New South Wales Supreme Court CITATION : Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 HEARING DATE(S) : 6 September 2007 JUDGMENT DATE : 26 September 2007 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Brereton J DECISION : The proceedings are a justiciable controversy. The only proper exercise of discretion would be to decline final relief. Proceedings summarily dismissed. CATCHWORDS : CONSTITUTIONAL LAW – OPERATION AND EFFECT OF COMMONWEALTH CONSTITUTION – Judicial power – "matter" – where claim by Commonwealth for bare declaratory relief – whether justiciable controversy. - EQUITY – Remedies – declarations – discretion where claim for bare declaratory relief where declarations would not resolve whole controversy – whether declaration appropriate. - PROCEDURE – Summary disposal – where only proper exercise of discretion would be to decline final relief on discretionary grounds. - PROCEDURE – Stay of proceedings – where related proceedings involving some common issues between different parties pending in different court – whether one proceeding should be stayed. (CTH) Human Rights (Sexual Conduct) Act 1994, s 4(1) (NSW) Contaminated Land Management Act 1997 LEGISLATION CITED : (NSW) Equity Act 1901, s 10 (NSW) Supreme Court Act 1970, s 75 (TAS) Criminal Code Act 1924 Abebe v Commonwealth of Australia (1999) 162 ALR 1 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Barnard v National Dock Labour Board [1953] 2 QB 18 Blackburn v Attorney-General [1971] 2 All ER 1380 Buck v Attorney General [1965] Ch 745 Coles v Wood [1981] 1 NSWLR 723 Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 Croome v State of Tasmania (1997) 191 CLR 119 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dinari Ltd v Hancock Prospecting Pty Ltd [1972] 2 NSWLR 385 Fencott v Muller (1983) 152 CLR 570 Gardner v Dairy Industry Authority of New South Wales (1978) 18 ALR 55 Gardner v Dairy Industry Authority of NSW (1977) 18 ALR 55 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125], Hanson v Radcliffe Urban District Council [1922] 2 Ch 490 Howard v Pickford Tool Co Ltd [1951] 1 KB 417 Ibeneweka v Egbuna [1964] 1 WLR 219 In re Judiciary & Navigation Acts (1921) 29 CLR 257 In the Estate of Leahy [1975] 1 NSWLR 246 CASES CITED : Integrated Lighting and Ceilings Pty Ltd v Phillips Electrical Pty Ltd (1969) 90 WN (Pt 1) (NSW) 693 Ku-ring-gai Municipal Council v Suburban Centres Pty Ltd [1971] 2 NSWLR 335 Lohar Corp Pty Ltd v Dibu Pty Ltd (NSWCA, 11 May 1976, unreported) Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616 Mellifont v Attorney-General (Qld) (1991) 173 CLR 289 Mellstrom v Garner [1970] 2 All ER 9 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 Re Clay, Clay v Booth [1919] 1 Ch 66 Re McBain; ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd [1986] 5 NSWLR 362 Rosesin v Attorney-General (1918) 34 TLR 417 Sanderson Pty Ltd v Urica Liberty Systems BV (1998) 44 NSWLR 73 Smart v Allen (1970) 91 WN(NSW) 241 Spellson v George (1992) 26 NSWLR 666 Tampion v Anderson [1973] VR 321 Thorne v Motor Trade Association [1937] AC 797 Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 Walton v Gardiner (1993) 177 CLR 378 Text: Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed, [19-115] PARTIES : Commonwealth of Australia (plaintiff) BIS Cleanaway Limited (defendant) FILE NUMBER(S) : SC 3471/06 COUNSEL : Mr TGR Parker SC w Ms KR Richardson (plaintiff) Mr TF Bathurst QC w Mr DT Miller SOLICITORS : Clayton Utz (plaintiff) Allens Arthur Robinson (defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST BRERETON J Wednesday, 26 September 2007 3471/06 Commonwealth of Australia v BIS Cleanaway Ltd JUDGMENT 1 HIS HONOUR: The Commonwealth of Australia is the proprietor of land at Lucas Heights near the Liverpool Military Area at Menai, which for present purposes is accepted to be "contaminated land" within (NSW) Contaminated Land Management Act 1997 ("the CLM Act"). On 21 May 1971 the Commonwealth granted to Industrial Waste Collection Pty Ltd a licence to deposit trade waste on the land, and IWC as licensee covenanted (inter alia) not to permit or suffer any material likely to create a public nuisance or cause deterioration to surrounding amenities, plants, trees or animals to escape from the site of operations (cl I(v)(d)), to comply with any direction given by the Department of Public Health affecting the land which that Department considers to be in the interests of public health, safety or convenience (cl I(v)(e)), and to indemnify and keep indemnified the Commonwealth from and against all actions, suits, claims and demands of whatsoever nature which may be brought against the Commonwealth and all costs, charges and expenses that the Commonwealth may incur in respect of any accident, loss of life, injury and/or damage to any person or property which may occur during the continuance of the license through any cause which may be consequent upon the exercise by the licensee of the licence (cl I(vi)). 2 The Commonwealth contends, and the defendant BIS Cleanaway Ltd disputes, that the licence was novated to BIS on or about 28 August 1973. On 26 February 2007, the Environment Protection Authority made a remediation order under CLM Act, s 23, the consequence of which is that BIS is obliged to carry out the works required by that notice in respect of the land, unless the notice is set aside or varied by the Land and Environment Court in proceedings which BIS has since instituted in that court. 