Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd (No. 2) [2009] QSC 259

SUPREME COURT OF QUEENSLAND CITATION: Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd (No. 2) [2009] QSC 259 PARTIES: CAPE YORK AIRLINES PTY LTD (ACN 000 627 010) (plaintiff) v QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035) (defendant) FILE NO: BS 1762 of 2005 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 3 September 2009 DELIVERED AT: Brisbane HEARING DATE: 5 February 2009 JUDGE: Daubney J ORDER: 1. Within seven (7) days, the defendant shall provide those further and better particulars of paragraphs 11(c) and 22(c) of the Seventh Further Amended Defence which were sought in paragraphs 8(d) and 18 of the plaintiff’s request for further and better particulars of the Sixth Further Amended Defence dated 23 July 2008; 2. The application otherwise be dismissed; and 3. Costs reserved. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – DEFENCE AND COUNTERCLAIM – where defendant filed and served a seventh further amended defence – where plaintiff contended that the seventh further amended defence failed to distinguish between matters constituting the direct explanation for a denial and those matters pleaded as positive allegations – where plaintiff complained that the pleadings did not give the plaintiff notice of those matters which were no more than direct explanation for the denial and which had the effect of putting the plaintiff to proof, and those matters pleaded as material facts or to raise a positive case – where the plaintiff -- 1 of 12 -- 2 requested further and better particulars – whether what was pleaded was a mere explanation or an assertion of a material fact or positive case – whether the defendant provided sufficient particulars Uniform Civil Procedure Rules 1999 (Qld) Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd [2008] QSC 302, applied COUNSEL: D R Cooper SC for the plaintiff S S W Couper QC for the defendant SOLICITORS: BCI Duells Lawyers (Town Agents for Nicholl & Co Lawyers) for the plaintiff Cooper Grace Ward for the defendant [2] Consequent on my ruling1 that paragraph 5(c) of the sixth further amended defence did not comply with the requirements of rule 166 of the Uniform Civil Procedure Rules (UCPR), the defendant filed and served a seventh further amended defence (“7AD”). [3] The plaintiff contends, however, that the 7AD still fails to distinguish between matters which are adverted to in the defence as constituting the direct explanation for a denial and those matters which are pleaded as positive allegations raising issues for determination at trial in respect of which the defendant will bear the onus of proof. [4] In my previous judgment, I outlined at some length my views as to the interpretation, requirements and application of the rules of pleading denials under the UCPR. In particular, I highlighted the distinction drawn in the Rules between the requirement that a party denying an allegation give a “direct explanation” for its belief that the particular allegation is untrue and the obligation on a party to plead 1 [2008] QSC 302. -- 2 of 12 -- 3 material facts relied on and matters which, if not pleaded, may take the opponent by surprise. In respect of the direct explanation, I said: “[29] The direct explanation itself, clearly enough, is not a statement of a material fact for the purposes of rule 149. It may be, however, that the nature of the direct explanation of the party’s belief that an allegation is untrue necessarily compels the party to plead, in compliance with rule 149, the material facts (not evidence) on which it will rely to controvert the allegation or other matters to prevent the opponent being taken by surprise. Thus, if the direct explanation given by a defendant is that the alleged fact is so inconsistent with other matters that the defendant believes it to be untrue, the defendant should plead those other matters by way of response, 2 either as material facts under rule 149(b) or as matters required to be stated to prevent surprise under rule 149(c). On the other hand, if a party’s direct explanation is, for example, that it believes that a particular event simply did not occur, it may, depending on the case which it would seek to advance at trial, not be necessary to plead any other matters.” [5] Specifically in relation to the version of the defence then before me, I said: “[33] One of the reasons for the imprecision in the latest defence is the use of the formula that a paragraph of the statement of claim is denied ‘on the grounds that ...’