Supreme Court New South Wales Medium Neutral Citation: Coshott v Commonwealth Bank of Australia [2020] NSWSC 503 Hearing dates: On the papers – written submissions: 27 March, 14 and 23 April 2020 Date of orders: 06 May 2020 Decision date: 06 May 2020 Jurisdiction: Equity Before: Kunc J Decision: Proceedings summarily dismissed Catchwords: COSTS — Party/Party — Bases of quantification —Whether party represented by its own in-house lawyers entitled to recover costs after abolition of Chorley exception EQUITY — Equitable remedies — Declaration — Whether issue hypothetical Legislation Cited: Bankruptcy Act 1966 (Cth) Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules Cases Cited: Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 93 ALJR 1007 Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333 Coshott v Burke [2012] FCA 517 Coshott v Prentice (No 3) [2019] FCA 1497 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 London Scottish Benefit Society v Chorley (1884) 13 QBD 872 Texts Cited: P Herzfeld and T Prince, "Interpretation", 2nd edn, Lawbook Co, 2020 Category: Principal judgment Parties: Ljiljana Coshott (First Plaintiff) Robert Gilbert Coshott (Second Plaintiff) Commonwealth Bank of Australia ACN 123 123124 (Defendant) Representation: Counsel: S Prince SC (Plaintiffs) M E Hall (Defendant) Solicitors: Murphy Lyons (Plaintiffs) Dentons Australia (Defendant) File Number(s): 2019/314716 Publication restriction: No Judgment Summary 1. For many years, solicitors who successfully acted for themselves in litigation were able to obtain an order for their costs under what was known as the "Chorley exception" (the "Exception"). This was based upon the recognition in Australia of the decision of the Court of Appeal of England and Wales in London Scottish Benefit Society v Chorley (1884) 13 QBD 872. 2. With superficial similarity to the Exception, for many years governments and corporations have been able to obtain costs orders in respect of legal work undertaken in litigation on their behalf by "in house counsel". These are lawyers employed by them, often in legal departments which contain just as many solicitors as medium sized independent law firms. 3. The Exception was brought to an end in this country by the recent decision of the High Court in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 93 ALJR 1007 ("Bell"). In declining to extend the Exception to barristers, a majority of the Court held that the Exception was not part of the common law of Australia. 4. The first plaintiff (Mrs Coshott) and second plaintiff (Mr Coshott) have been in dispute with the defendant (the "Bank") for many years. The plaintiffs apparently contend that the High Court's abolition of the Exception means that a corporation such as the Bank is not entitled to a costs order for work done for it in litigation by its own employed lawyers ("Employed Solicitor Costs"). In an attempt to litigate this contention they commenced these proceedings by a summons which seeks only this substantive relief (the "Declaration"): "1. Declaration that the defendant is not entitled to indemnity under party and party costs orders for work performed by its in-house lawyers and staff." 1. The Bank moved to dismiss or strike out the summons for three reasons: 1. The summons was hopeless and bound to fail because, directly contrary to the terms of the Declaration, Bell was authority for the proposition that the entitlement to Employed Solicitor Costs existed independently, and continued despite the abolition of, the Exception; 2. The summons was hopeless and bound to fail because no such declaration would be made because it raised a hypothetical question with no actual consequences for the plaintiffs; 3. Solely in relation to Mr Coshott, the summons was an abuse of process by reason of issue or Anshun estoppel arising from a decision of Justice Rares in the Federal Court of Australia. 1. The Court accepts the first and second reasons. It is therefore unnecessary to consider the third reason. 2. As to the first reason, it is part of the ratio decidendi of Bell that the abolition of the Exception does not affect the entitlement to Employed Solicitor Costs. As to the second reason, the plaintiffs have failed to demonstrate any interest in the question posed by the summons beyond what might be described as an hypothetical or academic interest. There is no extant or even foreseeable dispute which the making of the Declaration will quell. 3. There was no difference between the parties about the legal principles which informed the Court's discretion to dismiss or strike out the summons. Because the Court accepts the Bank's first and second reasons, the proceedings will be dismissed generally. The Court will hear the parties on the question of costs. 