Supreme Court New South Wales Medium Neutral Citation: QBE Insurance (Australia) Limited v Gregory Robert Hotchin and Ors [2011] NSWSC 681 Hearing dates: 23 June 2011 Decision date: 23 June 2011 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Injunction granted Catchwords: ANTI-SUIT INJUNCTION - whether the defendants should be restrained from continuing proceedings in the United States of America seeking the same relief as sought in these proceedings Cases Cited: Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724 CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 Category: Interlocutory applications Parties: QBE Insurance (Australia) Limited ACN 003 191 035 (Plaintiff) Gregory Robert Hotchin, Administrator of the Estate of Brett Andrew Hotchin, deceased (1st Defendant) Denise Joy Kalin, Administrator of the Estate of Timothy Ross Langdon Down, deceased (2nd Defendant) Roger Hugh Langdon Down, Administrator of the Estate of Timothy Ross Langdon Down, deceased (3rd Defendant) Representation: Counsel: DJ Fagan SC with T Brennan and N Kirby (Plaintiff) A Abadee (1st, 2nd, 3rd Defendants) Solicitors: Norton White (Plaintiff) Cleary & Lee Pty Ltd (1st, 2nd, 3rd Defendants) File Number(s): 2011/195528 Judgment - EX TEMPORE 1These proceedings were commenced on 15 June 2011 when the plaintiff, QBE Insurance (Australia) Limited (QBE), filed a Summons and a Notice of Motion seeking declaratory relief and consequential orders against the defendants, Gregory Robert Hotchin as administrator of the estate of Brett Andrew Hotchin deceased (the first defendant), Denise Joy Kalin as co-administrator of the estate of Timothy Ross Langdon Down deceased (the second defendant), and Roger Hugh Langdon Down as co-administrator of the estate of Timothy Ross Langdon Down, deceased (the third defendant). 2The declarations sought by QBE are as follows: 1. That, on the true construction of the Aircraft Insurance Policy, number 02 Q01 0007782 issued by the Plaintiff the Defendants have not become entitled to indemnity under the said policy in respect of the proceedings specified in the Schedule hereto. 2. That, on the true construction of the Aircraft Insurance Policy number 02 Q01 0007782 issued by the Plaintiff the Defendants have not become entitled to payment by the Plaintiff of any legal costs and disbursements incurred by the Defendants in connection with the proceedings specified in the Schedule hereto. 3The proceedings referred in the Schedule of the Summons are: (1) Proceeding 2007-L004642 in the Circuit Court of Cook County, Illinois, USA; (2) Proceeding 0831-CV05866 in the Circuit Court of Greene County, Missouri, USA; and (3) Proceeding 0831-CV05931 in the Circuit Court of Greene County, Missouri, USA (the main USA proceedings). 4Today QBE moves on the Notice of Motion, also filed on 15 June 2011, in which the following order is sought: An order that the Defendants be restrained from taking any further step in proceeding 2011-L005095 in the Circuit Court of Cook County, Illinois, United States of America, other than those steps as may be required to have the proceeding dismissed or stayed until further order. 5The circumstances relevant to the decision in the main proceedings in this Court will involve a review of a Policy issued by QBE to various insured, but relevantly extending to the deceased pilots, Messrs Hotchin and Langdon Down, who were in charge of a commercial flight from Cairns to Bamaga in Queensland when it crashed and all on board perished. An Aviation Occurrence Report that is in evidence includes a statement that at the time of the crash both pilots were required to be endorsed in order to conduct an approach to the airport on instruments. That Report records that although the pilot in control or in command was appropriately endorsed to conduct the instruments approach, the co-pilot was not so endorsed and had no formal training in conducting such approaches. It is apparent that the plane crashed into a mountain range in low cloud on approach. 6In 2007 the representatives of the estates of all the deceased passengers and the pilots commenced the main USA proceedings against various companies claiming damages in respect of the manufacture of the aircraft instruments and other equipment. The companies in the proceedings in Missouri have counter-claimed against the deceased pilots alleging negligence. The claims can be generally described as claims for contribution. 7When the counter-claims were served, the defendants sought from QBE cover for the costs of defending the counter-claims and indemnity in respect of the claims made in the counter-claims. Correspondence between QBE's solicitors and the defendants' solicitors in the United States of America resulted in the parties joining issue in correspondence as to whether QBE is required to indemnify the defendants. 