. This coincides with the defendant’s submission, noted above, that each denial is ‘accompanied by grounds for the denial’. Whilst this is understandable shorthand, there is nevertheless a subtle but palpable distinction between stating ‘grounds for a denial’ on the one hand and giving ‘a direct explanation for the party’s belief that the allegation is untrue’ on the other. The latter is what is expressly required by the UCPR. The seriousness of that requirement can be determined from the fact that a failure to comply with it leads to the allegation being deemed admitted.” [6] The last hearing proceeded on the basis that I would rule specifically on one of the impugned paragraphs in the sixth further amended defence, with the parties accepting that my reasoning would apply equally in respect of the plaintiff’s other complaints. [7] My last judgment focused on paragraph 5(c) of the then version of the defence. In order to understand the complaints which the plaintiff continues to maintain about 2 Rule 165(1) provides for a party to lead “another matter” in response. -- 3 of 12 -- 4 the 7AD, it is appropriate to set out in full both paragraph 8 of the third further amended statement of claim (“the statement of claim”) and paragraph 5 of the 7AD. [8] The full pleaded paragraph in the statement of claim reads as follows: “8. As a consequence of the Ditching, the Aircraft: (a) was immersed in salt water; (b) immediately incurred, and is continuing to incur, a process of corrosion; (c) was subjected to both total and partial immersion in salt water, over the period of approximately 42⅓ hours from approximately 4:10 p.m. on Sunday 8 February 2004 to approximately 10:30 am on Tuesday 10 February 2004; (d) was recovered from the salt water and placed on a barge at approximately 10.30 am on Tuesday 10 February 2004; (e) remained on the barge for a period of approximately 8 days until it was delivered to the Barron River Barge Ramp at Cairns at approximately 8:25 am on Wednesday 18 February 2004 after which it was delivered to CYA’s hangar at the Cairns Airport; (f) was during the period from about 18 to 22 February 2004, and at the request of Mike Ellis of QBE’s loss adjusters (GAB Robins), cleaned by hosing down with fresh water by CYA, allowed to dry and sprayed with kerosene; (g) was not subjected to any washing with clean water, or any other cleaning, during the period form the ditching until the cleaning referred to in paragraph 8(f) herein.” [9] Paragraph 5 of the 7AD reads: “5. As to paragraph 8 of the Statement of Claim the Defendant: (a) admits the fact alleged in subparagraph 8(a); (b) admits that the hull of the Aircraft was subject to immersion in salt water over a period of approximately 42⅓ hours from 4.10 pm on Sunday 8 February 2004 to 10.30 am on Tuesday 10 February 2004; (c) denies the allegations contained in subparagraph 8(b) that the Aircraft immediately incurred and is continuing to incur a process of corrosion and believes the allegations to be untrue on the grounds that: -- 4 of 12 -- 5 (i) between 18 and 20 February 2004 the Plaintiff undertook the complete stripping of the interior trim, panels and inspection panels throughout the Aircraft and washed it out thoroughly before applying a liberal spray of kerosene; (ii) on or about 20 February 2004 Gunther Stern of the Plaintiff orally informed Mike Ellis of the Defendant’s loss adjusters GAB Robins that the Plaintiff had in place an anti-corrosion program and had recently sprayed the entire internals of the Aircraft including inside the wings and tail with a corrosion inhibiting wax product (the Defendant cannot give further particulars until after disclosure); and (d) alternatively, if the hull of the Aircraft has incurred and is continuing to incur a process of corrosion, denies the allegation that the corrosion is a consequence of the ditching and believes the allegation to be untrue on the following grounds: (i) any corrosion is a consequence of the Plaintiff’s failure to authorise repairs to the Aircraft as requested by the Defendant in letters dated 26 February 2004, 22 March 2004 and 24 March 2004; (ii) the Plaintiff has at all material times since on or about 18 February 2004 had possession and control of the Aircraft; (iii) since on or about 20 February 2004, the Plaintiff has left the Aircraft unprotected and exposed to the elements and has