4. The Bank's motion came before me in the Applications List. The parties agreed that, with the benefit of full written submissions, the Court could deal with the matter on the papers. The Court gratefully acknowledges that the parties' submissions were appropriately concise and to the point. The Bank's submissions in chief and in reply on its motion were prepared by Mrs M E Hall of Counsel. The plaintiffs' submissions were prepared by Mr S Prince of Senior Counsel. The facts 1. The evidence for the plaintiffs was an affidavit by Mr Coshott which contained only one substantive paragraph. As will become apparent, the absence of any other evidence is significant for determining the Bank's second submission. Mr Coshott's evidence was: "In District Court of New South Wales proceedings no. 1643/96 and New South Wales Court of Appeal proceedings no. 40863/03 against Ljiljana Coshott and myself the defendant was represented by its employed solicitors and staff and has claimed party and party costs for the work performed by its employed solicitors and staff." 1. The Bank filed an affidavit from which is derived what follows. 2. On 7 November 2008, Mr Coshott was made bankrupt. 3. There has been a great deal of litigation in Commonwealth jurisdictions between the plaintiffs, Mr Coshott's trustees in bankruptcy and relatives of Mr Coshott. This has been described by Lee J in the Federal Court as "an orgy of litigation": Coshott v Prentice (No 3) [2019] FCA 1497 at [2]. That litigation had itself been preceded by various proceedings between the plaintiffs and the Bank. 4. On 11 August 2011, the Bank lodged a proof of debt with Mr Coshott's trustee in bankruptcy (the "Trustee") seeking to prove for legal costs of $253,072.10. 5. On 27 September 2011, the Bank lodged a second proof of debt with the Trustee, seeking to prove an underlying judgment debt based on a MasterCard debt and interest in a total sum of $137,221.31 together with the costs incurred on that matter. 6. On 2 November 2011, the Trustee determined to admit the two proofs of debt in the sums of $201,529.19 and $115,028.65, totalling $316,557.84, and to reject the balance of the amounts CBA claimed (the "Partially Admitted Debts"). 7. On 23 November 2011, Mr Coshott filed an application seeking to review the Trustee's decision partially to admit CBA's proofs of debt. 8. On 27 April 2012, Rares J dismissed Mr Coshott's application: Coshott v Burke [2012] FCA 517 (the "Review Dismissal"). Mr Coshott did not appeal against the decision. 9. On 18 August 2015, Mr Coshott was discharged from bankruptcy by operation of law. 10. On 31 August 2017, the Bank's solicitors wrote to the plaintiffs' then solicitors: "Our client undertakes to refrain from enforcing the costs orders it has obtained against Ljiljana Coshott in District Court of New South Wales proceedings 1643 of 1996 and in New South Wales Court of Appeal proceedings 40863 of 2003." 1. On 4 September 2019, the High Court delivered its decision in Bell. 2. On 9 October 2019, the plaintiffs filed their summons in these proceedings seeking the relief set out in paragraph [4] above. 3. On 11 November 2019, the Bank's solicitors sent a letter to the plaintiffs' current solicitor which, among other things, confirmed the undertaking referred to in paragraph [20] above. I shall refer to these together as the "Bank's Undertaking". 4. By notice of motion filed on 15 November 2019 the Bank sought these orders: "1. An order pursuant to Part 13 rule 13.4 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the proceedings be dismissed against the Defendant on the basis that the First Plaintiff's and Second Plaintiffs (Plaintiffs) Summons filed 9 October 2019: (a) fails to disclose a reasonable cause of action against the Defendant; (b) alternatively, that the proceedings are frivolous or vexatious; (c) alternatively, that the proceedings are an abuse of process of the Court. 2. Alternatively, an order pursuant to Part 14 rule 14.28 UCPR that each paragraph of the Plaintiffs' Summons is struck out as against the Defendant. 3. The Plaintiffs pay: (a) the costs of the motion; and (b) the Defendant's costs in the proceedings; and 4. Such further or other order the Court sees fit to make." 1. Because UCPR Pt 14 r 14.28 is confined to "pleadings", which are expressly defined under the Uniform Civil Procedure Rules to exclude a summons, the Court has considered the Bank's motion solely by reference to UCPR Part 13 r 13.4: 13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). The effect of Bell – the parties' submissions 1. The Bank's submissions on this point were straightforward. First, the preservation of the entitlement to Employed Solicitor Costs was part of the ratio decidendi. Alternatively, if it was not part of the ratio, then those parts of the judgment constituted "seriously considered dicta" by a majority of the High Court and was therefore binding on this Court: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [134] and [158]. 2. For their part, the plaintiffs first took issue with the proposition that what the High Court had to say about Employed Solicitor Costs was part of the ratio of that case. The decision, they submitted, did not concern a corporate party's entitlement to Employed Solicitor Costs. 