Direct Factory Outlets Pty Ltd v Westfield Management Ltd [2003] FCA 1095 | Case summary

REASONS FOR JUDGMENT 1 On 24 June 2003, the applicant commenced these proceedings seeking declarations against the first respondent and subsequently against the second respondent. Those declarations sought to agitate as between these parties the issues raised in proceedings Q64 of 2003 between these respondents as applicants, and the Brisbane Airport Corporation ('BAC') and others as respondents. 2 On 4 July 2003, the respondents by notice of motion sought to have the proceedings dismissed or stayed on the grounds that there is no justiciable matter in issue between the applicant and the respondent entitling it to the declaratory relief sought. Central to the application was the circumstance that the applicant had no personal right or interest which it sought to assert or protect in the proceedings and that any interest it had was purely commercial. It had agreed terms with the BAC for a sublease of a building to be constructed at Brisbane Airport, but at that time the BAC was refusing to enter into any enforceable contractual arrangement with the applicant until the legality of its proposed conduct had been established in its favour in Q64 of 2003. 3 Since the original hearing on the notice of motion, BAC has signed an Agreement to Lease which gives to the applicant certain contractual rights enforceable against the BAC, conditional upon it being lawful for the BAC to carry the agreement into effect. Notwithstanding the existence of the Agreement to Lease, the respondents in these proceedings still seek that the proceedings be struck out. 4 The applicant, by a notice of motion, now seeks to join BAC as a respondent in these proceedings. The applicant also seeks by notice of motion in Q64 of 2003 to be joined as a respondent in those proceedings on the basis that it is a party whose rights under the Agreement to Lease with the BAC will be affected by the declaratory relief which is sought by the applicants in those proceedings. The applications in Q64 of 2003 resist the joinder of the applicant as a respondent in those proceedings. 5 The applicant has filed a proposed amended statement of claim, and pleads that it has rights under the Agreement to Lease made on 28 July 2003 which entitle it to a sub-tenancy in a building to be constructed by or for BAC as part of a larger development to be known as The Gateway Park Development. The content of The Gateway Park Development, as contended for by the respondents, is pleaded and particularised in par 9. The validity of that contention is traversed in par 10, where it is alleged that a different development to be developed in accordance with the Master Plan for the Brisbane Airport is to be carried out. It is then alleged that in respect of that development, the contentions of the respondents that the proposed conduct of the BAC in carrying into effect that development, and thereby giving effect to the Agreement to Lease, is and will be unlawful, are wrong. The applicant then alleges that the BAC may lawfully proceed with the development, and that the applicant may itself lawfully exercise its rights under the Agreement to Lease, and, under the sublease of the building, once built. 6 The pleading then sets out the contentions of the respondents as to why the proposed conduct of the BAC is unlawful and contrary to the provisions of the Airports Act 1996 (Cth) and why the contention are erroneous. 7 The applicant in the proposed pleading sets out its interest as follows: '36. The section 32 contentions, if correct, would make it - (a) unlawful for BAC to develop the Gateway Park in accordance with the Master Plan; (b) unlawful for BAC to construct and sublease to anyone, including DFO, the factory outlet building; (c) unlawful for DFO to cause BAC to construct and to sublease to it the factory outlet building. 37. The inconsistency contentions, if correct, would make it - (a) unlawful for BAC to develop the tourism precinct of the Gateway Park (which includes the factory outlet building) in accordance with the Master Plan; (b) unlawful for BAC to construct and sublease to anyone (including DFO the factory outlet building; (c) unlawful for DFO to cause BAC to construct and to sublease to it the factory outlet building. 38 The major development plan contentions, if correct, would make it - (a) unlawful for BAC to develop the outlet shopping precinct without a major development plan; (b) unlawful for BAC to construct and sublease to anyone including DFO the factory outlet building without a major development plan; (c) unlawful for BAC to cause BAC to construct and to sublease to it the factory outlet building; (d) necessary for BAC to apply for a major development plan with respect to the factory outlet building; (e) alternatively necessary for BAC to apply for a major development plan with respect to the factory outlet building, together with the whole of the outlet shopping precinct; (f) alternatively, make it impossible for a major development plan to be lawfully approved for the development of the factory outlet building or the outlet shopping precinct. 