Supreme Court New South Wales Medium Neutral Citation: QBE Insurance (Australia) Limited ACN 003 191 035 v Trad Thornton & Ors [2012] NSWSC 217 Hearing dates: 6 March 2012 Decision date: 06 March 2012 Jurisdiction: Equity Division - Duty List Before: Ball J Decision: See paragraphs 10 to 18 of this judgment. Catchwords: PRIVATE INTERNATIONAL LAW - anti-suit injunction - vexatious foreign proceedings - where issue in foreign proceedings already decided in NSW proceedings in which proper parties represented. PROCEDURE - application for summary judgment - no defence to the plaintiff's claim. PROCEDURE - summary judgment - whether appropriate to make declaration. Legislation Cited: Civil Aviation (Carriers' Liability) Act 1959 (Cth) Insurance Contracts Act 1984 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 GPI Leisure Corporation Ltd (in liq) v Yuill [1997] NSWSC 292 Great Southern Loans Pty Ltd v Locator Group Pty Ltd [2005] NSWSC 438 QBE Insurance (Australia) Ltd v Hotchin [2011] NSWSC 681 Category: Procedural and other rulings Parties: QBE Insurance (Australia) Limited ACN 003 191 035 (Plaintiff) Trad Thornton & 55 Ors (Defendants) Representation: T Brennan (Plaintiff) No appearance (Defendants) Norton White (Plaintiff) No Appearance (Defendants) File Number(s): 2011/323868 Judgment 1On 7 May 2005, aircraft WH-TFU crashed on final approach to Lockhart River Airport in Queensland killing the two pilots and thirteen passengers who were onboard. One of those passengers was Constable Urquhart. This judgment concerns an application by the plaintiff, QBE, for an anti-suit injunction and ancillary relief restraining Mr Urquhart, the personal representative of Constable Urquhart, from pursuing proceedings in Illinois (the Illinois insurance proceedings ) seeking an order that QBE indemnify the two pilots, Mr Hotchin and Mr Down, under an insurance policy it issued in respect of the aircraft. How proceedings came to be brought under the policy on behalf of the pilots in Illinois and how Mr Urquhart became a plaintiff in those proceedings requires some explanation. 2In 2007, Mr Wisner, a lawyer based in Illinois, commenced liability proceedings on behalf of the personal representatives of the pilots and passengers other than Mr Urquhart against a number of named defendants, including the manufacturer of the aircraft instruments and other equipment. The proceedings were commenced in Illinois in order to avoid the limitations on liability arising from various international conventions which have been ratified by Australia and which have become part of the law of Australia as a result of the passing of the Civil Aviation (Carriers' Liability) Act 1959 (Cth). 3The defendants in the Illinois proceedings counter-claimed against the deceased pilots alleging that they were negligent. Mr Wisner, on behalf of the pilots, then commenced the Illinois insurance proceedings against QBE seeking an indemnity under the policy in respect of the claims against them. That claim is brought under general condition C(11), which relevantly provides: 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. ... 4On 23 June 2011, Bergin CJ in Eq granted interlocutory anti-suit injunctions against the personal representatives of the pilots preventing them from taking further steps in the Illinois insurance proceedings, other than for the purposes of dismissing those proceedings. Her Honour did so because of the close connection the claim for indemnity had with Australia and the very limited connection it had with Illinois. Bergin CJ in Eq went on to determine the question of QBE's liability to indemnify the personal representatives of the pilots. In a judgment handed down on 10 November 2011, her Honour made orders to the effect that the pilots were not entitled to the benefit of the QBE policy because they had not complied with one of the conditions set out in section 4(B) of the policy. That section provides: It is necessary that the Insured observes and fulfils the following Conditions before the Company has any liability to make any payment under this Policy. One of those conditions is the following: The Insured shall comply with all Statutory Requirements which affect the safety or maintenance or operation of the Aircraft ... "Statutory Requirements" is defined in cl 4D(12) of the policy to include: All legislation and delegated legislation (including applicable legislation and delegated legislation of another country) and orders, rules, directions, notices, approvals, certificates and licences issued by a competent authority. 5In addition, her Honour granted prohibitory and mandatory injunctions requiring termination of the claims by the personal representatives of the pilots in the Illinois insurance proceedings and a declaration that QBE is not liable under the policy in respect of any liability arising from the accident involving aircraft VH-TFU on 7 May 2005. 6In the meantime, in the Illinois insurance proceedings a number of the personal representatives of the passengers (not including Mr Urquhart) applied to be joined in those proceedings apparently on the basis that they had an interest in the outcome of them. QBE then commenced these proceedings and was successful in obtaining orders from Gzell J on 11 October 2011 and 14 October 2011, the effect of which was to restrain each of the personal representatives (other than Mr Urquhart) from taking any step in the Illinois insurance proceedings. 