3. The plaintiffs' second, and more substantial argument, was a subtle one. That argument began with the proposition (about which there was no evidence but which was unchallenged by the Bank in its reply submissions) that there had never been an assessment of the costs claimed by the Bank which formed part of the Partially Admitted Debts. However, the plaintiffs submitted that the Bank "insists that it is entitled to orders based on a party and party assessment as though it were represented by external solicitors charging commercial rates which would necessarily include a profit component for that firm and without regard for an "overhead" approach to the calculation of its true entitlement" (plaintiffs' submissions, paragraph 12). The importance of this observation, according to the plaintiffs, was that it was their case that Bell has changed the way in which Employed Solicitor Costs should be calculated. They submitted that "at the very least", the primary focus must be on the "general principle" expressed at [33] by the plurality that: "The Courts have long regarded the statutory power to make an order for costs as confined by the concern to provide the successful party with a measure of indemnity against the expense of professional legal costs actually incurred in the litigation." 1. The plaintiffs' submission was that Bell left open the application of the indemnity principle to Employed Solicitor Costs. They drew attention to the emphasis of the plurality in expressing the general principle as being referrable to the "legal costs actually incurred". They also relied on the identification by Gageler J of the operation of the indemnity principle on Employed Solicitor Costs as costs "incurred in the form of an overhead" (at [68]). The effect of Bell - analysis of the decision 1. The Bank's application necessitates an examination of the reasoning in Bell. It is convenient to begin with the judgment of the plurality (Kiefel CJ, Bell, Keane and Gaudron JJ). 2. Their Honours immediately and squarely framed the issues on the appeal as not being confined to whether the Exception extended to barristers who represented themselves: "2. One issue raised by this appeal is whether the Chorley exception operates to the benefit of barristers who represent themselves. Another, more fundamental, issue is whether the Chorley exception should be recognised as part of the common law of Australia." 1. After referring to the statutory power to order costs, their Honours turned to an analysis of the Exception by reference to the principal authorities, emphasising (at [32]) that the Exception had been recognised by the High Court on earlier occasions as being "anomalous" or "dubious". Their Honours concluded their analysis of the authorities: "39. For these reasons, in the absence of a compelling reason to the contrary, this Court should now accept the "logical answer" and hold that the Chorley exception is not part of the common law of Australia, as foreshadowed by the majority in Cachia." 1. Then, as an essential part of their dispositive reasoning, their Honours turned to consider the several examples of a compelling reason to the contrary advanced by the respondent. It is in this context that the plurality expressly considered and determined the effect of abolition of the Exception on the entitlement to Employed Solicitor Costs under the heading "Unacceptable inconvenience" (emphases added; citations omitted): "46. The respondent argued that serious inconvenience would be occasioned in relation to the use of in-house solicitors by governments and corporations, including incorporated legal practices, if the Chorley exception were not recognised by this Court as part of the common law. It was argued that governments and other employers, and incorporated legal practices operating through a sole director, would be prevented from recovering costs for professional legal services rendered by employed solicitors. 47. This submission fails to appreciate that in relation to the use of in-house solicitors, such arrangements have been treated as being outside the general rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer, as is confirmed by the inclusion of "remuneration" in the definition of "costs" in the Civil Procedure Act. Where a government or corporate litigant has been represented by an employed solicitor, the courts have proceeded on the footing that the actual cost to the government or corporation of the legal services provided by its employed solicitor would not exceed, in any substantial amount, the sum recoverable by it for professional legal costs. In Commonwealth Bank of Australia v Hattersley, Davies A-J explained that: "[W]here an employed solicitor is involved, the traditional approach has been to award costs on a basis comparable to the costs which would have been incurred and allowed on taxation had an independent solicitor been engaged. The assumption has been made that, in an ordinary case, the indemnity principle will not be infringed by taking this approach." … 50. A decision by this Court that the Chorley exception is not part of the common law of Australia would not disturb the well-established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity." 1. In his reasons (at [63]), Justice Gageler agreed with the reasons