Chandrasekaran v Western Sydney Local Health District

The competing positions on costs

1. The alternative order sought by Dr Chandrasekaran is that the Health District pay her costs in this Court.
2. The Health District seeks to uphold the costs order made in its favour.

The appellant's partial success on appeal

1. At trial, the appellant failed on all of her claims against the Health District for damages for alleged misleading or deceptive conduct, breach of contract, breach of confidence, and injurious falsehood. The appellant also failed in her contentions asserting (i) bias and denial of procedural fairness, (ii) errors in the primary judge's decision to refuse the appellant's application to reopen her case, (iii) complaints with respect to the failure of the primary judge to draw Jones v Dunkel inferences, (iv) inadequacy of the reasons given by the primary judge, and (v) error in the primary judge's credibility findings.
2. The appellant's partial success on the appeal was limited to her claim for breach of contract, being the locum agreement with the Health District for the provision of services as a visiting medical officer at Redbank House, a unit of Westmead Hospital, for the period 27 December 2017 to 2 March 2018. With respect to this claim the Court concluded that: 1. the discretion conferred on the Health District to regulate the amount of work to be performed by the appellant "during the term" of the locum agreement did not authorise the Health District to terminate the locum agreement on 15 January 2018, and that by purporting to do so, the Health District breached the locum agreement; 2. damages for wrongful termination are to be assessed on the basis of the least onerous method of contractual performance, absent facts to the contrary; 3. the natural inference is that the Health District would have exercised its power under cl 15 of the Sessional determination to suspend the appellant's appointment; 4. the suspension of the appellant by the Health District would have had the consequence that while suspended, the appellant had no entitlement to payment of any fees under the locum agreement and, although suspension would have enlivened procedural fairness provisions under the Health Services Act 1997 (NSW), there was no basis for a finding that that procedure would have resulted in the re-appointment of the appellant before the end of the term of the locum agreement on 2 March 2018; and 5. in the absence of proof of actual damage, nor challenge to the primary judge's contingent findings on causation, no entitlement to compensatory damages had been established. Accordingly, the appellant was only entitled to nominal damages as a token of the Health District's breach of contract in the sum of $100.

The costs order made by the Court

1. In the principal judgment, the Court gave the following reasons at [286]-[287] for making the costs order in favour of the Health District (Gleeson JA, Leeming and Adamson JJA agreeing): The question ultimately is whether a party who is awarded nominal damages is to be regarded as the successful party; each case turns on its own facts and circumstances. In State of New South Wales v Stevens at [22], McColl JA (Ward JA and Sackville AJA agreeing) referred to authorities for the propositions that (i) in an action for breach of contract, if a plaintiff establishes liability, and obtains an order for payment of nominal damages, that plaintiff is usually not to be regarded as the successful party in the action, and (ii) costs should be awarded against a plaintiff who has obtained an order for nominal damages because that award was not the event at which the plaintiff was aiming. Here, the appellant sought to recover substantial damages for breach of contract; she has failed in that regard and is only entitled to nominal damages. That very limited success on appeal turned on the proper construction of the locum agreement, which occupied very little time on the appeal. The practical result of the appeal against the Health District is that the appeal was wholly unsuccessful, given that nominal damages are not compensatory damages. Nor can the appellant be regarded as the successful party on appeal as nominal damages is not the event at which the appellant was aiming. The appropriate order is that the appellant pay the Health District's costs in this Court.

Submissions

1. The appellant says that the finding of breach of contract is a substantial matter which justifies an order for costs in her favour. Reference was made to the quantum of damages claimed by her for the balance of the term of the locum agreement of approximately $69,000, past economic loss of about $1 million, and future economic loss of about $1.4 million. It is said that all damage to the appellant "arose from the breach of contract".
2. The Health District says that the fact that the appeal was allowed in part does not displace the conclusion that, having regard to the outcome of the proceedings, the order that the appellant pay the Health District's costs of the proceedings is the appropriate costs outcome.
3. It is said that despite the appellant's partial success in establishing a breach of contract, that victory was a hollow one, given (a) that the breach sounded in no more than nominal damages, and (b) the appellant failed on all other grounds of appeal, including the other pleaded and unpleaded breaches of contract, relevantly, the asserted "venue breach", the "conditions of work breach", allegations of intentional breach, allegations with respect to the availability of work, and non-compliance with s 105 of the Health Services Act.