taken no steps to prevent any ongoing corrosion of the Aircraft; (iv) if the Plaintiff had permitted the repairs referred to in this subparagraph the hull of the Aircraft would have incurred no process of corrosion. (e) admits the allegations in paragraphs 8(d), (e) and (f); (f) denies the allegations in paragraph 8(g) and believes the allegations to be untrue because the Aircraft was hosed down inside and out with clean fresh water by the salvage crew on 10 February 2004.” [10] One of the matters previously complained of in respect of the previous version of the defence was a failure by the defendant properly to plead so as to identify precisely the allegations with which issue was being joined. As I said at [31] of the last judgment, the rules for pleading defences under the UCPR require the pleader of the defence to be alert to identifying precisely the allegations which need to be -- 5 of 12 -- 6 addressed. Those concerns have been remedied, particularly by the amendments to paragraph 5(c) and 5(d). [11] Despite my observations concerning the use of the formula “on the grounds” which, for the reasons I identified previously, I regard as particularly inapt for the purpose of properly pleading a defence in compliance with the UCPR, the pleader in this case has chosen to retain the phrase in this, and other, impugned paragraphs of the 7AD. The plaintiff’s basic complaint remains, as previously, that pleadings in this form do not properly give the plaintiff notice of those matters which are nothing more than direct explanation for the denial and which have the effect of putting the plaintiff to proof, and those matters which are pleaded as material facts, or to raise a positive case, for issues at trial in respect of which the defendant will bear the onus of proof. [12] For its part, the defendant submitted: (a) If the direct explanation does not involve the pleading of material facts but is only the giving of an explanation in compliance with Rule 166(4), the defendant is entitled to lead evidence to contradict the allegation in the statement of claim which is denied, and (b) If the explanation for the denial is the existence of other material facts, then those material facts which have been pleaded are matters about which evidence can be led by the defendant. [13] I would accept those propositions, noting, if I may, that they are completely consistent with my observations in the previous judgment at [29]. [14] So far as paragraph 5 of the 7AD is concerned, I think it does now sufficiently identify the allegations which are denied and, albeit in what I regard as inappropriate shorthand by use of the phrase “on the grounds”, does identify the direct explanation for the belief that each respective allegation is untrue, and further -- 6 of 12 -- 7 identifies and pleads the material facts which the defendant will be seeking to prove at trial to make a positive case in the defence of the claim. In reaching this conclusion, I am aware that I am adopting what some might regard as a robust, or even generous, approach to my reading of paragraph 5, but do so on the basis that the UCPR ought not be applied with such technicality as to enable form to prevail over substance. [15] Turning, then, to the other paragraphs complained of by the plaintiff, these fall into a number of categories. [16] A large number of the impugned paragraphs have been amended simply by adding the words “and believes the allegations to be untrue” (or cognate words) to the assertion of denial. This, says the plaintiff, still leaves a question as to whether what is pleaded is mere explanation or an assertion of a material fact or positive case. The challenged paragraphs in the 7AD are 6A(b), 6B(b), 6B(c), 8(b), 10(d), 10A(a), 10A(b), 11, 11A, 12(a), 12(b), 12(d), 12A(a), 12A(b), 12A(c), 13(b), 14, 15(d), 17, 19(aa), 20, 24, 25(a), 26, 27(b), 30, 31, 32, 33, 34, 35(a), 35(b), 35(c), 35(d), 35(e), 35(f), 35(g), 36, 43(a) and 43A. The plaintiff also complains about paragraphs 12(g) and 13(a), which have not been amended in the 7AD. [17] The plaintiff also seeks to impugn paragraphs 10(a) and 10(b), which are paragraphs of the defence which have had more extensive amendments made to them. [18] Dealing with the first broad category, it will be seen that difficulties are provoked in numerous instances by the incantation of the words “and believes the allegations to be untrue” in conjunction with the formula “on the grounds”. The following examples will