Commonwealth of Australia v BIS Cleanaway Limited [2008] NSWCA 170 | Case summary

WEDNESDAY 23 JULY 2008 COMMONWEALTH OF AUSTRALIA v BIS CLEANAWAY LIMITED Judgment 1 HODGSON JA: On 26 September 2007, Brereton J made orders that proceedings brought by the claimant (the Commonwealth) against the opponent (BIS) be summarily dismissed, and that the claimant pay the opponent's costs of the proceedings. The claimant seeks leave to appeal from those orders. 2 In the proceedings, the claimant had sought declarations that the rights and obligations of the licensee under a deed of licence dated 21 May, 1971 from the claimant, in respect of a waste disposal site at Lucas Heights, were on and from September 1973 novated to the opponent, and that this novated licence imposed subsisting and enforceable obligations on the opponent, which may relevantly be expressed as follows: firstly, not to permit material likely to create a public nuisance, or cause deterioration to surrounding amenities, plants, trees or animals to escape from the land; secondly, to comply with any direction of the Environmental Protection Agency or the Department of Environment Conservation, affecting the land, which the Agency or Department considers to be in the interests of public health, safety or convenience; and thirdly, to indemnify the complainant against claims which may be brought against it and expenses which the claimant may incur in respect of any damage to persons or property which may occur during the continuance of the licence, and consequent on the exercise by the opponent of the licence. 3 The opponent applied for an order that the proceedings be summarily dismissed, and the primary judge made that order, on the ground that the relief sought was so hypothetical and/or inutile that, as a matter of discretion, no judge acting reasonably could but refuse it. 4 The complainant contends that this decision was in error, principally on the following three bases: first, that the stringent requirements for summary dismissal, which in this case would be that no judge acting reasonably could make the declaration sought, could not be satisfied; secondly, that the primary judge erred in applying s63 of the Supreme Court Act, because there were no claims that had been brought forward which the Court would not be determining; and thirdly, that the primary judge erred in considering that the cases of Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286, and Coles v Wood [1981] 1 NSWLR 723 dictated that the only proper exercise of discretion would be refusal of declaratory relief. 5 In my view, there is some force in the second and third points; and although, for reasons I will give, I propose that leave to appeal be refused, I would not wish to be taken as endorsing everything that the primary judge said in relation particularly to those second and third points. 6 In my opinion, leave to appeal should be refused because there is insufficient doubt about the correctness of the result reached by the primary judge, and because refusal of leave would not involve any substantial injustice. 7 There was no allegation in the proceedings of any past, present or threatened breach by the opponent of any provision of the licence. There was no allegation in the proceedings of any past, present or threatened claim against the claimant, or of any past, present or proposed expense incurred, or to be incurred, by the claimant. 8 There would in my opinion be no practical consequences of the making of declarations of the kind sought, except such consequence as they may have in relation to a breach, claim or expense of the kind I have mentioned. And if and when the claimant were to allege any such breach, claim or expense, this would almost certainly raise specific questions as to the interpretation of the licence, as to what, if there had been a novation, were the precise terms and effect of the novation (for example in relation to activities which had been undertaken prior to the novation), and what (if there had been a termination of the licence or some event affecting its operation as from any particular time) was the effect of that termination, or that affectation, as to any application the licence had into the future from that time. Issues such as these would be issues that would best be dealt with together with determination of issues raised in connection with the orders actually sought in these proceedings, rather than separately from them in a piecemeal way. 9 The determination of the issues such as these, separately from determination of issues relating to the declarations sought, would be very likely to raise serious problems of the kind that can be raised when separate determinations of interrelated questions are sought. 10 It is for those reasons particularly, in addition to the theoretical and very general and unspecific nature of the declarations, that I consider that it could not be an appropriate exercise of discretion in this case to grant the declarations sought. 11 A further reason for refusing leave is that the orders made in this case, as conceded by Mr Bathurst for the opponent, would not prevent the commencement of further proceedings if and when an allegation can be made of some breach, claim or expense of the kind I have mentioned. 12 So for those reasons, I propose that the application for leave be dismissed with costs. 13 IPP JA: I agree with Justice Hodgson, and would add the following. 14 The Commonwealth correctly recognises that the grant of bare declarations in this case will not result in a final resolution of the disputes between the parties. BIS in its defence has asserted that the declarations sought lacked utility. Despite the fact that the case has been on foot for some two years, the Commonwealth has made no attempt to amend its Statement of Claim to claim an indemnity or damages for breach of the licence agreement as novated. 15 It is not possible to foresee and identify which of the obligations for which the Commonwealth contends, if any, may be breached, and in what manner. There is indeed nothing to suggest that any will be breached, or that any claim for an indemnity will arise. 16 Mr Parker SC who, together with Miss Richardson, appeared for the Commonwealth, accepted that he had no instructions to allege that any relevant breach had occurred within the last six years, or that any loss has been incurred over this period that would entitle the Commonwealth to an indemnity under the licence agreement. There is no ongoing business relationship between the parties. 17 Mr Parker suggested in argument that, were the Commonwealth to obtain declarations in the terms sought, it could use those declarations to persuade the State government to take action against BIS. I do not regard that as in any way being an appropriate factor to take into account in determining whether there is utility in the relief sought. 18 It is also not possible to foresee if the declarations formulated by the Commonwealth would be sufficiently wide or precise to apply to and be capable of resolving disputes that may arise. There are likely to be difficult problems concerning the time from when any obligations, if any, that BIS may have under the licensing agreement arose, and the time when those obligations cease. There may be difficult problems in determining whether obligations owed under the licence agreement are owed by the original licensor or by BIS. The declarations as sought would not cover these kind of issues. Problems may arise in construing declarations which are made so as to determine whether they apply to unforeseen factual circumstances. Different and new declarations may have to be sought to provide for unexpected breaches or indemnities. 19 The trial sought by the Commonwealth concerning the bare declaration is expected to take several days, and may well be costly. Both parties are powerful entities, and there is a real prospect that, whatever the result, there will be an appeal to this Court, and even attempts to appeal to the High Court. On this basis the litigation will endure for some years. Should a claim for indemnity for breaches arise in the interim, new litigation may well be commenced. The potential complexities of such a situation are endless. 20 In my opinion, in the particular circumstances of this case, it is highly undesirable that there be any separation of issues. 21 I have some doubts about certain aspects of the primary judge's reasons. It is not entirely clear to me whether his Honour exercised a proper discretion when dismissing the claim or whether he thought he was bound to do so by Neeta v Phillips, and Coles v Wood. There are other passages in his Honour's reasons relating to the discretion to be exercised which could be said to reflect an inappropriate test. 22 It is, however, unnecessary to resolve these questions. I have explained why I do not think this is an appropriate case for the novation issue to be determined in the absence of a claim for an indemnity, or for damages. I am not persuaded that the refusal of leave will result in an injustice to the Commonwealth. Accordingly I agree with the orders proposed by Hodgson J. 23 CAMPBELL JA: I agree with each judgment just given, and with the orders proposed. 24 HODGSON JA: So the orders of the Court are as I have indicated. The application for leave to appeal is dismissed with costs. oOo

Commonwealth of Australia v BIS Cleanaway Limited

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