given by the plurality for the abandonment of the Exception. However, critically for present purposes, his Honour went on expressly to consider the effect of abandoning the Exception on the entitlement to Employed Solicitor Costs because, as his Honour explained at [65], the Supreme Court of New Zealand had recently refused to abandon the Exception because in that court's view it would have been fatal to the entitlement to Employed Solicitor Costs. In concluding that in Australia there was no basis to find that abolishing the Exception would eliminate the entitlement to Employed Solicitor Costs, his Honour expressly noted that the award of Employed Solicitor Costs predated the judicial creation of the Exception and had a different basis to it (citations omitted): "67. … The legislative history of the Civil Procedure Act contains nothing to suggest legislative endorsement of the Chorley exception. As to the statutory setting elsewhere in Australia, it is sufficient to record that, in an argument on behalf of the respondent legal practitioner which left no stone unturned or unflung in defence of the Chorley exception, no suggestion was made that the statutory costs regime presently applicable in any other Australian jurisdiction has been framed in a manner which relies on the continuing existence of the Chorley exception. Unlike the position in New Zealand, there is in Australia no legislative impediment to its wholesale judicial abolition. 68. Recovery of costs by a party using an employed solicitor predated introduction of the Chorley exception. The better view, explained in a number of cases to which the Supreme Court of New Zealand appears not to have been referred, is that recovery of costs by a party using an employed solicitor is an application of the general principle rather than an exception to it. The general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation, albeit that those professional legal costs are incurred in the form of an overhead and are therefore not reflected in a severable liability." 1. Justice Nettle was the only judge who declined to go so far as the rest of the Court as to abolish the Exception. His Honour agreed in the outcome on the more limited basis that the Exception should not be extended to barristers. One of the reasons his Honour took the more limited approach was because, in his view (at [75]), abolition of the Exception would, as a matter of logic, mean the entitlement to Employed Solicitor Costs would cease to exist. 2. Justice Edelman gave his own reasons for agreeing that the Exception should be no part of the common law of Australia. His Honour did not expressly refer to Employed Solicitor Costs or to what might be the effect of the abolition of the Exception on the entitlement to such costs. However, in my respectful view, his Honour may be taken to have dealt with it inferentially: "86. None of these concerns prevent the alteration of the costs rule recognised in Chorley. No party pointed to any legal doctrine whose development had been affected by the Chorley rule. Nor was it suggested that anyone had arranged their affairs on the basis of the rule. …" The effect of Bell – consideration 1. Having regard to the foregoing analysis of Bell, the Court accepts the Bank's submissions that the declaration sought by the plaintiffs would never be made and the summons is bound to fail for three reasons: 1. It is part of the ratio decidendi of Bell that the abolition of the Exception leaves the entitlement to Employed Solicitor Costs as part of the law of Australia; 2. If the preceding conclusion is wrong, then this Court is nevertheless bound by those parts of the decision in Bell which discuss the continued entitlement to Employed Solicitor Costs as seriously considered dicta of a majority of the High Court; and 3. Assuming in favour of the plaintiffs that the issue that they actually wish to address is how Employed Solicitor Costs are to be assessed, then the Declaration does not invite an answer to that question. 1. I will deal with each of these reasons in turn. 2. In the chapter entitled "Ratio Decidendi" in P Herzfeld and T Prince, "Interpretation", 2nd edn, Lawbook Co, 2020, the authors write (at [34.20]) (citations omitted): "The prevailing definition is that given by Cross and Harris: "The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step by a judge in reaching his conclusion having regard to the line of reason adopted by him, or a necessary part of his direction to the jury." That definition has been approved and applied by judges in Australia and England. It focuses upon the reasons for decision." 1. It is apparent from the analysis of Bell set out above, that in reaching their conclusion that the Exception should not be part of the common law of Australia, five judges of the High Court (the plurality and Gageler J) expressly considered and approved as a necessary step in reaching that conclusion the proposition that abolition of the Exception would have no effect upon the entitlement to Employed Solicitor Costs. This might also be put as the proposition that the abolition of the Exception did not mean or require that the entitlement to Employed Solicitor Costs was also abolished. 