State of New South Wales v Stevens [2012] NSWCA 415 | Case summary

Court of Appeal (NSW)|2012-12-05|Before: McColl JA, Ward JA

Background 46The respondent is a schoolteacher with specialist qualifications for the education of children with special needs and autism. Between 2003 and 2006 she worked as a teacher at Cranebrook High School. 47In 2006, the Department of Education and Training ("Department") conducted an investigation into certain complaints that had been made against the respondent. Although the outcome of the investigation was not wholly unfavourable to the respondent, she was dissatisfied with the findings. 48On 5 April 2007, the respondent commenced proceedings in the Supreme Court seeking orders setting aside the investigator's decision. The respondent alleged, among other things, that she had been denied procedural fairness. 49The Supreme Court proceedings were settled by the execution of a deed dated 28 March 2008 ("Deed") to which the parties were the respondent and the Director-General of the Department ("Director-General"). Under the Deed, the respondent released the Director-General and all Departmental officers from any claims relating to the investigation into her conduct and the decision made by the investigator. In return, it was agreed that the Department would set aside the findings of the investigator within 14 days and take certain action concerning the further conduct of the investigation within periods specified in the Deed. 50Unfortunately, the Department did not comply with the terms of the Deed. It appears that its delay in implementing the agreed terms was in part (but only in part) due to the loss of the original Deed and the Department's insistence on the execution of a replacement document. 51On 27 August 2010, the respondent commenced proceedings in the District Court against the State pursuant to the provisions of the Crown Proceedings Act 1988. In her amended statement of claim, the respondent alleged that the State (including the Director-General) breached the terms of the Deed by failing to set aside the investigator's decision within 14 days and in failing to take other steps relating to the investigation within the time limits provided in the Deed. 52The respondent claimed that by reason of the State's breaches of the Deed she suffered injuries, loss and damage. Her statement of particulars identified the injuries as "exacerbation of psychological injury" and injury to her personal reputation. The statement claimed that her continuing disabilities included humiliation, distress, anxiety and loss of confidence. The respondent's particulars of loss of income stated that she had lost the opportunity for advancement in her career. This was said to be due to the ongoing investigation and the inclusion of her name on the notification register of the Commission for Children and Young People. She also attributed the lost opportunity to her own loss of confidence which, in turn, was the product of the State's breaches of contract. 53The respondent claimed damages for her injuries, pain and suffering, humiliation, distress and injury to her reputation. She also sought damages for the "vexation, distress and inconvenience resulting from [the State's] breach of the deed of contract". In addition, the respondent claimed aggravated and exemplary damages, and an order that the State remove her name from the notification register. At trial, the claim for exemplary damages was withdrawn. 54The State's defence admitted the breaches alleged by the respondent. However, the State denied that the respondent had suffered the injuries, loss or damage particularised in her statement of particulars.

Primary Judgment 55The primary Judge recorded (at [60]) that the State acknowledged its breaches of the Deed. However, the State had argued that:

under the CL Act the respondent could not receive damages for non-economic loss unless she satisfied the threshold stated in s 16 of the CL Act and the evidence did not support her claim that the severity of her injuries was at least 15 per cent of the most severe case; and
in any event, there was no evidence that the breaches of the Deed, specifically the delays in implementing its terms, were causative of any problems the respondent had experienced. 56The primary Judge made (at [68]) the following findings: "(i) The [State] was in breach of the performance of its obligations under the Deed ... (ii) There were no reasons or no adequate reasons advanced by the [State] for its breaches; ... (vi) The [respondent] suffered anxiety and stress as a result of the compounding effect of two [earlier] motor vehicle accidents, as a result of the fact of complaints being made against her and upheld in part and as a result of being transferred to another school against her wishes; (vii) That anxiety and stress was significant and debilitating but was not caused by the [State's] breaches of the Deed; (viii) The [respondent] did not apply for positions of promotion as a result of her general level of anxiety and stress, and not because of the [State's] breaches although they may have played a role; (ix) The Civil Liability Act applies to the present case: Insight Vacations Pty Ltd v Young [2010] NSWCA 137. In order to succeed in a claim for personal injury damages, the [respondent] has to establish that she suffered more than 15% of a most severe case of injury. The evidence does not support a finding that she has met that threshold. (x) Even if the breaches were causative of the [respondent's] anxiety and stress, there was no evidence or no adequate evidence upon which the court could assess whether the [respondent] had sustained an injury that amounted to 15% of the most severe case." 57Despite these findings, the primary Judge considered that the State should be ordered to pay "nominal damages" of $10,000. Her Honour reasoned as follows: "69. It is trite law that a breach of contract by one party always gives the other party a right to recover damages for the breach: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [58]. 