8QBE, by its solicitor's letter of 20 May 2011, indicated that it took the view that it was not required to agree to provide indemnity "at this point" and was unable to make a determination in respect of the pilots' actions prior to the hearing and determination of the main USA proceedings. 9The first and second defendants filed a Summons in proceedings 2011-L005095 in the Circuit Court of Cook County on 18 May 2011 seeking the entry of judgment in their favour against QBE "for an amount in excess of the minimum jurisdictional amount" of that court, together with costs and attorney's fees and such other damages as may be allowed by law. The complaint includes the following: 1. Plaintiff Denise Kalin is the co-administrator of the Estate of Timothy Ross Langdon Down, deceased. Plaintiff Robert Hotchin is the administrator of the Estate of Brett Andrew Hotchin, deceased. 2. Defendant QBE Insurance (Australia) Limited ("QBE") is, upon information and belief, an Australian company which conducts business in Illinois sufficient to subject it to the jurisdiction of Illinois courts. This cause of action arises, at least in part, from defendant's transaction of business in Illinois in insuring plaintiffs against liability arising from a suit brought against plaintiffs in Illinois. Therefore, this defendant also is subject to the long-arm jurisdiction of this Illinois court. 3. Defendant QBE issued a policy of insurance to Lessbrook Pty. Limited t/as Transair effective from November 30, 2004 to November 30, 2005, in consideration for a premium paid. (A copy of the subject policy is attached hereto as Ex. A). 4. Defendant QBE's policy included coverage for legal liability to passengers, pursuant to which defendant QBE agreed to indemnify the insured in respect of all sums which the insured shall become legally liable to pay as compensatory damages in respect of accidental bodily injury, fatal or otherwise, to passengers while onboard the aircraft. Defendant QBE further agreed in its policy to pay the legal costs and expenses of its insured in defending any action in respect of any claim for compensatory damages covered by defendant QBE's policy. 5. Defendant QBE also agreed, under a section of its policy entitled "Pilot Cover", to indemnify any pilot of its insured for any liability for compensatory damages described above. 6. Plaintiffs' decedents, Timothy Ross Langdon Down and Brett Andrew Hotchin, respectively, were employed as pilots by Lessbrook Pty. Limited and were working in that capacity as pilots of a certain Lessbrook aircraft being operated as Aero Tropic Air Services Flight from Bamaga to Cairns, Australia on May 7, 2005. 7. The above-described aircraft crashed near Lockhart River, Australia on said date and all those onboard the aircraft were killed. 8. A lawsuit was brought in the Circuit Court of Cook County, Illinois, Case No. 10 L 3842, and entitled Thornton, et al. v. Hamilton Sundstrand Corp., et al. on behalf of the families of 11 of the 12 passengers and the two pilots onboard the accident aircraft. 9. A counterclaim was brought in this Illinois action, Thornton, et al. v. Hamilton Sundstrant Corp., et al., by defendants in that action, Hamilton Sundstrand Corporation, Honeywell International, Inc., M7 Aerospace, LP, and Jeppesen Sanderson, Inc., against the plaintiff estates of Timothy Ross Langdon Down and Brett Andrew Hotchin. 10. Another lawsuit was brought on behalf of 11 of the 12 passengers onboard the accident aircraft and the two pilots of the accident aircraft in the Circuit Court of Greene County, Missouri, Case No. 0831-CV05866, and entitled Thornton, et al. v. Lambert Leasing, Inc., et al. 11. A counterclaim was filed in that action in Greene County, Missouri by Jeppesen Sanderson, Inc. against the plaintiff estates of the two pilots, Timothy Ross Langdon Down and Brett Andrew Hotchin. 12. Plaintiffs have given defendant QBE with notice of these claims and have requested that defendant QBE provide them with a defense and indemnity to the above counterclaims. 10Mr Fagan SC, leading Mr T Brennan of counsel and Mr N Kirby of counsel, submitted that in all the circumstances it is appropriate to restrain the defendants from proceeding with the Cook County proceedings involving the same issues that will arise in these proceedings, as the proceedings in Cook County against QBE are vexatious. 