New South Wales Supreme Court CITATION : Waterways Authority of New South Wales v Coal & Allied Operations Pty Limited [2006] NSWSC 183 HEARING DATE(S) : 21/03/06 JUDGMENT DATE : 23 March 2006 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : 1. Order that the claims in the statement of claim be dismissed.; 2. Order that the plaintiff pay the defendant's costs of the proceedings. CATCHWORDS : PROCEDURE - where plaintiff's claims made out except in one respect so that proceedings must be dismissed - whether declarations in terms of intermediate findings should be made - PROCEDURE - costs - whether unsuccessful plaintiff should have costs order against successful defendant on issue-by-issue basis LEGISLATION CITED : Supreme Court Act 1970, s.75 Uniform Civil Procedure Rules 2005, rule 36.1 Eastland Technology Australia v Whisson (2005) 223 ALR 123 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 CASES CITED : Waters v PC Henderson (Aust) Pty Ltd (unreported, NSWCA, 6 July 1994) Waterways Authority of New South Wales v Coal and Allied Operations Pty Limited [2005] NSWSC 1285 Whitlam v Insurance Australia Group Ltd [2005] NSWSC 200 PARTIES : Waterways Authority of New South Wales - Plaintiff Coal & Allied Operations Pty Limited - Defendant FILE NUMBER(S) : SC 5099/99 COUNSEL : Mr M.L.D. Einfeld QC/Mr J.M. Atkin - Plaintiff Mr M.C.L. Dicker - Defendant SOLICITORS : Dibbs Abbott Stillman - Plaintiff Allens Arthur Robinson - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY, 23 MARCH 2006 5099/99 WATERWAYS AUTHORITY OF NEW SOUTH WALES v COAL & ALLIED OPERATIONS PTY LIMITED JUDGMENT 1 In reasons for judgment delivered on 15 December 2005 (Waterways Authority of New South Wales v Coal and Allied Operations Pty Limited [2005] NSWSC 1285), I indicated that submissions should be made on the form of relief (and on costs) in light of conclusions which I expressed as follows (with "C&A" referring to the defendant and "MSB" referring to the plaintiff): "1. The failure of C&A to remove the wharf at or before the expiration of the term created by the memorandum of lease dated 12 January 1972 (as subsequently varied) constituted breach by C&A of the contractual promise contained in clause 7 of the memorandum of lease. 2. It would not have been unlawful for C&A to remove the wharf at any time during the period commencing on 10 November 1992 (when MSB, in exercising the "exclusive control" over Sydney Harbour vested in it by s.33 of the Sydney Harbour Trust Act 1900, required C&A to remove all structures and equipment) and ending at the expiration of the term created by the memorandum of lease (as varied). 3. Because no relevant consent of the Minister for Ports and Waterways was for the time being in force, it would have been unlawful for C&A to remove the wharf on the day on which these proceedings were commenced, being 17 December 1999. 4. If MSB's application for an order for specific performance requiring C&A to remove the wharf were pressed, the court would decline to make that order. 5. Damages in lieu of specific performance will therefore not be awarded to MSB in respect of C&A's breach of the contractual promise contained in clause 7 of the memorandum of lease." 2 The claims in the statement of claim were as follows: "(a) A declaration that the defendant in failing to remove the wharf in breach of Clause 7 of the Lease and Clause 13 of the Licence; (b) An order that the defendant specifically perform its obligations pursuant to Clause 7 of the Lease and Clause 13 of the Licence, including removing the wharf; (c) Damages; (d) Any further order the Court may see fit to make; and (e) Costs." 3 The plaintiff's case was opened and argued on a basis stated at paragraphs [12] and [13] of the earlier judgment: "[12] MSB claims a declaration that C&A, in failing to remove the wharf, is in breach of clause 7. A claim for an order for specific performance is made but not pressed. MSB does, however, press a claim for damages, making it clear that that claim has its basis in s.68 of the Supreme Court Act 1970: 'Where the Court has power: (a) to grant an injunction against the breach of any covenant, contract or agreement, or against the commission or continuance of any wrongful act, or (b) to order the specific performance of any covenant, contract or agreement, the Court may award damages to the party injured either in addition to or in substitution for the injunction or specific performance.' [13] The specific performance claim is thus maintained to the extent necessary to create the foundation for an award of damages in lieu of specific performance pursuant to s.68." 4 Having regard to the claims made by the plaintiff, the way in which the plaintiff's case was argued and the conclusions stated in the earlier judgment, the defendant submits that the proceedings should be disposed of simply by an order that the statement of claim be dismissed. The plaintiff says, however, that the court should make five specific declarations, together with an order that the statement of claim be otherwise dismissed. Those declarations are as follows: "1. Declaration that by clause 7 of the lease granted 12 January 1972 and by clause 13 of the license dated 12 June 1992, by the plaintiff to the defendant (' the lease ') the defendant is obliged to remove the wharf situated at Balls Head (" the wharf ') if the plaintiff does not itself remove the wharf and does not desire to retain the wharf. 