Supreme Court New South Wales Medium Neutral Citation: Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd (Costs) [2016] NSWSC 717 Hearing dates: 19 May 2016 Date of orders: 02 June 2016 Decision date: 02 June 2016 Jurisdiction: Equity Before: Rein J Decision: see [22] Catchwords: PROCEDURE- Costs- unsuccessful plaintiff seeks an order that successful defendant pay plaintiff's costs by reason of the 1st defendant succeeding on a point not previously pleaded- Held- the 1st defendant should have pleaded the defence but its failure to do so ought not to deprive it of its entitlement to costs, or either of the other defendants to theirs. Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Nowlan v Marson Transport [2001] NSWCA 346; (2001) 53 NSWLR 116 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff [2008] NSWCA White v Overland [2001] FCA 1333; (2001) 67 ALD 731 Conridge v Schaapveld [2015] NSWSC 663 Texts Cited: N/A Category: Costs 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: 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. On the 16th of June 2015 I gave judgment in this matter holding that, by reason of an earlier judgment on a separate question in these proceedings given by Bergin CJ in Eq on 10 December 2012 [2012] NSWSC 1518, Polo Enterprises Australia Pty Ltd ("Polo") (the plaintiff) was precluded from maintaining a claim for damages for breach of contract against the defendant Pinctada Hotels and Resorts Pty Ltd ("Pinctada") there being an issue estoppel: [2015] NSWSC 756. 2. Her Honour had found that the terms alleged by Polo to be expressly or impliedly contained in the Joint Venture Agreement ("JVA") between Polo and Pinctada were not contained in the JVA. 3. As I explained in my judgment at [2], there were three claims advanced in the hearing: 1. a claim for damages for alleged breach of the JVA, 2. a claim for amounts said to have been wrongly charged or claimed by Pinctada in connection with the JVA, 3. a claim that Pinctada and two other defendants connected with Pinctada had engaged in misleading and deceptive conduct for which Polo should be compensated for damages allegedly suffered by Polo. 1. On 15 June 2015 Polo at the hearing before me abandoned any claim under the second category and on 16 June 2015 after I had handed down my judgment it abandoned its third claim. 2. Polo appealed from Bergin CJ in Eq's decision and from my decision and filed applications for leave to appeal as well as against the possibility that leave to appeal was required. The Court of Appeal determined that leave was required for both appeals and that the application for leave to appeal from Bergin CJ in Eq's decision was well out of time. The application for leave to appeal from my decision was not out of time but the Court of Appeal described that appeal as hopeless: see [2015] NSWCA 397 at [57]. The Court of Appeal (Ward JA with whom Bathurst CJ and Tobias AJA concurred) held that leave to appeal should be refused because no point of principle arose out of Bergin CJ in Eq's determination, damages were quite limited in scope, and the point on which Bergin CJ in Eq was said to have erred was not one articulated before her Honour. 3. Polo filed an application for special leave in the High Court which was discontinued on 18 February 2016. 4. The proceedings, it is agreed, are now at an end. Polo has been unsuccessful in obtaining any of the relief sought. Pinctada, and the other defendants, unsurprisingly, assert that the appropriate costs order is that Polo pay their costs of the proceedings before me. 5. The usual rule is that costs "follow the event" see Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 42.1. To avoid that consequence Polo must point to some reason why that usual rule should not apply. S98(1) of the Civil Procedure Act 2005 ("CPA") provides that, subject to the Rules of Court, costs are in the discretion of the Court. 6. Polo claims that the responsibility for costs lies with Pinctada because when Pinctada put on its defence to Polo's Amended Statement of Claim it did not raise the defence of issue estoppel as a defence to Polo's claim for damages. That failure amounted, it was submitted by Dr Peden Counsel for Polo, to an 'ambush' by the defendant of a type described and criticised by the NSW Court of Appeal in Nowlan v Marson Transport [2001] NSWCA 346; (2001) 53 NSWLR 116 and Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff [2008] NSWCA 243. In White v Overland [2001] FCA 1333; (2001) 67 ALD 731 per Allsop J as his Honour then was, a commercial case, said, "the parties should take steps to ensure that all relevant parties to a dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or direction hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged." In Nowlan this approach was adopted and extended to cases involving personal injury claims, and it is clear that it extends to all cases in equity and not simply what might be described as commercial causes. 1. Dr Peden contended that as Polo had pressed on with its claim for damages it should be inferred it was on the understanding that there was no contention by Pinctada that the judgment of Bergin CJ in Eq created a bar to its claim for damages for breach of contract and that Polo was put in an awkward position (at the hearing before me) of having to deal with a new defence. 2. Mr d' Arville Counsel for Pinctada draws attention to the fact that 1. He did raise the point in written submissions delivered in the week preceding the hearings. 2. The decision of Bergin CJ in Eq was given on a separate question which was part of these very proceedings. Polo and its advisors could not have been confused or in doubt as to the import of that decision and if they were that cannot be laid at the door of Pinctada. The "card", in Mr d' Arville's words, was on the table. 