39. The subleasing contentions, if correct would make - (a) the Agreement to Lease, insofar as it provides for the grant of a sublease, of no effect; (b) make it unlawful for BAC to grant the sublease pursuant to the Agreement to Lease; (c) further or alternatively, the sublease to be granted pursuant to the Agreement to Lease of no effect. 40. The building permit contentions, if correct, would make it - (a) unlawful for BAC to construct the factory outlet building and the infrastructure and sublease the factory outlet building to anyone including DFO; (b) unlawful for DFO to cause BAC to construct the factory outlet building and the infrastructure and sublease the factory outlet building to it. 41. DFO wishes to - (a) perform and obtain the benefit of the performance by BAC of the Agreement to Lease; (b) cause BAC to perform its obligations under the Agreement to Lease and in particular to construct with infrastructure) and sublease to it the factory outlet buildings; (c) have it determined that it is entitled to do so; (d) have it determined that - (i) BAC is entitled to perform its obligations under the Agreement to Lease and in particular to construct the factory outlet building and infrastructure and sublease the factory outlet buildings to it; (ii) (further) BAC is entitled to construct the factory outlet building and infrastructure and sublease the factory outlet building to DFO without the obtaining of a major development plan in relation to the construction of that building either on its own or with any other parts of the outlet shopping precinct; (iii) alternatively, that it is possible to obtain a lawful approval of a major development plan to construct the factory outlet building (either on its own or with any other parts of the outlet shopping precinct) and infrastructure and sublease the factory outlet building to DFO; (iv) BAC is entitled to carry out the development on the Airport Site of a mix of other business and commercial activities car parking areas and landscaped areas, in accordance with the Master Plan.' 8 The respondents submit that the matters pleaded in the amended statement of claim do not raise as between the applicant and the respondents a justiciable controversy or one which the applicant has the standing to itself advance in these proceedings. They submit that at its highest, the proceedings show that there may be between them a sharp difference of opinion as to how the proceedings in Q64 of 2003 ought to be determined but they do not show in the applicant a claim of a right, title, interest or immunity whether under the Airports Act 1996 (Cth), any other Act or under the general law which the applicant seeks to have preserved or enforced by any of the declarations sought. Further, they submit that the resolution of these proceedings will not advantage or disadvantage the applicant because the BAC will not be obliged to perform any of the obligations under the Agreement to Lease until it is determined in Q64 of 2003 whether it can lawfully do so. 9 Importantly, the respondents contend that to create a justiciable controversy, the applicant must allege in its amended statement of claim the commission or threatened commission of a wrong, in the nature of a breach or contravention of some private right or public right or duty, in respect of which the applicant has the standing to seek a remedy available under the law. 10 The power of this Court to make declarations arises from s 21 of the Federal Court of Australia Act 1976 (Cth) ('the FCA'): Tobacco Institute of Australian Limited v Australian Federation of Consumer Organizations Inc (No 2) (1993) 41 FCR 89 (FC). It is also an inherent power of superior courts of record as this Court is: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581 - 582. 11 Section 21 of the FCA provides : '21(1) The Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed. (2) A suit is not open to objection on the ground that a declaratory order only is sought.' 12 Section 21 of the FCA is to the same effect as s 75 of the Supreme Court Act 1970 (NSW) as amended and O 26 r 19 of the Rules of the High Court of Australia. As to those provisions, Gibbs ACJ said in Sankey v Whitlam (1978) 142 CLR 1 at 23: '... The word "right", in the expression "declarations of right" in s.75 of the Supreme Court Act, 1970 (N.S.W.) and O.26, r.19 is used in a sense that is wide and loose. It includes what might more precisely be described as privileges, powers and immunities.' 13 Section 21 of the FCA empowers the Court to make a declaration of right in a matter in which it has original jurisdiction: Tobacco Institute of Australia at 98, 106, 108 - 112; RAIA Insurance Brokers Limited v FAI General Insurance (1993) 41 FCR 164 (FC) at 177. 