There is a further reason which reinforces that conclusion. The power to grant a declaration is, of course, wide: J N Taylor Holdings Ltd v Bond (supra). Although the power to make a declaration extends to cases which are dependent on future facts: Rediffusion (Hong Kong) v AG (Hong Kong) [1970] UKPC 12; [1970] AC 1136 at 1158; Commonwealth v Sterling Nicholas Duty Free Pty Ltd [1972] HCA 19; (1972) 126 CLR 297 at 305, that power will not be exercised when the court is called upon to answer a question that is purely hypothetical: University of NSW v Moorhouse [1975] HCA 26; (1975) 133 CLR 1 per Gibbs J at 10. As Brennan J noted in Re Trade Practices Act [1978] FCA 10; (1978) 19 ALR 191 at 208, the question whether a particular case falls on one side or the other of the line that divides the hypothetical from the non-hypothetical is a matter of degree. There is no precise test for determining in every case whether there is a real controversy between the parties. The question in each case is whether the facts alleged show that, under all the circumstances, there is a substantial controversy between parties having adverse legal interests of sufficient immediacy and reality to warrant a declaratory judgment: Maryland Casualty Co v Pacific Coal and Oil Co [1941] USSC 28; (1940) 312 US 270 at 273. A controversy as to the lawfulness of future conduct cannot be said to be immediate and real if it is unlikely that one party will engage in the conduct: Golden v Zwickler [1969] USSC 48; (1969) 394 US 103 at 109. If the prospects of a party engaging in the conduct are uncertain, the uncertainty may deprive the controversy of a sufficient immediacy and reality to warrant the making of a declaration: Steffel v Thompson [1974] USSC 53; (1973) 415 US 452 at 460. These decisions of the Supreme Court of the United States were followed and applied by Brennan J in Re Trade Practices Act (supra) at 208 to 209. Thus, the degree of uncertainty as to whether a party will engage in the conduct proposed will usually determine whether the circumstances call for the making of a declaration: Re Trade Practices Act (supra) at 209. Glenmont is unable to point to any fact which gives rise to any apprehension that Parker and Edwards will act in breach of the policy. There is nothing which shows that there is any present likelihood that Lend Lease will refuse indemnity or take some step which is adverse to the interests of Glenmont. There are, in short, no facts which give rise to any immediate or real controversy between Glenmont and Lend Lease. It is not sufficient merely to show that Glenmont has an apprehension that Lend Lease might take a step which is adverse to its interests, for the apprehension may be imaginary or speculative, rather than real.

For all of these reasons, Glenmont is not entitled to a declaration in absolute terms simply stating that Lend Lease is liable to indemnify Parker and Edwards.

The only other issue as between Glenmont and Lend Lease is whether Lend Lease owed a duty of care to Glenmont to settle the claim within a reasonable time. The claim is misconceived. There is no privity of contract between Glenmont and Lend Lease. Generally speaking, an insurer owes no duty of care to a party who has suffered loss and damage by reason of the conduct of the insured: Hoods Trustees v Southern Union General Insurance Co of Australasia Limited [1928] Ch 793 802, 808; Re Harrington Motor Co Limited [1928] Ch 105; Windsor v Chalcraft [1939] 1 KB 279, 287; Karamanolis v Prudential Insurance Co Limited (1983) 150 DLR (3d) 81. However, as at present advised, I am not prepared to say that under no circumstances could a duty of care arise as between an insurer and a third party who has made a claim against the insured. It is possible to envisage circumstances in which the insurer may act in such a way as to give rise to such a degree of proximity which will result in a duty of care to the third party. But in the circumstances of this case, as it has been pleaded by Glenmont, there is nothing which points to the possibility of such a duty of care. I have used the expression "possibility" since Lend Lease must show that Glenmont cannot succeed on any possible view of the facts or law. The facts as pleaded by Glenmont do not show how the alleged duty of care arises. Instead, facts are pleaded for the purpose of stating the claim for a declaration that Lend Lease should be ordered to indemnify under the policy. In the course of argument, Mr Holland was asked to identify the facts which gave rise to the duty of care but he was unable to do so. In the circumstances, Glenmont is not able to show any facts which could give rise to a duty of care on the part of Lend Lease vis-a-vis Glenmont to settle the claim within a reasonable time.

There are at least two other difficulties with this part of the claim. First, Glenmont's statement of claim baldly asserts the existence of a duty of care to it to pay within a reasonable time any claim made by Glenmont against Parker and Edwards which fell within the terms of the policy. That assertion belies the entitlement of Lend Lease to require Parker and Edwards to defend the claim. That in turn leads to the second difficulty. If Parker and Edwards succeed in defending the claim, there will be no liability to Glenmont for which they will seek indemnity from Lend Lease. The alleged duty of care assumes too much. It assumes that Glenmont will succeed in its claim. That is a further indication that the alleged duty of care does not exist.

With some justification, Mr Holland emphasised that the strike out application was made by Lend Lease at an extremely late stage at the very commencement of the trial. He pointed to the fact that Lend Lease had not raised any issue on the pleadings after the appeal had been dismissed in December 1993. In other cases, such a submission would have considerable force. But it is apparent that, in this case, at the eleventh hour, there has been a very material change in circumstances which justifies the application. The decision by Lend Lease to indemnify Parker and Edwards rendered it unnecessary to deal with a substantial issue at the trial and, therefore, had an important bearing upon the future conduct of the trial. The removal of this issue will substantially shorten the length of the trial. It was appropriate to address both the question of the claim for the declaration and the claim that Lend Lease owed a duty of care to Glenmont to pay within a reasonable time the claim it had made against Parker and Edwards. The issue is of such importance that it is appropriate also that the court should take the unusual course of hearing an appeal against an interlocutory order of this nature.

Mr Holland also submitted that it was inappropriate for Lend Lease to rely only on the announcement made in open court by Mr Trim QC and not to file an affidavit in support of its application. In that way, he said, more detail as to the compromise would be available. In the circumstances of this case, nothing could be gained by filing an affidavit. The only relevant fact was that Lend Lease had agreed to indemnify pursuant to the policy. The court had been informed of that by counsel for both Lend Lease and Parker and Edwards. An affidavit would not advance the state of relevant information. The judge was entitled on act on the information given to him by Mr Trim QC. Courts will often act on the assurances of counsel given as officers of the court. I do not think that there was any aspect of the procedure which was irregular or inappropriate.

For all of these reasons, I would allow the appeal. I would set aside the decision of the trial judge and, in lieu thereof, make an order striking out paras 46 to 61 inclusive of the statement of claim and the prayers for relief as against the sixth defendant.

[2] (1996) 68 SASR 19.

[4] See J.N. Taylor Holdings Ltd (In Liq) v Bond (supra) per King CJ at 440.

[7] See Hungerford v Walker [1989] HCA 8; (1989) 171 CLR 125.

[8] Legal Reporter, Vol 20, para 5, 23 March 1999.