Hill End Gold Ltd v First Tiffany Resource Corporation [2010] NSWSC 555 | Case summary

Grant leave to the parties to apply, by arrangement with my associate within seven days, for any alternative or additional order consequent upon this judgment and any alternative or special costs order, by lodging with my associate a document specifying the orders sought and an outline of the submissions relied on. 4. Direct that exhibits be returned upon the undertaking of the parties' representatives to return them to the court in the event of an appeal or otherwise. 2 The order dismissing the proceedings with costs was made in circumstances where it was evident that there might be further argument on consequential relief and costs. I raised with the parties then the possibility that one or other of them might seek further consequential orders arising from the conclusions stated in the judgment. In addition, given the history of the proceedings, it was also foreseeable that there might be special costs considerations which had not to that point been agitated before the court. It was for those reasons that I directed that the order not be entered for 14 days.

· The requirements for recalling orders already made were not satisfied; · In any event, the declarations sought by HEGL should not be made; and · The costs order previously made was appropriate, but if the court were minded to allow re-opening, then there should be an order that Tiffany's costs be assessed on the indemnity basis from 11 March 2009. Recalling the orders 6 Having regard to the circumstances in which the principal judgment was given, and in particular the contemplation that further orders consequent upon the judgment might be appropriate, and that the parties had not had an opportunity to address the question of costs in the light of the judgment, I do not accept that the strictures regulating the circumstances in which the court may recall its orders, as described in, for example, State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29, 38 and Brooker v Friend & Brooker Pty Ltd (No 2) [2008] NSWCA 129, [78], are applicable. This was a case in which judgment was given in circumstances in which potential consequential issues had not been addressed, and the parties could not necessarily have been expected to address them, prior to judgment. Nor had the parties been heard on the question of costs; the costs order made was that which I considered prima facie appropriate on what was then before the court, but conscious of the potential that further argument or evidence might change the position. I would not decline to make further consequential orders or a different costs order on the ground that insufficient reason had been established for permitting those issues now to be agitated. Declaratory relief 7 As to the declaratory relief now sought by HEGL, the circumstance that such relief was not sought by either party in the course of the proceedings to date is not decisive. In Farrell v Mulroney [1978] 1 NSWLR 221, Rath J, in the course of publishing reserved reasons for judgment, added (at 224): In this matter I propose to publish my reasons for judgment. I do not propose to make any formal orders. It will be one consequence of my judgment that the Court will refuse both the declarations asked for. In my opinion, although this will be, if necessary, a matter for debate when I direct the bringing in of short minutes, the defendants, although they have filed no cross-claim, are entitled to, and should have, declarations in their favour. Whether the defendants ask for them or not, I may still make them, but I would presume the defendants would ask for them. … I think it is most important that the matter should not simply end by the Court refusing to make the declarations sought by the plaintiff. To leave the matter at that point would, to some degree and perhaps to a large degree, defeat the purposes for which Waddell J directed the separate hearing of the questions raised by these pars 14 and 15 of the summons, set out below, and I emphasise that what he directed was the hearing of the "questions" raised. There is, I think, no doubt about the Court's power; to save counsel unnecessary research I will tell counsel where the Court's power is to be found. First of all it will be found in Pt 40, r 1 of the Supreme Court Rules , 1970. That gives the power to the Court to give a party relief, even though there is no claim made for the relief. Then there is further power in Pt 31, which is the separate issues part, especially in r 5 which empowers the Court to enter any declaratory judgment that it thinks proper so to do. Further reference to the Court's power, and perhaps this is basic in a way, is s 78 of the Act. The power was exercised by Helsham J in Graham H Roberts Pty Ltd v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93 at p 109, and you will find his Honour deals with the matter on the last page of his judgment. Perhaps I could add to that that, if the Court has not got the power under any of those rules then I have got no doubt, as at present advised, that it has inherent power. So that the burden would be rather heavily upon anybody that wishes to contend that I cannot make the proper declarations here to achieve the proper determination on the matters in controversy. I should have given a further reference, of course, to s 63 of the Act. 8 It was precisely such thoughts that inclined me to the view that, notwithstanding the failure of the plaintiff's claim, it might be desirable to make further (declaratory) orders. However, in the present case there are also a number of countervailing considerations. First, Tiffany seeks no such order, and