2. Declaration that as at the termination of the lease the removal of the wharf was not prevented by or under any statute or statutory instrument and in particular: (a) prior approval of North Sydney Council under the Local Government Act 1993 for the removal of the wharf was not required; (b) the removal of the wharf would not have amounted to development of the structure so as to require consent under State Regional Environmental Planning Policy No. 23 (' SREP no. 23 '); (c) the wharf was not a ' relic ' as defined under the Heritage Act 1977 so that consent under that Act was not required to remove the wharf. 3. Declaration that it would not have been unlawful for the defendant to remove the wharf at any time during the period commencing on 10 November 1992 (when the plaintiff by its predecessor the MSB, in exercising the 'exclusive control' over Sydney Harbour vested in it by s.33 of the Sydney Harbour Trust Act 1900, required the defendant to remove all structures and equipment) and ending at the expiration of the term created by the lease. 4. Declaration that because there was no relevant consent of the Minister for Ports and Waterways it would have been unlawful for the defendant to remove the wharf on the day on which these proceedings were commenced, being 17 December 1999. 5. Declaration that at the date of commencement of these proceedings any Order of the Court that the defendant remove the wharf would have required the performance of an unlawful act and an order for specific performance requiring the defendant to remove the wharf would be declined." 5 No such declaratory relief was sought in the statement of claim. But that, the plaintiff says, is no barrier to the court's granting it. It refers, in that connection to rule 36.1 of the Uniform Civil Procedure Rules 2005: " General relief (cf SCR Part 40, rule 1; DCR Part 31, rule 8; LCR Part 26, rule 1) At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion." 6 The defendant says, however, that there is no utility in the making of the declarations – or, in terms of rule 36.1, that the "nature of the case" does not "require" that form of relief. The declarations alone, it is said, would lead nowhere in terms of settling the parties' controversy. Reference is made to the well-known passage in the judgment of Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at p.307, which, as is recognised in the judgment of McLure JA (with whom Malcolm CJ and Steytler P agreed) in Eastland Technology Australia v Whisson (2005) 223 ALR 123, goes to the discretion that attends the grant of declaratory relief. Barwick CJ and Jacobs J said: "Unless the parties are agreed on the consequences which flow from a declaration that such a contract has or has not been validly rescinded it is generally undesirable that a court should so declare without any orders for consequential relief. If a party to such a contract claims that a contract has not been validly rescinded such a judicial declaration is proper if that party continues ready and willing at the conclusion of the litigation to perform the contract. A consequence of the declaration should be that the party submit to the performance of the contract on his part and to an order for specific performance of the contract if that is appropriate. If such an order is not or cannot be made nor an inquiry into damages ordered then a declaration that on a certain day the contract has not been validly rescinded serves no purpose in the litigation. Before such a declaration is made the party seeking the declaration may already have elected to treat the other party's purported rescission as a repudiation and may have himself rescinded the contract. All that has then been achieved is an issue estoppel if and when the claim for damages for breach of contract is pursued in other proceedings. This was not the intention of the legislation as appears from s. 63. Conversely, if a declaration be made that a contract has been validly rescinded but no consequential orders for damages or for return or retention of the deposit are made in those proceedings the purpose of s. 63 is not achieved." 7 Barwick CJ and Jacobs J emphasised that when exercise of the power under s.75 of the Supreme Court Act 1970 to grant declaratory relief is in contemplation, the court must bear in mind the duty imposed by s.63: " Final determination The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided." 8 The plaintiff suggested only one reason why the declarations should be made, namely, that they would provide an encapsulation of the result in a form that would assist an appellate tribunal. That reason, in my view, is not a valid reason for going against what is said in Neeta (Epping) and numerous other cases by making binding declarations of right which do not form the foundation of or lead on to substantive and dispositive orders which are the source of rights and obligations. The only substantive and dispositive order that is appropriate here is a simple order of dismissal; and that does not depend for its efficacy upon any of the suggested declarations. It flows from the court's findings which, I venture to say, are readily discoverable from the reasons of 15 December 2005. Indeed, the plaintiff has found the findings sufficiently discernible to enable it to frame the proposed declarations (although the defendant says, and the plaintiff agrees, that they require some minor adjustment to reflect the findings with precision). 9 I see no utility in any of the declarations. They will not be made. The proceedings will simply be dismissed. This makes it unnecessary to canvass the particular points about the proposed declarations which the defendant raised and which I understood the plaintiff to accept. 