3 In the present proceedings, which the Commonwealth instituted on 28 June 2006 – before the remediation order – the Commonwealth seeks only declarations that the licence has been novated to BIS, and that BIS has the obligations referred to in the three clauses of the licence mentioned above. BIS claims an order that the proceedings be stayed or summarily dismissed, on the following grounds: · That the declarations sought, if made, would produce no foreseeable consequences for either party, and that a claim for such declaratory relief is not a justiciable controversy or "matter" in the constitutional sense, with the consequence – as these are proceedings to which the Commonwealth is a party and therefore involve an exercise of Federal jurisdiction – that they have no jurisdictional basis. I reject this submission; · In any event, that the declaratory relief sought is so hypothetical or inutile that as a matter of discretion no judge acting reasonably could but refuse it on the ground of inutility or hypotheticality, and accordingly that the proceedings are doomed to fail and ought to be summarily dismissed. I accept this submission; · Alternatively, that it is vexatious for BIS to be faced with these proceedings as well as the Land and Environment Court proceedings, which may result in the present proceedings being inutile, so that they should at least be stayed pending determination of the Land and Environment Court proceedings. I would reject this submission. 4 The circumstances in which the court will summarily dispose of proceedings are not in doubt. Such a course is appropriate only where the defect in the plaintiff's claim is clearly established [General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125], and is inappropriate if there are serious questions of fact to be determined [Spellson v George (1992) 26 NSWLR 666]. An order will be made only if the claims are absolutely hopeless or there is no possibility of the facts pleaded giving rise to a good cause of action [Walton v Gardiner (1993) 177 CLR 378; Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 90; Tampion v Anderson [1973] VR 321, 325]. In short, the applicant for summary dismissal has to show that the case against it is obviously untenable. 5 One consequence of the stringent test for summary disposal is that it is rarely granted where it is asserted only that a plaintiff's claim will fail on discretionary grounds. This is because, although generally speaking a plaintiff's cause of action must be established at the time when proceedings are instituted, questions of the discretion to grant or withhold relief are judged according to the circumstances prevailing at the time of hearing; for the purposes of such an application, the plaintiff's case must be taken at its highest; and it may often be difficult to exclude the possibility that a judge may reasonably not decline relief. Mr Parker SC, for the Commonwealth, put that if there is any possibility that the facts at the time of the final hearing might support a favourable exercise of discretion, then it would be inappropriate to grant summary dismissal, but I think that states the position too stringently. It is always theoretically possible that facts may arise before the final hearing that make it appropriate to grant relief which would not have been appropriate when the proceedings were commenced. However, a court is entitled to use the factual situation at the date of the hearing of the application for summary dismissal as a proxy for those which will prevail at the time of final hearing, at least in the absence of reason to suppose that some change is impending. A party is not entitled to institute proceedings, doomed to fail if heard immediately, in the hope that some change of circumstances while they await trial might result in a different outcome. 6 I therefore do not accept that summary dismissal is not available in a case in which it is asserted that the plaintiff must fail for discretionary reasons. However, summary disposal will be appropriate in such a case only where no reasonable judge could fail to decline relief for discretionary reasons, or, alternatively put, where the only proper exercise of discretion would be to decline relief. The constitutional issue 7 One circumstance in which a fatal defect in a claim will be clearly established, so as to justify summary dismissal, is where the Court has no jurisdiction to hear and determine it. 8 It is not in dispute that, because the Commonwealth is a party, the proceeding involves Federal jurisdiction, and that such jurisdiction depends on the existence of a "matter" in the constitutional sense – that is, a justiciable controversy between the parties. BIS submits that there is no "matter", because the declaration sought, if made, would produce no foreseeable consequences for either party, and that a claim for such a declaration is not a justiciable controversy. Notice under (CTH) Judiciary Act, s 78B was given to the Attorneys General of the Commonwealth, each of the States and the Territories. None sought to intervene. 