Quetel Pty Ltd v Lestery Pty Ltd

[1994] HCATrans 334

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No BSS of 1993

B e t w e e n -

OUETEL PTY LTD

Applicant

and

LESTERY PTY LTD

First Respondent

and

GEOFFREY ROBERT LESSUE and

DENISE ELIZABETH LESSUE

Second Respondents

Application for special leave

to appeal

Quetel 1 13/5/94

BRENNAN J
DAWSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 13 MAY 1994, AT 9.55 AM

Copyright in the High Court of Australia

MR P.A. KEANE, OC:  May it please the Court, I appear with

my learned	friend, MR P.A. FREEBURN, for the
applicant.	(instructed Minter Ellison Morris
Fletcher)

MRS. BONUTTO: If it please the Court, I appear for the

respondents. (instructed by Lyons)

MR KEANE:  Your Honours, this application concerns a claim

made in an action which, it is submitted, is

hypothetical, and in conformity with principle,

should not be entertained by the Court. If we can

take the Court immediately to page 28 of the

application book, to the passage from the judgment

of the court in Ainsworth v Criminal Justice

Commission and invite Your Honours to read what

appears in the citation:

"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 ..... 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'.

Your Honours, we accept that the question whether

the power should be exercised is one for the Court's discretion, but that discretion is a

judicial one, and as the Court said in Ainsworth,

it is a discretion marked out by the boundaries of

the proper exercise of judicial power.

This case arises under a lease of licensed

premises by the first plaintiff from the applicant

defendant and a guarantee of the obligations of the

lessees by the second plaintiffs. The particular

term that gives rise to the question in respect of

which the other side, we say, seeks advice, is in

paragraph S(d) of the statement of claim, at page 4

of the record. If Your Honours would go to that

Your Honours will see that it provides that

additional rental may be demanded by the lessor if demand for the owner's portion of the licence fee, payable under the Liquor Act is made by the lessee.

The plaintiff, the respondents to this application,

seek a declaration that that provision is

ineffective to deny the statutory right of the

Quetel 2 13/5/94

lessee to recover the owner's portion of the

licence fees - that is 25 per cent, Your Honours.

It is said on the other side that the

particular issue is therefore a narrow one. But,

Your Honours, it is our submission the the question

is whether the principles regulating the exercise

of the judicial power to declare rights support the

availability of a declaration at all in such a

case.

GAUDRON J: There is no doubt that the question raised is

one that does go to the actual rights, inter se, of

the lessor and lessee and the existing rights,

actual and existing.

MR KEANE:  In the sense, Your Honour, that there is a

document which the parties have signed, and about

which they have different views.

DAWSON J: No, they have entered into a contractual

relationship, under which they have rights and

obligations - - -

MR KEANE:	Yes, Your Honour.
DAWSON J:	- - - and what is sought to be determined is the extent of those existing rights and obligations.
MR KEANE:	With respect, Your Honour, not quite. What is

sought to be determined is whether, if certain

events occur so as to crystallize, so as to render

enforceable those rights - - -

DAWSON J:  The rights and obligations exist whether or not

those events occur.

MR KEANE: Well, Your Honour, they exist in the sense that

any rights, the subject of any charter, statutory

or private, exist, but the question is whether -

and, in our submission, is the reason that this

application is truly hypothetical - is that no one,	as a result of this declaration, is going to have a
greater liability than they have at the present.
There is going to be no greater right to recover
money; no greater liability to pay money.

DAWSON J: They are going to know what their rights are.

MR KEANE:  Well, that is right, Your Honour. They will have

the assistance of the court as to their prospects

of success in an action.

BRENNAN J: Not the "assistance" of the court, they will

have the "ruling" of the court as to the measure of

the net rights of the plaintiff, if the plaintiff

should demand them.

Quetel	13/5/94
MR KEANE:	Quite, Your Honour. And it is that last

addition - - -

AT 10.01 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.05AM:

MR KEANE:	Your Honours, if we can continue, I was about to say, in response to Your Honour the presiding
Judge, that it is the last clause of the question
Your Honour posed to me which, in our submission,
is eloquent of the hypothetical nature of the
claim. It is in the nature of, "If we do this,
will we win?" May we say that the case is
different from a case such as the Russian Bank case, which Your Honour may have had in mind when
saying, "It is a permissible invocation of judicial
power to ask what is the measure of an existing
liability". That indeed was the case in the
Russian Bank case. But it is a different thing,
with respect, to say, "If I proceed with a demand
and the other side then make a demand on me, will I
win?" And that is the nature of this claim, and
that, in our respectful submission, is something
which is outside the proper scope of the principles
which regulate the exercise of judicial power.

