement, an amended defence was subsequently verified on behalf of Pinctada on 16 June 2015 in which it was pleaded that the parties were bound by the determination of Bergin CJ in Eq and that Polo was estopped from alleging that either of the terms pleaded at [6] and [7] was a term of the Joint Venture Agreement. 11. Rein J determined the issue as to the issue estoppel first, it being indicated by Polo in the course of argument that in the event of that issue being determined against Polo a stay would then be sought to permit an appeal on that issue. Senior Counsel for Polo also indicated at that time that if the contract claim was not available to Polo it would not conduct a hearing on the remainder of the causes pleaded. 12. His Honour concluded that Polo was not entitled to run its case for breach of contract based on non-compliance of cll 1.3-1.6 of the Joint Venture Agreement as that issue had already been determined by Bergin CJ in Eq, her Honour having held that Pinctada was not in breach of the Joint Venture Agreement by applying for and obtaining the right to carry out the 2013 beach polo event. 13. Following Rein J's decision, the parties agreed orders by consent pursuant to which Polo's claims in respect of misleading and deceptive conduct were dismissed and its new contract claims were to await the outcome of an application for leave and appeal from the judgment of Bergin CJ in Eq but would be dismissed if that application for leave or appeal was unsuccessful. Proposed Grounds of Appeal 1. The proposed appeal grounds are contained in Polo's draft notice of appeal, as follows: Bergin CJ in Eq's judgment dated 10 December 2012 1. The learned trial judge erred in finding that Clause 1.6 of the 2011 Joint Venture Agreement did not have the effect of restraining a party who failed to exercise the option referred to in clauses 1.3 and 1.4 2. Her Honour erred in finding that it was not an implied term of the 2011 Joint Venture [Agreement] that in these circumstances the Respondents were obliged to give notice under clauses 1.3 and 1.4 of the JVA [Joint Venture Agreement] and they were not entitled to conduct the Event in the subsequent year or years without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses. Rein J's judgment dated 16 June 2015 3. His Honour erred in finding that the judgment of Bergin CJ in Equity dated 10 December 2012 finally determined the appellant's right to claim damages for breach of the 2011 Joint Venture [A]greement. 1. The orders sought in the draft notice of appeal include the setting aside of the orders of both the primary judges (notwithstanding that a number of the orders of Rein J were, as already noted, by consent); a declaration that the proper construction of cll 1.3-1.6 of the Joint Venture Agreement is as set out below; and the remittal of the matter to be heard with respect to the issue of damages for breaches of cll 1.3 and 1.4 of the Joint Venture Agreement, and [34]-[44] of the second further amended statement of claim; as well as for costs. The proper construction of the relevant clauses of the Joint Venture Agreement, for which a declaration is sought, is set out in [5] of the prayers for relief as being that: a. A party who failed to exercise the option referred to in clauses 1.3 and 1.4 would not be at liberty to conduct the Event in the year to which the option related; and b. It was an implied term of the 2011 JV Agreement that in these circumstances the Respondents became obliged to give notice under clauses 1.3 and 1.4 and they were not entitled to conduct the Event in the subsequent year(s) without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses. Leave 1. I propose to deal first with the question of leave. 2. Leave is necessary for an appeal from a decision in proceedings in the Supreme Court of any question or issue ordered to be determined separately from any other question or issue (s 103 of the Supreme Court Act 1970 (NSW)). The fact that the determination of the separate question was a final decision does not, as Polo has in its written submissions suggested, gainsay the requirement for such leave. It should have been apparent to those acting for Polo in December 2012 that leave was necessary in order to appeal from the decision of Bergin CJ in Eq and that there was a specified time within which such an application was required under the rules to be made. That time has long since expired and hence not only is leave required for the appeal to be brought against her Honour's decision but Polo also requires an extension of time for the bringing of the leave application. 3. Similarly, leave is necessary to appeal both from an interlocutory decision, as was the procedural ruling of Rein J on the question of issue estoppel (s 101(2)(e) Supreme Court Act), and from a judgment or order made in proceedings with the consent of the parties. Hence, leave is necessary for Polo to appeal from the decision of Rein J, even though it led to the summary dismissal of the proceedings. No extension of time is required in that regard. 