Nerang Subdivision Pty Ltd v Hutson

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SUPREME COURT OF QUEENSLAND

CITATION:

Nerang Subdivision Pty Ltd v Hutson [2020] QSC 225

PARTIES:

NERANG SUBDIVISION PTY LTD

ACN 129 469 254

(first applicant)

KANAYA HOLDINGS PTY LTD

ACN 098 864 905

(second applicant)      

PACIFIC VIEW FARM (QUEENSLAND) PTY LTD

ACN 114 561 081

(third applicant)

v

ROBERT HUTSON IN HIS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF NANCY ULLMAN LOESKOW

(respondent)

FILE NO/S:

BS 3114 of 2020

DIVISION:

Trial Division

PROCEEDING:

Originating Application

DELIVERED ON:

28 July 2020

DELIVERED AT:

Brisbane

HEARING DATE:

19 June 2020

JUDGE:

Bond J

ORDER:

The orders of the Court are:

1.   The application is dismissed.

2.   I will hear the parties as to costs.

CATCHWORDS:

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – DECLARATIONS – JURISDICTION – ADVISORY OPINIONS AND HYPOTHETICAL QUESTIONS – where the applicants seek declaratory relief to determine which party to a development deed is responsible for meeting the cost of GST – where it is presently unclear whether any liability for GST will arise – where there are numerous contingencies to be satisfied before the development reaches a stage where there may be a taxable supply – whether granting declaratory relief would amount to answering a hypothetical question

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10, considered
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9, considered

Re Tooth & Co Ltd (1978) 31 FLR 314; [1978] FCA 10, considered

COUNSEL:

D Kelly QC, with P Somers, for the applicants

S Doyle QC, with M May, for the respondent
SOLICITORS:

Mills Oakley for the applicants

Cooper Grace Ward for the respondent

Introduction

  1. When Nancy Ullman Loeskow died on 22 May 2008, she was the registered proprietor of 312.3 hectares of land on the western side of the Pacific Highway on the Gold Coast.

  2. On 30 September 2009, the then executors of Mrs Loeskow’s estate (the Owner) entered into a development deed (the Deed) with the first and second applicants (jointly and severally, the Developer) which recorded the parties’ mutual desire to associate together to carry out the development of that land, the sale of the separate parcels created upon its staged subdivision and the distribution of the proceeds in accordance with the Deed.[1] 

    [1]The Deed was subject to a condition precedent that an existing development deed between Mrs Loeskow and the third applicant dated 2 June 2005 would be terminated.  I infer that that condition precedent was met.

  3. On 21 September 2018, the original executors of Mrs Loeskow’s estate were replaced by the respondent by order of the Court.  For all present purposes, the respondent is now the party who has acceded to the rights and obligations of the Owner under the Deed and further references to “the Owner” are references to him.

  4. The planned development is to be known as Pacific View Estate.  It is to be a large greenfield master planned community and it…

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Details
Case
[2020] QSC 225
Decision Date

CaseChat Overview and Summary

In the case of Nerang Subdivision Pty Ltd v Hutson, the applicants sought declaratory relief to determine which party to a development deed was responsible for meeting the cost of Goods and Services Tax (GST). The matter was before the court as it was presently unclear whether any liability for GST would arise, and there were numerous contingencies to be satisfied before the development reached a stage where there may be a taxable supply. The court was required to decide whether granting declaratory relief would amount to answering a hypothetical question. The court examined the traditional attitude of courts to refuse to provide answers to hypothetical questions or to give advisory opinions, as well as the considerations which mark out the boundaries of judicial power in Bass v Permanent Trustee Co Ltd. The court held that a declaratory judgment must be based on a concrete situation and capable of amounting to a binding decision raising a res judicata between parties. In this case, although there was a genuine dispute between the parties, the court found that the circumstances did not warrant the making of a declaration, and dismissed the application. The court will hear the parties as to costs.

