BETWEEN : THIESS CONTRACTORS PTY LTD (ACN 010 221 486)

Appeal - Appellant appealed against dismissal of claim and upholding of respondent's counterclaim - Respondent failed to prove damages - Appellant ordered to pay respondent nominal damages of $100

Costs - Trial costs left undisturbed - Appellant ordered to pay respondent one fifth of its costs of the appeal

1 JUDGMENT OF THE COURT: These are applications for costs arising out of the judgment of this Court in an appeal brought by the appellant. The appellant had been unsuccessful, at trial, both in its claim against the respondent and in the respondent's counterclaim against it. It appealed against the decision in each case.

2 The claim and counterclaim centred around a contract made between the appellant and the respondent in July 1992 and incorporated in a formal document executed by them in July 1993. That contract was terminated by the respondent. The appellant commenced proceedings against it alleging, amongst other things, that the termination of the contract was unlawful. It claimed substantial damages. The respondent denied that the termination was unlawful. It alleged, amongst other things, that the appellant had breached an obligation of good faith which had been expressly provided for by the contract. It brought a counterclaim against the appellant, relying essentially upon the same facts as had been raised by it in answer to the appellant's claim against it. It, too, claimed substantial damages. The trial Judge dismissed the appellant's claim and upheld the respondent's counterclaim. He awarded to the respondent damages of $4,853,000.

3 The appellant appealed, as we have said, against both the dismissal of its claim and the upholding of the counterclaim. Its appeal against the dismissal of its claim was dismissed. So far as its appeal against the decision on the counterclaim was concerned, this Court found that no basis had been shown for upsetting any of the findings of fact made by the trial Judge with respect to the merits of the counterclaim or in respect of various issues of causation. However we held that his Honour had erred in finding that the respondent had proved its damages. We found, on the appeal, that there was a crucial lacuna in the damages formula which the respondent had attempted to prove at trial. We awarded to Placer, in lieu of the sum of $4,853,000 awarded by the trial Judge, nominal damages fixed at $100.

4 The appellant now seeks an order that it be paid its costs of the whole of the appeal. So far as the costs of the trial are concerned, it submits that, while the respondent should have the costs (already ordered by the trial Judge) of defending the appellant's claim, the appellant should have its costs of defending the counterclaim (which were awarded by the trial Judge in favour of the respondent).

5 The respondent, on the other hand, contends, firstly, that the appellant should pay the whole of its costs of getting up the appeal and two thirds of its costs of the hearing of the appeal. This submission was based upon two propositions. The first was that less than one third of the time taken up on the hearing of the appeal was expended on issues going to the proof of the respondent's damages in its counterclaim. The second was that the respondent had been faced with a 38 page notice of appeal which this Court has already found to have been deficient in form and which, the respondent said, caused it great difficulty in the preparation of the appeal. The notice of appeal was abandoned on the first day of the appeal.

6 Next, so far as the costs of the trial are concerned, the respondent submits that its counterclaim was for all intents and purposes a mirror image of its defence to the appellant's claim. This, it says, follows from the fact that the material facts pleaded in support of its counterclaim (for breach of contract, fraud and breach of fiduciary duty on the part of the appellant) were the same as those pleaded in the defence. It submits that the only issues raised by its counterclaim which were not raised in the defence, were those contained within its particulars of damage. It also says that only a very small proportion of the trial was taken up by submissions relating to damages and that no witness called by either party gave evidence solely in relation to matters raised in the counterclaim. It consequently contends that the trial Judge's orders should be left undisturbed or that only some very small allowance should be made in respect of its failure to prove its damages.

7 It is plain, so far as the costs of the trial are concerned, that there is no reason to disturb the findings of the trial Judge as regards his award to the respondent of its costs of defending the appellant's claim against it (and nor were we asked to do so).

8 So far as the costs of the counterclaim are concerned we accept, of course, that these must have regard for the fact that the respondent failed, as we have found, to prove its damages. However we also accept that the proof of damages took up only a very small proportion of the trial (counsel for the respondent put this, without objection from counsel for the appellant, at about 5 per cent to 10 per cent of the trial) and that the only additional issues of fact raised in the counterclaim, when compared with the appellant's claim against the respondent, related to proof of the respondent's damages.