70. If the breach is not proved to have caused any loss, the party that has breached the contract is liable to pay nominal damages: Luna Park Ltd (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286; Chappel v Hart (1998) 195 CLR 232. 71. Nominal damages is a technical phrase which acknowledges the infraction of a legal right, which though it gives no right to real damages, yet gives a right to the verdict or judgment. The term 'nominal damages' does not mean 'small damages': The Mediana [1900] AC 113 at 116 per Lord Halsbury. 72. It is unnecessary for the [respondent] to have expressly sought an order for nominal damages in the alternative to her claim for substantial damages. Upon a finding that the [State] was in breach of the contract (which was admitted) it necessarily follows that the [respondent] is entitled to an order for nominal damages if she failed to establish that she had suffered substantial damages: Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 at [14]. 73. Taking into account the fact that the [respondent] had to engage the services of her solicitor throughout 2008 and into 2009 to insist on the [State's] performance of its obligations pursuant to the Deed and had, no doubt, to endure the humiliation, stress and cost consequent upon the [State's] conduct, and that this situation continued for more than a year, in my view it is appropriate to make an award of $10,000.00 for nominal damages and I so order." 58Her Honour indicated (at [75]) that she proposed to order that the State pay the respondent's costs. However, she provided for the parties to make submissions to vary the costs order if they were so advised. 59It appears that the State moved to vary the costs order and, accordingly, a further hearing on costs took place before the primary Judge. After hearing argument, her Honour ordered the respondent to pay the State's costs. Although a transcript of her Honour's ex tempore judgment was not included in the appeal papers, it would seem that she applied the principle that a plaintiff who succeeds in obtaining only nominal damages for breach of contract is not usually to be regarded as the successful party in the litigation: Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149, at [47]-[52], per Campbell J; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39, at [100], per Campbell JA (with whom McColl JA and Handley AJA agreed); Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (Supplementary Decision) [2011] WASCA 65, at [5]-[11], per curiam. There is no appeal or cross-appeal from the costs order.

Submissions 60Ms Hartstein, who appeared on behalf of the State, submitted that once a plaintiff claims personal injury damages, no award of damages can be made in the plaintiff's favour unless Part 2 of the CL Act is satisfied. Thus if the plaintiff's claim for personal injury damages fails (for whatever reason), the Court cannot award the plaintiff damages for a separate cause of action, even if the damages claimed for that cause of action are entirely unrelated to any injury sustained by the plaintiff. It follows, so Ms Hartstein argued, that an award of nominal damages for breach of contract, such as the award of $100 in Motium v Arrow Electronics, would be precluded if in the same proceedings the plaintiff's claim for personal injury damages failed. 61In the alternative, Ms Hartstein submitted that [73] of the primary Judge's reasons made it clear that the award of $10,000, although characterised as an award of "nominal damages", was intended to compensate the respondent for "humiliation" and "distress" and thus constituted an award of personal injury damages. Since the respondent did not satisfy the 15 per cent threshold stated in s 16 of the CL Act, the award could not stand. 62In the further alternative, Ms Hartstein contended that the primary Judge's award of damages of $10,000 was inconsistent with her findings earlier in the judgment. Specifically the damages award was inconsistent with the findings (at [68(vii), (viii)]) that the respondent's anxiety and stress were not caused by the State's breach of contract and that her failure to apply for promotion was also not caused by the State's breaches. 63Mr Cairn, who appeared for the respondent, submitted that an award of a purely nominal sum as nominal damages for breach of contract is not an award of "personal injury damages" within s 11A(1) of the CL Act, regardless of whether the claimant also seeks (unsuccessfully) substantial damages for injuries sustained. 64Mr Cairn recognised that there were difficulties in the path of upholding the primary Judge's award of $10,000 as nominal damages for breach of contract. However, he submitted that the award could be supported on the basis that her Honour took into account her findings (at [61], [65]) that the State's approach to the review of the original decision "left much to be desired" and that the Department had demonstrated "carelessness" in dealing with the complaints made against the respondent. Such an award, so he argued, would not fall foul of either s 11A or s 16 of the CL Act.