9 The power of the Court to grant purely declaratory relief is undoubted, and the constraints on that power are generally discretionary, not jurisdictional, as Lord Sterndale MR explained in Hanson v Radcliffe Urban District Council [1922] 2 Ch 490 (at 507): In my opinion … the power of the court to make a declaration, where it is a question of defining the rights of two parties, is almost unlimited; I might say only limited by its own discretion. 10 This view was endorsed in Barnard v National Dock Labour Board [1953] 2 QB 18. To similar effect, in Ibeneweka v Egbuna [1964] 1 WLR 219, Viscount Radcliffe said (at 224): Much has been said in various reported judgments about the nature of the power thus vested in the court, but none of these observations detracts from the two primary considerations, that the power to make declarations is conferred, surely not by accident, in wide and general terms, and that what is conferred is a discretion to be exercised according to the facts of each individual case. 11 However, while accepting that the court has an extensive power to grant declaratory relief, Mr Bathurst QC, for BIS, submits that, at least in the context of the exercise of Federal jurisdiction, the power is circumscribed by the boundaries of judicial power, for which proposition he cites the judgment of Mason CJ, Dawson, Toohey and Gaudron JJ in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (at 581-2): It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which it is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise. However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have 'a real interest' and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' or if 'the court's declaration will produce no foreseeable consequences for the parties'. 12 The formula "no foreseeable consequences", invoked on behalf of BIS, has its origin the judgment of Mason J in Gardner v Dairy Industry Authority of NSW (1977) 18 ALR 55, in which his Honour said that a declaration that would not lead to damages or other consequential relief but might at best in some undefined way initiate administrative or legislative action that might improve the position of the appellants and others in their position would not have been granted. While his Honour appears to have been contemplating refusal of declaratory relief on discretionary grounds, rather than any constitutional objection, in Ainsworth, in the passage already cited (at [5]), a majority of the High Court adopted the same terminology in describing the limits of judicial power. 13 In Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591, seven Justices all agreed in the result but gave six separately reasoned judgments. Gaudron J said (at 612 [48]): There is no matter within the constitutional meaning of that term unless there is a remedy available at the suit of the person instituting the proceedings in question. That follows from the essential features of 'matter' identified in In re Judiciary & Navigation Acts . It was said in that case 'there can be no matter ... unless there is some immediate right, duty or liability to be established by the determination of the court ... [And the legislature] cannot authorise [the] court to make a declaration of the law divorced from any attempt to administer that law.' … [52] There may be cases where a bare declaration that some legal requirement has been contravened will serve to redress some or all of the harm brought about by that contravention. Ainsworth v Criminal Justice Commission was such a case. But a declaration cannot be made if it 'will produce no foreseeable consequences for the parties'. That is not simply a matter of discretion. Rather, a declaration that produces no foreseeable consequences is so divorced from the administration of the law as not to involve a matter for the purposes of Ch III of the Constitution. And as it is not a matter for those purposes, it cannot engage the judicial power of the Commonwealth. … 14 It is of course well established that a "matter" in the constitutional sense is a justiciable controversy as to "some immediate right, duty or liability to be established by the determination of the court" [In re Judiciary & Navigation Acts (1921) 29 CLR 257, 265 (Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ); Fencott v Muller (1983) 152 CLR 570, 603 (Mason, Murphy, Brennan and Deane JJ); Mellifont v Attorney-General (Qld) (1991) 173 CLR 289, 316-7 (Brennan J); Abebe v Commonwealth of Australia (1999) 162 ALR 1, 34 (Gaudron J), 46 (Gummow and Hayne JJ), 58 (Kirby J); Truth About Motorways, 610 [43], 612 [48], 613 [52] (Gaudron J)]. 