Disposition of the application to vary costs order

1. Costs are in the broad discretion of the Court with the general rule being that they should follow the "event": Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. Generally, the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15].
2. Underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the Court considers to be the responsibility of each party for the incurring of costs: Commonwealth Bank of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA, Mason P and Beazley JA agreeing).
3. 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: Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 at [47]-[52] (Campbell J); Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 at [100] (Campbell JA, McColl JA and Handley AJA agreeing).
4. That is, an award of nominal damages is no longer regarded as a "peg on which to hang costs": State of New South Wales v Stevens (2012) 82 NSWLR 106; [2012] NSWCA 415 at [22] (McColl JA, Ward JA and Sackville AJA agreeing), referring to Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926; (FCAFC, 10/9/97, Spender, Nicholson and Finn JJ, BC9704267 at 12). Adapting the words of Stevenson LJ in Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685; 1 WLR 395 at 401, in a like context, "the event of an award of nominal damages was not the event at which the plaintiff was aiming".
5. Here, the appellant was seeking substantial damages for the balance of the term of the locum agreement, past economic loss, and future economic loss. Those claims for damages serve to highlight why the practical result of the appeal, being an order for nominal damages, was not the event at which the appellant was aiming. Nor did the appellant's submissions identify any facts that would support the conclusion that the appellant really has been successful, although only obtaining an award of nominal damages.
6. Contrary to the appellant's characterisation of her "success" in establishing breach of contract as the most significant or overwhelming outcome of the proceedings, the Court (a) found that the appellant was only entitled to nominal damages of $100, not compensatory damages, (b) rejected the claim for damages for past and future economic loss, and (c) rejected all other appeal grounds, including the other pleaded and unpleaded breaches of contract.
7. The appellant says that the Calderbank offer by the Health District in the proceedings below justifies a special costs order against the Health District on the appeal. Although this offer by the Health District was not in evidence on the present application, it is common ground in the parties' submissions on costs that the Health District made a Calderbank offer below in an amount of $40,000. The appellant says that UCPR r 42.15 applies, and therefore the Health District should pay the appellant's costs of the appeal on an indemnity basis. That submission misunderstands the UCPR.
8. Whilst UCPR r 51.49 permits this Court to have regard to any offer of compromise made in the court below, in the circumstances of this case the offer of compromise made by the Health District below is not a basis for making an indemnity costs order against the Health District on the appeal, as sought by the appellant. The significance on appeal of an offer of compromise at trial is explained in Carter v Mehmet (No 3) [2022] NSWCA 64 at [27]: This well-established position was summarised by Bell P, Macfarlan and Leeming JJA in Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 as follows: "[10] It was not suggested that the Calderbank offers made in respect of the proceedings at first instance should affect the costs orders made in Valmont's favour in relation to the appeal. This approach accorded with the standard approach taken where no separate Calderbank offer is made in relation to appeal proceedings, that being that although the Court may have regard to the earlier offer made in the context of proceedings at first instance, the costs of the appeal are usually determined by reference to the issues in, and the outcome of, the appeal: see Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [70]-[79] (Perisher Blue); Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [37]-[41]; Bathurst Regional Council as Trustee for the Bathurst City Council Crown Reserves Reserve Trust v Thompson (No 2) [2012] NSWCA 420 at [16]; McKeith v Royal Bank of Scotland Group PLC; Royal Bank of Scotland Group PLC v James (No 2) [2016] NSWCA 260 at [31]-[36], [44]-[46]; Gray v Hobson (No 2) [2018] NSWCA 131 at [9]-[12]; and Squire v Squire (No 2) [2019] NSWCA 120 at [3] (Squire)."
9. Here, the appellant's partial success on appeal was substantially less than the offer of compromise of $40,000 by the Health District at trial. There is no basis for invoking UCPR r 42.15 in favour of the appellant. No separate offer of compromise was made by the Health District on appeal; nor did the Health District seek a special costs order in its favour on the appeal, taking into account its offer of compromise at trial.
10. Two further matters should be mentioned.
11. First, the appellant complains about the special costs orders made at trial in favour of the Health District and the second respondent (Charterhouse) on 16 December 2021 (which are reproduced at [7] of the principal judgment). It is said that the dates for costs payable by the appellant and Charterhouse on an ordinary and indemnity basis "seem incorrect" as Calderbank offers were made earlier than July 2019. That complaint can be put aside since there were no grounds of appeal nor submissions by the appellant on the appeal challenging the special costs orders made at trial.
12. Second, the appellant complains that the Court proceeded on several incorrect bases in its principal judgment when addressing her claim for damages for breach of contract. That is not relevant to the appellant's application to vary the costs order made by this Court. The appellant's remedy lies in seeking special leave to appeal to the High Court, which application she has already filed.

Conclusion

1. Given that the appellant's partial success on appeal resulted in an award of only nominal damages and that the appellant failed on all other grounds of appeal, no reason has been shown why the costs order made in favour of the Health District should be varied.

Orders

1. The Court makes the following orders: 1. Refuse the appellant's application to vary the costs order made in favour of the first respondent on 1 December 2023. 2. Appellant to pay the first respondent's costs of the application to vary the costs order.

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