Reasoning 65It is convenient to start with some principles relating to the award of nominal damages in a claim founded on breach of contract. 66The classic statement of the difference between damages and nominal damages is that of the Earl of Halsbury LC in The Owners of The Steamship "Mediana" v The Owners, Master and Crew of The Lightship "Comet" [1900] AC 113 ("The Mediana"). In a passage to which her Honour referred (at [71]), but did not quote in full, his Lordship said (at 116): "'Nominal damages' is a technical phrase which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right which, though it gives you no right to any real damages at all, yet gives you a right to the verdict or judgment because your legal right has been infringed. But the term 'nominal damages' does not mean small damages. The extent to which a person has a right to recover what is called by the compendious phrase damages, but may be also represented as compensation for the use of something that belongs to him, depends upon a variety of circumstances, and it certainly does not in the smallest degree suggest that because they are small they are necessarily nominal damages." This passage was adopted by Griffith CJ (with whom Barton J agreed) in Baume v Commonwealth [1906] HCA 92; 4 CLR 97, at 116-117. 67It is trite law that a plaintiff who sues for breach of contract and proves the breach, but cannot or does not establish that he or she has suffered loss as a result of the breach, is entitled to nominal damages but no more: Chappel v Hart [1998] HCA 55; 195 CLR 232, at [149], per Hayne J; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; 61 CLR 286, at 305, per Latham CJ; at 312, per McTiernan J; Motium v Arrow Electronics, at [11], per curiam; Chitty on Contracts, General Principles (31st ed, 2012), at [26-009]. 68The common law courts awarded nominal damages where a legal wrong was committed without loss or damage being sustained, because a money judgment was practically the only remedy which the common law could bestow: McGregor on Damages (18th ed, 2009), at [10-001]. The award was always of a token sum, which in England in the nineteenth and twentieth centuries, was usually fixed at ₤2, with minor variations: McGregor on Damages, at [10-006]; Weld-Blundell v Stephens [1920] AC 956 (20 shillings). In Australia, the amounts awarded as nominal damages have not been uniform, but have always been minimal: see, for example, Luna Park (one shilling); Motium v Arrow Electronics ($100). One advantage of a small monetary award to a plaintiff was that it provided a "mere peg on which to hang costs": Beaumont v Greathead (1846) 2 CB 494; 135 ER 1039, at 499, 1041, per Maule J. However, more recent authorities have largely dismantled the peg: see at [59] above. 69Ms Hartstein's principal submission was that s 11A of the CL Act precludes a court from awarding nominal damages for breach of contract in any case where the plaintiff unsuccessfully claims damages for personal injuries resulting from the breach. According to Ms Hartstein, it is of no moment that the claim for compensatory damages is founded on a breach of contract and fails because the plaintiff cannot prove that any injuries were caused by the breach. On her argument, once a claim for "personal injury damages" (as defined in s 11 of the CL Act) is made and fails, the court is precluded from awarding damages to the plaintiff on any other cause of action, regardless of the quantum of damages. Ms Hartstein accepted in oral argument that the logic of her submission was that no damages could ever be awarded in an action in which the plaintiff has failed on a pleaded claim for personal injury damages, even if the alternative cause of action on which the plaintiff succeeds has nothing to do with the claim for personal injury damages. 70The submission made by Ms Hartstein cannot be reconciled with the plain language of Part 2 of the CL Act, particularly ss 11A and 16. Section 11A(1) provides that Part 2 applies to and in respect of an award of personal injury damages. Section 11A(3) states that a court cannot award damages contrary to Part 2. It is therefore necessary to go elsewhere in Part 2 to ascertain the relevant constraint on the court's power to award damages. For present purposes, that constraint is found in s 16(1), which provides that no damages may be awarded for non-economic loss unless the severity of the loss exceeds the specified threshold. The language of s 16(1) mirrors the other constraints on the court's powers in Part 2, all of which are expressed to apply to an award of damages: see, for example, ss 12(1), 13(1), 14(1), 15(2), 15A(2), 15B(2). 