9 It must also be borne in mind that we have left undisturbed the trial Judge's findings that the respondent established not only a breach of contract on the part of the appellant but also fraud and breach of fiduciary duty. His Honour found that the appellant breached its contractual duty of good faith owed to the respondent by making representations which were deliberately false to the effect that certain plant costs it would incur in carrying out mining operations were its genuine estimates of those costs when it knew that those estimates contained elements of profit. While we have found, as we have said, that the respondent failed to prove its damages we have, as we have also said, substituted for the amount awarded by the trial Judge in favour of the respondent an amount of nominal damages. That being so, the fact remains that it has been successful in making out a cause of action on these very serious allegations. It may be so that an award of only nominal damages will ordinarily be found to disentitle the successful party from an award of costs, at least where the establishment of a legal right is not one of the primary purposes of the proceedings (see Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874 and Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 at 402 - 404). However, the discretion is wide and there is no invariable rule to that effect. We consider that it is open to a court to depart from the usual practice in a case of this kind in which causes of action of this nature are made out, in which the counterclaim largely mirrored the defence in proceedings (claiming substantial damages) initiated by the appellant, and in which the damages claim failed because a wrong approach was taken to the proof of damages.

10 Taking all of these circumstances into account, it seems to us that the appropriate exercise of discretion is one which would leave the trial Judge's decision on the question of the costs of the trial, including the trial of the counterclaim, undisturbed, save that there should be no order as regards the respondent's costs of proving its damages in the counterclaim.

11 As to the costs of the appeal, it is no easy task to ascertain how much of the argument on the appeal was taken up by the unsuccessful appeal against the decision on the appellant's claim against the respondent and how much by the successful appeal against the decision on the counterclaim. There was, once again, a considerable overlap in respect of matters other than those going to the issue of quantification of damages.

13 The first is that no more than one third of the time taken up on the appeal concerned the quantification of the respondent's damages.

14 The second is that the appellant succeeded only on a very small number of the very many grounds of appeal which were raised in the notice of appeal, insofar as those grounds were argued at all and insofar as we are able to ascertain which of the grounds related to the issue of the respondent's entitlement to damages.

15 The third is that the notice of appeal was considerably more of a hindrance than a help. We have already said that that document was 38 pages long. It contained 90 grounds of appeal, most of which were split into several sub-grounds giving rise, in reality, to some hundreds of grounds of appeal. We have previously said that a great many of these grounds were repetitive and unnecessarily argumentative, that there was no readily discernible structure to them and that many of them ranged from the speculative to the hopeless. We have also said, in the course of giving our reasons for decision on the appeal, that there appears to have developed a practice, in regard to notices of appeal, of including every argument of which human ingenuity can conceive, irrespective of their merits. We have said that it must be remembered that lawyers owe a duty to the court to exercise due care in the drafting of notices of appeal and that they have an obligation to exercise an independent judgment in regard to arguments presented to the court so that the time of the court is not taken up unnecessarily (Giannarelli & Shulkes v Wraith [1988] HCA 52; (1988) 165 CLR 543). We have warned that failure to comply with these duties may result in appropriate costs orders and other consequences. In this case the respondent's solicitors have said (and we are not at all surprised by this) that they were required to spend an inordinate amount of time analysing each of the many grounds of appeal.

16 In all of these circumstances it seems to us that the appropriate exercise of discretion is one which would result in an order that the appellant is to pay to the respondent one fifth of its costs of the appeal. This would, in our opinion, allow for the fact that the appellant, while successful in a major respect, was unsuccessful on considerably more issues than those in respect of which it succeeded. It would also make some allowance for the waste of time and money occasioned by the deficiencies in the notice of appeal.

17 We propose, consequently, to make the following orders:

1 So far as the costs of the trial are concerned, the orders made by the learned trial Judge are to be left undisturbed save that there is to be no order as to costs as regards the costs incurred in respect of matters going to the proof, or disproof, of the respondent's damages in respect of its counterclaim.

(a) the appellant is to pay to the respondent one fifth of its costs of the appeal, including any reserved costs, to be taxed.

(b) The respondent is to have a certificate for second counsel and an instructor in respect of the appeal.

(c) The scale limits are not to apply to the taxation of the costs of the appeal.

(d) The taxing officer is directed to make separate and reasonable allowance for:

(ii) the costs of preparation by the respondent of its submissions; and

(iii) the costs of preparation by the respondent of its list of issues