3. If that was not enough, when Polo's solicitors wrote to Pinctada's solicitors after Bergin CJ in Eq's decision Pinctada's solicitors said on 8 Feb 2013 (Exhibit A1 p2): "Because, the claim for breach of contract depends on the claimed express and implied terms (which Bergin CJ in Eq found did not exist) and the other part of Australian Consumer Law claim was also based on those terms, [Polo], has lost on those parts of its claim, which leaves only the Australian Consumer Law claim based on the other matters in paragraphs 256 and 28 ("the Remaining Claims"). The Remaining Claims are with respect, hopeless and we invite [Polo] to consent to orders dismissing the proceedings with no further order as to costs (preserving however, the current costs order in favour of [Pinctada] [Cable Beach Polo Pty Ltd])" 1. To the letter of 8 February 2013 Polo's solicitor responded by letter of 19 Feb 2013 refuting the "hopelessness" of the remaining claims and asserting that they were distinct from the claim determined by Bergin CJ in Eq. The letter asserted: "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 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. Pinctada's solicitors replied on 21 Feb 2013 saying: "You contend that there is still a live claim based on a failure of [Pinctada] to offer [Polo] the first right of refusal to stage an event in 2013." and indicating that Polo's assertion of damages by reason of it not being able to stage an event in 2013 was "factually incorrect." The letter went on to attack the claims of misrepresentation which in part depended on the decision of the Council to grant the right to stage a Polo event to Cable Beach Polo Pty Ltd ("Cable Beach") (the second defendant), because the Council's decisions were to be reconsidered de novo by the Western Australian State Administrative Tribunal. Pinctada's solicitors then said: "we therefore invite you to address the matters outlined above. Our present view is they can only be addressed by [Polo] discontinuing the action," and warned that: "in the event that you do not adequately address those matters, we will seek instructions to apply to have the statement of claim struck out" pp6-7 of Exhibit A1. 1. Pinctada did not in fact apply to have the Statement of Claim struck out. 2. In my view there can be no doubt that as at February 2013, Polo, by its legal representatives at least, were fully on notice that Pinctada contended that the contract claim for damages was barred by the Court's December 2012 recent decision. I do not accept that the letter of 21 February could be taken as an abandonment of what had been said in the letter of 8 February 2013. The risk to Polo of proceedings was reinforced by the other matters identified in the letter of 21 February 2013. 3. Notwithstanding the warnings and the risk that was entailed in not heeding those warnings Polo filed an Amended Statement of Claim on 17 May 2013. Pinctada and Cable Beach filed their defence to the Amended Statement of Claim on 17 July 2013 which raised the defence of repudiation for the first time but did not plead issue estoppel. Polo amended again in October 2013 and yet again in June 2015 when it joined the third defendant Ms Paspaley. 4. Mr d'Arville contends there was no obligation upon Pinctada to plead issue estoppel because Bergin CJ in Eq had determined the matter by way of the procedure of an agreed separate question. He contended that the position would be different if the estoppel was said to arise out of other proceedings. 5. Had there been no Amended Statement of Claim and no defence to the Amended Statement of Claim required then there may well be a question about whether the defendant was required to amend to plead issue estoppel but once the defendant accepted that it needed to file a defence to the Amended Statement of Claim I think it was incumbent on the defendant to include what was in fact a new ground that had become available to it by reason of the determination of the separate question in its favour. 6. Part 14.4 of the UCPR provides: 14.14 General rule as to matters to be pleaded specifically (1) In a statement of claim, the plaintiff must plead specifically any matter that, If not pleaded specifically, may take the defendant by surprise. (2) In a defence or subsequent pleading, a party must plead specifically any matter: (a) that, if not pleaded specifically, may take the opposite party by surprise, or (b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or (c) that raises matters of fact not arising out of the preceding pleading. (3) Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality. 1. Dr Peden relied on (2)(a). Given the correspondence to which I have referred I would prefer to base my conclusion on (2)(b). There are circumstances which arise at trial for example where the plaintiff has settled with one defendant where liabilities are joint and this founds a defence which has not previously existed and the defendant might be excused from filing a defence (see for example, Conridge v Schaapveld [2015] NSWSC 663 [28] – [34]) but in my view this was not such a case. 2. Whilst the issue estoppel defence should have been pleaded in my view this failure should not result in any of the defendants being deprived of an order for costs that would otherwise flow because of the following matters: 1. The correspondence to which I have referred. 2. The fact that notwithstanding that correspondence Polo pressed on with its claim (i.e. before any defence to the Amended Statement of Claim was filed). 3. That Mr d'Arville had, in submissions sent a week before the hearing before me in June 2015 made clear that Pinctada was relying on the estoppel and notwithstanding this Polo pressed on with all its claims and disputed that any estoppel arose. Polo's ground for disputing the existence of the estoppel seemed to be based on the same erroneous view contained in the letter of 19 Feb 2013. 4. When Pinctada's reliance on the issue estoppel point was mentioned on 15 June 2015 I raised with Mr Higgs the point that that if his client pressed on with the contract claim notwithstanding the advancement of the issue estoppel defence it could be relevant to the costs issue: Exhibit A p226.44 - 227.30. 5. That Polo proceeded with its contract claims after receipt of the letter of 8 Feb 2013 to which I have referred and having lost on the estoppel point pressed on with an appeal from my decision from that point on a basis which the Court of Appeal described as hopeless leaves me unpersuaded that the failure of the Pinctada to plead the estoppel point was critical or significant in Polo pressing on with the entire case. 6. There were two claims raised by Polo that were not dependent on the contract point - the accounting claim and the Australian Consumer Law claim. These claims were advanced by Polo, and Pinctada was forced to defend them. These two claims were abandoned during or after the hearing before me. Mr d'Arville pointed out that there was a strong overlap between the damage claims for breach of contract and for the alleged misleading and deceptive conduct. 7. Insofar as the second and third defendants are concerned there can, in any event, be no reason why they should not be awarded all of their costs as there was no contract claim against them and they were required to defend themselves against Polo's claims which were abandoned at or during the hearing. Conclusion 1. For the reasons given I am of the view that the usual rule as to costs should apply with the consequence that Polo should pay the costs of the defendants, including the costs of this application, as agreed or assessed. ********** 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: 04 July 2016