Lambert Leasing Inc v QBE Insurance Australia Ltd

[2012] NSWSC 953

Supreme Court

New South Wales

Medium Neutral Citation:

Lambert Leasing Inc v QBE Insurance Australia Ltd [2012] NSWSC 953

Hearing dates:

3 August 2012

Decision date:

21 August 2012

Jurisdiction:

Equity Division - Commercial List

Before:

Stevenson J

Decision:

The following passages of Professor Swisher's report are rejected:

(1) the last sentence of paragraph 6 (commencing "As I opine below");

(2) paragraph 8;

(3) the last sentence of paragraph 10;

(4) the first sentence of paragraph 11;

(5) the words "The Virginia General Assembly and" in paragraph 11;

(6) the second to fourth sentences of paragraph 12;

(7) paragraphs 13 to 25 (including the paragraph numbered "12").

Catchwords:

EVIDENCE - expert reports - advance ruling - foreign law - content evidence - application evidence - whether inadmissible

Legislation Cited:

Evidence Act 1995
Uniform Civil Procedure Rules 2005

Cases Cited:

Allstate Life Insurance v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79; (1996) 137 ALR 138
Australian Competition and Consumer Commission (ACCC) v Allphones Retail Pty Ltd (No 3) [2009] FCA 1075; (2009) 259 ALR 541
Gondarra v Minister for Families, Housing, Community Services and Indigenous Affairs [2012] FCA 185; (2012) 127 ALD 288
Kernahan v ACN 003 134 475 Pty Ltd [2010] NSWSC 51; (2010) NSWLR 452
NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 [2012] NSWLEC 120
Southern Cross Airports Corp Pty Ltd v Chief Commissioner of State Revenue [2011] NSWSC 349
Welker v Rinehart (No 6) [2012] NSWSC 160

Category:

Interlocutory applications

Parties:

Lambert Leasing Inc (first plaintiff)
Saab Aircraft Leasing Inc (second plaintiff)
QBE Insurance Australia Ltd (first defendant)
Jalgrid Pty Ltd (second defendant)
Dramatic Investments Pty Ltd (third defendant)

Representation:

Counsel:
D S Weinberger (plaintiffs)
T Brennan (first defendant)
J S Emmett (second and third defendants)
Solicitors:
Awford Legal (plaintiffs)
Norton White (first defendant)

File Number(s):

SC 2011/86506

Judgment

1. The second and third defendants seek preliminary rulings, pursuant to s 192A of the Evidence Act 1995 ("the Act"), on the admissibility of certain passages in the affidavit of Professor Peter Swisher ("Professor Swisher") sworn 16 May 2012. Professor Swisher is a Professor of Law at the University of Richmond Law School in Richmond, Virginia, in the United States of America. Professor Swisher purports to give evidence as to the law of the Commonwealth of Virginia.

1. By an Aircraft Purchase Agreement dated 4 May 2003, the first plaintiff sold an aircraft to Partnership 818, a partnership comprising the second and third defendants.

1. Partnership 818 leased the aircraft to another company. During a flight in Queensland on 7 May 2005, the aircraft crashed, killing the two pilots and 13 passengers.

1. The relatives of the pilots and passengers have brought proceedings against the plaintiffs in the United States.

1. The plaintiffs seek indemnity from the first defendant, QBE Insurance Australia Ltd, in relation to these claims.

1. The plaintiffs also sue the second and third defendants, pursuant to an indemnity in the contract of sale in relation to the aircraft. The plaintiffs seek to recover the losses allegedly suffered by reason of the proceedings brought against them in the United States.

1. The relevant contract was subject to the law of Virginia.

1. The parties have exchanged Foreign Law Notices which reveal that the following issues of foreign law arise: -

(a)   is it a principle of the law of Virginia that an indemnity contract will only be construed to indemnify against a certain loss or liability if the language of the contract clearly and definitely shows that the intention of the indemnity so applied;

(b)   is it a principle of the law of Virginia that indemnity provisions in a contract are construed in accordance with their plain meaning;

(c)   is it a principle of the law of Virginia that the term "use" is a term of wide import in the context of a vehicle or aircraft;

(d)   is it a principle of the law of Virginia that leasing a vehicle is to be equated with the "use" of a vehicle.

Section 192A of the Act

1. Section 192A of the Act provides that a court can make a ruling in relation to the admissibility of evidence proposed to be adduced, in advance of the hearing, "if it considers it to be appropriate to do so".