10 There is then the question of costs. The defendant says that costs should, in the usual way, follow the event so that the unsuccessful plaintiff is ordered to pay the successful defendant's costs. The plaintiff submits, however, that this is one of those unusual cases in which the successful party should be ordered to pay the unsuccessful party's costs (or, at least, a large part of them). 11 The plaintiff's basic submission is that the proceedings raised several discrete issues; that it was successful on all but one of them; and that it was failure on that one issue only that caused it to fail. 12 Caution must be exercised in seeking the split of cases into successful and unsuccessful components from the respective parties' viewpoints. The necessary caution is referred to in the judgment of Mahoney JA in Waters v PC Henderson (Aust) Pty Ltd (unreported, NSWCA, 6 July 1994). A recent statement of the position is to be found in the judgment of Einstein J in Whitlam v Insurance Australia Group Ltd [2005] NSWSC 200: "[25] Where there is a mixed outcome in proceedings the question of apportionment is very much a matter of discretion, the exercise of which will often depend on matters of impression and evaluation. [26] Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those in which it failed: Waters v PC Henderson (Aust) Pty Ltd (unreported, CA (NSW), Kirby, Mahoney and Priestley JJA, 40678/91, 6 July 1994) (per Mahoney JA). [27] In NRMA Ltd & Ors v Morgan & Ors (No 3) [1999] NSWSC 768 Giles J put the matter as follows : '[I]t must be remembered that parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case, and unless a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which he was successful and those on which he failed. It is sufficient to refer to Cretazzo v Lombardi (1975) 13 SASR 4 at 12; Hughes v Western Australian Cricket Association (1986) ATPR 40-748 at 48,136; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271-2; and Waters v P C Henderson (Australia) Pty Ltd (NSWCA, 6 July 1994, unreported).'" 13 The plaintiff characterises the discrete issues as follows: first, whether there was a breach of clause 7 of the lease; second, whether the "self-help" remedies of the lessor precluded resort to ordinary legal remedies (that is, the "code" issue); third, whether the defendant was legally permitted to remove the wharf at the expiry of the lease (which involved several sub-issues arising under various pieces of legislation); and, fourth, whether the defendant was legally permitted to remove the wharf at the time the proceedings were commenced. The plaintiff says, quite rightly, that the defendant succeeded on only the last of these. 14 The defendant accepts the plaintiff's analysis of the outcome on an issue-by-issue basis; also that its success turned wholly on the findings as to the need for and absence of the consent of the Minister for Ports and Motorways as at the date of initiation of the proceedings. The defendant contends, however, that the proceedings should not, for costs purposes, be broken up according to issues. It submits that no issue or group of issues was "clearly dominant or separable", to adopt the words used by Einstein J at paragraph [24] of the Whitlam case. 15 The defendant makes the following points in support of its submission: first, that the three days of the hearing were occupied mainly by openings, going through the quantity of documents necessary to an appreciation of the factual background, hearing two witnesses and submissions; second, that little time at the hearing was spent on the legal issues on which the defendant failed (these were dealt with in subsequent written submissions); third, that the witnesses' evidence was required to establish essential factual matters; fourth, that some time was spent on questions of estoppel and discretionary considerations which the court ultimately found it unnecessary to consider; fifth, that the issues on which the defendant failed were complex and clearly of such a nature as to be reasonably and properly arguable; sixth, that the subsequent written submissions dealt with not only statutory questions on which the defendant failed but also the statutory question on which it was successful; seventh, that no witnesses were called on the issues on which the defendant failed, which issues involved legal questions rather than factual disputes; and, eighth, that the matters on which the defendant failed were merely part of the defence and should not be seen as dominant. 16 I am not satisfied that it is appropriate to approach the question of costs in this case on an issue-by-issue basis. I accept the defendant's submissions. The single issue which assured the defendant's success could not have been approached except against the background of, and as part of, the overall inquiry reflected in the judgment. This is borne out by the fact that the discussion at paragraphs [111] to [122], which led to the finding in favour of the defendant at items 3, 4 and 5 of paragraph [126], followed on from the updating material in paragraphs [105] to [110] which, in turn, took as its starting point the result reached at the end of paragraphs [45] to [104]. And none of that discussion would have been meaningful unless the contractual position dealt with in the earlier part of the judgment had been determined. In this way, consideration of and decision on the single issue on which the defendant succeeded was intimately connected with the totality of the issues and was in no real sense separate or discrete. 17 In the result, therefore, the orders of the court are as follows: 1. Order that the claims in the statement of claim be dismissed. 2. Order that the plaintiff pay the defendant's costs of the proceedings. ********** 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.