15 Together, the authorities to which reference has been made establish that a claim for a declaration alone does not constitute a justiciable controversy if the declaration will not establish some immediate right, duty or liability. However, that does not mean that for there to be a justiciable controversy there must be in issue an immediate right that has been infringed, or a duty that has been breached, or an immediate liability to pay damages or to suffer some other consequential remedy. Ainsworth illustrates this. The Commission had delivered a report highly critical of the appellants and made recommendations adverse to them. The High Court held that the appellants were entitled to a declaration that the Commission failed to observe the requirements of procedural fairness, even though no consequential relief was available, certiorari being unavailable because the Commission's report had of itself no legal effect and carried no legal consequences direct or indirect. Immediately after the passage already cited above, the majority judgment continued (at 22): The present case involves no mere hypothetical question. At all stages there has been a controversy as to the Commission's duty of fairness. A report has been made and delivered under s 2.18 of the Act. That report has already had practical consequences for the appellants' reputations. For all that is known, those consequences may extend well into the future. It is appropriate that a declaration be made in terms indicating that the appellants were denied natural justice. That may redress some of the harm done. 16 It necessarily follows that, insofar as a declaration cannot be granted if it will produce "no foreseeable consequences" for the parties, the relevant consequences are not limited to legal consequences, but extend to practical consequences. 17 In Croome v State of Tasmania (1997) 191 CLR 119, the plaintiffs brought proceedings in the High Court for declarations that provisions of the (TAS) Criminal Code Act 1924 which prohibited homosexual acts were inconsistent with (CTH) Human Rights (Sexual Conduct) Act 1994, s 4(1). The plaintiffs had not been prosecuted for any contravention of the relevant provisions, and there was no threatened prosecution, but alleged that they had engaged in conduct which rendered them liable to be prosecuted under those provisions. The High Court held that liability to be prosecuted, quite apart from liability to be convicted on particular facts, was sufficient foundation for a justiciable controversy. Brennan CJ, Dawson and Toohey JJ said (at 127-8): The plaintiffs plead that they have engaged in conduct which, if the impugned provisions of the Code were and are operative, renders them liable to prosecution, conviction and punishment. The fact that the Director of Public Prosecutions does not propose to prosecute does not remove that liability. Liability to prosecution under the impugned provisions of the Code will be established if the Court were to determine the action against the plaintiffs even if liability to conviction and punishment under those provisions cannot be determined by civil process. Controversy as to the operative effect of the impugned provisions of the Code will be settled and binding on the parties. The plaintiffs have a sufficient interest to support an action for a declaration of s 109 invalidity. 18 Gaudron, McHugh and Gummow JJ said (at 136): Their Honours in In re Judiciary & Navigation Acts are not to be taken as lending support to the notion that, where the law of a State imposes a duty upon the citizen attended by liability to prosecution and punishment under the criminal law, and the citizen asserts that, by operation of s 109 of the Constitution, the law of the State is invalid, there can be no immediate right, duty or liability to be established by determination of this Court, in an action for declaratory relief by the citizen against the State, unless the Executive Government of the State has, at least, invoked legal process against the particular citizen to enforce the criminal law. 19 In the present case, the Commonwealth does not allege any breach of the licence or any clause in it, nor claim specific performance nor any injunction to enforce it or any of its provisions. It seeks only a declaration that BIS is bound by the licence, and as a result by three of the covenants in it. Nonetheless, I do not accept that such declarations if granted do not establish some immediate duty or liability of BIS. To the contrary, the declarations claimed if granted would establish that BIS was bound to perform the covenants of the licence, and therefore had particular and identifiable duties or obligations. These would be immediate duties or liabilities, in the sense of obligations immediately and presently binding on BIS, even if there is no allegation that they have been breached. It could not be said that establishing that BIS had such obligations would involved no foreseeable consequences for the parties: to the contrary, it would establish that BIS had certain obligations, and the Commonwealth corresponding rights, under the three relevant covenants; moreover, those are immediate legal consequences as distinct from merely practical consequences and involve present legal relations between the parties. 20 In Re McBain; ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372, Gaudron and Gummow JJ said (at [62]): These statements suggest that the task of identification of the 'matter' said to be the subject of the present litigation is to be approached as a tripartite inquiry: first, the identification of the subject matter for determination in each of C22 and C6; secondly, the identification of the right, duty or liability to be established in each proceeding; thirdly, the identification of the controversy between the parties to C22 and C6 for the quelling of which the judicial power of the Commonwealth is invoked. Whilst each of these inquiries may be pursued separately, all are related aspects of the basal question, 'is there a 'matter' in the sense required by Ch III of the Constitution?' In our view, there is no such 'matter', and this is so whether the moving party here is seen either as the Attorney-General or the ecclesiastical authorities. 