indeed opposes such declarations being made. Secondly, in the principal judgment I concluded that, as between HEGL and Tiffany, the issue that Tiffany had a 15% free-carried interest (at least as at 1997) was res judicata. Thirdly, all that was necessary to my decision was that Tiffany's free-carried interest had not become contributory, and although I considered what was the trigger for it to become contributory, and (albeit in much less detail, because it did not strictly arise) the consequences had Tiffany's interests become contributory of a failure or refusal to contribute, those conclusions were not essential to my judgment. Fourthly, the issue as to the consequences of Tiffany failing to contribute when its interest became contributory - which is the subject of proposed declaration (d) - did not strictly arise in light of my other conclusions; I addressed it lest my other conclusions be found to be in error and in less detail than would otherwise have been the case; it was therefore not part of the ratio decidendi. Fifthly, proposed declaration (c), as framed, might incorrectly convey that there was a liability to contribute in the circumstances described, rather than, as I was inclined to think, an election to contribute or to exit. 9 Proposed declarations (a) and (b) add little if anything to the order of the Mining Warden; that I concluded that the Warden's order founded a res judicata is a strong reason for not making a further declaration. Insofar as it was suggested that it adds clarity as to the particular holdings concerned, that was not the subject of controversy before me and was not the subject of adjudication. 10 Proposed declarations (c) and (d) would be hypothetical, in the sense that the state of affairs they contemplate may never arise. There is much to be said for the view that any future dispute as to whether Tiffany's interest has become contributory, and if so the consequences of any failure to contribute, should be determined, if necessary, in the factual context in which the question then arises. Insofar as my judgment gives rise to issue estoppels, they will bind the parties. Insofar as it does not, then I am unpersuaded that, over the opposition of Tiffany, one should, in the name of providing further clarity convert non-essential conclusions expressed in the course of the judgment into declarations forming part of the binding decision. 11 I therefore decline to make the declaratory orders sought by HEGL. Costs 12 While costs are in the discretion of the court, a proper exercise of that discretion (as indeed the rules require) is that ordinarily they follow the event. Here, HEGL failed to gain any of the relief it sought and the proceedings it brought will be dismissed; the prima facie position is that the unsuccessful plaintiff should pay the successful defendant's costs. 13 HEGL's argument that Tiffany should pay HEGL's costs of the proceeding up to 26 September 2008, or alternatively that each party should bear its own costs in respect of that period, is essentially that the complete abandonment of Tiffany's case premised on the so-called 1987 Termination Agreement - including its assertion that the "trigger" for contribution was a "feasibility study" within the meaning of the 1983 Joint Venture Agreement - had the effect that the proceeding practically started again with HEGL's Further Amended Statement of Claim of 26 September 2008. 14 The stance originally adopted by Tiffany, premised on the 1987 Termination Agreement, unquestionably lured HEGL into revising its approach to the case, abandoning its original contention that Tiffany never acquired an interest under the 1982 Agreement, but embracing the 1987 Termination Agreement and contending that Tiffany's free-carried interest had become contributory pursuant to the Feasibility Study term in the 1983 Joint Venture Agreement, as allegedly preserved by the 1987 Termination Agreement. Tiffany's later change of position, abandoning the 1987 Termination Agreement, then caused HEGL to resume the contention that Tiffany had not acquired an interest under the 1982 Agreement - but on grounds different to those originally advanced. However HEGL, far from abandoning the 1987 Termination Agreement, continued to advance it as a major aspect of its case, as well after as before Tiffany eschewed it. As pointed out in my judgment on the application to withdraw certain admissions [Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866, [52]-[53], HEGL did not change its position on the faith of the admissions which Tiffany was subsequently granted leave to withdraw. In those circumstances, I do not accept that it can be said that Tiffany's initial advancing and subsequent abandonment of the 1987 Termination Agreement caused HEGL to incur costs that would not otherwise have been incurred, over and above the costs of Tiffany's motion for leave to withdraw its initial admissions of the 1987 Termination Agreement, which I dealt with at the time, ordering that Tiffany pay HEGL's costs of that motion [Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866, [64]-[65]]. 15 Moreover, on the conclusions reached in the principal judgment, HEGL would have failed on every version of its case, and would have done so even had the 1987 Termination Agreement been proved or admitted. The grounds on which Tiffany ultimately succeeded would have wholly defeated the claims advanced by HEGL in the original Statement of Claim of 2 March 2006, the Amended Statement of Claim of 4 May 2007, the Further Amended Statement of Claim of 26 September 2008 and the Reply of 3 April 2009. Insofar as HEGL sought to mount a case (in the original Statement of Claim, or ultimately) that Tiffany had never held a free-carried interest, that flew in the face of the res judicata established by the determination of the Mining Wardens Court. And insofar as HEGL's case was that any free-carried interest had been triggered so as to become contributory, and subsequently lapsed, I concluded that even if the feasibility study term was (as HEGL contended) that contained in the 1983 Joint Venture Agreement, the suite of documents delivered in 2003 did not satisfy the requirements of the definition. 