1. Section 192A was inserted in the Act, with effect on 1 January 2009.

1. The section has been considered in a number of cases (for example Southern Cross Airports Corp Pty Ltd v Chief Commissioner of State Revenue [2011] NSWSC 349 per Gzell J; Australian Competition and Consumer Commission (ACCC) v Allphones Retail Pty Ltd (No 3) [2009] FCA 1075; (2009) 259 ALR 541 per Foster J; Kernahan v ACN 003 134 475 Pty Ltd [2010] NSWSC 51; (2010) NSWLR 452 per Hammerschlag J; Gondarra v Minister for Families, Housing, Community Services and Indigenous Affairs [2012] FCA 185; (2012) 127 ALD 288 per Kenny J).

1. The section specifies only one test for the court to exercise its power, namely that it "considers it appropriate to do so". I agree with the observations of Biscoe J in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 [2012] NSWLEC 120 at [40]: -

"Whether the court should make advance rulings under s 192A is a discretionary case management decision to be made in accordance with the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute."

1. It appears to me that some good reason should be advanced in order that the court exercise jurisdiction under s 192A. However, it is not necessary, in my opinion, to show "special circumstances" or to show that the circumstances are "out of the ordinary".

1. In my opinion, there is good reason to exercise jurisdiction under s 192A of the Act in this case.

1. It is likely that the second and third defendants will adduce expert evidence in reply to that of Professor Swisher. It is probable that a person who resides in Virginia, or elsewhere in the United States, will give such expert evidence. Professor Swisher resides in the United States.

1. If rulings as to the admissibility of Professor Swisher's affidavit were deferred to the hearing, it may be necessary for Professor Swisher to reformulate his report whilst in Sydney and remote from his research facilities at the University of Richmond. It may also be necessary for the expert called by the second and third defendants to do likewise. No doubt, in the internet age, Professor Swisher and his counterpart have access to United States authority online. Nonetheless, it is likely that inconvenience, and delay will occur if it were to prove necessary for Professor Swisher (and his counterpart) to reformulate their reports, on the run, during the hearing.

1. In those circumstances, I propose to consider the objections taken to Professor Swisher's report.

1. Rather than set out lengthy extracts from Professor Swisher's report in this judgment, I attach a copy of it as an annexure.

1. It is common ground that Allstate Life Insurance v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79; (1996) 137 ALR 138 is authority for the proposition that in deciding whether expert evidence as to foreign law is admissible, a distinction must drawn between the content and effect of foreign law on the one hand, and its application on the other.

1. In Allstate Lindgren J said (at 82F): -

"The distinction is between identifying and expounding, in general terms, the scope, meaning and effect of relevant statutory and non-statutory foreign law (content evidence) and opining how that foreign law applies to the facts of a particular case (application evidence)."

1. "Content evidence" is admissible. "Application evidence" is not.

1. The first defendant submits that Professor Swisher has not, at any point, acknowledged that he has read the Expert Witness Code of Conduct referred to in the Uniform Civil Procedure Rules 2005 ("UCPR") r 31.23. It follows, the first defendant submits, that the Professor's report cannot be admitted unless the Court otherwise orders (UCPR r 31.23(3)) and that the onus is one the plaintiffs to satisfy the Court that it should so order: Welker v Rinehart (No 6) [2012] NSWSC 160 at [33-35].

1. It is true that Professor Swisher does not, in terms, give the relevant acknowledgements. However the heading of his affidavit reads: -

"Affidavit of Expert Witness Professor Peter Nash Swisher in accordance with Uniform Civil Procedure Rules 2005: Schedule 7 Expert Witness Code of Conduct [Rule 31:23]".

1. For the purposes of this application, I am prepared to read that heading as a statement by Professor Swisher that he has read the Expert Witness Code of Conduct, and that he agrees to be bound by it.

First objection - paragraph 5

1. The second and third defendants object to the last three sentences of paragraph 5 of Professor Swisher's report (commencing from "But not all indemnity contracts").

1. In paragraph 5 of his report, Professor Swisher addresses the issue referred to in paragraph [8(a)] above (whether the law of Virginia requires indemnity contracts to "clearly and definitely show an intention that the indemnities so apply".)

1. Professor Swisher opines that Virginia courts "generally are bound to adhere to the 'plain meaning' rule in interpreting indemnity contracts". I would read that statement as expressing Professor Swisher's opinion that the principle in [8(b)] above (rather than that in [8(a)]) applies "generally".