21 Mr Bathurst QC submitted that while the first two requirements suggested in McBain were satisfied, the third was not. It is to be borne in mind that their Honours emphasised that all three elements were related aspects of the basal question, whether there is a "matter". However, in my judgment, all three requirements are met: the subject matter for determination is whether the licence has been novated to BIS; the right and duty to be established is whether BIS is bound to perform, and the Commonwealth is entitled to have it perform, the obligations of the licensee under the licence; the controversy between the Commonwealth and BIS is whether or not BIS is presently bound by the licence, and the declarations sought would determine that controversy and establish immediate rights, duties and liabilities, in particular whether BIS is bound by the licensee's covenants. Just as in Croome liability to be prosecuted, quite apart from liability to be convicted on particular facts, was sufficient foundation for jurisdiction, so in the present case whether a party is bound by a contract, quite apart from any liability for damages for breach of contract, involves ascertainment of immediate rights, duties and liabilities, such that there is a justiciable controversy and, therefore, a "matter". 22 Accordingly, I reject the submission that there is no justiciable controversy or "matter". The constitutional objection fails. Discretionary refusal of declaratory relief 23 The appropriate test in the present circumstances is whether no court acting reasonably would do other than decline to make a declaration because of inutility and/or hypotheticality, so that the only proper exercise of discretion would be to decline to grant the declaratory relief sought. 24 (NSW) Supreme Court Act 1970, s 75, which substantially re-enacts (NSW) Equity Act 1901, s 10, provides as follows: 75 No proceedings shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby and the Court may make binding declarations of right whether any consequential ruling is or could be claimed or not. 25 Parliament plainly intended that the Court be able to make declarations without consequential relief, and any approach to the exercise of the discretion to decline declaratory relief that began from the proposition that it was inappropriate to make declaratory orders without consequential relief would be inconsistent with s 75, since Parliament has plainly intended that the Court be empowered to make declarations of right without granting consequential relief. In Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297, Barwick CJ emphasised the extent and utility of that power (at 305): The jurisdiction to make a declaratory order without consequential relief is a large and most useful jurisdiction. In my opinion the present was an apt case for its exercise. The respondent undoubtedly desired and intended to do as he asked the court to declare he lawfully could do. The matter, in my opinion, was in no sense hypothetical, but in any case not hypothetical in a sense relevant to the exercise of this jurisdiction. Of its nature, the jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law. Indeed, it is that capacity which contributes enormously to the utility of the jurisdiction. Here the respondent was in business carrying out in relation both to ships and airports activities of the general kind proposed in this case. No doubt, duty free goods not desired to be personally carried by a departing passenger purchaser, or too large to be admitted to the cabin of an aircraft were being delivered by the respondent to the airport prior and at the date of the commencement of this suit. Further, there had been actual opposition by the Customs Department to the course which the respondent desired and intended to take. In my opinion the Supreme Court was right to entertain the respondent's suit in relation to both the declarations sought. 26 Nonetheless there are established categories of case in which the Court will generally decline, as a matter of discretion, to exercise its undoubted power to make a declaration. The importance of the established categories is that they facilitate a consistent and principled approach to the exercise of the discretion. 27 One such category is where the issue involved is "purely theoretical" [Re Clay, Clay v Booth [1919] 1 Ch 66 (declaration that plaintiff not liable under guarantee declined where no claim under guarantee had been made against plaintiff); Mellstrom v Garner [1970] 2 All ER 9 (declaration as to construction of covenant against canvassing customers declined where plaintiff had no intention of doing so); Sanderson Pty Ltd v Urica Liberty Systems BV (1998) 44 NSWLR 73 (no declaration should be made as to right to terminate an agreement in the absence of any election to terminate); Rosesin v Attorney-General (1918) 34 TLR 417 (declaration that plaintiff not liable to be called-up for military service not appropriate where he had not yet been called-up); Howard v Pickford Tool Co Ltd [1951] 1 KB 417 (declaration that defendants had