4. I also note that leave is required to appeal from a final judgment or order in proceedings where the matter in issue is less than $100,000 (s 101(2)(r) Supreme Court Act). At the hearing before Rein J, there was discussion as to the quantum in issue in the proceedings. Reference was made to an expert report that was said to be available (and to which there was objection by Pinctada) but it does not appear that it was tendered, presumably because the matter was dealt with on the discrete issue as to whether there was an issue estoppel binding Polo. 5. His Honour was informed from the bar table that for the years 2014 to 2017, Polo claimed an entitlement to about $100,000 each year (as a half share presumably of the profits or potential profits of the successive yearly events). No figure seems to have been given for 2013. The half-share figure to which Polo claimed to be entitled for 2010 was again around $100,000; that for 2011 about $65,000. On that rough indication, if the only arguable breach of contract claim by Polo were, say, to a claim for damages for the loss of the opportunity to participate in the 2013 year alone, then the claim would appear to be one that was very close to, if not less than, the $100,000 monetary threshold (leaving aside interest). While Polo contends that it is entitled to much more than that, it is something to bear in mind when considering whether this is a matter that warrants leave. 6. In determining whether to grant an extension of time to bring an appeal, the Court considers the length of delay; any explanation for the delay; whether the applicant for leave has a fairly arguable case; and the extent of any prejudice suffered by the respondent to the application (Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [55]). 7. In determining whether leave to appeal should be granted, however, something more must be demonstrated than that the decision was arguably wrong. What is ordinarily required to be demonstrated is that the matter involves a question of principle or of public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable. (See Clarke v State of New South Wales [2015] NSWCA 27; Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69; Jaycar Pty Limited v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164.) Where a disproportionate amount of time and cost will be involved, that is a factor tending against the grant of leave to appeal, particularly having regard to the case management principles enshrined in the Civil Procedure Act 2005 (NSW). 8. On the application for leave to appeal, Polo relies on an affidavit sworn 1 October 2015 by Mr John Gazecki, a director of Polo. Mr Gazecki deposes that, from 10 December 2012, Polo intended to appeal from her Honour's decision but was waiting for the final hearing of the matter before bringing the appeal ([5]). He deposes that he believed that, as the injunction and costs orders were interlocutory, and as the proceedings below were continuing, Polo would require leave to appeal from her Honour's judgment (a belief that was correct in the sense that leave was required but incorrect in the misunderstanding as to the final nature of a determination of a separate question under r 28.2 UCPR). 9. Mr Gazecki goes on to depose that Polo was focussed on seeking damages for breach of the Joint Venture Agreement which he says was the subject of the final hearing ([6]). 10. Mr Gazecki then gives evidence as to the steps taken in relation to the proceedings after her Honour's judgment and annexes correspondence passing between the parties, including a letter dated 8 February 2013 which Pinctada's lawyers sent to Polo's then solicitors stating, among other things: Because, the claim for damages for breach of contract depended on the claimed expressed and implied terms (which Bergin CJ in Eq found did not exist), and the other part of the Australian Consumer Law claim was also based on those terms, PEA [Polo] has lost on those parts of its claim, which leaves only the Australian Consumer Law claim based on the other matters in paragraphs 25b and 28 … 1. Pinctada's lawyers there expressed the view that the remaining claims were hopeless and invited Polo's consent to the dismissal of the proceedings with no order as to costs. That invitation was declined. Polo's solicitors maintained that the claim for breach of contract was distinct from the claim her Honour had determined and that the claim was breached on failure to provide the first right of refusal pursuant to cl 1.4 of the contract which had deprived Polo of the opportunity to stage the 2013 event. It was said that as there was no dispute that Pinctada had failed to offer the first right of refusal, and the only matter remaining for the Court in that regard to determine would be the quantum of damages. 