11The serious issue to be tried in respect of the claim QBE makes in these proceedings includes the issue of whether it was necessary for the co-pilot to be endorsed for instrument landing for the cover to respond. The relevant clauses of the Policy relied upon by Mr Fagan in this regard are as follows: Due Diligence 1. The Insured shall at all times use due diligence and do and concur in doing everything reasonably practicable to avoid accidents and to avoid or diminish any loss hereon. Compliance with Statutory Requirements 2. The Insured shall comply with all Statutory Requirements which affect the safety or maintenance or operation of the Aircraft and shall ensure that: (a) the Aircraft is airworthy at the commencement of each Flight; (b) all Log Books, maintenance releases and other records in connection with the Aircraft which are required from time to time shall be kept up to date and shall be produced to the Company or its agents on request; (c) the employees and agents of the Insured comply with such orders and requirements. Claims Procedure 3. Immediate notice of any event likely to give rise to a claim under this Policy shall be given as stated in the Schedule. In all cases the Insured shall: (a) furnish full particulars in writing of such event and forward immediately notice of any claim with any letters or documents relating thereto; (b) give notice of any impending prosecution; (c) give all information, do all things, provide signed statements, provide all documents, records and things, and assist the insurers and their agents in any other way in the investigation and in connection with any proceeding or inquiry as the Company or its agents or representatives may require; (d) be available and attend conferences and give evidence and/or instructions when required by the Company or its agents, ensure that any employees required by the Company are available to do likewise and take all reasonable steps to ensure that any other person connected with the Insured is available and will assist and give evidence if so required; (e) not act in any way to the detriment or prejudice of the interest of the Company. ... Pilot Cover 11. Sections 2 and 3 of this Policy extend to indemnify jointly and severally with the Insured any pilot approved in accordance with the terms of this Policy provided such pilot observes and fulfils the conditions and is subject to the exclusions of the Policy. In the event of an award being made both against the Insured (or his estate) and against the pilot (or his estate), the named Insured shall to the extent of his liability be entitled to priority in respect of any indemnity payable by the Company. 12If it is necessary for the co-pilot to be so endorsed before QBE is liable to indemnify the defendants and the co-pilot was not so endorsed, then the defendant's claim against QBE in the USA would appear to be doomed to fail. As can be seen from the extract from the complaint made in the Circuit Court of Cook County that very issue is raised as a consequence of the claim in paragraph 5. Accordingly it would be necessary for the Circuit Court to decide that same issue. 13Another factor of some relevance is that one of the companies that is sued by the defendants in the USA proceedings, Lambert Leasing Inc, has brought proceedings in the Commercial List of this Division seeking declaratory relief in relation to the Policy and whether QBE is liable to it for defence costs and in respect of indemnifying it for any damages found against it in the Missouri proceedings. 14On 22 June 2011 the solicitor for QBE was notified by the American attorney for the defendants that a Notice of Motion, referred to as an "emergency motion", had been prepared to be filed in the Circuit Court of Cook County seeking an anti-suit injunction against the plaintiff in these proceedings. It is not clear whether that emergency motion has yet been filed in that jurisdiction. 15Both parties have referred to the decision of the High Court in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 and in particular to the following passages of that judgment (at 391-392 and 395-396): The counterpart of a court's power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion. And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if "an estate is being administered...or a petition in bankruptcy has been presented...or winding up proceedings have been commenced...an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets". Similarly, as Gummow J pointed out in National Mutual Holdings Pty Ltd v Sentry Corporation , a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with proceedings pending in that court. The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes. Quite apart from the inherent power of a court to protect its own processes, a court may, in the exercise of the power deriving from the Chancery Court, make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights. If the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in the exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought. ... The cases concerned with injunctions in restraint of proceedings in foreign courts recognise that, although an injunction of that kind operates in personam, it nevertheless interferes with the processes of the foreign court and may well be perceived as a breach of comity by that court. Comity, relevantly, was explained by the Supreme Court of the United States in Hilton v Guyot in the following terms: "'Comity', in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." For this reason, the cases also emphasise that the power to grant injunctions in restraint of foreign proceedings should be exercised with caution. And that is so whether the injunction is sought in the exercise of the inherent or equitable jurisdiction. 