14 There need not be a cause of action before the power may be exercised, provided the subject matter in respect of which the declaration is sought is within the jurisdiction of the Court and there is a real controversy to be determined: Guaranty Trust Co of New York v Hannah & Co [1915] 2 KB 536 at 572; J N Taylor Holdings Ltd v Bond (1993) 59 SASR 432 (FC) at 435; Martin v Taylor [2000] FCA 1002 at [27]; Clarke v Australian Labor Party (SA) (1999) 74 SASR 109 at 135. 15 It may be that the Courts now recognise that the jurisdiction is not limited to the declaration of the rights and immunities of the parties inter se, but may also include declaratory relief in respect of a third party: In re S (Hospital Patient: Court's Jurisdiction) (1996) Fam 1 (CA) at 22 per Millett LJ (with whom Kennedy J agreed); this is because a justiciable controversy is not limited to rights, duties or liabilities in which the opposing parties have correlative interests: Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1999) 200 CLR 591 at [76] - [77], [120], [122], [152], [183] and [211]; the contrary view was stated by Lord Diplock in Gouriet v Union of Post Office Workers [1978] AC 435 at 501, where he said: '... the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not of anyone else.' 16 Nonetheless the requirement remains that a justiciable controversy in respect of a matter must exist before there is jurisdiction to grant declaratory relief; that is, there must exist a controversy as to some immediate right, duty or liability to be established by the determination of the Court: In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; 266 - 267; Fencott v Muller (1983) 152 CLR 570 at 603; Abebe v The Commonwealth (1999) 197 CLR 510 at 524, 555, 570, 585; Truth About Motorways at [43], [48] - [50], [154] - [155]. 17 The nature of the power to grant declaratory relief was examined by the High Court of Australia in Ainsworth at 581 - 582 (Mason CJ, Dawson, Toohey and Gaudron JJ): '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." Forster v. Jododex Aust. Pty. Ltd. (1972), 127 C.L.R. 421, at p. 437, per Gibbs J. 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. See In re Judiciary and Navigation Acts (1921), 29 C.L.R. 257. The person seeking relief must have "a real interest" (Forster (1972), 127 C.L.R., at p. 437, per Gibbs J.; Russian Commercial and Industrial Bank v. British Bank for Foreign Trade, Ltd., [1921] 2 A.C. 438, at p. 448, per Lord Dunedin) 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" (University of New South Wales v. Moorhouse (1975), 133 C.L.R. 1, at p. 10, per Gibbs J.) or if "the Court's declaration will produce no foreseeable consequences for the parties" (Gardner v. Dairy Industry Authority (N.S.W.) (1977), 52 A.L.J.R. 180, at p. 188, per Mason J.; see also p. 189, per Aickin J.; 18 A.L.R. 55, at pp. 69, 71 respectively.)' See also the decision of Brennan J in Ainsworth at 596. 18 The power to grant a declaration 'should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances for their making': Ibeneweka v Egbuna [1964] 1 WLR 219 at 225. 19 A declaration must produce useful, foreseeable consequences for the parties, otherwise it will be refused: Interchase Corporation Limited (in liq) v FAI General Insurance Company Limited [2000] 2 Qd R 301 (FC) at 320 - 321; Gardiner v Dairy Industry Authority (NSW) 52 ALJR 180 at 188; Ainsworth at 582. 20 In my opinion, the applicant does have a sufficient interest to bring these proceedings and there is utility in the declarations sought. Prior to the entry into the Agreement to Lease, and having regard to the issues pleaded in the previous statement of claim, the applicant did not have such an interest and the mere traverse of the allegations made in proceedings Q64 of 2003 did not create as between the applicants and the respondents, a legal controversy fixed in a factual context, the determination of which would deliver an entitlement to a declaration which had utility in resolving that controversy. In those circumstances, the proceedings were liable to be stayed or struck out at an early stage: CE Heath Casualty & General Insurance Ltd v Pyramid Building Society [1997] 2 VR 256 (VCA) per Ormiston JA with whom Tadgell JA agreed, at 260, 262. 21 The position however changed when: (a) the applicant entered into the binding Agreement to Lease with the BAC, notwithstanding that the obligations to carry it into effect were conditional upon the legality of doing so; and (b) the BAC decided to apply for a major airport development plan in respect of the Gateway precinct, which development included, but was greater than, the construction of the direct factory outlet building and infrastructure. 