2. It is submitted for Polo that the delay from December 2012 until June 2015 was because both parties had proceeded on the basis that the hearing and judgment of her Honour was interlocutory. That apparently mistaken view of the finality of her Honour's determination (seemingly not shared by Pinctada at least as at the time of its 8 February 2013 letter) does not change the fact that a forensic decision was made by Polo not to seek leave to appeal from her Honour's decision insofar as its focus was on the final hearing and it decided to wait until then to make any such application. 3. Pinctada's lawyers (as noted above) had expressed the view soon after the December 2012 judgment that the claims for breach of contract depended on the pleaded terms that her Honour had found did not exist. Polo did not agree. It cannot fairly be suggested that, by not pressing its view at that stage and by then engaging in the preparation for the hearing of the remaining claims, Pinctada in some way induced Polo not to proceed with an application for leave to appeal at an earlier time. Rather, the position was that there was a forensic decision made by Polo (which had the benefit of legal advice at all relevant times) to concentrate on the final hearing in the proceedings and not to seek leave to appeal from the December decision until after the final hearing had concluded (apparently on the mistaken belief that leave would not then be necessary to appeal from her Honour's decision, assuming that the outcome of the final hearing was not favourable to Polo). 4. Pinctada submits that this case does not raise a point of principle requiring consideration by this Court since the question on appeal is limited to the operation of one particular contract between the parties, whose joint venture has now broken down, and no issues of general importance arise. I agree. 5. Pinctada also submits that the continued dispute between the parties should not be allowed to drag on further, noting that in addition to the Court proceedings in this state there have been other proceedings brought by Polo in Western Australia (in the State Administrative Tribunal) in relation to the Council's approval of Cable Beach Polo's application (to which reference was made in Pinctada's defence in relation to the misleading and deceptive conduct allegations at [32] of the amended statement of claim). It is a matter of public record that there have also been proceedings in the Supreme Court of Western Australia in relation to the Tribunal's dismissal of Polo's application. 6. Polo's delay in seeking leave to appeal from the decision of Bergin CJ in Eq, coupled with the fact that no point of principle or general importance in the proposed appeal is raised, points to the refusal of leave to appeal from that decision. That is fortified by the view I have reached, for the reasons I set out below, that the only aspect on which there may be an argument as to her Honour's construction of the Joint Venture Agreement relates to the question whether cl 1.6 of the Joint Venture Agreement should be read as giving to Polo, in the events which happened, an exclusive right to stage the beach polo event in 2013 (not in any subsequent years) particularly since the basis on which there might be such an argument was not one particularised in the pleading nor does it seem clearly to have been put to her Honour and was only raised on the application for leave to appeal following comments from the bench. Rather, the case, as particularised, seems to have been put squarely on the basis that any implied term was one that arose as a matter of business efficacy. 7. If any damages were to be limited to the loss of opportunity to conduct the event in 2013 alone, then there is every prospect that a disproportionate amount of costs and time will be expended in now revisiting that issue; particularly since Pinctada's position is that if the matter were to be remitted then it would press its defence as to any restraint of the kind for which Polo contends being unenforceable under the relevant legislation relating to restraints of trade in Western Australia. 8. I would therefore refuse the application for leave to appeal from her Honour's determination of the separate question. 9. As to Rein J's decision, in my opinion the ground of appeal raised in relation to this decision is hopeless. There is no arguable error in his Honour's application of the principles of issue estoppel on the facts of this case. Moreover, the orders sought to be set aside are consent orders. Leave to appeal from that decision should also be refused. Construction of the Joint Venture Agreement 1. To explain why it is that I have concluded that her Honour's construction of the relevant provisions of the Joint Venture Agreement could not be said to be arguably wrong except perhaps (and even then only on a basis seemingly not argued before her Honour) in relation to its operation for the 2013 event, it is necessary to consider the text of cl 1 of the Joint Venture Agreement, which I have set out earlier in these reasons. 