71The only presently relevant reference to a "claim" is in s 11A(2), which states that Part 2 applies regardless of whether the claim for damages is brought in tort, in contract, under statute or otherwise. The obvious purpose of s 11A(2) is to ensure that the constraints imposed elsewhere in Part 2 on the court's power to award personal injury damages apply regardless of the manner in which the claim for such damages is pleaded. In the absence of s 11A(2), it might have been arguable, for example, that a claim founded on breach of contract rather than tort was not caught by Part 2 of the CL Act, even though the plaintiff seeks damages for personal injuries sustained in consequence of the alleged breach of contract: see Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 78 NSWLR 641, at [118], per Basten JA; at [174], per Sackville AJA (the appeal to the High Court concerned other issues: Insight Vacations Pty Ltd v Young [2011] HCA 16; 243 CLR 149). Section 11A(2) does not say, and cannot be read as saying, that no damages can be awarded in any case where the plaintiff claims personal injury damages, even if that claim fails and the damages actually awarded are founded on a separate cause of action and have nothing to do with any personal injuries sustained by the plaintiff. 72It follows from what I have said that Part 2 of the CL Act does not apply to the award of nominal damages in respect of the State's breach of contract unless that award is itself of "personal injury damages" as defined in s 11. Even then, Part 2 would not preclude an award of nominal damages for breach of contract in the present case unless the award could be classified as "damages ... for non-economic loss" within s 16(1). 73The principles to which I have referred earlier make it clear that an award of true nominal damages for breach of contract does not "relate to the death or injury of a person" (CL Act, s 11), whether or not the plaintiff has claimed damages for personal injury in the same proceedings. Nominal damages for breach of contract are awarded precisely because the plaintiff has not sustained any loss or is unable to prove any loss by reason of the breach. In the present case, the award of nominal damages (leaving aside the quantum of the award) was made independently of any injury sustained by the respondent. Indeed it was made on the express basis that there was no causal relationship between the breach of contract and any injury sustained by the respondent. 74The award to the respondent was made (or should have been made) simply to vindicate her claim that her legal rights had been infringed. An award of nominal damages on that basis is not "an award of damages that relate to the death of or injury to a person" and is therefore not an award of "personal injury damages" within s 11. Since Part 2 of the CL Act applies only to or in respect of an award of personal injury damages, it does not apply to a true award of nominal damages for breach of contract. 75A fortiori an award of nominal (in the sense of token) damages for breach of contract is not an award of damages for non-economic loss within s 16(1) of the CL Act. 76While the primary Judge was entitled to award the respondent nominal damages for the State's breach of contract, her Honour fell into error in assessing nominal damages at $10,000. With respect, there is a clear inconsistency between the finding that the State's breach caused no loss to the respondent and an award of damages based, in part at least, upon the humiliation and stress said to be sustained by the respondent as a consequence of the State's conduct. 77The primary Judge stated clearly (at [70]-[71]) that she was contemplating making an award of nominal damages because the respondent had not proved that the State's breach had caused her any loss. However, her Honour seems to have misinterpreted the observations of Lord Halsbury in The Mediana (at [66] above) to mean that nominal damages need not be limited to a small amount. His Lordship was making a different point, namely that a small award of compensatory damages is not the same as an award of purely nominal damages. Lord Halsbury's observations provide no warrant for awarding nominal damages for breach of contract in other than a token amount. 78Mr Cairn sought to justify the award of $10,000 on the ground that her Honour had taken into account that the Department had treated the respondent carelessly and with insufficient regard for her interests. These considerations possibly may have supported an award of aggravated or even exemplary damages against the State, but her Honour was not entitled to take those considerations into account in determining the quantum of nominal damages. (As I have noted and Mr Cairn accepted, the respondent withdrew her claim for exemplary damages at the trial.) In any event, an award of either aggravated or exemplary damages in favour of the respondent is likely to have been precluded by Part 2 of the CL Act: State of New South Wales v Corby [2010] NSWCA 27; 76 NSWLR 439, at [47]-[52], per Basten JA (with whom Beazley and Tobias JJA agreed). 79For these reasons, the primary Judge's award of nominal damages for the State's breach of contract should be upheld, but the quantum of the nominal damages should be reduced to a truly token amount. As the sum of $100 was awarded as nominal damages in Motium v Arrow Electronics I am content to adopt that sum.