repudiated contract not appropriate where plaintiff had plainly elected to affirm contract); and see generally Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed, [19-115]]. However, even though the issue is theoretical, the court has jurisdiction and may, exceptionally, exercise it [Thorne v Motor Trade Association [1937] AC 797 (declaration granted as to validity of rule of association notwithstanding absence of any dispute); Ku-ring-gai Municipal Council v Suburban Centres Pty Ltd [1971] 2 NSWLR 335 (declaration granted that correspondence between the parties did not constitute a contract, but the defendants were apparently asserting that there was a contract, so that the question was not merely hypothetical (at 341)); Dinari Ltd v Hancock Prospecting Pty Ltd [1972] 2 NSWLR 385 (declaration granted that dispositions not invalidated by statutory prohibition on accumulation of income); see generally Meagher, Gummow and Lehane, [19-120]]. Each of these cases had the feature that the declaration would at least quell a future potential dispute. 28 Another, related, category is where no good purpose would be served by granting declaratory relief [Buck v Attorney-General [1965] Ch 745; Blackburn v Attorney-General [1971] 2 All ER 1380; Gardner v Dairy Industry Authority (declaration if otherwise appropriate would have been declined where it had no foreseeable consequences, not leading to damages or other consequential relief but at best somehow prompting possible administrative or legislative action that that might improve the position of the appellants and others in their position); Rivers v Bondi Junction-Waverley RSL Sub-Branch Ltd [1986] 5 NSWLR 362 (declaration that election of directors involved irregularities refused where they did not affect the result)]. In this respect, it is generally inappropriate to grant declaratory relief if it will be inconclusive, in the sense that the proposed declaration would leave unresolved issues, with the parties still in dispute as to the consequences so that further litigation would be required to resolve the controversy [Smart v Allen (1970) 91 WN(NSW) 241; Integrated Lighting & Ceilings Pty Ltd v Phillips Electrical Pty Ltd (1969) 90 WN (Pt 1) (NSW) 693, 702]. 29 That a suit for a declaration should not be in substance the determination of a question anterior to a further suit for substantive relief is authoritatively illustrated by Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286. At first instance, Holland J had refused to declare that the vendor had not validly terminated a contract for sale of land. The High Court allowed an appeal, deciding that the contract was on foot, but concluding that – as the parties were not in agreement as to the consequences and in particular whether specific performance was available – it was inappropriate to grant the declaration sought. Barwick CJ and Jacobs J observed that Supreme Court Act, s 75, had to be considered in conjunction with s 63, which provides that the court so far as possible must completely and finally determine in the one proceeding all matters in controversy between the parties. Their Honours said (at 307): When the power under s 75 of the Supreme Court Act 1970 is exercised the duty under s 63 must be borne in mind. This is particularly important in relation to subject matters in which the appropriate curial relief depends upon equitable doctrine and rules, especially the rules relating to the specific performance of contracts. These rules have not been substantially changed by the introduction of the judicature system of procedure and pleading. The court can still grant specific performance of a contract in any case where it could previously do so and cannot grant specific performance in any case where it could not previously do so. Unless the parties are agreed on the consequences which flow from a declaration that such a contract has or has not been validly rescinded it is generally undesirable that a court should so declare without any orders for consequential relief. If a party to such a contract claims that a contract has not been validly rescinded such a judicial declaration is proper if that party continues ready and willing at the conclusion of the litigation to perform the contract. A consequence of the declaration should be that the party submit to the performance of the contract on his part and to an order for specific performance of the contract if that is appropriate. If such an order is not or cannot be made, nor an inquiry into damages ordered, then a declaration that on a certain day the contract had not been validly rescinded serves no purpose in the litigation. Before such a declaration is made the party seeking the declaration may already have elected to treat the other party's purported rescission as a repudiation and may have himself rescinded the contract. All that has then been achieved is an issue estoppel if and when the claim for damages for breach of contract is pursued in other proceedings. This was not the intention of the legislation as appears from s 63. Conversely, if a declaration be made that a contract has been validly rescinded but no consequential orders for damages or for return or retention of the deposit are made in those proceedings the purpose of s 63 is not achieved. 