2. Clearly, as her Honour found (at [44]), cl 1.2 amounted to a conditional agreement to negotiate in good faith an extension of the Joint Venture Agreement to 2015, the condition to which the agreement to negotiate was subject being uncertain (since it depended on the "outcome" of the 2011 event). No complaint was made by Polo as to any breach of cl 1.2; nor was there complaint as to her Honour's construction of the clause. 3. The process then provided for in cll 1.3-1.5 was directed at what might be described as an ad hoc extension (there referred to as a revival) of the Joint Venture Agreement for a particular event. Her Honour was satisfied that the words "[n]otwithstanding clause 1.2 above" at the commencement of cl 1.3 were used because the parties intended that they could proceed to stage another beach polo event in joint venture together notwithstanding that they had not completed their good faith negotiations to extend the term of the Joint Venture Agreement to 2015 or notwithstanding that they had decided not to extend the term of the agreement to 2015 ([45]). There is no suggestion that this was an incorrect construction of the opening words of cl 1.3. 4. At [47], her Honour concluded that the word "exclusive" in the expression "exclusive first right of refusal" in cl 1.3 was probably superfluous and considered that what was to be offered under cl 1.3 was the opportunity to conduct a consecutive event in accordance with the same or substantially the same terms as the Joint Venture Agreement and that the requirement to make that offer to the other party (before staging the event on its own or offering the opportunity to anyone else) provided the parties with the security that neither could stage a consecutive event without the other party before the other party had the opportunity to take up "the option" of staging the event in joint venture. 5. Polo places some weight on the words "the exclusive first right of refusal" in cl 1.3 and argues that her Honour was incorrect in treating "exclusive" as superfluous. 6. Polo argues that the meaning to be given to "exclusive" in cl 1.3 should match or reflect that which is found in cl 1.6 (i.e., the liberty, if the option is not exercised, to conduct the event "independently, or with such other parties as it deems appropriate"). As I understand it, the work said to be performed by "exclusive" is thus to make clear that the option to be offered was an option to "go forward ... with each other alone, and to the exclusion of others" (my emphasis). Even assuming that to be the objective meaning of "exclusive" in cl 1.3, it does not shed light on what is meant by the "liberty" provided for in cl 1.6. Indeed, on one view, it supports the construction for which Pinctada contends, i.e., that cl 1.6 is confirmatory in its operation, insofar as it may be read as making clear that the option (on this hypothesis being to conduct a consecutive event jointly and exclusively, in the sense of to the exclusion of any other parties) having been refused, it is open to the party who offered the option to proceed as it wishes in the future (and, to use a colloquial expression, that thereafter all bets are off). 7. At [48], her Honour accepted that the expression "consecutive Event"" evidenced the parties' intention that the mechanism was to apply if either party wished to stage another event subsequent to the 2011 Event but that this did not mean the event had to be staged annually; rather, the use of the expression "in the subsequent year, or years" accommodated the prospect that the event might be staged after 18 months or two years or more but that it would be the next one in a series following the 2011 event. No complaint is made as to this construction of those words. 8. Her Honour having observed (at [40]) that the real issue was whether cl 1.6 conferred an exclusive right, was of the opinion (at [54]) that had the parties intended that the party who made the unaccepted offer of the first right of refusal would have a "right" or an "exclusive right" to conduct the consecutive event, it was probable that such an expression would have been used in cl 1.6. Her Honour pointed to the added difficulty that the "liberty" in cl 1.6 applies to the event not only in "that year", meaning the year the subject of the offer of the first right of refusal, but also "any subsequent years". Her Honour (at [55]) noted the concession by Senior Counsel then appearing for Polo that the expression "and any subsequent years" in cl 1.6 presented difficulties for Polo's construction and had suggested that the parties really intended that the "liberty" only applied to the event in the year that was the subject of the offer of the first right of refusal. Her Honour did not accept that submission (which, I note, would render the words "and any subsequent years" meaningless). 