Orders 80I have given consideration to dismissing the application for leave to appeal on the ground that the amount involved is very small and the costs incurred by the parties are likely to be disproportionate to that amount: Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56, at [22], per Campbell JA (with whom Young JA agreed); Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164, at [32]-[39], per Basten JA (with whom Tobias JA agreed). However, the State's argument raised a question of construction that justifies the grant of leave. Although the State's principal argument has not succeeded, the orders challenged by the State have been shown to be affected by an error warranting correction. Leave to appeal should be granted. 81Although the State has succeeded in reducing the quantum of damages, its principal argument has not succeeded. Each party should bear its or her own costs of the appeal. 82I agree with the orders proposed by McColl JA.

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: 12 December 2012

hip "Comet" [1900] AC 113 ("The Mediana") Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2000] WASCA 102 Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 Weld-Blundell v Stephens [1920] AC 956 Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56 Texts Cited: Chitty on Contracts, General Principles, 31st ed (2012) Sweet & Maxwell McGregor on Damages, 18th ed (2009) Sweet & Maxwell McGregor on Damages, 17th ed (2003) Sweet & Maxwell Mayne and McGregor on Damages, 12th ed (1961) Sweet & Maxwell McCormick, Damages, (1935) West Publishing Company Ogus, The Law of Damages, (1973) Butterworths R H Kersley, Broom's Legal Maxims, 10th ed (1939) Sweet & Maxwell Category: Principal judgment Parties: State of New South Wales (Appellant) Helen Stevens (Respondent) Representation: Counsel: V Hartstein (Appellant) J Cairn (Respondent) Solicitors: Crown Solicitor's Office (Appellant) Herbert Weller (Respondent) File Number(s): 2012/62221 Decision under appeal Date of Decision: 2011-11-29 00:00:00 Before: Olsson SC DCJ File Number(s): 2010/284809

Statement of the case 5The respondent set out the particulars of the damages she said she had suffered in relation to the breach of the Deed in a document headed "Statement of Particulars - Personal Injury Proceedings". It is unnecessary to set out the precise claim she advanced in this respect. It was common ground at the trial that the damages she sought to recover were for personal injuries, recovery of which was governed by the provisions of Part 2 of the Act. 6The primary judge concluded (at [68]) that although the respondent had established that the appellant breached the Deed, the anxiety and stress she said she suffered was not caused by those breaches. Her Honour also found that, in any event, to recover personal injury damages within the meaning of that term in s 11 of the Act, it was necessary that the respondent establish that the severity of her non-economic loss was at least 15 percent of a most extreme case (s 16) and that she had not established that she had met that threshold. Accordingly, her Honour concluded that the respondent could not recover damages for personal injury. 7Having reached that conclusion, however, the primary judge awarded the respondent nominal damages in respect of the appellant's breach of the Deed, referring to and applying Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 (at [58]); Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 and Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232. Her Honour observed (at [71]) that nominal damages acknowledged "the infraction of a legal right, which though it gives no right to real damages, yet gives a right to the verdict or judgment" and, too, that " 'nominal damages' does not mean 'small damages' ", referring to The Mediana [1900] AC 113 (at 116) per Lord Halsbury. 8The primary judge stated that it was unnecessary for the respondent to have expressly sought an order for nominal damages in the alternative to her claim for personal injury damages because her entitlement to such an order necessarily followed from the finding that the appellant had breached the Deed. In this respect her Honour referred to Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (Supplementary Decision) [2011] WASCA 65 (at [14]). Her Honour then said: "73. Taking into account the fact that the plaintiff had to engage the services of her solicitor throughout 2008 and into 2009 to insist on the defendant's performance of his obligations pursuant to the Deed and had, no doubt, to endure the humiliation, stress and cost consequent upon the defendant's conduct, and that this situation continued for more than a year, in my view it is appropriate to make an order of $10,000.00 for nominal damages and I so order." 9The primary judge initially ordered the appellant to pay the respondent's costs, however after argument changed that order to one requiring the respondent to pay the appellant's costs of the proceedings.