serve to illustrate. -- 7 of 12 -- 8 [19] Paragraph 10A(g) of the statement of claim alleges that at all material times “Mickey Stowers of Airport Structures International Corporation Inc a company incorporated in the United States of America (“ASIC”) was appointed as an agent by QBE, and acted within the scope of his authority, in respect of the claim.” Paragraph 6A(b) of the 7AD pleads that the defendant “denies the allegation in subparagraph (g) therein and believes the allegation to be untrue on the ground that Mickey Stowers was not appointed as an agent by QBE and had no authority to act on behalf of QBE”. This pleading, it seems to me, is intended to be a denial of the fact with the explanation of untruth, without the defendant asserting any material facts on which it would rely for a positive case. This plea would not, however, restrict the defendant from leading evidence to contradict the plaintiff’s allegation (provided, of course, that the defendant does not seek to rely on a matter which, if not stated specifically, may take the plaintiff by surprise at trial). [20] Other paragraphs in the defence which fall into the same category are paragraphs 27(b), 31, 35(e), 35(g) and 43A. [21] A second example is seen in paragraphs 10B(d) and (e) of the statement of claim, which plead: “d) CASA would not issue a Certificate of Airworthiness, or lift the suspension of the Certificate of Airworthiness, in respect of the Aircraft unless it was satisfied that:- i) the repair of the Aircraft was done in accordance with approved data; and ii) the Aircraft was in a condition for safe operation; and -- 8 of 12 -- 9 iii) there was in place an amended ongoing airworthiness maintenance and inspection program in respect of the Aircraft; e) CASA would not issue an AOC in respect of the Aircraft, or otherwise allow the Aircraft to be returned to service as a Class A aircraft for schedules public transport activities and used for business or commercial operations, unless it was satisfied that:- i) the repair of the Aircraft was done in accordance with approved date; and ii) the Aircraft was in a condition for safe operation; iii) there was in place an amended ongoing airworthiness maintenance and inspection program in respect of the Aircraft;” Paragraph 6B(b) of the 7AD pleads that the defendant “denies the allegations in subparagraphs (b)(iii) and (e)(iii) therein and believes the allegations to be untrue on the grounds that any specified ongoing airworthiness maintenance and inspection program need not be an amended program”. Whilst I do not endorse this form of pleading, a pragmatic reading of this denial indicates that the defendant’s belief for the untruth of the allegation is founded in the positive case which it will seek to make at trial, and on which it will presumably lead evidence, namely that “any specified ongoing airworthiness maintenance and inspection program need not be an amended program”. Other paragraphs of the 7AD which, in my view, should be read in a similar fashion are 6B(c), 10A(a), 11, 11A, 12(a), 12(b), 12(d), 12(g), 12A(a), 12A(b), 12A(c), 13(a), 13(b), 14, 19(aa), 20, 26, 30, 32, 34, 35(e) and 43(a). [22] The further example occurs in paragraph 12 of the statement of claim, which pleads a variety of circumstances which the plaintiff alleges are included in the meaning of -- 9 of 12 -- 10 the words “loss of ... the Aircraft”, on a true construction of the relevant insurance policy. By paragraph 9(b) of the 7AD, the defendant largely denies paragraph 12 “and believes the allegations to be untrue as a matter of law”. This, it seems to me, is a clear example of a pleading which properly gives a direct explanation for the denial. The denial in paragraph 10(d) of the 7AD ought be regarded similarly. [23] In addition, there are a number of paragraphs complained of in which the denials are made by reference to, and incorporation of, denials, explanations and allegations of fact elsewhere in the 7AD. These, it seems to me, are permissible and comprehensible by the plaintiff. They are paragraphs 8(b), 10A(b), 15(d), 24, 25(a), 17, 33, 35(a), 35(b), 35(c), 35(d), 35(f) and 36. [24] As to paragraphs 10(a) and 10(b) of the 7AD, these respond to an allegation in the statement of claim contending for the implication of certain terms in the relevant insurance policy. The paragraphs, as amended, make clear not only that issue is joined on the asserted implications as a matter of law but they also advertise the