16Mr Fagan has also referred to the following passage of Brereton J's judgment in Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724 at [78]: [78] In my view, given the choice of law, the jurisdiction clause (even if it be non-exclusive), the location of the parties, where they made their contract, and the very faint connection with California, the invocation of Californian jurisdiction for the purpose of securing a supposed legal advantage which on the evidence before me does not exist is unconscionable, vexatious and oppressive in the relevant sense. In other words, California is a clearly inappropriate forum for the resolution of this dispute. 17QBE has not sought an order for a stay or a dismissal of the American proceedings. However that is not an impediment to it in these proceedings. 18Mr Abadee submitted that if QBE were successful in achieving an interim injunction in respect of the American proceedings until this Summons was heard it would be a rather Pyrrhic victory because he claims QBE would have to be joined to those proceedings in any event. 19I disagree with that submission because if QBE is correct in relation to the endorsement of the co-pilot it would not be permissible to join QBE in the American proceedings as I presently see the issues that are being litigated in those proceedings. 20Having regard to the complaint filed in the Circuit Court of Cook County against QBE, it is inappropriate for two courts to be deciding the very same issue. The American proceedings are vexatious in that regard, grounding a basis for an anti-suit injunction. 21One of the difficulties QBE faces in this application is that there is little detail of the process of what occurs in Illinois in case management and the like. However, there is a decision of the Appellate Court of Illinois in relation to an application that was made to transfer the proceedings to Australia. The reasons are in evidence (Exhibit 1) and there is some reference therein to the "docket" system. Mr Abadee effectively conceded that the claim against QBE in Cook County would have to await the outcome of the determination of liability in respect of the other parties, at least for the purposes of assessing the quantum of any damages that may be entered by way of judgment against QBE. QBE would need to amend its Summons in these proceedings to add what has been argued today, that it is not liable to the defendants as opposed to the declaration that is sought, which injects a temporal aspect to the declaration, being that it is not "at this stage" liable to the defendants. 22If QBE is correct in its proposed claim in relation to the need for the co-pilot's endorsement that would seem to put an end to any litigation against QBE by the present defendants. It is difficult, however, in this preliminary hearing to be certain that this would be the case. However presently on the balance of probabilities it would appear to be the case. 23The choice of law of the Policy is Australia. The geographical cover of the Policy is Australia and surrounding countries. The parties to the Policy of insurance are within the jurisdiction. It is true that there is no jurisdiction clause in the Policy but that seems to me to be a neutral factor in my consideration of whether to grant the orders sought by QBE in its Notice of Motion. 24It is clear that the defendants seek to injunct QBE from proceeding with these proceedings and it is in that environment in which this application should also be considered. 25I am conscious of what the High Court said in CSR Limited v Cigna Insurance Australia Limited , referred to above, in relation to ensuring the integrity of the processes of this Court. I am satisfied it would be vexatious for the application against QBE in Cook County, Illinois, filed on 18 March 2011 to continue whilst these proceedings are on foot. 26However, having regard to the late indication given by QBE in relation to the endorsement point and the need for it to amend its claim to include that declaration I will provide the defendants liberty to apply should there be any developments of which I am presently unaware in the United States courts that affect this issue. 27I am satisfied that it is appropriate to grant the order on a limited time basis with a requirement that QBE proceed to ready itself for argument in these proceedings on an urgent basis. That means that I will put a timeframe within which the parties are to prepare these proceedings and grant the injunction as requested. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 July 2011