22 Under the Agreement to Lease the applicant acquired rights, the enforcement of which depended upon the resolution of the controversy now pleaded in the proposed amended statement of claim. Those issues plead a specific factual context, namely the development pleaded in par 10, which the applicant contends gives it the right to require the BAC to carry the Agreement to Lease into effect. It also raises as an issue its right to insist upon the BAC constructing the direct factory outlet building and infrastructure provided for in the Agreement to Lease irrespective of whether the BAC obtains an approval for a major development plan which includes such a building. That is, it asserts a right if it is otherwise lawful to do so, to force the BAC to construct the building because on the proper construction of s 89(1), s 90(1) and 90(4) of the Airports Act 1996 (Cth), the building would not be a major airport development requiring a major airport development plan. The applicant has an interest in having a declaration to this effect binding against both the BAC and the respondents, in the event that the BAC does not obtain the requisite approval it now seeks for a larger development, albeit one including the direct factory outlet building. 23 These circumstances give utility to the declarations sought: Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 at 301, 305, 315; Telstra v Australian Telecommunications Authority (1995) 133 ALR 417 at 424 - 425; Oil Basins v Commonwealth (1993) 178 CLR 643 at 648 - 649. The declarations would not be divorced from any relevant factual circumstances which would otherwise cause the Court to refuse to make the declarations: Bass v Permanent Trustee Company Limited (1999) 198 CLR 334 at [49]; Re Navigation and Judiciary Acts (1921) 29 CLR 257 at 266. 24 I am satisfied that the respondents are proper contradictors and that each of the necessary conditions identified by the High Court in Ainsworth at 581 - 582 is now made out by the applicant. 25 The applicant seeks to bind the BAC and the respondents in respect of the issues raised in the proposed amended statement of claim, including the issue relating to the need for a major airport development plan for the direct factory outlet building alone, which the BAC now does not seek to assert in Q64 of 2003. That is a sufficient interest to support the proceedings for declaratory relief and to join the BAC as a respondent: Oil Basins v Commonwealth at 653 - 654. 26 In these circumstances, the proper course is to dismiss the respondent's application to dismiss or stay the within the proceedings. 27 On the applicant's notice of motion, leave will be granted to add the BAC as a respondent and leave given to file and serve the proposed amended application and amended statement of claim. 28 The applicant is not a necessary party to proceedings Q64 of 2003: Australian Tape Manufacturers v The Commonwealth (1990) 94 ALR 641 at 644 - 645. Convenience alone does not justify joinder: News Limited v Australian Rugby Football League (1996) 64 FCR 410 (FC) at 523 - 525; Australian Tape Manufacturers at 645; Interchase Corporation Ltd v FAI Insurance Company Ltd [2000] 2 Qd R 30 (QCA) 301 at 312, 316. However, the position is different where the rights or liabilities of a person may be directly affected by any order which may be made in the proceeding. The test was stated by the Privy Council in Penang Mining Company v Choong Sun (1969) 2 Malay Law Journal 52 at 55 - 56: 'It has been sometimes said as in Moser v Marsden [1892] 1 Ch 487 and in Re I G Farbenindustrie A G [1944] 1 Ch 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal" and "commercial" interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?' This test was applied by Franki J in Trade Practices Commission v Milreis Pty Ltd (1978) 18 ALR 17 at 23. 29 The arguments which the applicant would seek to advance in Q64 of 2003 can be advanced in its own proceedings. If the applicant presses to be joined as a respondent in Q64 of 2003, it having a sufficient interest for joinder, then in my view it should be at its own risk as to costs and that success in Q64 of 2003 will by no means mean that it is entitled to an order for costs. Also, it will be at risk as to costs if its participation in Q64 of 2003 causes the prolongation of those proceedings: Du Pont de Nemours & Co v Commissioner of Patents (No 5) (1989) 87 ALR 491 at 495. 30 Prior to the changed circumstances which the applicant now relies upon to maintain these proceedings, the respondents were entitled to relief on their notice of motion. However, their continued opposition to the proceedings as disclosing no justiciable controversy after the circumstances changed was erroneous for the reasons given above. In all the circumstances, the costs of the parties in these proceedings on the two notices of motion ought to be their own costs in the proceedings; similarly, on the notice of motion for joinder in Q64 of 2003. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.

Direct Factory Outlets Pty Ltd v Westfield Management Ltd

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