30 That approach has been applied in the Court of Appeal [Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170; In the Estate of Leahy [1975] 1 NSWLR 246; Lohar Corp Pty Ltd v Dibu Pty Ltd (NSWCA, 11 May 1976, unreported) (albeit with some qualification by Street CJ, it was not doubted by the other members of the Court); and Coles v Wood [1981] 1 NSWLR 723]. In Trans Realties, Glass JA, having referred to the utility of the practice that had developed of granting declarations that covered only some of the disputed ground, said (at 176): Be that as it may, the High Court has emphatically laid down that the practice of incomplete adjudication requires reconsideration: Neeta (Epping) Pty Ltd v Phillips. The declaratory jurisdiction now derived from s. 75 of the Supreme Court Act , 1970 is subject to the admonition in s. 63 that, in the interest of avoiding multiplicity of proceedings, all matters in controversy should be finally determined. Where equitable relief is concerned, in particular, the public interest in finality will generally override the private interest in selective litigation. 31 In Coles v Wood, Hutley JA, with whom Samuels JA agreed, said (with reference to Supreme Court Act, s 63, Neeta v Phillips, Trans Realties v Grbac, and Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616, and pointing out that in Lohar Corp v Dibu the majority had not said otherwise) emphasised the importance of adherence to the philosophy of s 63, and added (at 728-9): Where substantive remedies can be sought, the Supreme Court should insist on their being sought in addition to declarations. Where money is owing, a mere declaration is of less utility than a judgment. For example, it does not carry interest, as does a judgment, and will have to be followed by further proceedings to enable the remedies available to a judgment [creditor] to be obtained. … The Supreme Court, in my opinion, should refuse to entertain proceedings for declarations in a case of this kind, unless the appropriate substantive remedies are sought in the proceedings. 32 In the present case, the Commonwealth does not allege that BIS has breached any of its obligations under the licence if it has been novated, nor assert a present right to be indemnified by BIS, nor seek any substantive relief in respect of the licence. Although a remediation order has issued, it has issued against BIS, not against the Commonwealth. If BIS fails in its Land and Environment Court proceedings, it will be obliged to comply with the remediation order, regardless of whether or not it has any contractual obligation under the licence. In that event, the declaration would appear of no utility. If, however, BIS succeeds in the Land and Environment Court, the remediation order may be set aside or varied. That does not meant that the Commonwealth will be liable; before the Commonwealth would be bound to perform works, a further remediation order would have to be made against the Commonwealth. If the Commonwealth were ultimately required to carry out remediation works, it could then seek to invoke the indemnity against BIS, and its entitlement to any such indemnity (or to compel BIS to perform works, or to claim damages for breach of contract, under the licence agreement) would then fall to be determined in the context of a particular factual setting. The declaration would not establish liability on the particular facts under the indemnity, but only that BIS was bound by the indemnity: if the Commonwealth obtained the declaration sought, and later brought proceedings for indemnity, it would have to show that its liability was attributable to a cause which was consequent upon the exercise by the licensee of the licence. That will not be resolved by the declarations. 33 The Commonwealth submits that, as the site is contaminated, questions may arise in the future as to the Commonwealth's ability to enforce covenants in the licence against BIS, and that liability under those covenants is not co-extensive with liability under the CLM Act. Each of those propositions may be accepted. But the circumstance that questions may arise in the future as to the ability of the Commonwealth to enforce the covenants in the licence is illustrative that those questions have not yet and may never arise, and if they do will require further litigation. The Commonwealth has foreshadowed that if the declarations sought were granted, it might later argue that BIS was contractually bound to comply with the Remediation Order (by operation of cl I(v)(e) of the licence), even if the Order was set aside or varied by the Land and Environment Court. In that event, the Commonwealth would have to establish that the Remediation Order was "a direction given by the Department of Public Health affecting the land which that Department considers to be in the interests of public health, safety or convenience". That will not be resolved by the declarations. 