Legal Principles 14Damages are "the prime remedy in actions for breach of contract and tort" and "have been defined as 'the pecuniary compensation, obtainable by success in an action, for a wrong which is either a tort or a breach of contract' ": Cassell & Co Ltd v Broome [1972] AC 1027 (at 1070) per Lord Hailsham of St Marylebone LC. The definition his Lordship adopted was taken from Mayne and McGregor on Damages, 12th ed (1961) Sweet & Maxwell (at [1]). 15Ogus, The Law of Damages (1973) Butterworths (at 1 - 2) has a somewhat more analytical approach to the concept of damages. He groups the issues a court may have to decide in any action for breach of contract or in tort into those relating to liability and those relating to damages. The former include, relevantly, "whether the breach of contract ... inflicted an injury on the plaintiff's person or property, or gave rise to a purely economic injury". The latter include "the extent of the plaintiff's losses (pecuniary and non-pecuniary) consequent upon [the] injury and whether such losses are recoverable at law and the amount of money to be paid as compensation for the legally recoverable pecuniary and non-pecuniary losses". 16While accepting his classification "is not perfect", Ogus explains (at 2) that the liability/damages distinction: "... reflects the difference between two major tasks of legal science. The first seeks to prescribe the quality of conduct necessary to make a man or an enterprise answerable for injuries caused. It must have recourse to a certain set of moral, economic and social factors. The second determines the extent of the injured party's redress, the types of loss which may properly be made the subject of an award, and the general level of compensation. The factors which influence the incidence of liability may be relevant here but more often different considerations prevail, notably those representing the economic standards of the community." 17Ogus is also critical (at 2) of the "loose usage" of the terms "damage" and "damages", suggesting "damage" should be confined "to the injury inflicted by the tort or breach of contract" while "damages" should "connote the sum of money payable by way of compensation" (emphasis in original). 18The principles concerning the award of nominal damages in the case of a breach of contract were conveniently set out by the West Australian Court of Appeal (McLure P, Newnes and Murphy JJA) in Motium Pty Ltd v Arrow Electronics Australia Pty Ltd as follows: "6 Nominal damages were described by Lord Halsbury in The Mediana [1900] AC 113 in the following oft-cited passage: 'Nominal damages' is a technical phrase which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right which, though it gives you no right to any real damages at all, yet it gives you a right to the verdict or judgment because your legal right has been infringed. But the term 'nominal damages' does not mean small damages (116). See, too, Baume v Commonwealth [1906] HCA 92; (1906) 4 CLR 97, 116 - 117 (Griffiths CJ). 7 It is clear that a breach of contract by one party always gives the other party a right to recover damages for the breach: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [58]. If the breach is not proved to have caused any loss, the party that has breached the contract is liable to pay nominal damages: see Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 301; Huppert v Stock Options of Australia Pty Ltd [1965] HCA 30; (1965) 112 CLR 414, 424, 431; Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 [93], [149]." (Emphasis added) 19Recovery of nominal damages given in the case of a breach of contract where the plaintiff has failed to prove the breach has caused any loss is said to "sufficiently vindicate[s] the plaintiff's right": R H Kersley, Broom's Legal Maxims, 10th ed (1939) Sweet & Maxwell (at 128). As Ogus emphasised (The Law of Damages, supra, at 22): "[Nominal damages] is not ... a case of damages being quantified on a non-compensatory principle, but a method of recording a verdict where no compensation is required". 