May we refer Your Honours in that regard to

the observations made in In re Clay, (1919) 1 Ch 66

at 78, in the passage that was adopted with

approval by Mr Justice Starke in Hume v Munro

(No 2). It is at page 78, Your Honours, where the

Master of the Rolls said:

The petitioners have not been attacked.	No
claim has been made against them; but they
launched these proceedings to have it
determined that some one who has not made a
claim and who has not asserted any right has
no claim and has no right. In my opinion they
are not entitled to do that.

Now, Your Honours, in this case the relevant

declaration as to rights which is sought would be

to the effect that if the other side were to make a

claim against us and we were to make demand for the

extra rent, then that demand would fail. That is precisely, in our respectful submission, what the

Master of the Rolls in that case, and in the High

Court, through the Chief Justice Sir John Latham

Quetel 13/5/94

and Mr Justice Starke said, was not permissible in

Hume v Munro.

DAWSON J: What was the situation in that case? It was not

a question of an existing contract, was it?

MR KEANE:  Well no, Your Honour. It was a question whether

the parties were entitled to seek specific

performance of an agreement - sorry, Your Honour,

Hume v Munro or Clay v Booth?

DAWSON J: Clay v Booth.

MR KEANE:  Your Honour, that was a case where there was a

deed of indemnity that had been executed in favour

of an administrator of estate by the beneficiaries.

Some costs had been incurred and the beneficiaries

were concerned whether a claim would be made

against them by the administrator under that deed of indemnity. He reserved his position until the

administration was complete. The beneficiaries

sued for a declaration that no moneys would be

properly payable under the deed of indemnity. In

our respectful submission, this case is a fortiori

that, because in this case it is entirely within

the power of the respondents to engage the rights,

if any, said to exist - - -

DAWSON J: You say "engage". What does that mean?

MR KEANE:  To create a liability, Your Honour.

DAWSON J: Yes, but the rights are there in the first place.

The position would be analogous if they said, "If

we entered into a contract of this sort, what would

our rights be?". That would be something which had

not yet occurred, and based upon a hypothesis. But

they have entered into a contract and they do have

rights.	They merely want to know the extent of
them.

MR KEANE: Well, Your Honour, whether they have rights or

not, depend upon whether they take further action

and, importantly, Your Honour, whether we - - -

DAWSON J: But there is no need for an action. Surely in

this situation there is a contra dicta; the lessor

claims a particular interpretation of the right and

the lessee claims another interpretation.

MR KEANE:  And, Your Honour, as to that, the parties have a

difference of views.

DAWSON J: Yes.

MR KEANE:  They are, as Sir John Latham would have described

them, in the position of putting argumentative

Quetel 13/5/94

assertions to each other, but that does not affect

their liabilities, inter se, by one cent.

BRENNAN J: There is certainly controversy as to the rights

of the respective parties, and that, I suppose is a

point of distinction from Clay, in the terms in

which the Clay judgment appears.

MR KEANE:  That is so, but in terms of the observations that

we have read to the Court from the Master of the

Rolls, it is precisely, with respect, a case where

someone who has not made a claim, and who has not

asserted any right, is being sued by the other

side, seeking to say that we would have no right if

we did make a claim on them, assuming, of course, a

further hypothetical, that they made a claim on us.

DAWSON J:  The question there was whether a right existed at

all. That question is not so here. There is a

right. It is just a question of its extent.

MR KEANE:	Your Honour, with respect, the question in Clay v Booth, was whether the right existed. There was no question about there being a right to indemnity.
The question was whether it extended to the events
which had happened, and that is why this case is a
fortiori, with respect, because here - - -
DAWSON J:	The right here does extend to the events which

have happened, or will happen or the situation

which exists; it is a question of their extent.

MR KEANE: With respect, Your Honour, we will not repeat it,

but that is only the case if the other side,

comforted by the view the court takes, then decides

to make a demand and then, if we, for our part,

decide to make a demand for further rent.

BRENNAN J:  Is that the full way of describing the point at

issue between the parties?

