Supreme Court New South Wales Medium Neutral Citation: Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 345 Hearing dates: 11 April 2013 Decision date: 11 April 2013 Jurisdiction: Equity Division - Commercial List Before: Stevenson J Decision: Award plaintiff nominal damages; plaintiff to pay the defendants' costs of the proceedings. Catchwords: DAMAGES - whether plaintiff entitled to nominal damages for breach of contract COSTS - plaintiff successful on some issues but unsuccessful overall - whether costs should follow the event Cases Cited: Alamdo Holdings Pty Limited v Australian Window Furnishings (NSW) Pty Ltd [2008] NSWSC 7 Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Australian Conservation Foundation Inc v Forestry Commission of Tasmania (1988) 81 ALR 166 Cross v Queensland Newspapers Pty Ltd (No 2) [2008] NSWCA 120 Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 281 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Services (No 2) [2011] NSWCA 171 Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (Supplementary Decision) [2011] WASCA 65 Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 Rockcote Enterprises Pty Ltd v Fs Architects Pty Ltd; Carelli v Fs Architects Pty Ltd [2008] NSWCA 39 State of New South Wales v Stevens [2012] NSWCA 415 Sydney Ferries v Morton (No 2) [2010] NSWCA 238 Tarabay v Leite [2008] NSWCA 259 Turkmani v Visalingham (No 2) [2009] NSWCA 279 Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 Texts Cited: Peter W Young, Clyde Croft and Megan L Smith, On Equity, (2009) Thomson Reuters Category: Costs Parties: Gold and Copper Resources Pty Limited (plaintiff) Newcrest Operations Limited (first defendant) Newcrest Mining Limited (second defendant) Representation: Counsel: C R C Newlinds SC with F T Roughley (plaintiff) I M Jackman SC with S A Lawrance (defendants) Solicitors: Corrs Chambers Westgarth (plaintiff) Allens (defendants) File Number(s): SC 2012/25721 Publication restriction: Nil Judgment 1On 2 April 2013 I ordered that these proceedings be dismissed, for the reasons I then gave: Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 281. 2On 11 April 2013 I made the following orders: - (1)Pursuant to UCPR r 36.16 (3A) I set aside my orders of 2 April 2013. (2)Judgment for the plaintiff against the first defendant in the sum of $100. (3)Each party pay its own costs of the motion of 4 April 2013. (4)The Amended Summons is otherwise dismissed with costs. 3I said that I would deliver my reasons for making those orders. These are the reasons. 4In this judgment, I shall use the same abbreviations as I used in my reasons of 2 April 2013. 5Arising from those reasons, two further questions arose. 6First, whether, as sought by GCR in a Notice of Motion filed on 4 April 2013, I should vary my order of 2 April 2013 dismissing the proceedings (pursuant to UCPR r 36.16 (3A)) by: - (1)making a declaration that by making the Statements to the Department, the first defendant, Newcrest Operations, acted in breach of the Confidentiality Agreement; and (2)ordering Newcrest Operations to pay GCR nominal damages for that breach of the Confidentiality Agreement; 7Second, what order should be made for the costs of the proceedings. The declaration and order sought 8It was common ground that, in light of my findings, GCR was entitled to nominal damages. 9The general rule is that a party who has breached a contract is liable to pay at least nominal damages, even if no loss has been caused: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 301; and more recently State of New South Wales v Stevens [2012] NSWCA 415 at [7] per McColl JA (with whom Ward JA and Sackville AJA agreed at [67]). 10It was also common ground that an appropriate award of nominal damages is, in the circumstances of this case, $100: see State of New South Wales v Stevens at [34] - [37] per McColl JA and at [79] per Sackville AJA (referring to Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (Supplementary Decision) [2011] WASCA 65, which, like this case, was one where a party had established a breach of contract, but failed to prove resultant loss). 11I was not persuaded that I should make the declaration sought for three reasons. 12First, the award of nominal damages is, in my opinion, a sufficient vindication of GCR's rights: see State of New South Wales v Stevens at [19]. 13Second, there is, in my opinion, no utility in making the declaration. There is no ongoing relationship between the parties. The declaration sought would produce no foreseeable consequences for the parties: see Young, Croft and Smith, On Equity, (2009) Thomson Reuters at [16.820]. 14Third, to make the declaration would give a misleading impression of the practical outcome of the proceedings, which is that GCR has failed to establish that Newcrest Operations' breach of the Confidentiality Agreement was of any practical consequence. GCR has thus failed to establish a critical aspect of its case and has, in substance, lost the case. What order should be made for costs? Resolution of the issues in the proceedings 15In my reasons of 2 April 2013 I held that by making the Statements to the Department, Newcrest Operations was in breach of its obligations under the Confidentiality Agreement. 16In making that finding, I accepted GCR's submissions as to: - (1)what Newcrest disclosed to the Department by making the Statements; (2)the proper construction of the Confidentiality Agreement; (3)whether the Statements were required "by law" for the purposes of cl 2.4(1) of the Confidentiality Agreement; and (4)whether cl 2.3 of the Confidentiality Agreement was enlivened. 17Having held that Newcrest acted in breach of the Confidentiality Agreement, I did not accept GCR's submissions that there was a basis upon which equity should intervene to protect GCR's confidence. This finding was relevant to GCR's claim for an account of profits. 18So far as GCR's claim that, by making the Second Statement, Newcrest engaged in misleading or deceptive conduct, contrary to the former s 52 of the TPA, I rejected GCR's submission that the Second Statement was made "in trade or commerce". I did accept GCR's submission that the Second Statement was misleading or deceptive. 19The principal basis upon which GCR failed was causation; I was not satisfied that Newcrest Operations' breach of the Confidentiality Agreement caused it to make a profit, or GCR to make a loss. 20In those circumstances, it was not necessary for me to deal, in detail, with all of the issues that arose in regard to quantum. However, I did not accept GCR's submissions as to Mr Miller's evidence, nor as to the holding of a further enquiry concerning the "strategic value" to Newcrest of the hypothetically relinquished portions of its exploration licences. 