20The underlying rationale for nominal damages is often said to have been explained by Holt CJ in Ashby v White [1790] EngR 55; (1703) 2 Ld Raym 938 [92 ER 126] (at 955) on the basis that "... every injury imports a damage, though it does not cost the party one farthing". McGregor on Damages, 17th ed (2003) Sweet & Maxwell (at 10-003) criticises Holt CJ's statement on the basis that, relevantly, it "explains nothing because it is a fiction as those cases where there is no clear evidence of loss show". However Holt CJ's explanation accords with Ogus' preference for the use of the term "damage", that is to say as referring to the "injury inflicted by ... the breach of contract". 21McGregor (at 10-003, footnote 7) cites the "more realistic statement" in McCormick, Damages (1935) West Publishing Company (at 86) that "[t]he recognition of a right unrelated to detriment sustained is merely a metaphorical prophetical way of saying that in given conditions an adverse judgment will be given without a showing of loss" (emphasis added). McGregor regards the "proper approach" to understanding nominal damages as being to "regard an injuria or wrong as entitling the claimant to a judgment for damages in his favour even without loss or damage, but where there is no loss or damage such judgment will be for nominal damages only". This analysis accords with Ogus' approach (see [19] above). Thus, as Lord Tenterden CJ said in Marzetti v Williams [1830] EngR 839; (1830) 1 B & Ad 415 (at 423), "the plaintiff is entitled to have a verdict for nominal damages, although he did not prove any actual damage at trial". 22Historically, nominal damages served another purpose than that of vindicating a plaintiff's right. They were "a mere peg on which to hang costs": Beaumont v Greathead [1846] EngR 257; (1846) 2 CB 494 (at 499). However they are no longer so regarded: see Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926 (Full Federal Court, Spender, Nicholson and Finn JJ). As Campbell J (as his Honour then was) explained in Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 (at [47] - [52]) "[i]n 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". His Honour repeated this passage of his reasons in his judgment in Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 (at [100]) where it was approved by Handley AJA and myself. One aspect of this passage which warrants repetition is his Honour's citation of Stephenson LJ's explanation in Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 (at 401) that 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 plaintiffs were aiming. They were aiming at £ 82,500, and the mere fact that they ultimately got something - token or nominal damages - does not enable me to regard them as remaining successful plaintiffs." See also Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (at [10]). 23The appellant informed the Court without demur from the respondent, that it relied upon the principles set out in [22] to persuade the primary judge in February 2012 to reverse her original costs order in favour of the respondent. 24Once the distinction between the basis for nominal and compensatory damages is understood, it can be readily seen, in my view, that a nominal damages award is not subject to the Act. 25Part 2 of the Act only applies to "an award of personal injury damages": s 11A(1). It applies "regardless of whether the claim for the damages is brought in tort, in contract, under statute or otherwise": s 11A(2). Section 11A(3), prohibits a court from awarding "damages, or interest on damages" contrary to Part 2. "Damages" are defined in s 3 to include, subject to irrelevant exceptions, "any form of monetary compensation". "Injury" and "personal injury damage" are defined in s 11 (Part 2) to mean respectively "personal injury", including "impairment of a person's ... mental condition", and "damages that relate to the death of or injury to a person". 26Critically, nominal damages are not "real damages" and, in particular, they are vindicatory, not compensatory. They are awarded because the plaintiff has established the liability issue, being the breach of contract, in the senses explained by Ogus and McGregor, but has not established that any damages flowed from that breach. Accordingly they are not "monetary compensation" and do not fall within the meaning of "an award of personal injury damages" in the Act. 27The appellant has failed to establish its first ground of appeal.