2. However it might be expressed, having regard to the definition of ratio decidendi set out in the paragraph [39] above, it is clear that the continuation of the existence of the entitlement to Employed Solicitor Costs is part of the ratio decidendi of Bell and binding on all courts in Australia. The Declaration is therefore contrary to the common law of Australia and would never be made. 3. It follows, and insofar as it may be necessary the Court finds, that the law in this State remains as set out in the decision of Davies A-J (as it happens, concerning the Bank) in Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333. It is sufficient to quote the headnote that "Corporate employed solicitors are entitled to have their costs assessed on the same basis as that of independent solicitors exercising comparable skills in the performance of comparable work". 4. Second, if the conclusion expressed in the preceding two paragraphs is wrong, I alternatively determine that this Court is bound by the conclusion of five of the seven judges of the High Court that Employed Solicitor Costs continue to be recoverable despite the abolition of the Exception as "seriously considered dicta" by a majority of that Court and therefore binding on this Court: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [134] and [158]. 5. I should add that either of the conclusions I have just expressed means that this is not an example of a case where the claim should be permitted to continue because while a single judge may be bound to rule against it, it would be open to a higher court to find otherwise. On the view that I have taken of Bell, the Court of Appeal is also bound and, given the detailed consideration by the High Court, it is fanciful to think that Court would depart from its conclusions on Employed Solicitor Costs were special leave to be granted for an appeal from the Court of Appeal. 6. Finally, if I correctly understand the plaintiffs' argument set out in paragraphs [28] and [29] above to be that the issue which the plaintiffs in fact wish to agitate is how, after Bell, Employed Solicitor Costs are to be assessed or calculated, then I do not see how proceedings for the Declaration will give rise to a determination of that issue. There are at least two reasons for this. 7. First, argument about how Employed Solicitor Costs are to be assessed necessarily assumes an entitlement to such costs. That assumption is contrary to the terms of the Declaration. 8. Second, the plaintiffs have not demonstrated, and I cannot see how it could be so in any event, how these proceedings could be the vehicle for determining - directly or incidentally - how such costs are to be assessed or calculated. As the plaintiffs' submissions accept, there has been no assessment of those costs. Nor have they demonstrated how, after all this time, any such assessment could occur. There is no evidence that the Bank or anyone else is about to precipitate anything that would require such an assessment and, by reason of the Bank's Undertaking, there is clear evidence to the contrary in relation to Mrs Coshott. A hypothetical issue – the parties' submissions 1. The plaintiffs' argument concerning the hypothetical nature of the Declaration was based on two closely related submissions: 1. The plaintiffs had no real (as opposed to academic) interest in having the matter determined and, as such, lacked standing; and 2. The question posed by the Declaration was hypothetical with no foreseeable consequences. 1. The legal principles underlying these propositions are uncontroversial. The plaintiffs relied on this convenient summary in the judgment of Mason CJ, Dawson, Toohey and Gaudron JJ in Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 at 581-582 (citations omitted): "It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which "(i)t 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". " 1. On the question of standing, the Bank submitted that the Bank's Undertaking was a complete answer in relation to Mrs Coshott. By reason of that unconditional undertaking, the need to answer the question posed in the Declaration just did not arise in her case. 2. The Bank's argument in relation to Mr Coshott was: 1. The costs orders underlying the Partially Admitted Debts constituted provable debts under s 82(1) of the Bankruptcy Act 1966 (Cth) (the "BA"). The fact that they were subsequently partially admitted and thereby proven only reaffirmed their status as provable debts: BA s 83. 2. There had been no revocation of the proven and Partially Admitted Debts (see BA ss 102 and 104) and Mr Coshott's application for review before Rares J had been unsuccessful (see the Review Dismissal referred to in paragraph [18] above) . 3. The time to appeal against the Review Dismissal had long expired by several years. 4. Mr Coshott had been discharged from his bankruptcy by operation of law (see BA ss 149 and 149A). 