1. The objection taken to the passage referred to is that it does not provide any evidence about the meaning, effect, scope or content of Virginia law "that the Court can meaningfully apply to the issues in dispute between the parties".

1. I do not accept this submission. I read the objected to passage as setting out Professor Swisher's opinion as to the extent to which there is a qualification to the general rule and referring to two cases in which that qualification has been put into effect.

1. I admit this passage in the report.

Second objection - paragraph 6

1. The second and third defendants object to all of paragraph 6 of Professor Swisher's report.

1. In that paragraph, Professor Swisher expresses an opinion as to the recognition by the law of Virginia of the "doctrine" of contra proferentem. The second and third defendants submit that there is no dispute between the parties as to this matter, and that Professor Swisher's observations are for that reason irrelevant.

1. However, in paragraph 6 Professor Swisher goes on to describe an "important qualification" to the rule and refers to cases that may have some relevance to the issues in the proceedings. Subject to what I say below as to the last sentence of paragraph 6, I admit this paragraph.

1. In that last sentence, Professor Swisher says: -

"As I opine below, I do not believe that the language of Sections 7.01 and 7.02 of the parties' Aircraft Purchase Agreement was ambiguous."

1. Here, Professor Swisher is giving what Lindgren J described as "application evidence". I reject this sentence.

Third objection - paragraphs 7 and 8

1. The second and third defendants object to these paragraphs upon the basis that they do not contain evidence about the meaning, effect or scope of the law of Virginia.

1. Paragraph 7 simply recites extracts from the agreement, and I allow it.

1. Paragraph 8 contains Professor Swisher's commentary on the facts of the case and an assertion, not expressed to be related to any opinion as to the law of Virginia, as to the burden of proof. The paragraph also includes Professor Swisher's opinion as to the effect of the indemnity clause in the relevant contract.

1. I accept the second and third defendant's submissions and reject paragraph 8.

Fourth objection - paragraph 10

1. In paragraph 10 Professor Swisher recites passages from the second and third defendants' Commercial List Response concerning the proper construction of the relevant agreement and concludes: -

"With all due respect, I must disagree with this assessment."

1. Professor Swisher is thereby expressing an opinion as to the proper construction of the agreement and is seeking to give "application evidence". I reject the last sentence of paragraph 10.

Fifth objection - paragraph 11, first sentence

1. This sentence is objected to by the second and third defendants upon the basis that it is a statement about insurance practice in Virginia.

1. I accept that submission. The first sentence of paragraph 11 is rejected.

Sixth objection - paragraph 11, last three sentences

1. The second and third defendants object to Professor Swisher's reference to "the Virginia General Assembly and" on the basis of relevance. I accept this submission. The words "the Virginia General Assembly and" are rejected.

1. The second and third defendants object to the balance of these sentences on the basis that Professor Swisher mentions a single authority to support his proposition that the Virginia Supreme Court recognises a "liberal application for the term 'use'". This may go to the weight of Professor Swisher's opinion but does not, in my opinion, render it inadmissible. I therefore allow the balance of the sentences objected to.

Seventh objection - paragraph 12, second to fourth sentences

1. The plaintiffs do not press these sentences. They are rejected.

Eighth objection - paragraph 12, last sentence

1. In this sentence Professor Swisher opines that the term "all liabilities" has been "liberally interpreted" by the Virginia Supreme Court, and refers to two authorities.

1. The second and third defendants submit that two decisions on the subject "cannot assist the Court unless it is possible to extract from those cases something about the meaning, effect, scope or content of Virginia law".

1. In my opinion, the fact that Professor Swisher refers only to two cases may affect the weight of his opinion, but does not render it inadmissible. I allow this sentence.

The remaining objections - paragraphs 13 to 25

1. The plaintiffs do not press these paragraphs, including the paragraph numbered "12". They are rejected.

Conclusion

1. For these reasons, I reject the following passages from Professor Swisher's report: -

(a)   the last sentence of paragraph 6 (commencing "As I opine below");

(b)   paragraph 8;

(c)   the last sentence of paragraph 10;

(d)   the first sentence of paragraph 11;

(e)   the words "The Virginia General Assembly and" in paragraph 11;

(f)   the second to fourth sentences of paragraph 12;

(g)   paragraphs 13 to 25 (including the paragraph numbered "12").

1. Otherwise, my opinion is that Professor Swisher's report is admissible.

1. I will hear the parties concerning costs.

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Annexure

Decision last updated: 21 August 2012