MR KEANE:	We submit that it is, Your Honour.
BRENNAN J:	Why would you not regard it as a question at

issue between them as to the existence and measure

of the plaintiff's right to demand whatever it may

be, a quarter, or whatever it might be, of the

amount net?

MR KEANE: Because, Your Honour, it is no more a real legal

controversy, that is to say, that will affect them

in their obligations towards each other, than a

difference of views about the correctness of a

proposition in a legal text book.

BRENNAN J: But the controversy between them is specifically

as to that point, is it not? In other words, does

Quetel 6 13/5/94

the plaintiff have a right to demand a net payment

of so much from the defendant?

MR KEANE:  Your Honour, that is to put it in a rather

different way, with respect, because there is not

any question about that. One can look at the

document and see - one can look at the statute and

see that.

BRENNAN J:  One cannot look at it without resolving the

question of the operation of 18B.

MR KEANE:  Yes, Your Honour, but that only arises if there

is, in fact, a demand made for the recovery of the owner's portion, and then, that right is contested

by us, demanding further rent.

BRENNAN J:  Does that not indicate the measure of the net

right of the plaintiff to make its demand?

MR KEANE:  No, Your Honour, because that only happens in the event that those demands are made. It is not a

case, with respect, where there is an existing

liability, and the only question is as to the

measure of that liability. Your Honours, I

appreciate that we are engaged in a colloquy where,

from this end, the same point is being made perhaps

in a number of ways.

BRENNAN J: Yes, it is a question of how one does analyse

the points that are in dispute between the parties.

That there is an existing dispute of some kind is not in controversy, as I understand it, but you are endeavouring - - -

MR KEANE: There is a difference of views - - -

BRENNAN J: Yes.

DAWSON J: That is what a dispute is.

BRENNAN J:  You are endeavouring to characterize this,

however, as maturing into a dispute only when a

demand is made. Is that the situation?

MR KEANE:  Quite, Your Honour. Your Honour Justice Dawson

says a dispute is a difference of views. A legal

controversy, such as attracts judicial power to

declare the rights, is a dispute which makes, in

our respectful submission, a difference to the

parties. This does not and will not unless the

other side receive a view from the court that
encourages them to then pursue those rights.

Your Honours, as to our prospects of success,

may we mention the obvious, the perhaps trite fact,

that two of the judges below have agreed with our

Quetel	13/5/94 view; two have taken a contrary view and, of those two who took the contrary view, in the majority as
appears from page 35 point 9, to 36 point 1 of the
record, did so on the evident footing that the
principles regulating the exercise of the power to make declarations, are not so clear as to enable
the court to say that the action was hypothetical
and should be dismissed.

Now, in our submission, if that is the

position under the law that the court cannot say at

the commencement of the case whether the judicial

power has been properly engaged, then the law is in

a sorry state, with respect. And as to the other point which we apprehend is made against us, that

this is an appeal brought at an interlocutory

stage, and that the General Steel principles apply for the benefit of the other side, that is to say, that it cannot be demonstrated beyond argument that

the claim is hypothetical, then it should be

allowed to run to trial. As to that, we submit

that those principles have nothing to say, that is
to say the General Steel principles, to this

question, and that it is rather the other way. But

it is most desirable that every court, at first

instance, should be able to say whether a claim is

properly before it, and should be in a position, in

accordance with established principle, to dismiss

it if it is not.

If it please the Court, those are our

submissions.

BRENNAN J: Thank you, Mr Solicitor. We need not trouble

you, Mr Bonutto.

The pleadings in this case show an existing

controversy as to the existence and measure of the

first defendant's net liability to the plaintiff in

the event of the plaintiff making a demand.	In
such a commercial matter there is authority to
support the jurisdiction found by the majority of

the Court of Appeal, and if the jurisdiction

existed, there was no discretion to strike out the

pleadings.

There is not sufficient reason to doubt the

correctness of the majority decision in the Court

of Appeal to warrant a grant of special leave.

Accordingly, special leave will be refused.

MR BONUTTO:  May it please the Court, the respondents seek

costs for the application.

BRENNAN J:  Do you have anything to say to that,

Mr Solicitor?

Quetel	13/5/94
MR KEANE:	No, Your Honours.

BRENNAN J: Special leave will be refused with costs.

AT 10.17 AM THE MATTER WAS ADJOURNED SINE DIE

Quetel 13/5/94