5. The effect of the discharge and the costs orders being provable in his bankruptcy (with no revocation or appeal from Review Dismissal) was that Mr Coshott was released from the debts created by the costs orders (see s 153 of the BA). 1. The Bank's submission in relation to Mr Coshott was summarised as "In a nutshell, [the Bank] cannot seek to recover or enforce those [costs] orders against Mr Coshott anymore (and indeed, there is no suggestion that they presently are doing so). As intended by the bankruptcy regime, the slate has been wiped clean and Mr Coshott need not worry about those orders" (the Bank's submissions in chief, paragraph 43). 2. The Bank then deployed the arguments set out in paragraphs [50] to [52] above in support of its submission that the Declaration was hypothetical and, therefore, one which in the exercise of its discretion the Court would never make. The Bank submitted that, given the Bank's Undertaking in relation to the costs orders against Mrs Coshott, and the effect of the argument set out in paragraph [51] above in relation to Mr Coshott, there was no reason for or utility in granting the declaratory relief sought, even if it were otherwise correct as a matter of law. While there was no doubt that the Court could make binding declarations of right in the absence of consequential relief (see s 75 of the Supreme Court Act 1970 (NSW)), it was revealing that the summons did not seek consequential relief. The plaintiffs had not articulated, and it was not possible to imagine, what consequential proceedings or relief would flow from the making of the Declaration. 3. In their submissions, the plaintiffs sought to identify a number of bases on which they said that they had standing and that the issue posed by the Declaration was not hypothetical. It is convenient to set those out in the next section of these reasons. The declaration is hypothetical – consideration 1. The Court accepts the Bank's submissions in relation to both plaintiffs. The Coshotts do not have the requisite interest in the determination of the question posed by the Declaration. As a corollary, the Declaration raises a purely hypothetical or academic question. The Court is therefore satisfied to the standard of certainty required for summary dismissal, that even if it reflected the law (which the Court does not accept), the Declaration would never be made. 2. Before turning to the plaintiffs' specific submissions, there are two general reasons why the Court has reached this conclusion. 3. First, the plaintiffs' submissions in answer to the Bank's arguments of lack of standing and hypotheticality have an overwhelming quality of unreality and speculation. If the Bank or someone else (most likely the Trustee or his successor) was in fact taking, or had even just threatened, steps of any kind against either of the plaintiffs that would require determination of the Declaration, the plaintiffs would undoubtedly have filed evidence about it. The fact that they have not filed any such evidence is the primary basis on which the Court finds that there is no actual extant controversy, or even a foreseeable prospect of such a controversy, relating to either of the plaintiffs that is required to be quelled by the making of the Declaration. That conclusion is also supported by the lack of any consequential relief in the summons; that only the Bank and not, for example, the Trustee or his successor is joined; and, that nearly five years have passed since Mr Coshott's discharge from bankruptcy. In relation to Mrs Coshott that finding is also made in reliance on the Bank's Undertaking. 4. Second, what I have said in paragraphs [45] to [47] above applies equally to this part of the argument as reasons why the Declaration would never be made, even if the plaintiffs had standing and the question was not hypothetical. 5. I will next set out each of the bases advanced on behalf of the plaintiffs and why the Court has rejected them. 6. The plaintiffs submitted that there is nothing hypothetical about the "resolution of the legal dispute between the parties in this case" (plaintiffs' submissions, paragraph 26). As I have already said, the difficulty for the plaintiffs is that they have advanced no evidence of any extant legal dispute between them and the Bank which requires resolution, let alone a resolution which will be achieved by making the Declaration. 7. In paragraph 27 of their submissions, the plaintiffs then referred to "The question as to the appropriate legal basis upon which the [Bank] can quantify the debt of the Plaintiffs' owed jointly and severally to it pursuant to extant orders of the District Court and Court of Appeal, which have not been compromised or otherwise discharged, are obviously not purely hypothetical". Again, however, there is no basis on which the Court can conclude as a matter of fact that the Bank or anyone else wants to, or needs to, quantify the debt of the plaintiffs in the way they suggest so as to create a legally cognisable dispute. 8. Next, the plaintiffs asserted that the Bank has a true interest to oppose the Declaration because the Bank maintains its proof of debt and would be seeking to have a distribution made to it consistently with BA s 107. This would, in turn, diminish any potential residue available to Mr Coshott. 