9. Her Honour concluded (at [56]) that the concept of being "at liberty", in the context in which that expression was used in cl 1.6, meant that Polo was free to proceed in 2013 and subsequent years without having to be in a joint venture with Pinctada. 10. Polo emphasises in this Court that cll 1.3-1.6 require both parties to offer the other the opportunity of being involved in future Broome beach polo events. That is clearly the case. However, Polo goes on to argue that, having refused the option offered in 2012, Pinctada is not "at liberty" to conduct a beach polo event at least up until 2015 unless Pinctada gives a subsequent cl 1.3 notice that Polo rejects. (The concession that the restraint would operate only until 2015, inconsistent with the damages claim to 2017, is made by reference in cl 1 to the possible extension of the agreement only until 2015.) 11. That submission fails adequately to take into account the concluding words of cl 1.6 (which it was accepted in argument both before her Honour and in this Court point against Polo's construction). 12. Once the option procedure has been invoked by a party (here, Polo) and the other party has not taken up the offer (or, in the terminology of the clause, has failed to "exercise" the option) then not only does cl 1.6 provide that the party who made the offer be "at liberty to conduct the Event in that year and any subsequent years" (my emphasis) but the clause goes on to provide that the terms of cl 1.3-1.6 "will cease to bind either party" (again, my emphasis). 13. The concluding words of cl 1.6 can only be read as having the effect that, at most, (assuming its construction of the clause were otherwise correct) Polo would have had the exclusive right to conduct the event in the 2013 year because thereafter, on the express words of the clause, the first right of refusal procedure would cease to apply. There can be no basis for suggesting that "either party" means only the party (here Polo) which offered the unaccepted option. Thus there is no basis on which the notice term (pleaded at [7]) can be implied, as this would be inconsistent with the express terms of cl 1.6. That effectively disposes of Polo's case for breach based on the term pleaded at [7]. 14. If the concluding words of cl 1.6 are to be given effect, on no view could Polo claim damages for breach of cll 1.3-1.5 for the years 2014 and 2015, let alone through to 2017, because thereafter the "exclusive right of first refusal" procedure ceases to apply. Pinctada thus has no ongoing obligation to offer to stage the event jointly with Polo, irrespective of who it was that invoked the option procedure in the first place. That is a logical result because cl 1.6 contemplates that the party offering the option may then proceed to hold the event and clearly, if it did, the sequence of consecutive "joint" events would necessarily be broken. 15. Polo's answer to that difficulty is to submit, in effect, that the terms of cll 1.3 to 1.5 will only cease to bind the parties once an event breaking the sequence of consecutive events has actually occurred and that, since it has not occurred (because Polo did not conduct an event in 2013), Pinctada remained bound by cll 1.3-1.5. (It nevertheless accepts, however, that its damages claim through to 2017 is overstated since, read with cl 1.1, the expression "subsequent years" must be limited to the years up to and including 2015.) That, however, does not readily accord with the language of cl 1.6. 16. Polo argues that its construction supports the commercial purpose or objects to be secured by the contract, noting that the uncontroversial evidence was that it was an experienced promoter and organiser of polo events around Australia since 2008 and that the business model used was that of Polo. It is submitted that the clear purpose behind cll 1.3-1.6 was that Polo's reputation and business model would be protected such that it could not be excluded from running a beach polo event unless it made a positive election to cease its involvement. In the context of that submission, it was said that the relevant clauses (1.3-1.6) were intended to operate not as a restraint but as a positive inclusion of both parties to the event; i.e., neither could be excluded unless it chose to be excluded. Similarly, in oral argument this was referred to as an option rather than a restraint, though that proposition was later withdrawn or at least qualified. One must keep in mind what was pleaded in this regard. The term contended for (at [6]) was an express or implied "restraint term". 