matters on which the defendant will be positively relying in seeking to defeat the implication of the terms. [25] It follows, from what I hope will be seen as a pragmatic approach to the pleadings in this matter, that the plaintiff’s challenge to the 7AD should be dismissed. [26] The plaintiff has also sought further and better particulars of numerous of the paragraphs in the 7AD. The defendant has already provided a response to the -- 10 of 12 -- 11 plaintiff’s request for particulars, but the plaintiff considers the responses to be inadequate. Dealing with the requests by reference to the relevant paragraphs in the 7AD: - Paragraph 5B(b) – I consider that the defendant has provided sufficient particulars. - Paragraph 6B(d) – I consider that the defendant has provided sufficient particulars. - Paragraph 8(c) - the plaintiff’s request to be provided with particulars of the parts of documents identified by the defendant as evidencing the fact that it had formed a certain view does not seem to me to be a proper request. - Paragraph 10(a)(ii) - the plaintiff’s request to be provided with further particulars of the assertions by the defendant that an implied term contended for by the plaintiff cannot be implied as a matter of law from the terms of the policy does not seem to me to be a proper request. - Paragraph 11(c) – in its defence, the defendant has positively asserted that “ASIC did propose to repair the aircraft in accordance with approved data”, but has refused to provide particulars of this allegation. Counsel for the defendant pointed out that there was a variety of data capable of constituting “approved data”, and that the defendant ought not be obliged to limit its case in this respect. That, however, misses the point that the plaintiff ought be on notice of the facts, matters and circumstances on which the defendant will rely in advancing this positive allegation. The defendant ought supply the further and better particulars sought of paragraph 11(c) of the 7AD. - Paragraph 19(d) – the defendant has pleaded that “between 18 and 20 February 2004 the plaintiff undertook the complete stripping of the interior trim, panels and inspection panels throughout the Aircraft and washed it out thoroughly before applying a liberal spray of kerosene”. The plaintiff’s request for details of who washed which particular parts by what method and device is, in my view, a request for evidence. - Paragraph 22(c) – the defendant has alleged that if CASA sought to insist upon a requirement for documentary confirmation that it had approved the repair works then any such confirmation would be “unlawful, unreasonable and unenforceable”, but refuses to provide particulars of the basis for each of these assertions. In my view, the plaintiff is entitled to particulars of the facts and matters relied on to contend that CASA’s insistence on such a requirement would have yielded each of the pleaded consequences. -- 11 of 12 -- 12 - Paragraph 28 – the plaintiff has sought particulars of details of a witness referred to in general terms in the defence. The pleading sufficiently identifies the case which the defendant will be seeking to make; it ought not be required to disclose details of its witness. [27] The plaintiff has had some, but not complete, success in respect of its application for further and better particulars. The plaintiff’s application is otherwise to be dismissed, although, as I have already indicated on several occasions, the underlying basis for that dismissal so far as the complaints about the form of pleading are concerned is largely pragmatic. I would be disinclined at this stage of the proceeding to order costs of this application against the plaintiff. As will be apparent, I am not at all satisfied that the amended defence is as compliant as it could, or even ought, be, but do not see it to be in the parties’ interests to delay the matter even further by ordering the defendant to plead yet again. In all of the circumstances, the costs of the plaintiff’s application will be reserved. [28] Accordingly, it is ordered: 1. Within seven (7) days, the defendant shall provide those further and better particulars of paragraphs 11(c) and 22(c) of the Seventh Further Amended Defence which were sought in paragraphs 8(d) and 18 of the plaintiff’s request for further and better particulars of the Sixth Further Amended Defence dated 23 July 2008; 2. The application otherwise be dismissed; and 3. Costs reserved. -- 12 of 12 --