9. The Court accepts the Bank's submission that BA s 107 does not assist the plaintiffs. That section confirms that a creditor "is not entitled to receive, in respect of a provable debt, more than the amount of the debt and any interest payable to him or her under" the BA. The reference to a "provable debt" and the issue of Mr Coshott's entitlement to any residue must depend on Mr Coshott challenging the admission by the Trustee of the Partially Admitted Debts. However, any time to challenge this has long since passed given the Review Dismissal and the regime for appeals against trustees' decisions set out in BA s 104. If the purpose of seeking the Declaration is to put the plaintiffs in a position to mount such challenges, the time for such challenges has long passed and the Court therefore accepts that there is no interest which the plaintiffs can maintain in obtaining the Declaration (even if it would otherwise be made). 10. In relation to Mrs Coshott, the plaintiffs submitted (plaintiffs' submissions, paragraph 30) that "the consequences of the appropriate legal method for the quantification of the Court orders provides the basis for indebtedness to the [Bank]. Regardless of whether steps are taken to enforce that debt, it will hang over her and remain an obligation imposed on her by a court order". She was thereby said still to have an interest. I accept that the Bank's Undertaking is complete answer to this submission. Furthermore, these proceedings do not challenge either the "basis for indebtedness" or the "court order" in question. 11. Next, the plaintiffs submitted that what they referred to in paragraph 31 of their submissions as "the clarification of the legal basis for the debt" would be necessary for any later claim by Mr Coshott's trustee in bankruptcy against Mrs Coshott, based on her joint indebtedness to the Bank. This argument does not demonstrate any sufficient legal interest in the Declaration or lack of hypotheticality when there is no evidence that any claim by the Trustee or his successor against Mrs Coshott is in contemplation or even likely. 12. Finally, the plaintiffs referred in paragraphs 32 and 33 of their submissions to the desirability of the "correction" of the basis of the claim submitted by the Bank to the Trustee which remains unsatisfied from Mr Coshott's bankrupt estate both as a matter as between the Bank and Mr Coshott, and in relation to the subsequent entitlement of Mr Coshott to any residue from his bankrupt estate after the declaration and payment of dividends to his creditors. However, again, there is no evidence concerning the administration of Mr Coshott's bankrupt estate including whether or not a dividend has been declared and whether or not the debts remain unsatisfied. 13. For these reasons, the Court concludes that even if the Declaration represented the law, the plaintiffs have failed to demonstrate a legally cognisable interest in its resolution which rises above academic or theoretical, or that the Declaration is required to quell a legal controversy that is actual or in prospect. The Declaration is hypothetical, such that in accordance with the principles set out in paragraph [49] above, it is not a declaration which in the exercise of its discretion the Court would ever make. Conclusion 1. The conclusions which I have reached mean that it is unnecessary for the Court to consider the third basis advanced by the Bank, being an argument made in relation to Mr Coshott alone based upon issue or Anshun estoppel said to arise from the Review Dismissal. 2. There was no dispute between the parties about the principles which apply to an application under UCPR Pt 13 r 13.4. I have taken into account that the Court's discretion under that rule to dismiss proceedings is an exceptional one. Nevertheless, the Court finds that, for the reasons I have set out above, this is a plain and obvious case (see General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125) that: 1. the summons does not disclose a reasonable cause of action; and 2. the proceedings are doomed to fail, so that their continuation would be an abuse of the process of the Court, because the Declaration is contrary to the common law of Australia, and even if it were otherwise, raises only an academic or hypothetical question about which, as such, the Court would not exercise its discretion to grant declaratory relief. 1. The proceedings will be ordered to be dismissed generally pursuant to UCPR Pt 13 r 13.4(1). In doing so, I record that the Court is also satisfied, for the reasons set out in this judgment, that making this order gives effect to the overriding purpose pursuant to s 56(2) of the Civil Procedure Act 2005 (NSW). The Court will give the parties an opportunity to make submissions as to costs in the absence of agreement. ********** Amendments 07 May 2020 - Jurisdiction changed from Equity - Admiralty List to Equity Last word in paragraph 47 changed from "her" to "Mrs Coshott" 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: 07 May 2020