Orders

Orders of the court

The orders of the Court are:

1. The application is dismissed.

2. I will hear the parties as to costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The High Court subsequently re-examined the considerations which mark out the boundaries of judicial power in Bass v Permanent Trustee Co Ltd in the joint judgment of Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ in the following passage:[16]The purpose of a judicial determination has been described in varying ways. But central to those descriptions is the notion that such a determination includes a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy. …Because the object of the judicial process is the final determination of the rights of the parties to an action, courts have traditionally refused to provide answers to hypothetical questions or to give advisory opinions. The jurisdiction with respect to declaratory relief has developed with an awareness of that traditional attitude. In In re F (Mental Patient: Sterilisation), Lord Goff of Chieveley said that:“a declaration will not be granted where the question under consideration is not a real question, nor where the person seeking the declaration has no real interest in it, nor where the declaration is sought without proper argument, eg in default of defence or on admissions or by consent.”By “not a real question”, his Lordship was identifying what he called the “hypothetical or academic”. 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 and such a declaration will not be hypothetical in the relevant sense. Barwick CJ pointed this out in The Commonwealth v Sterling Nicholas Duty Free Pty Ltd. However, that is not the present case.It is true that some have seen the use of the declaratory judgment as little more than the giving of an advisory opinion. However, one crucial difference between an advisory opinion and a declaratory judgment is the fact that an advisory opinion is not based on a concrete situation and does not amount to a binding decision raising a res judicata between parties. Thus, the authors of one recent text on declaratory judgments emphasise that, where the dispute is divorced from the facts, it is considered hypothetical and not suitable for judicial resolution by way of declaration or otherwise. They say:“If … the dispute is not attached to specific facts, and the question is only whether the plaintiff is generally entitled to act in a certain way, the issue will still be considered theoretical. The main reason for this is that there may be no certainty that such a general declaration will settle the dispute finally. Subsequent to that declaration a person (the defendant himself or someone else) may be adversely affected by a particular act of the plaintiff. It may then be doubtful whether this act is covered by the declaration. In such a case the affected person will probably be entitled to raise the issue again on its special facts. Indeed, such a declaration will in effect be a mere advisory opinion.”[16](1999) 198 CLR 334 at 355-7, citations omitted and bold emphasis added.

Ratio Decidendi

Legal Principle Established

His Honour went on to explain that the difference between the two cases may only be one of degree in the following passage:[17]In the United States, where federal courts are limited (pursuant to Art. III of the U.S. Constitution, and by the Declaratory Judgment Act) to granting declaratory relief only in “a case of actual controversy”, the Supreme Court has held that the difference between such a case and an hypothetical case is one of degree: “The difference between an abstract question and a ‘controversy’ contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy between parties having adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment” (Maryland Casualty Co. v. Pacific Coal and Oil Co.). The immediacy and reality of a controversy are factors to which weight must be given in applying the principle expressed by Lord Radcliffe in delivering the judgment of the Judicial Committee in Ibeneweka v. Egbuna: “… it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realization that judicial pronouncements ought not to be issued unless there are circumstances that call for their making”. A controversy as to the lawfulness of future conduct cannot be said to be immediate and real if it is unlikely that the applicant will engage in the conduct (Golden, Acting District Attorney of Kings County v. Zwickler). If the prospects of the applicant 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). The degree of uncertainty as to whether the applicant will engage in the conduct proposed will usually determine whether the circumstances call for the making of a declaration. [17](1978) 31 FLR 314 at 333-4, formatting altered for clarity, citations omitted and bold emphasis added. Although Brennan J’s observations were expressed in a case in which a declaration was being sought as to the lawfulness of proposed future conduct, they are helpful in the present context in which what is at issue is the contractual consequences of possible future conduct in relation to the possible incidence of GST. Although made before Bass v Permanent Trustee Co Ltd, his Honour’s observations are consistent with the High Court’s emphasis that a declaratory judgment must be based on a concrete situation and capable of amounting to a binding decision raising a res judicata between parties. This is not a case in which there is doubt as to whether a genuine dispute between the parties does exist. Correspondence between the parties evidences the existence of such a dispute.