16 I therefore do not accept that any special provision should be made in respect of costs incurred prior to 28 September 2008. 17 HEGL's argument that each party should bear its own costs of the proceedings from 27 September 2008, save insofar as costs orders have already been made, depends essentially upon the view that neither party succeeded - since Tiffany's contention that the free-carried interest was absolute and would never become contributory had been rejected, and that the agreement found by the Court, in particular in its incorporation of the 1983 Memorandum Agreement, was one not advanced by either party. However, I entirely reject the proposition that it can sensibly be said that neither party succeeded. On any view, HEGL brought the defendant and the case to court, and ultimately entirely failed, as its proceedings will be dismissed. That failure was underpinned by issues which did not depend on the conclusion that the operative agreement included the 1983 Memorandum Agreement. In any event, it was always an alternative contention of Tiffany, and one that received much attention during the hearing even if it was not Tiffany's primary position, that upon termination of the 1983 Joint Venture Agreement, the 1982 Agreement, incorporating the 1982 Memorandum Agreement, was revived. While it is true that the high point of Tiffany's case was that the free-carried interest would never become contributory, its pleading contained the alternative contention that the 1983 Memorandum Agreement provided the relevant trigger. In any event, it is much more significant that the plaintiff entirely failed, than that not every basis of the defendant's defence succeeded. 18 HEGL further argued that there should be an exception for the significant costs incurred in connection with the evidence and cross-examination of Mr McAlpine and Mr Cleaver - including a video link - which were said to be principally associated with Tiffany's (unsuccessful) contention that the free-carried interest would never become contributory. However, my perception of the cross-examination of those witnesses was that, while it touched on the issue of whether there was or could be no trigger, its primary focus by far was to seek (ultimately unsuccessfully) to prove, through Tiffany's witnesses, the 1987 Termination Agreement. There was ample and fertile material for such cross-examination, and embarking on it was an entirely reasonable course. But ordinarily, reasonable pursuit of an unsuccessful case or defence does not protect a party from an adverse costs order. While Tiffany's prior support of the 1987 Termination Agreement created much of that material and lured HEGL into embracing it, once Tiffany eschewed it, HEGL pursued reasonably, but at its own risk. 19 Finally, HEGL observed that the proceedings were delayed for some time while Tiffany was deregistered. It is not clear that any additional costs (beyond those of the motion for leave to withdraw admissions, which Tiffany has in any event been ordered to pay) were incurred as a result, but there may have some. Tiffany did not oppose an order that it should pay any such costs. 20 The costs associated with the various amendments have been dealt with from time to time in the course of the proceedings. For the foregoing reasons, save in respect of costs attributable to Tiffany's deregistration, and where special orders have been made, there is insufficient reason to depart from the prima facie rule that HEGL as unsuccessful plaintiff should pay the costs of the successful defendant Tiffany. 21 Tiffany contended that, by reason of an offer made on 11 March 2009 "without prejudice except as to costs", its costs after that date should be assessed on the indemnity basis. First, the offer was not a formal offer of comprise under the rules, so even assuming it to be more favourable to HEGL than the outcome it does not mandate any costs consequences but is no more than a relevant discretionary consideration. Secondly, it has not been shown to my satisfaction that the offer was more favourable to HEGL than the ultimate outcome. Thirdly, the offer was made on 11 March 2009, a month before the commencement of the substantive hearing on 6 April, but was expressed to remain open only for seven days, a shorter period than permitted by the rules relating to offers of compromise; although an offer of compromise under the rules made less than two months before the date set down for commencement of trial (as by analogy this one was) need not be left open for 28 days, but only "for such time as is reasonable in the circumstances", I am unpersuaded that a period seven days would satisfy that requirement in respect of an offer made a month before trial. 22 For those reasons, I do not consider it appropriate to order that Tiffany's costs after 11 March 2009 be assessed on the indemnity basis. Conclusion 23 Accordingly, I will vary or supplement the orders pronounced on 29 April 2010, by:

Hill End Gold Ltd v First Tiffany Resource Corporation

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Judgment (20 paragraphs)

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Cases Cited (4)