Nominal damages - quantum 28Lord Halsbury's statement in The Mediana (at 116) that "the term 'nominal damages' does not mean small damages" was not a licence to award a large sum by way of nominal damages. As his Lordship explained in a passage to which Griffiths CJ referred with approval in Baume v Commonwealth [1906] HCA 92; (1906) 4 CLR 97 (at 116 - 117), "[t]he extent to which a person has a right to recover what is called by the compendious phrase damages, but may be also represented as compensation for the use of something that belongs to him, depends upon a variety of circumstances, and it certainly does not in the smallest degree suggest that because they are small they are necessarily nominal damages." In other words, Lord Halsbury was distinguishing between an award of nominal damages and small damages. As I have explained, the former are awarded because the plaintiff has established an infraction of a legal right but no damages, whereas the latter are compensatory. Both may be small, but in the case of nominal damages, that is because they are "a sum of money that may be spoken of, but that has no existence in point of quantity": Beaumont v Greathead (at 499) per Maule J. 29This can be illustrated by Timpar Nominees Pty Ltd v Archer [2001] WASCA 430, a case which concerned "a prolonged dispute between neighbours regarding the respective rights of the respondents as the owners of the dominant tenement in relation to a right of carriageway and of the appellant as the owner of the servient tenement": (at [1]). On appeal, the question arose whether an award of $1,000 could be characterised as nominal damages. The trial judge had said (see [106]) that he awarded the respondents that sum "for interference with their right of access and the prevention of their enjoyment of the right of way to which they are entitled". Kennedy J (with whom Wheeler J agreed) said: "[111] In the case of nominal damages, a token sum is awarded. The learned editor of McGregor on Damages noted that, in the United Kingdom, 5 pounds has become the norm for nominal damages - see Brandeis Goldschmidt & Co v Western Transport Ltd [1981] QB 864 at 874 and see also Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; FCt SCt of WA; Library No 970604; 13 November 1997, in which nominal damages were fixed at $10. An award of $1,000 is clearly not an award of nominal damages, as that expression is understood ... I would allow this ground of appeal and reduce the award to $10." (Emphasis added). 30In 1973, Ogus said (at 22) that an award of nominal damages was "a token sum, which varied in size, but is now generally £2". By 2003, as Timpar Nominees Pty Ltd v Archer noted, in the United Kingdom that amount had crept up to £5: McGregor on Damages (at 10-006). 31A similar incremental trend can be seen in Australian nominal damages awards. In Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (at 305), where the defendant was found to have been entitled to determine a contract and to claim damages for its non-performance by the plaintiff, but there was no evidence of its loss, the High Court awarded one shilling as nominal damages, without costs. 32Notwithstanding the statement in Ogus concerning what I would colloquially call the "going rate" for nominal damages awards, in Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113 the English Court of Appeal awarded the plaintiffs 40 shillings in nominal damages. In Hanflex Pty Ltd v NS Hope & Associates [1990] 2 Qd R 218 (at 228 - 229), Demack J (Kelly SPJ and Kneipp J agreeing) applied a rough inflationary factor saying that: "[i]n Sykes' case nominal damages were said to be 40 shillings in 1971 so I would assume that at this time, nominal damages should be regarded as $10." 33In Gore v Montague Mining Pty Ltd [2000] FCA 1214 (at [73]) the Full Court of the Federal Court (Hill, Carr and Sundberg JJ) took into account "that in Hanflex the sum was fixed at $10 as being comparable to the forty shillings awarded in 1971 in Sykes and said "[a]s ten years have passed since the Full Court's decision in Hanflex, there should be judgment for $20." 34In Motium Pty Ltd v Arrow Electronics Australia Pty Ltd where the appellant established that the respondent breached a contract, but failed to prove that it had suffered any loss as a result of the breach, the Court of Appeal awarded $100 by way of nominal damages. That was the same nominal damages award as Steytler and Wheeler JJ gave in Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2000] WASCA 102. The Court in Motium Pty Ltd v Arrow Electronics Australia Pty Ltd did not consider whether it should apply an inflationary factor to the sum of $100 having regard to passage of time since Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd was decided. 35The amount the primary judge awarded for nominal damages of $10,000 can clearly not be characterised as a token award within the principles to which I have referred. Moreover, the matters her Honour took into account (at [73], set out above at [8]) in determining the quantum of her "nominal" damages award were appropriate to a case where a plaintiff was being awarded compensatory damages. They appeared, too, to be based on the premise that the plaintiff had proved that the breach of the Deed had caused her at least "stress", a matter her Honour had already said (at [68]) was not caused by the appellant's breach. 36In my view, while the award of $10,000 damages involved a discretionary decision, in awarding that sum the primary judge misapprehended the principles concerning an award of nominal damages. Her assessment was wholly erroneous in a manner warranting appellate intervention: House v R [1936] HCA 40; (1936) 55 CLR 499. 37I would regard $100 an appropriate amount to award by way of nominal damages as a token of the appellant's breach of the Deed. I would, accordingly allow the appellant's second ground of appeal. The remaining grounds need not be considered as they are incidental to the two critical points of principle disposed of in these reasons. 38As to costs, the appellant has only had partial success on appeal and has not succeeded on the principal ground it sought to advance concerning the construction of the Act. In those circumstances, in my view it is appropriate that each party bear its and her costs of the appeal.

State of New South Wales v Stevens

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