34 The Commonwealth submits that the present proceedings afford an opportunity to decide a discrete question in a cost effective way. This amounts, in effect, to an application to the court to decide a preliminary question, in the absence of any proceeding to which it is preliminary. Accordingly, granting the declarations sought would not completely and finally determine any controversy that may arise between the parties. The present litigation is essentially an anterior step to further litigation, in which further issues will necessarily arise. If the declarations were made, then should the Commonwealth subsequently seek to obtain substantive relief, there would remain a range of factual and legal issues that would not have been addressed during the proceedings for declaratory relief, in respect of which liability would still have to be proved. This would probably necessitate revisiting at least some of the evidence that would be adduced in the proceedings for a declaration. The declarations if granted would therefore not finally resolve the issues between the parties. In the absence of any claim for substantive relief, it is not apparent that there is any utility in deciding the "preliminary question" raised by the claim for declaratory relief. 35 The case is practically indistinguishable from Neeta v Phillips. Nothing appears which makes it such an exceptional case as to warrant the exercise of the discretionary jurisdiction to grant a declaration, despite Supreme Court Act, s 63: granting the declarations would not resolve a potential future dispute, because they would leave subsequent issues unresolved. In my view Neeta v Phillips and Coles v Wood dictate that in this context the only proper exercise of discretion would be to refuse declaratory relief. Duplication of proceedings 36 BIS's third submission is that it ought not be required to defend these proceedings while the Land and Environment Court proceedings are on foot, and that at the least the present proceedings should be stayed. Although Mr Parker SC submitted that the present application had never been put as one for a stay as distinct from summary disposal, the motion claims a stay, and the Commonwealth's submissions of 4 April 2007 recognise as much [par 1], even describing it as the primary relief sought [par 7]. 37 The proceedings in the Land and Environment Court were instituted by BIS (albeit in response to notice served on it by the EPA), not by the Commonwealth. The Commonwealth is not a party (and is not a necessary party) to the Land and Environment Court proceedings. Although novation is raised as an issue in the Land and Environment Court proceedings, in that BIS alleges that there has been no novation, the ultimate relevant question in those proceedings is whether BIS is an "appropriate person" for the purposes of the CLM Act, which (not being the owner or notional owner of the land) depends on whether it is "responsible" for the contamination. Although whether it is bound by the licence may inform that decision, the question whether the licence has been novated will not necessarily require determination in the Land and Environment Court proceedings. 38 If the Commonwealth were entitled, as a matter of contractual obligation under the licence, to compel BIS to indemnify it, or to comply with the remediation order, I do not see why the Commonwealth's proceeding would be liable to be stayed, just because BIS has challenged the order in the Land and Environment Court. There is no abuse of process involved in the Commonwealth seeking to establish its rights against BIS while BIS, in a different court, challenges the remediation order. 39 Had I not concluded that the only proper exercise of discretion would be to decline declaratory relief in the circumstances, I would not have stayed the proceedings on the basis of the pendency of the Land and Environment Court proceedings. Conclusion 40 There is a justiciable controversy between the Commonwealth and BIS as to whether or not BIS is presently bound by the covenants of the Licence. The declarations sought would determine immediate rights, duties and liabilities, in particular whether BIS is bound by the licence covenants. Accordingly, I reject the submission that there is no justiciable controversy or "matter". The constitutional objection fails. 41 If a proposed declaration would leave unresolved issues between the parties - as if it were a preliminary step that would be inconclusive, the parties being in dispute as to the consequences - it is inappropriate to grant the declaration. Granting the declarations sought would not completely and finally determine the controversy between the parties, but would serve as determination of a preliminary question anterior to further dispute. In the absence of any claim for substantive relief, this case is practically indistinguishable from Neeta v Phillips. Nothing appears which makes it such an exceptional case as to warrant the exercise of the discretionary jurisdiction to grant a declaration that would not be conclusive of the controversy. Neeta v Phillips dictates that in this context the only proper exercise of discretion would be to refuse declaratory relief. 42 Had I not concluded that the only proper exercise of discretion would be to decline declaratory relief in the circumstances, I would not have stayed the proceedings on the basis of the pendency of the Land and Environment Court proceedings. 43 My orders are: (1) Order (pursuant to UCPR, r 13.4) that the proceedings be dismissed. (2) Order that the plaintiff pay the defendant's costs of the proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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