21In substance, GCR succeeded in relation to liability (entitling it to the award of nominal damages), but failed in regard to causation and remedy. Award of nominal damages not sufficient to warrant a costs order 22Successful recovery of nominal damages does not, on its own, entitle a party to an order for the costs of the proceedings: Rockcote Enterprises Pty Ltd v Fs Architects Pty Ltd; Carelli v Fs Architects Pty Ltd [2008] NSWCA 39 at [100] per Campbell JA (with whom McColl JA and Handley AJA agreed). 23In Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 at [47] - [52] Campbell J (as his Honour then was) said that in an action for breach of contract if the plaintiff establishes liability and obtains an order for payment of nominal damages, the plaintiff is usually not regarded as the successful party to the action: see also Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874; Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [98] per McHugh J. 24The Full Court of the Federal Court has held that "[a]n award of nominal damages ought not today be regarded as a 'peg on which to hang costs'": Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926 at [12] per Spender, Nicholson and Finn JJ. Why should costs not follow the event? 25The general rule is, of course, that costs follow the event. 26Nonetheless, GCR submitted, that in view of its success in relation to the issues outlined above, each party should bear its own costs, or, at least, that GCR should only pay a portion of Newcrest's costs. 27The general approach is to order costs in accordance with the outcome of the proceedings as a whole, without attempting to differentiate between particular issues in which the successful party may not have succeeded. However, it is open for a court to make a different order, particularly where the losing party succeeds on certain issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31] - [36]; Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [10] - [12]; Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [20]; Cross v Queensland Newspapers Pty Ltd (No 2) [2008] NSWCA 120 at [13]; Tarabay v Leite [2008] NSWCA 259 at [76]. 28Usually, a court will only deprive the successful party of the costs relating to an issue on which it lost where that issue was "clearly dominant or separable": Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 331 per Mahoney JA; cited with approval in James v Surf Road Nominees Pty Ltd at [31] - [33] per Beazley, Tobias and McColl JJA and in Turkmani v Visalingham (No 2) [2009] NSWCA 279 at [9] per Hodgson JA (with whom Beazley and McColl JJA agreed). 29It is not necessary for a party to show that an issue was both "clearly dominant" and "separable" to justify departure from the usual order as to costs: Turkmani v Visalingham at [12]. 30Where a plaintiff's case fails, it may sometimes be appropriate to order the plaintiff to pay the costs of issues unsuccessfully raised by the defendant, even if those issues are severable, as long as the defendant acted reasonably in raising those issues: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Services (No 2) [2011] NSWCA 171 at [9] - [10] per Hodgson JA (with whom Allsop P, as his Honour then was, and Macfarlan JA agreed). 31In any case, it will generally only be appropriate for a court to order that a successful party bear its own costs where its conduct has been in some way improper or unreasonable: Alamdo Holdings Pty Limited v Australian Window Furnishings (NSW) Pty Ltd [2008] NSWSC 7 at [34] per Barrett J. This is particularly the case where the successful party is a defendant. As observed by Burchett J in Australian Conservation Foundation Inc v Forestry Commission of Tasmania (1988) 81 ALR 166 at 169: - "A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately, the question is one of discretion and judgment." 32I accept that the issues on which GCR succeeded (in effect, liability) were "separable" from the issues on which it failed (causation and remedy). 33However, I find it more difficult to conclude that GCR succeeded on a "clearly dominant" issue or issues that would warrant departure from the usual order as to costs. The issues on which it succeeded were certainly important. But Newcrest emphasised, throughout the hearing, that a central issue in the case was the one on which it succeeded; namely that even if it was in breach of the Confidentiality Agreement (or any other duty of confidence), and even if it had engaged in misleading or deceptive conduct, such conduct did not cause it to make a profit, or GCR to make a loss. Such conduct, it was submitted, made no difference to the Department's consideration of Newcrest's applications to renew its exploration licences. In oral submissions, GCR also accepted that "causation is a huge issue in this case". Indeed, that issue took up a considerable proportion of the hearing time before me. 34Another issue which took much hearing time was the dispute between the parties' experts as to the fair market value of Newcrests' exploration licences; particularly those which Newcrest would have been obliged to relinquish had it not satisfied the Department as to "special circumstances". Cross-examination of those witnesses took a full day (in a four day trial) and occupied more than half the time devoted to oral testimony. This evidence was relevant to the profit allegedly made by Newcrest and the loss allegedly suffered by GCR. Because GCR failed in relation to the equitable confidence issue, and causation, it also failed in relation to these issues. 35To succeed, it was necessary for GCR to do more than show a breach by Newcrest of the Confidentiality Agreement. It had to show that breach had some consequence. I see both these issues as having, at least, equal significance. 36In any event, I cannot see anything improper or unreasonable in the manner in which Newcrest conducted its defence. It did not succeed in relation to all issues. But it did succeed in relation to those that mattered. And in relation to one issue - the proper construction of the Confidentiality Agreement, GCR very fairly conceded that the arguments put on behalf of Newcrest were available: see the 2 April 2013 judgment at [76]. 37In light of these factors, I was not persuaded that the usual consequence of victory should not follow. 38For those reasons I made the orders at [2]. ********** 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: 15 April 2013