17. The reference to the parties' agreement as to the need to protect their business expertise and model takes the matter no further. This is the obvious purpose behind cl 20 of the Joint Venture Agreement. 18. Polo argues that the reference in cl 20.5 refers to each of the "restraint obligations imposed by this Agreement" (as compared with the references in cls 20.3, 20.4 and 20.6 to restraints imposed by the "clause") suggests that the parties understood that there were restraints in the agreement beyond those concerning the intellectual property referred to in cl 20. I accept that the change in terminology is curious. However, it does not provide more than weak support for the construction for which Polo contends. 19. Insofar as Polo has pleaded (at [6]) that cl 1.6 is an express restraint term, that must be rejected. Nowhere does that clause refer to the concept of "exclusive" liberty to conduct the event nor does it provide that the other party is restrained from conducting its own event. Therefore, as her Honour noted, the term pleaded in [6] could only arise by way of implication. 20. Relevantly, Polo's pleading particularised the implication of such a term as one arising as a matter of business efficacy. Polo has not pointed to anything to suggest that her Honour erred in the application of the BP Refinery test in this regard (whether in respect of the implied term pleaded at [6] or that at [7]). 21. The high point of Polo's construction argument in this Court, it seems to me, is that, as a matter of construction, one should draw from the words "will be at liberty" in cl 1.6 the corollary that the other party is not at liberty to hold the event in that year (i.e., a "constructional implication"). That would give content to the words "will be at liberty" beyond them simply being confirmatory. 22. However, the argument for Polo was not put to her Honour on the basis of a constructional implication i.e., that the textual interpretation of cl 1.6 required the conclusion that there was a restraint imposed on Pinctada staging the event in 2013. 23. Rather, the outline of submissions of Polo at first instance on the separate question contained the following. At [36], it was submitted that to read the contract in a way which gave each of the joint venture partners the right to conduct the next event unilaterally and independently, and without giving the other partner the opportunity to be involved, rendered the clause meaningless and gave the joint venture, or the parties, no benefit or right in respect of future events; which was said to be against common sense. 24. At [39], it was submitted: Therefore on the proper construction of the Clause, and where PEA [Polo] has served notice on PHR [Pinctada] but it has not taken up that option: (a) PEA [Polo] has the exclusive right to hold the event the subject of the notice (ie the 2013 event); (b) PHR [Pinctada] has no right to hold the 2013 event and is not permitted to do so. 1. In the alternative it was submitted at [40] that, by Pinctada failing to give notice of intention to conduct the event pursuant to cl 1.4 it had no right to hold the 2013 event and would be prevailed from so doing. 2. The submissions at [39]-[40] go no further than to state the construction for which Polo contended. 3. Again, in reply submissions at [5] Polo submitted that the unduly wide construction of the last words of cl 1.6 renders meaningless the liberty which the other party is given to conduct the next event and would involve replacing the words "other party" with "each party" or to remove the words "the other party will have liberty appropriate" completely. 4. While, on a charitable reading, a constructional implication argument might be said to have been in some way subsumed in the above submissions, it was not clearly articulated as such; rather, the debate seems to have been as to the business efficacy of the agreement if the clause were not interpreted as Polo contended. 5. It may readily be accepted that the drafting of the Joint Venture Agreement was infelicitous in a number of respects. Her Honour's construction gave it a workable operation and has not been shown to be more than arguably wrong, if that, and then only in relation to the 2013 year. In the circumstances referred to earlier, this does not warrant the grant of leave to appeal and it is not necessary to express a concluded view on the constructional implication issue raised in the course of argument in this Court. Conclusion 1. I would make the following orders: 1. Grant an extension of time for the filing of the summons, insofar as the summons seeks leave to appeal from the decision of Bergin CJ in Eq of 10 December 2012, to 13 July 2015. 2. Dismiss the summons seeking leave to appeal with costs. 1. TOBIAS AJA: I agree with Ward JA. ********** Amendments 16 December 2015 - Date amended in headnote DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2015