7In the meantime, on 12 October 2011, Mr Urquhart sought and obtained an order to intervene in the Illinois insurance proceedings and himself obtained an anti-suit injunction from the Illinois court. It was for that reason that the orders made by Gzell J on 14 October 2011 did not restrain Mr Urquhart from taking any step in the Illinois insurance proceedings, although those orders did restrain Mr Urquhart from taking any action without leave of this court from alleging contempt or breach of any order against QBE in the Illinois insurance proceedings by reason of any step taken by QBE in these proceedings. The anti-suit injunction obtained by Mr Urquhart was subsequently dissolved by the Illinois court on 2 December 2011. 8By notice of motion filed on 20 February 2012, QBE sought the following orders against Mr Urquhart: 1. ... ... 3. A declaration that the plaintiff is not liable to Gregory Robert Hotchin (Mr Hotchin) in his capacity as administrator of the Estate of Brett Andrew Hotchin, deceased or Denise Joy Kalin (Ms Kalin) or Roger Hugh Langdon Down (Mr Down) in their capacity as administrators of the Estate of Timothy Ross Langdon Down deceased under Aircraft Insurance Policy 02Q010007782 in respect of any liability arising from the accident involving aircraft VH-TFU on 7 May 2005 because at the time of the accident the deceased pilots had failed to comply with statutory requirements which affected the operation of the aircraft by the conduct of the approach to land at Lockhart River, Queensland, using a GNSS (RNAV), navigation procedure when one of the pilots was not endorsed to use that procedure. 4. An order that within 3 days of the date of the order, the fourteenth defendant, Shane Urquhart, take all steps necessary to have his claim in proceeding 2011-L5095 in the Circuit Court of Cook County, Illinois, dismissed or otherwise appropriately terminated. 5. An order that the fourteenth defendant be permanently restrained by himself, his attorneys, solicitors or agents in the Courts of the United States of America or elsewhere, from: (a) commencing any proceeding or making any claim in a proceeding alleging that Mr Hotchin, Ms Kalin or Mr Down or any of them are entitled to be indemnified by the plaintiff or that the plaintiff is liable to any of Mr Hotchin, Ms Kalin or Mr Down in respect of any liability arising from the accident involving aircraft VH-TFU on 7 May 2005. (b) taking any step or permitting any step to be taken having the effect of prosecuting or supporting a claim by any person that Mr Hotchin, Ms Kalin or Mr Down or any of them are entitled to be indemnified by the plaintiff or that the plaintiff is liable to any of the defendants in respect of any liability arising from the accident involving aircraft VH-TFU on 7 May 2005. 9The application for those orders was heard by me on 6 March 2012. There has been no appearance filed by Mr Urquhart in the proceedings and there was no appearance by or on his behalf on 6 March 2012, although the matter was called when it first came before the Registrar and it is apparent from the evidence before me that Mr Urquhart had been served with the application. At that time, I made orders substantially in the terms sought and indicated that I would publish my reasons for doing so later. These are those reasons. 10The application is made pursuant to Uniform Civil Procedure Rules 2005 ( UCPR ), r 13.1(1), which provides: If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. 11QBE filed an affidavit in the form required by UCPR 13.1(1)(b). Three questions arise on the application. The first is whether Mr Urquhart has a defence to QBE's claim that it is not obliged to indemnify the pilots. The second is whether Mr Urquhart has a defence to the claim that QBE is entitled to anti-suit injunctions to restrain him from taking any steps in the Illinois insurance proceedings and to require him to discontinue those proceedings. The third is whether it is appropriate to make the declaration sought by QBE in the absence of a contested hearing. 12In my opinion, it is clear that Mr Urquhart has no defence to QBE's claim that it is not liable to indemnify the pilots. At the hearing before Bergin CJ in Eq on 10 November 2011, her Honour identified a number of preliminary questions which ultimately were answered by consent. Those questions and answers included the following: a. Were there "statutory requirements" (within the meaning of B2 of the Policy) applicable to the conduct of the flight by aircraft VH-TFU from Bamaga to Lockhart River on 7 May 2005, (the "incident flight") that a RNAV (GNSS) navigation procedure not be used if one (or more) of the pilots was not endorsed to use such a procedure? ANSWER: Yes b. Was a RNAV (GNSS) approach procedure used in the conduct of the incident flight? ANSWER: Yes c. Was Mr Down endorsed to use a RNAV (GNSS) approach procedure on 7 May 2005? ANSWER: No d. If the answers to questions (a) or (b) are yes and the answer to question (c) is "no" did i. Mr Hotchin fail to comply with any statutory requirements in respect of which the answer to question (a) applies? ANSWER: Yes ii. Mr Down fail to comply with any statutory requirements in respect of which the answer to question (a) applies? ANSWER: Yes 13The evidence that was before her Honour, and which no doubt persuaded the defendants in those proceedings to consent to the separate questions being answered in the way that they were, was also before me. It is not necessary to review that evidence in detail. It is sufficient to say that that evidence establishes that a RNAV (GNSS) approach procedure was used in the conduct of the flight that led to the accident, that the co-pilot, Mr Down, was not endorsed to use that procedure and that there was a statutory requirement that both pilots be endorsed to use that procedure before it could be used. It follows that the pilots failed to satisfy a condition of the policy. It is apparent that that failure contributed to the accident. Consequently, the pilots are not entitled to relief under s 54 of the Insurance Contracts Act 1984 (Cth), and QBE was entitled to deny indemnity. 14As to the second issue, the principles governing the granting of anit-suit injunctions in Australia are set out in the judgment of Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345. Those principles were usefully summarised by McDougall J in Great Southern Loans Pty Ltd v Locator Group Pty Ltd [2005] NSWSC 438 at [24]. Relevantly, McDougall J said: (4) Their Honours considered the circumstances in which an antisuit injunction might be granted. One is where it was necessary to do so to protect the integrity of the court's processes once set in motion: for example, where proceedings had been commenced for the administration of an estate, or to wind up a company, and a person sought in foreign proceedings to obtain the sole benefit of foreign assets. Their Honours pointed out that the inherent power "is not to be restricted to defined and closed categories" but one "to be exercised when the administration of justice so demands or ... when necessary for the protection of the court's own proceedings or processes." (At 391-392.) (5) There is a separate basis on which an antisuit injunction could be granted. That is where "the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of legal rights". In some such cases, "the equitable jurisdiction to restrain unconscionable conduct may be exercised in aid of legal rights." Thus, the court may grant an injunction "in aid of a promise not to sue in a foreign jurisdiction constituted, for example, by an agreement to submit to the exclusive jurisdiction of the courts of the forum". (At 392.) (6) On this latter ground, an antisuit injunction may be granted where the foreign proceedings are vexatious: for example, where complete relief is available in the local proceedings, where there is nothing to be gained from the foreign proceedings over and above what could be gained in the local proceedings, or where there is complete correspondence between the local and foreign proceedings. The power is not confined to the examples; its limits "are determined by the dictates of equity and good conscience." (At 393-394.) 15In the present case, the proceedings in Illinois are vexatious because the very issue that is the subject of those proceedings - whether the pilots are entitled to an indemnity under the QBE policy - has been finally determined in this court in proceedings in which the proper parties to that question (that is, the pilots' personal representatives and QBE) were represented. 16As to the third issue, courts are generally reluctant to make declarations on an application for summary judgment. As Young J (as he then was) explained in GPI Leisure Corporation Ltd (in liq) v Yuill [1997] NSWSC 292: There is no doubt that it is competent for the court to make a declaration on an application for summary judgment, but it will only be in exceptional cases that the court will do so. Although courts have become more venturesome since 1939, what was said by Lord Maugham, LC in New Brunswick Railway v British & French Trust Corp Ltd [1939] AC 1, 22, for the greater part still holds good. His Lordship said, "I think it right to observe that it is in my view undesirable that judges should make declarations as to the true construction of documents on motions for judgment in default of defence. It has not, I believe, been the practice to do so in the Chancery Division for a good many years. As far as possible the Court should make such declarations only when the matter has been argued by counsel on each side, and is then the subject of adjudication by the judge." 17However, in my opinion, this is an appropriate case in which to make an exception. This is not a case where the declaration is sought merely on the basis of deemed admissions arising from the failure of Mr Urquhart to appear and to file a defence. As I have said, the evidence before me established that QBE was entitled to deny indemnity to the pilots on the grounds that it did. Having regard to the history of the proceedings, there is utility in making the position of this court clear on that question. Indeed, similar declarations have been made both as between QBE and the pilots and as between QBE and the personal representatives of the other passengers. There can be no reason in those circumstances for withholding a declaration in relation to the claim by Mr Urquhart. 18It is for those reasons that I made the orders that I did. ********** 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: 16 March 2012